SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of September, 2016

Commission File Number 33-99720

ARAUCO AND CONSTITUTION PULP INC.

(Translation of registrant’s name into English)

El Golf 150

Fourteenth Floor

Santiago, Chile

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

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-             

ARAUCO AND CONSTITUTION PULP INC

TABLE OF CONTENTS

Item		Page
1.	Ratio Analysis of the Consolidated Financial Statement		1
2.	Unaudited Consolidated Financial Statement		6
3.	Unaudited Consolidated Financial Income Statement		8
4.	Unaudited Consolidated Statement of Changes in Net Equity		10
5.	Unaudited Consolidated Statement of Cash Flow		11
6.	Unaudited Notes to the Consolidated Financial Statement		12
	Annex: Press Release

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

1. ANALYSIS OF FINANCIAL POSITION

a) Statement of Financial Position

The principal components of assets and liabilities at each period, as follows:

Assets	09-30-2016 ThU.S.$		12-31-2015 ThU.S.$
Current assets		2,595,599		2,651,920
Non-current assets		11,252,654		11,018,471
Total assets		13,848,253		13,670,391
Liabilities	09-30-2016 ThU.S.$		12-31-2015 ThU.S.$
Current liabilities		1,389,228		1,034,251
Non-current liabilities		5,527,584		5,989,695
Non–parent participation		44,494		37,735
Net equity attributable to parent company		6,886,947		6,608,710
Total net equity and liabilities		13,848,253		13,670,391

As of September 30, 2016, total assets increased U.S.$178 million compared to December 31, 2015, equivalent to a 1.3% variation. This deviation was driven mainly by increases in the balance of investments in connection with the purchase of a 50% interest in the joint venture SONAE ARAUCO, properties, plant and equipment and biological assets, partially offset by a decrease in trade and other accounts receivable.

In turn, total liabilities decreased by U.S.$107 million mainly due to a decrease in financial liabilities and non-financial liabilities for a lower register of provision for minimum dividend compared to December 31, 2015.

The main financial and operational indicators as of the dates and periods indicated below are as follows:

Liquidity ratios	09-30-2016		12-31-2015
Current Liquidity (current assets / current liabilities)		1.87		2.56
Acid ratio (( current assets-inventories, biological assets) / current liabilities )		1.00		1.42
Debt indicators	09-30-2016		12-31-2015
Debt to equity ratio (total liabilities / equity)		1.00		1.06
Short-term debt to total debt (current liabilities / total liabilities)		0.20		0.15
Long-term debt to total debt (non-current liabilities / total liabilities)		0.80		0.85
	09-30-2016		09-30-2015
Financial expenses coverage ratio (earnings before taxes + interest expense / interest expense)		1.99		2.97
Activity ratio	09-30-2016		12-31-2015
Inventory turnover-time (cost of sales / inventories + current biological assets)		2.89		2.95
Inventory turnover-time (excluding biological assets) (Cost of sales /inventory)		3.79		3.89
Inventory permanence-days ((inventories + biological assets) /cost of sales)		124.71		122.16
Inventory permanence-days (excluding biological assets) (inventory / cost of sales)		94.98		92.45

1

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of September 30, 2016, the short-term debt represented 20% of total liabilities (15% as of December 31, 2015).

Our financial expenses coverage ratio decreased from 2.97 to 1.99, mainly due to the lower earnings before taxes for the period ended September 30, 2016, compared to the same period of 2015.

b) Statements of income

Income before income tax

Income before income tax registered a profit of approximately U.S.$199 million compared to a profit of approximately U.S.$382 million in the same period of 2015. The negative variation of U.S.$183 million is explained by the factors described in the following table:

Item	MU.S.$
Gross margin		(312	)
Distribution and Administrative Expenses		69
Other income/ expenses by function		35
Exchange differences		28
Others		(3	)
Net change in income before income tax		(183	)

The main indicators related to result accounts and the details of revenues and operation costs are as follows:

Revenues	09-30-2016 ThU.S.$			09-30-2015 ThU.S.$
Pulp		1,588,710			1,794,026
Timber		1,865,010			2,031,729
Forestry		68,976			88,325
Other		18,085			25,871
Total revenues		3,540,781			3,939,951
Sales costs	09-30-2016 ThU.S.$			09-30-2015 ThU.S.$
Wood		553,041			511,588
Forestry work		443,319			478,564
Depreciation and amortization		277,483			277,323
Other costs		1,312,478			1,406,319
Total sales costs		2,586,321			2,673,794
Profitability index	09-30-2016			12-31-2015
Profitability on equity		2.79			5.46
Profitability on assets		1.37			2.59
Return on operating assets		2.18			4.13
Profitability ratios	09-30-2016			09-30-2015
Income per share (U.S.$) (1)		1.24			2.44
Income after tax (ThU.S.$) (2)		141,811			278,584
Gross margin (ThU.S.$)		954,460			1,266,157
Financial costs (ThU.S.$)		(200,455	)		(193,788	)

(1) Earnings per share refer to the profit to net equity to parent company.

(2) Includes non-controlling interest.

2

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

EBITDA	09-30-2016 MU.S.$			09-30-2015 MU.S.$
Gain (loss)		141.8			278.6
Finance costs		200.5			193.8
Financial income		(25.8	)		(35.1	)
Expenses for income tax		57.4			103.6
EBIT		373.9			540.9
Depreciation and amortization		301.8			298.9
EBITDA		675.7			839.7
Cost at fair value of the harvest		253.7			231.5
Gain from changes in fair value of biological assets		(139.8	)		(140.7	)
Exchange difference		0.1			27.8
Others*		2.7			35.0
Adjusted EBITDA		792.3			993.4

* 2016: Forest loss provision MU.S.$2.7

* 2015: Forest loss provision MU.S.$11.4

2. MAIN SOURCES OF FINANCING

Arauco’s financing needs are mainly covered through the capital markets, with bond issuances and credits obtained from banks and financial institutions serving as the main sources of financing. For short-term borrowing, Arauco follows a liquidity policy which indicates the amounts and institutions from which it can borrow according to several conditions defined in the policy. In the case of long-term debt, corporate bond issuances in the local market and also in international markets are used as sources of new resources. Another source of long-term financing corresponds to borrowings from banks and financial institutions around the world.

3. DIFFERENCE BETWEEN ECONOMIC VALUES AND BOOK ASSETS

Assets and liabilities are presented in the Financial Statements according to International Financial Reporting Standards and instructions issued by the Chilean Securities Commission. We believe that there are no material differences between the economic value of our assets and the value reflected in these Financial Statements.

4. MARKET SITUATION

Pulp Division

During the third quarter, prices dipped to the lowest levels during this year, although the mood has improved at quarter-end. Among other factors, growing supply from Europe and North America increased long fiber producer stocks by two days, while new supply from Brazil enabled short fiber producer stocks to increase by six days. Seasonality effects in the Northern hemisphere did not help matters, as the summer months brought with them less demand. Compared to the same quarter of last year, inventory levels for long fiber remained at similar levels, while hardwood levels increased by 10 days.

Despite leading price recoveries during the last quarter, this quarter Asia suffered a setback in prices, with China leading the way. Overall prices declined 6% in both fibers, which translated in adjustments of U.S.$ 25 to U.S.$ 30 in long fiber prices, and U.S.$30 to U.S.$ 40 in short fiber prices. The price gap between both fibers remained wide, with long fiber U.S.$ 110 above short fiber prices, incentivizing a higher use of short fiber over long fiber. The effect of additional volume from North America also pressured prices, although this new supply is planned to produce fluff pulp in the medium and long term as the fluff market develops and deepens. In the meantime, Asian markets remain attractive to enter rapidly

3

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

and compete via prices to sell this excess supply. Printing and writing paper demand remained active, and exports increased as the local currency in Asian countries depreciated against the U.S. dollar.

The European market suffered minor adjustments of approximately 2% to 3% in both fibers, translating into a decline of U.S.$ 10 for long fiber prices and U.S.$ 20 for short fiber prices. Although the factors pressuring prices are similar to those affecting Asia, price declines werenot as pronounced, especially since Asian prices recovered much more during the second quarter compared to European prices. Paper markets remained stagnant and even tissue producers experienced price slumps.

Markets in Latin America continued to be active, with the exception of Brazil with lower than average pulp prices due to the aggressive position of new supply within the country took within the local market. Middle Eastern markets followed global tendencies and special discount in spot prices were frequent in order to divert excess supply from more important and regular markets.

During this quarter, our production levels were normal, with maintenances stoppages in our Licancel Pulp Mill in July and Line 2 of our Arauco Pulp Mill at the end of August, both lasting approximately two weeks.

Timber Division

Our wood products segment showed mixed results during the third quarter, which overall maintained revenues stable compared to last quarter. Revenues of this segment adjusted of 0.5% upward, reaching U.S.$ 638.1 million. Prices improved in some regions, especially in Chilean and Brazilian markets. However, this price improvement was in detriment of sales volume, with both markets declining by 10.8% and 7.2% in sales volume, respectively. The opposite effect occurred in Argentina and other markets, with prices slightly dipping in favor of increased sales volume.

Within the panels market, there were overall stronger price increases than decreases throughout all markets, with the exception of Brazil which saw a minor decline in prices in MDF and PBO. Higher local competition within this market added pressure to prices in this country. The depreciation of the Brazilian real against the U.S. dollar also gave way to lower returns in U.S. dollar terms for exports. Our melamine products, however, were well positioned and continued to reap the benefits. In North America, MDF had a positively sloped demand throughout the quarter, and imports from our production facilities in Brazil, Argentina and Chile increased in order to meet this higher demand. Particleboard sales did not fare as well, but maintained somewhat similar levels in terms of price and volume compared to last quarter. Sales in Mexico prospered and prices remained stable this quarter despite new MDF mills starting up locally. Products that differentiate us from our competitors, such as our melamine products, helped maintain sales volume. In Argentina, there was an upsurge in sales volume, despite exports being difficult to concrete. MDF moldings have also regained strength across markets.

Furthermore, sawn timber markets continued to recover. Asia and Oceania, one of our stronger markets within sawn timber sales showed a healthy demand, with China and Korea showing stable prices and sales volume. In the United States and Canada, Arauco was able to regain market position in Araucoply, as there was a stronger demand for these products throughout the region. This effect was slightly offset by higher sales volume from Latin American countries. Price hikes in pine moldings, though modest, have yet to affect our

4

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

bottom line. Middle Eastern markets continue to show favorable results, expanding Arauco´s client base in India and consolidating price increases. Other markets, such as Latin America and the Caribbean and Europe, have shown stability, with plywood picking up strength in the latter.

5. ANALYSIS OF CASH FLOW

The main components of net cash flow in each period are as follows:

	09-30-2016 ThU.S.$			09-30-2015 ThU.S.$
Positive (negative) Cash flow
Cash flow from operating activities		597,374			688,005
Cash flow from (used in) financing activities:
Loan and bond payments		(47,349	)		(613,510	)
Dividend payments		(100,557	)		(99,064	)
Others		(246	)		(929	)
Cash flow from (used in) investment activities:
Loans to related companies		0			(23,628	)
Incorporation and sale of property, plant and equipment		(233,617	)		(255,436	)
Incorporation and sale of biological assets		(101,741	)		(123,170	)
Purchase of participation in joint ventures		(153,135	)
Sale of participation in associates		6,781
Dividends received		4,772			5,095
Others		(5,464	)		567
Positive Net cash flow (negative)		(33,182	)		(422,070	)

The financing cash flow had a negative balance of U.S.$148 million in the current period compared to a negative balance of U.S.$713 million in the same period of 2015. Such decrease was mainly due to an increase in bank loans received and a decrease in loan payments.

In relation to the flow of investment at the end of the current period, there was a negative balance of U.S.$482 million compared to a negative balance of U.S.$397 million in the same period of 2015. Such increase was mainly due to greater disbursements for the purchase of the interest in the joint venture SONAE ARAUCO, partially offset by lower payments for the acquisition of properties, plant and equipment and biological assets.

6. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of September 30, 2016, a ratio of fixed rate debt to total consolidated debt of approximately 86.8%, which it believes is consistent with industry standards. The Company does not participate in futures trading as to maintain one of the lowest cost structures in the industry, the risks for price fluctuations are bounded.

The Company and most of its subsidiaries maintain their accounting records and prepare their financial statements in U.S. dollars. Both the accounts receivable and most financial liabilities are denominated in U.S. dollars or are covered by an exchange rate swap, as well as most of their revenues. As a result, exposure to changes in the exchange rate has decreased significantly.

In the report to the Consolidated Financial Statements as of September 30, 2016, a detailed analysis of the risks associated with the business of Arauco is available (See Note 23).

5

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	Note	09-30-2016 (Unaudited) ThU.S.$		12-31-2015 ThU.S.$
Assets
Current Assets
Cash and cash equivalents	5		459,668		500,025
Other current financial assets	23		9,599		32,195
Other current non-financial assets	25		177,645		133,956
Trade and other current receivables	23		642,452		733,322
Accounts receivable from related companies	13		3,678		3,124
Current Inventories	4		909,607		909,988
Current biological assets	20		297,496		306,529
Current tax assets			92,338		64,079
Total Current Assets other than assets or disposal groups classified as held for sale			2,592,483		2,683,218
Non-Current Assets or disposal groups classified as held for sale	22		3,116		3,194
Total Current Assets			2,595,599		2,686,412
Non-Current Assets
Other non-current financial assets	23		5,347		595
Other non-current non-financial assets	25		129,900		125,516
Trade and other non-current receivables	23		15,547		15,270
Investments accounted for using equity method	15-16		438,494		264,812
Intangible assets other than goodwill	19		81,611		88,112
Goodwill	17		75,071		69,475
Property, plant and equipment	7		6,914,297		6,896,396
Non-current biological assets	20		3,588,474		3,520,068
Deferred tax assets	6		3,913		3,735
Total non-Current Assets			11,252,654		10,983,979
Total Assets			13,848,253		13,670,391

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)

	Note	09-30-2016 (Unaudited) ThU.S.$			12-31-2015 ThU.S.$
Equity and liabilities
Liabilities
Current Liabilities
Other current financial liabilities	23		717,874			296,038
Trade and other current payables	23		558,007			583,018
Accounts payable to related companies	13		7,321			7,141
Other current provisions	18		628			858
Current tax liabilities			8,887			10,976
Current provisions for employee benefits	10		5,185			4,497
Other current non-financial liabilities	25		91,326			131,723
Total current liabilities other than assets included in disposal groups classified as held for sale			1,389,228			1,034,251
Total Current Liabilities			1,389,228			1,034,251
Non-Current Liabilities
Other non-current financial liabilities	23		3,731,504			4,236,965
Other non-current provisions	18		38,686			34,541
Deferred tax liabilities	6		1,637,491			1,619,012
Non-current provisions for employee benefits	10		59,788			51,936
Other non-current non-financial liabilities	25		60,115			47,241
Total non - current liabilities			5,527,584			5,989,695
Total liabilities			6,916,812			7,023,946
Equity
Issued capital			353,618			353,618
Retained earnings			7,285,529			7,204,452
Other reserves			(752,200	)		(949,360	)
Equity attributable to parent company			6,886,947			6,608,710
Non-controlling interests			44,494			37,735
Total equity			6,931,441			6,646,445
Total equity and liabilities			13,848,253			13,670,391

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

	Note	January-September						July-September
		(Unaudited)
		2016			2015			2016			2015
		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Income Statement
Revenue	9		3,540,781			3,939,951			1,187,470			1,285,891
Cost of sales	3		(2,586,321	)		(2,673,794	)		(885,155	)		(896,547	)
Gross profit			954,460			1,266,157			302,315			389,344
Other income	3		189,635			182,500			69,869			72,344
Distribution costs	3		(353,576	)		(404,278	)		(123,755	)		(140,952	)
Administrative expenses	3		(386,669	)		(404,632	)		(134,853	)		(122,266	)
Other expense	3		(43,878	)		(72,318	)		(10,467	)		(18,007	)
Profit (loss) from operating activities			359,972			567,429			103,109			180,463
Finance income	3		25,759			35,069			7,862			15,792
Finance costs	3		(200,455	)		(193,788	)		(64,685	)		(62,636	)
Share of profit (loss) of associates and joint ventures accounted for using equity method	15		14,003			1,255			3,972			2,241
Exchange rate differences			(74	)		(27,823	)		(992	)		(22,563	)
Income before income tax			199,205			382,142			49,266			113,297
Income Tax	6		(57,394	)		(103,558	)		(17,842	)		(26,319	)
Net Income			141,811			278,584			31,424			86,978
Net income attributable to
Net income attributable to parent company			140,222			276,107			31,138			86,204
Income attributable to non-controlling interests			1,589			2,477			286			774
Profit (loss)			141,811			278,584			31,424			86,978
Basic earnings per share
Basic earnings per share from continuing operations			0.0012392			0.0024400			0.0002752			0.0007618
Basic earnings per share			0.0012392			0.0024400			0.0002752			0.0007618
Earnings per diluted shares
Earnings per diluted share from continuing operations			0.0012392			0.0024400			0.0002752			0.0007618
Earnings per diluted share			0.0012392			0.0024400			0.0002752			0.0007618

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			January-September						July-September
			(Unaudited)
	Note		2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Profit (loss)				141,811			278,584			31,424			86,978
Components of other comprehensive income that will not be reclassified to profit or loss before tax:
Other comprehensive income before tax actuarial gains losses on defined Benefit plans				(4,497	)		868			(1,582	)		(537	)
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will not be reclassified to profit or loss before tax				299			(1,246	)		555			(4,113	)
Other Comprehensive Income that will not be reclassified to profit or loss before tax				(4,198	)		(378	)		(1,027	)		(4,650	)
Components of other comprehensive income that will be reclassified to profit or loss before tax:
Exchange differences on translation
Gains (losses) on exchange differences on translation, before tax		11		179,690			(392,119	)		(11,863	)		(225,907	)
Other Comprehensive Income before tax exchange differences on translation				179,690			(392,119	)		(11,863	)		(225,907	)
Cash flow hedges
Gains (losses) on cash flow hedges, before tax				44,277			1,059			33,035			(17,101	)
Reclassification adjustments on cash flow hedges before tax				(10,658	)		(9,845	)		(2,539	)		(2,741	)
Other Comprehensive Income before tax Cash flow hedges				33,619			(8,786	)		30,496			(19,842	)
Other Comprehensive income that will be reclassified to profit or loss before tax				213,309			(400,905	)		18,633			(245,749	)
Income tax relating to components of other comprehensive Income that will not be reclassified to profit or loss before tax
Income tax relating to defined benefit plans of other comprehensive income				1,212			(216	)		424			187
Income tax relating to components of other comprehensive Income that will be reclassified to profit or loss before tax
Income tax relating to cash flow hedges of other comprehensive income		6		(8,171	)		1,732			(7,129	)		3,824
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss abstract				(8,171	)		1,732			(7,129	)		3,824
Other comprehensive income				202,152			(399,767	)		10,901			(246,388	)
Comprehensive income				343,963			(121,183	)		42,325			(159,410	)
Comprehensive Income attributable to
Comprehensive income, attributable to owners of parent company				337,382			(112,453	)		42,219			(153,703	)
Comprehensive income, attributable to non-controlling interests				6,581			(8,730	)		106			(5,707	)
Total comprehensive income				343,963			(121,183	)		42,325			(159,410	)

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

09-30-2016 Unaudited	Issue Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial gains or losses on defined benefit plans ThU.S.$			Several Other Reserves ThU.S.$			Other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent T.hU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01/01/2016		353,618		(872,770	)		(55,396	)		(16,668	)		(4,526	)		(949,360	)		7,204,452			6,608,710			37,735			6,646,445
Changes in Equity:
Comprehensive income
Net income																			140,222			140,222			1,589			141,811
Other comprehensive income, net of tax				174,703			25,448			(3,290	)		299			197,160						197,160			4,992			202,152
Comprehensive income		0		174,703			25,448			(3,290	)		299			197,160			140,222			337,382			6,581			343,963
Dividends																			(59,145	)		(59,145	)		266			(58,879	)
Increase (decrease) through for transfers and other changes equity																			0			0			(88	)		(88	)
Changes in equity		0		174,703			25,448			(3,290	)		299			197,160			81,077			278,237			6,759			284,996
Closing balance at 09/30/2016		353,618		(698,067	)		(29,948	)		(19,958	)		(4,227	)		(752,200	)		7,285,529			6,886,947			44,494			6,931,441
09-30-2015 Unaudited	Issue Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial gains or losses on defined benefit plans ThU.S.$			Several Other Reserves ThU.S.$			Other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent T.hU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01/01/2015		353,618		(498,495	)		(53,022	)		(15,790	)		(3,745	)		(571,052	)		6,984,564			6,767,130			47,606			6,814,736
Changes in Equity:
Comprehensive income
Net income																			276,107			276,107			2,477			278,584
Other comprehensive income, net of tax				(380,917	)		(7,054	)		657			(1,246	)		(388,560	)					(388,560	)		(11,207	)		(399,767	)
Comprehensive income		0		(380,917	)		(7,054	)		657			(1,246	)		(388,560	)		276,107			(112,453	)		(8,730	)		(121,183	)
Dividends																			(116,213	)		(116,213	)		(690	)		(116,903	)
Increase (decrease) for transfer and other changes																			0			0			(806	)		(806	)
Changes in equity		0		(380,917	)		(7,054	)		657			(1,246	)		(388,560	)		159,894			(228,666	)		(10,226	)		(238,892	)
Closing balance at 09/30/2015		353,618		(879,412	)		(60,076	)		(15,133	)		(4,991	)		(959,612	)		7,144,458			6,538,464			37,380			6,575,844

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

	09-30-2016			09-30-2015
	ThU.S.$			ThU.S.$
STATEMENTS OF CASH FLOWS
Cash Flows from (used in) Operating Activities
Classes of cash receipts from operating activities
Receipts from sales of goods and rendering of services		3,880,924			4,370,918
Other cash receipts from operating activities		371,835			254,629
Classes of cash payments
Payments to suppliers for goods and services		(2,866,583	)		(3,178,939	)
Payments to and on behalf of employees		(386,161	)		(385,209	)
Other cash payments from operating activities		(168,339	)		(131,540	)
Interest paid		(178,700	)		(195,176	)
Interest received		19,056			11,981
Income taxes refund (paid)		(71,109	)		(63,985	)
Other (outflows) inflows of cash, net		(3,549	)		5,326
Net Cash flows from Operating Activities		597,374			688,005
Cash flows (used in) investing activities
Other cash receipts from sales of equity or debt instruments of other entities		6,781			—
Other cash payments to acquire interests in joint ventures		(153,135	)		—
Loans to related parties		—			(23,628	)
Proceeds from sale of property, plant and equipment		9,413			3,472
Purchase of property, plant and equipment		(243,030	)		(258,908	)
Proceeds from sales of intangible assets		—			99
Purchase of intangible assets		(1,858	)		(2,901	)
Proceeds from other long-term assets		1,572			295
Purchase of other non-current assets		(103,313	)		(123,465	)
Dividends received		4,772			5,095
Other outflows of cash, net		(3,606	)		3,369
Cash flows used in Investing Activities		(482,404	)		(396,572	)
Cash flows from (used in) Financing Activities
Total loans obtained		542,461			248,953
Loans obtained in long term		297			583
Proceeds from short-term borrowings		542,164			248,370
Repayments of borrowings		(589,810	)		(862,463	)
Dividends paid by subsidiaries or special purpose companies		(100,557	)		(99,064	)
Other inflows of cash, net		(246	)		(929	)
Cash flows from (used in) Financing Activities		(148,152	)		(713,503	)
Net increase (decrease) in Cash and Cash Equivalents before effect of exchange rate changes		(33,182	)		(422,070	)
Effect of exchange rate changes on cash and cash equivalents		(7,175	)		(20,206	)
Net increase (decrease) of Cash and Cash equivalents		(40,357	)		(442,276	)
Cash and cash equivalents, at the beginning of the period		500,025			971,152
Cash and cash equivalents, at the end of the period		459,668			528,876

The accompanying notes are an integral part of these interim consolidated financial statements.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2016 AND 2015 AND DECEMBER 31, 2015

NOTE 1. PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

Entity Information

Celulosa Arauco y Constitución S.A. and subsidiaries, (hereafter “Arauco” or the “Company”), tax identification number 93,458,000-1, is a closely held corporation, that was registered in the Securities Registry (the “Registry”) of the Superintendency of Securities and Insurance (the “SVS”) as No. 042 on June 14, 1982. Additionally, the Company is registered as a non-accelerated filer with the Securities and Exchange Commission (SEC) of the United States of America.

Forestal Cholguán S.A., subsidiary of Arauco, is also registered in the Securities Registry as No. 030.

The Company’s head office address is El Golf Avenue 150, 14^th floor, Las Condes, Santiago, Chile.

Arauco is principally engaged in the production and sale of forestry and timber products. Its main operations are focused on the following business areas: Pulp, Plywood and Fiberboard Panels, Sawn Timber and Forestry.

Arauco is controlled by Empresas Copec S.A., which owns 99.9780% of Arauco, and is registered in the Securities Registry as No. 0028. Each of the above mentioned companies is subject to the oversight of the SVS.

The ultimate shareholders of Arauco are Mrs. Maria Noseda Zambra de Angelini, Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi through the entity Inversiones Angelini y Cia. Ltda., which owns 63.4015% of the shares of AntarChile S.A., the controlling shareholder of our parent company Empresas Copec S.A.

Arauco’s Interim Consolidated Financial Statements were prepared on a going concern basis.

Presentation of Interim Consolidated Financial Statements

The Financial Statements presented by Arauco as of September 30, 2016 are:

• Interim Consolidated Statements of Financial Position as of September 30, 2016 and December 31, 2015.

• Interim Consolidated Statements of Comprehensive Income by function for the periods between January 1 and September 30, 2016 and 2015

• Interim Statements of Other Consolidated Comprehensive Income for the periods between January 1 and September 30, 2016 and 2015

• Interim Consolidated Statements of Changes in Equity for the periods between January 1 and September 30, 2016 and 2015.

• Interim Consolidated Statements of Cash Flows – Direct Method for the periods between January 1 and September 30, 2016 and 2015.

• Explanatory disclosures (notes)

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Period Covered by the Interim Consolidated Financial Statements

Period between January 1 and September 30, 2016.

Date of Approval of Interim Consolidated Financial Statements

These interim consolidated financial statements were approved by the Board of Directors of the Company (the “Board”) at the Extraordinary Session N° 558 held on November 11, 2016 for the period between January 1 and September 30, 2016.

Abbreviations used in this report:

IFRS - International Financial Reporting Standards

IASB - International Accounting Standards Board

IAS - International Accounting Standards

IFRIC - International Financial Reporting Standards Interpretations Committee

MU.S.$ - Millions of U.S. dollars

ThU.S.$ - Thousands of U.S. dollars

U.F. – Inflation index-linked units of account

EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization

ICMS – Tax movement of inventories and services (Brazil)

Functional and Presentation Currency

Arauco and most of its subsidiaries determined the United States (“U.S.”) Dollar as its functional currency since the majority of its revenues from sales of its products are derived from exports denominated in U.S. Dollars, while their costs of sales are to a large extent related or indexed to the U.S. Dollar.

For the pulp operating segment, most of the sales are exports denominated in U.S. Dollars and costs are mainly related to plantation costs which are settled in U.S. Dollars.

For the sawn timber, panel and forestry operating segments, although total sales include a mix of domestic and exports sales, prices of the products are established in U.S. Dollars, which is also the case for the cost structure of the related raw materials.

In relation to the cost of sales, although labor and services costs are generally billed and paid in local currency, these costs are not as significant as the costs of raw materials, which are driven mainly by global markets and therefore, influenced mostly by the U.S. Dollar.

The presentation currency of the consolidated financial statements is the U.S. Dollar. Figures on these interim consolidated financial statements are presented in thousands of U.S. Dollar (ThU.S.$).

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Summary of significant accounting policies

a) Basis for preparation of interim consolidated financial statements

These interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and represent the full adoption, explicitly and unreserved of the mentioned international standards.

Retroactive application of IFRS

On October 17, 2014, the SVS issued Circular Letter No. 856, instructing auditees to register in fiscal year 2014 against equity the differences in assets and liabilities as a result of deferred taxes arising from the direct effect of the increase in the first category tax rates introduced by Law No. 20,780. Such accounting treatment differs from IAS 12 and, therefore, represented a change to the framework for the preparation and presentation of financial information adopted up to that date.

Considering what was explained in the preceding paragraph represented a specific and temporary deviation from IFRS, as from 2016 and according to paragraph 4A of IFRS 1, Arauco has decided to apply retroactively such rules (in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”), as if it had never stopped applying them.

Given that what was indicated in the preceding paragraph does not alter any of the accounts shown in the financial statements as of September 30, 2016 and 2015, nor the financial statements as of December 31, 2015 and 2014, in accordance with paragraph 40A of IAS 1 “Presentation of Financial Statements”, it is not necessary to present financial statements as of January 1, 2015 (third column).

The interim consolidated financial statements have been prepared on the historical cost basis, except for biological assets and certain derivative financial instruments which are measured at revalued amounts or fair value at the end of each period as explained in the following significant accounting policies.

b) Critical accounting estimates and judgments

The preparation of these interim consolidated financial statements, in accordance with Superintendency of Securities and Insurance (SVS), requires management to make estimates and assumptions that affect the carrying amounts reported. These estimates are based on historical experience and various other assumptions that are considered to be reasonable. Actual results may differ from these estimates. Management believes that the accounting policies below are the critical judgments that have the most significant effect on the amounts recognized in the consolidated financial statements.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

-Biological Assets

The recovery of forest plantations is based on discounted cash flow models which means that the fair value of biological assets is calculated using cash flows from continuing operations on a discounted basis, based on our sustainable forest management plans and the estimated growth of forests.

These discounted cash flows require estimates in growth, harvest, sales prices and costs; therefore it is important that management make appropriate estimates of future levels and trends for sales and costs, as well as conduct regular surveys of the forests to establish the volumes of wood available for harvesting and their current growth rates. The main considerations used to measure forest plantations are presented in Note 20, including a sensitivity analysis.

-Goodwill

Goodwill represents the excess of the acquisition cost over the fair value of the Group’s holding in the identifiable net assets of the acquired subsidiary at the date of acquisition. Said fair value is determined whether based on assessments and/or the discounted future flow method using hypotheses in their determination, such as sales prices and industry indexes, among others. See Note 17.

-Litigation and Contingencies

Arauco and its subsidiaries are subject to certain litigation proceedings. Future impact on Arauco’s financial condition derived from such litigations is estimated by management, in collaboration with its legal advisors. Arauco applies judgment when interpreting the reports of its legal advisors who provide updated estimates of the legal contingencies at each reporting period and/or at each time a modification is determined to be necessary. For a description of current litigations see Note 18.

c) Consolidation

The interim consolidated financial statements include all entities over which Arauco has the power to direct the relevant financial and operating activities. Subsidiaries (including special purpose entities) are consolidated from the date on which control is obtained and up to the date that control ceases.

Specifically, a company controls an investee or subsidiary if, and only if, they have all of the following:

(a) power over the investee, i.e. the investor has existing rights which give it the ability to direct the relevant activities (the activities that significantly affect the investee’s returns)

(b) exposure or rights to variable returns from involvement with the investee; and

(c) the ability to use power over the investee to affect the amount of the investor’s returns.

When Arauco holds less than the majority of voting rights in a company in which it participates, it nonetheless has the power over said company - when these voting rights are enough - to grant it in practice the ability to unilaterally direct said company’s

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

relevant activities. Arauco takes into account all facts and circumstances in order to assess if the voting rights in a company in which it participates are enough for granting it the power, including:

a) the size of the investor’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

b) potential voting rights held by the investor, other vote holders or other parties;

c) rights arising from other contractual arrangements; and

d) any additional facts and circumstances that indicate the investor has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

The Company will reevaluate whether or not it holds control of a company in which participates if the facts and circumstances indicate that changes have occurred in one or more of the three elements of control mentioned above.

Consolidation of an investee shall begin from the date the investor obtains control of the investee and cease when the investor loses control of the investee. An entity includes the income and expenses of an acquired or sold subsidiary in the interim consolidated financial statements from the date it gains control until the date when the entity ceases to control the subsidiary.

The profit or loss of each component of other comprehensive income is attributed to owners of the parent company and the non-controlling interest, as appropriate. Total comprehensive income is attributed to the owners of the parent company and non-controlling interests even if the results of the non-controlling interest have a deficit balance.

If a subsidiary uses accounting policies other than those adopted in the interim consolidated financial statements for transactions and other events in similar circumstances, appropriate adjustments are made to the financial statements of subsidiaries in order to ensure compliance with Arauco’s accounting policies.

All intercompany transactions and unrealized gains and losses from subsidiaries have been fully eliminated from interim consolidated financial statements and non-controlling interest is presented in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

The interim consolidated financial statements at the end of this period include the assets, liabilities, income and expenses of the subsidiaries shown in Note 13.

Certain consolidated subsidiaries have Brazilian Real and Chilean Pesos as their functional currencies. For consolidation purposes, the financial statements of those subsidiaries have been prepared in accordance with IFRS and translated into the presentation currency as indicated in Note 1 (e) (ii).

A parent company will present non-controlling interests in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

d) Segments

Arauco has defined its operating segments according to its business areas, based on the products and services sold to its customers. This definition is consistent with the management, resource allocation and performance assessment made by key personnel responsible for making relevant decisions related to the Company’s operation. The Chief Operating Decision Maker (CODM) is the Chief Executive Officer who is responsible for making these decisions and it is supported by the Corporate Managing Directors of each segment.

Based on the aforementioned process, the Company has established operating segments according to the following business units:

• Pulp

• Timber

• Forestry

Refer to Note 24 for detailed financial information by operating segment.

e) Functional currency

(i) Functional currency

All items in the financial statements of Arauco and each of its subsidiaries, associates and jointly controlled entities are measured using the currency of the primary economic environment in which each entity operates (the functional currency). The interim consolidated financial statements are presented in U.S. dollars, which is Arauco’s functional and presentation currency.

(ii) Translation to the presentation currency of Arauco

For the purposes of presenting interim consolidated financial statements, assets and liabilities of Arauco’s operations in a functional currency different from Arauco´s are translated into U.S. dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange rate differences are recognized in other comprehensive income and accumulated in “Other reserves” within–equity.

(iii) Foreign Currency Transactions

Transactions in currencies other than the functional currency are recognized at the exchange rates prevailing at the dates of the transactions. Profit or loss on transactions in currencies other than the functional currency resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognized in the statement of income, except those which are recorded in other comprehensive income and accumulated in equity such as cash flows hedging derivatives.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

f) Cash and cash equivalents

Cash and cash equivalents include cash-in-hand, deposits held on demand at banks and other short term highly liquid investments with an original maturity of three months or less and which are subject to an insignificant risk of changes in value.

g) Financial Instruments

Financial assets

Financial assets are classified into the following specified categories: ‘loans and receivables’ and “derivative financial instruments”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All purchases and sales of financial assets are recognized and derecognized on the trade date, which require delivery of assets within the same time frame established by regulation or convention in the marketplace.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are classified as current assets, except for those with maturities more than 12 months after the reporting period, which are classified as non-current assets. Loans and receivables include trade and other receivables.

Loans and receivables are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition and are subsequently measured at amortized cost using the effective interest rate method, less any impairment.

Derivative financial instruments are explained in Note 1 h)

Financial liabilities

Financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments (including all fees and amounts paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Financial obligations are classified as current liabilities, unless Arauco holds an unconditional right to defer their settlement during at least 12 months after the balance sheet’s date.

The estimate of the fair value of obligations with banks is determined using valuation techniques that include discounted cash flow analyses applying rates of similar loans. Bonds are appraised at market value.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

h) Derivative financial instruments

(i) Derivative Financial Instruments - The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps, currency swaps and zero cost collar contracts. The company’s policy is that derivative contracts are entered into for economic hedging purposes and that there be no instruments for speculation purposes.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently re-measured at fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss unless the derivative is designated as a hedging instrument and complies with hedge accounting requirements of IAS 39, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

(ii) Embedded derivatives - The Company assesses the existence of embedded derivatives in financial instrument contracts. Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at FVTPL as a whole. Arauco has determined that no embedded derivatives currently exist.

(iii) Hedge accounting - The Company designates certain hedging instruments as either fair value hedges or cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, Arauco documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

-Fair Value Hedges under IAS 39- Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in profit or loss in the line item relating to the hedged item.

-Cash flow hedges under IAS 39 - The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is included in the Finance costs line item in the consolidated statement of profit or loss. Amounts previously recognized in other comprehensive income are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in profit or loss. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

i) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost method.

The cost of finished and in process products includes the cost of raw materials, direct labor, other direct costs and manufacturing overhead expenses.

Initial costs of harvested wood are determined at fair value less cost of sale at the point of harvest.

Biological assets are transferred to inventories when forests are harvested.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

When market conditions result in the production costs of a product exceeding its net realizable value, the inventories are written-down to their net realizable value. This write-down also includes obsolescence amounts resulting from slow moving inventories and technical obsolescence.

Spare parts that will be consumed in a period of less than twelve months are presented in inventories and recognized as an expense when they are consumed.

j) Non-current assets held for sale

The Group classifies certain property, plant and equipment, intangible assets, investments in associates and disposal groups (groups of assets to be sold together with their directly associated liabilities) as non-current assets held for sale which as of the date of the statement of financial position are the subject of active sale efforts which are estimated to be highly probable. Non-current assets held for sale are presented separately from the other assets in the balance sheet.

These assets or disposal groups are measured at the lower of the carrying amount or the fair value less the costs to sell, and are no longer depreciated or amortized from the time they are classified as non-current assets held for sale.

k) Business Combinations

Arauco applies the acquisition method to account for a business combination. This method requires the identification of the acquirer, determination of the acquisition date, recognition and measurement of the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree; and recognition and measurement of goodwill or a gain from a bargain purchase. Identifiable assets acquired and liabilities assumed and any contingent liabilities in a business combination are initially measured at fair value at the acquisition date, except:

-deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 respectively;

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CELULOSA ARAUCO Y CONSTITUCION S.A.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

-liabilities or equity instruments related to share-based payment arrangements of the acquire or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquire are measured in accordance with IFRS 3 at the acquisition date; and

-assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with such standard.

Acquisition-related costs are accounted for as expenses when they are incurred, except for costs to issue debt or equity securities which are recognized in accordance with IAS 32 and IAS 39.

A parent will present non-controlling interests in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

Changes in the ownership interest of a parent in its subsidiary that do not result in a loss of control are treated as equity transactions. Any difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the parent company. No adjustment is made to the carrying amount of goodwill, neither gains nor losses are recognized in the statement of profit or loss.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may initially be measured either at fair value or at the present ownership instruments’ proportionate share of non-controlling interests, in the recognized amounts of the acquiree’s identifiable net assets. The choice is made on a transaction-by-transaction basis.

Arauco measures the fair value of the acquired company in the business combination achieved in stage (“step acquisition”), recognizing the effects of remeasurement of previously held equity interest in the acquiree in the statements of income.

If the initial accounting for a business combination is not completed by the end of the reporting period in which the combination occurs, Arauco reports preliminary amounts for the items for which the accounting is incomplete. During the measurement period (no more than one year), these preliminary amounts are retrospectively adjusted, or additional assets or liabilities are recognized to reflect new information about facts and circumstances that existed at the acquisition date, if known, would have affected the amounts recognized at that date.

Business combinations that are under common control transactions are accounted using as a reference the pooling of interest. Under this method, assets and liabilities related to the transaction carry over the previous carrying values. Any difference between assets and liabilities included in the consolidation and the consideration transferred, is accounted in equity.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

l) Investments in associates and joint arrangements

Associates are entities over which Arauco exercises significant influence, but not control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Joint arrangement is defined as an entity over which there is joint control, which exists only when the decisions about strategic of activities, both financial and operational, require the unanimous consent of the parties sharing control.

Investments in joint arrangements are classified as a joint venture or as a joint operation. A joint operation is a joint arrangement in which the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement in which the parties that have joint control of the arrangement (i.e., participants in a joint venture) have rights to the net assets of the arrangement.

Investments in associates and joint ventures are accounted for using the equity method and are initially recognized at cost. Their carrying amount is increased or decreased to recognize Arauco’s share of the profit or loss and other comprehensive income. Dividends received are recognized by deducting the amount received from the carrying amount of the investment. Arauco’s investment in associates includes goodwill (both net of any accumulated impairment loss).

The investments in joint operations are recognized through consolidation of assets, liabilities and results of operations in relation to Arauco’s ownership percentage.

If the cost of acquisition is lower than the fair value of the net assets of the associate acquired, the difference is recognized directly in the income statement and presented in the line Other Income (Loss).

Investments in associates and joint ventures are presented in the consolidated statement of financial position in the line item “Investments accounted for using equity method”.

Only if the investor has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture, it must recognize a liability, showing a zero investment until such time as it generates profits that reverse the generated negative equity previously generated as a result of accrued losses. Otherwise, a liability is not recognized but a zero investment is indicated regardless.

m) Intangible assets other than goodwill

After initial recognition, intangible assets with finite useful lives are carried at cost less any accumulated amortization and impairment losses.

Amortization of an intangible asset with a finite useful life is allocated over the asset’s useful life. Amortization begins when the asset is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

(i) Computer Software

Computer software licenses are capitalized in terms of the costs incurred to acquire and make them compatible with existing software. These costs are amortized over the estimated useful lives of the software.

(ii) Water Rights, Easements and Other Rights

This item includes water rights, easements and other acquired rights recognized at historical cost which have indefinite useful lives as there is no foreseeable limit to the period over which these assets are expected to generate future cash flows. These rights are not amortized, but are tested for impairment at least annually, or when there is any indication that the assets might be impaired.

(iii) Customers and trade relations with customers

Correspond to the valuation over the time of the established relationship with customers, from the sale of products and services through its sales team. These relations will materialize in sales orders, which generate revenue and cost of sales. The useful life has been determined to be 15 years.

n) Goodwill

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the statement of income.

Goodwill is not amortized but tested for impairment on annual basis.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For purposes of impairment testing, goodwill in a business combination is allocated as of the acquisition date to the cash generating unit or a group of cash generating units expected to benefit from the synergies of the combination irrespective of whether other assets or liabilities of the acquiree are allocated to those units or group of units.

The goodwill generated on acquisitions of foreign companies, is expressed in the functional currency of such foreign company.

Goodwill recognized for the acquisition of the subsidiary Arauco do Brasil S.A. whose functional currency is the Brazilian Real, is translated into U.S. Dollars at the closing exchange rate. At the date of these interim consolidated financial statements, the change in the carrying amount of goodwill in Brazil is only related to the net exchange rate differences on translation.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

o) Property, Plant and Equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment. The cost includes expenditures that are directly attributable to the acquisition of the assets.

Subsequent costs, such as improvements and replacement of components, are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Arauco and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized from property, plant and equipment. All other repairs and maintenance costs are expensed in the period in which they are incurred.

Arauco capitalizes borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets as part of the cost of those assets, until the assets are ready for their intended use (See Note 12).

Depreciation is calculated by components using the straight-line method.

The useful lives of the items of property, plant and equipment is estimated according to the expected use of the assets.

The residual values and useful lives of assets are reviewed and adjusted, if appropriate, annually.

p) Leases

Arauco applies IFRIC 4 to assess whether an arrangement is, or contains, a lease. Leases of assets in which Arauco substantially holds all the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

Finance leases are initially recognized at the lower of the fair value at the inception of the lease of the leased property and the present value of the minimum lease payments.

When assets are leased under a finance lease, the present value of lease payments are recognized as financial account receivables. Finance income, which is the difference between the gross receivable and the present value of such amount, is recognized as the interest rate of return.

Leases in which substantially all risks and rewards are not transferred to the lessee are classified as operating leases. Payments under operating leases (net of any incentives received from the lessor) are recognized as an expense on a straight-line basis over the lease term.

Arauco evaluates the economic nature of the contracts that grant the right to use certain assets, for the purposes of determining the existence of implied leases. In these cases, the Company separates - at the beginning of the contract, and based on relative reasonable values - payments and considerations associated with the lease, from the rest of the elements incorporated to the contract.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

q) Biological Assets

IAS 41 requires that biological assets, such as standing trees, are measured at fair value less cost to sell in the statement of financial position. Forestry plantations are accounted for at fair value less costs to sell, based on the presumption that fair values of these assets can be measured reliably.

The measurement of forestry plantations is based on discounted cash flow models whereby the fair value of the biological assets is determined using estimated future cash flows from continuing operations calculated using our sustainable forest management plans and including the estimated growth of the forests. This valuation is performed on the basis of each identifiable farm block and for each type of tree.

The measurement of new forestry plantations made during the current year is made at cost, which corresponds to the fair value at that date. After twelve months, the valuation methodology used is that explained in the preceding paragraph.

Biological assets shown as current assets correspond to those forestry plantations that will be harvested in the short term.

Biological growth and changes in fair value of forestry plantations are recognized in the line item “Other income” in the consolidated statement of profit or loss.

r) Income tax expense and deferred income tax assets and liabilities.

The tax liabilities are recognized in the consolidated financial statements based on the determination of taxable income for the year and calculated using the tax rates in force in the countries where Arauco operates.

Deferred income tax is recognized using liability method, on the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated annual accounts. Deferred income tax is determined using tax rates contained in laws adopted as of the date of the financial statements and that are expected to be applicable when the related deferred tax asset is realized or the deferred income tax liability is settled.

Deferred income taxes are registered according to rules established in IAS12 “Income Taxes”.

The goodwill arising on business combinations does not give rise to deferred tax.

The deferred tax assets and tax credits are generally recognized for all deductible temporary differences to the extent that it is probable that future taxable profit will be available against which those deductible temporary differences can be utilized.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

s) Provisions

Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period.

t) Revenue recognition

Revenues are recognized when Arauco has transferred the risks and rewards of ownership to the buyer and Arauco has no right to dispose of the assets, nor effective control of such good.

(i) Revenue recognition from the Sale of Goods

Revenue from the sale of goods is recognized when Arauco has transferred to the buyer the significant risks and rewards of ownership of the goods, when the amount of revenue can be reliably measured, when Arauco does not retain any managerial involvement over the goods sold and when it is probable that the economic benefits associated with the transaction will flow to Arauco and the costs incurred in respect of the transaction can be measured reliably.

Sales are recognized in terms of the price agreed to in the sales contract, less any volume discounts and estimated product returns at the date of the sale. Volume discounts are evaluated in terms of estimated annual purchases. There is no significant financing component given that receivables from sales are collected within a short period, which is in line with market practices.

The structure for recognizing revenue from export sales is based on the 2010 Incoterms, which are the official rules for the interpretation of commercial terms issued by the International Chamber of Commerce.

The main Incoterms used by Arauco are the following:

“CFR (Cost and freight)”, where the company bears all costs including main transportation, until the products arrives at its port of destination. The risk is transferred to the purchaser once the products have been loaded onto the vessel, in the country of origin.

“CIF (Cost Insurance & Freight)”, where the Company organizes and pays for external freight services and some other expenses. Arauco is no longer responsible for the products once they have been delivered to the ocean carrier company. The point of sale is the delivery of the products to the carrier chartered by the seller.

(ii) Revenue recognition from Rendering of Services

When the outcome of a transaction involving the rendering of services can be reliably estimated, revenue is recognized by reference to the stage of completion of the transaction at the date of the reporting period, and when it is probable that the economic benefits associated with the transaction will flow to the Arauco.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Arauco mainly provides power supply services which are transacted principally in the spot market of the Sistema Interconectado Central (“Central Interconnected System”). According to current regulations, the prices on that market called “Marginal Costs” are calculated by the Centro de Despacho Económico de Carga del Sistema Interconectado Central (CDEC–SIC) (“Economic Load Dispatch Center of the Central Interconnected System”) and are generally recognized in the period in which the services are rendered.

Electrical power is generated as a by-product of the pulp and wood process and is a complementary business to it, which is initially supplied to the group’s subsidiaries and any surplus is sold to the CDEC-SIC.

Arauco provides other non-core services such as port services and pest control whose revenues are derived from fixed price service contracts, generally recognized during the period of the service contract on a straight-line basis over the term of the contract.

Revenues from operating segments mentioned in Note 24 are measured in accordance with the policies indicated in the preceding paragraphs.

Revenues from inter-segment sales (which are made at market prices) are eliminated in the interim consolidated financial statements.

u) Minimum dividend

Article No. 79 of the Chilean Corporations Law states that, unless otherwise unanimously agreed by the shareholders, corporations must distribute annually at least 30% of net income for the current year as cash dividend to shareholders determined in proportion to their shares or in the proportion established in the by-laws for preferred shares, if any, except where necessary to absorb accumulated losses from prior years.

The General Shareholders’ Meeting of Arauco agreed to distribute annual dividends at 40% of net distributable income, including an interim dividend to be distributed at year end. Dividends payable are recognized as a liability in the financial statements in the period when they are declared and approved by the Arauco’s shareholders or when arises the corresponding present obligation based on existing legislation or distribution policies established by the Shareholders’ Meeting.

The dividends payable provision is registered for 40% of the liquid distributable profit and against a lower equity, based on the yearly resolution of the Shareholders’ Meeting.

Dividends payable are presented in the line item “Other current non-financial liabilities” in the consolidated statement of financial position.

v) Earning per share

Basic earnings per share are calculated by dividing the net profit for the period attributable to the parent company by the weighted average number of ordinary shares outstanding during the period, excluding the average number of shares in the Company held by a subsidiary, if such circumstance exists. Arauco has not performed any type of transaction with a potential dilutive effect that would cause diluted earnings per share to be different from basic earnings per share.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

w) Impairment

Non-financial Assets

The recoverable amount of property, plant and equipment and other assets with finite useful lives are measured whenever there are any circumstances indicating that the assets have to recognize an impairment loss. Among the circumstances to consider as evidence of impairment are significant declines in the assets’ market value, significant adverse changes in the technological environment, obsolescence or physical damages of assets and changes in the manner in which the asset is used or expected to be used). Arauco evaluates at the end of each reporting period whether there is any evidence of the indications above mentioned.

A previously recognized impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount, however the reversal is limited to the amount recognized in previous years.

For the purposes of assessing impairment losses, assets are grouped at the lowest level for which there is identifiable cash flows separately for each cash-generating unit. Non-financial assets, other than goodwill, which had recognized an impairment loss, are reviewed at the end of each reporting period whether there are any circumstances indicating that an impairment loss previously recognized may no longer exists or has decreased.

“Cash-generating units” are the smallest identifiable groups of those cash inflows that are largely independent of the cash inflow from other assets or groups of assets.

Goodwill

Goodwill and intangible assets with indefinite useful life are tested annually for impairment or whenever circumstances indicate it. The recoverable amount of an intangible asset is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognized whenever the carrying amount exceeds the recoverable amount.

A cash-generating unit, for which goodwill has been allocated, is tested for impairment annually or more frequently when there are circumstances indicating that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets pro rata based on the carrying amount of each asset in the unit. Any impairment loss of goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

Goodwill is allocated to cash-generating units for impairment testing purposes. The allocation is made between cash-generating units or groups of cash generating units expected to benefit from the synergies of the combination.

Financial Assets

At the end of each reporting period, an assessment is performed in order to identify whether there is any objective evidence that a financial asset or a group of financial assets may have been impaired. Financial assets are impaired only when there is objective evidence that, as a result of one or more loss events that occurred after the initial recognition of a financial asset, the estimated future cash flows of the financial asset have been affected. Impairment losses are recognized in the consolidated statement of profit or loss.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

An allowance for doubtful accounts is established based on an analysis of the maturity of the portfolio and considering the insurance coverage on accounts receivable. Other conditions are assessed, for example, when there is objective evidence of default or delinquency in payments under the original sale terms and when the customer enters into bankruptcy or financial reorganization, and is written-off when Arauco has exhausted all levels of recovery of the receivable in a reasonable time.

The allowance for doubtful accounts is measured as the difference between the carrying amount of receivables and the present value of estimated future cash flows. The carrying amount of the receivable is reduced through the use of the allowance. If the impairment loss decreases in later periods, it is reversed either directly or by adjusting the provision for doubtful accounts, with effect in profit or loss.

x) Employee Benefits

Arauco constitutes labor obligations for severance payable in all circumstances for certain of its employees with at least 5 years of work in the Company, based on the terms of the staff’s collective and individual bargaining agreements.

The related provision is an estimate of the years of service to be recognized as a future labor obligation liability, in accordance with contracts between Arauco and its employees and pursuant to actuarial valuation criteria for this type of liability. This post-employment benefit is considered a defined benefit plan.

The main factors considered for calculating the actuarial value of severance obligation for years of service are employee turnover, salary increases and life expectancy of the workers included in this benefit.

Actuarial gains and losses are recognized in other comprehensive income in the year they are incurred.

These obligations are related to post-employee benefits in accordance with current standards.

y) Employee Vacations

Arauco recognizes the expense for employee vacation according to labor legislation in each country on an accrual basis.

This obligation is presented in the line item “Trade and Other current payables” and “Trade and Other non-current payables” depending on their respective maturities in the consolidated statement of financial position.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

z) Recent accounting pronouncements

a) Standards, interpretations and amendments that are mandatory for the first time for annual periods beginning on January 1, 2016:

Amendments and improvements	Contents	Mandatory application for annual periods beginning on or after
IFRS 11-Amendments	Establishes how to account for the acquisition of an interest in a joint venture operation that qualifies as a business.	January 1, 2016
IAS 16 and IAS 38 – Amendments	This amendment clarifies that the use of revenue-based methods to calculate the depreciation of an asset is not appropiate. It also clarifies that revenue is generally presumed to be an inappropiate basis for measuring the consumption of the economic benefits embodied in an intangible asset.	January 1, 2016
IAS 16 and IAS 41 – Amendments	These amendments change the reporting for bearer plants, which should be accounted for in the same way as property, plant and equipment. The amendments include them in the scope of IAS 16 rather than IAS 41.	January 1, 2016
IAS 27-Amendments	Allows entities to use the equity method to account for investments in subsidiaries, join ventures and associates in their separate financial statements.	January 1, 2016
IFRS 10, and IAS 28- Amendments	These amendmets address an inconsistency between IFRS 10 and IAS 28 regarding the contribution of assets between an investor and its associate or join venture. The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports	January 1, 2016
IAS 1-Amendments	The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports.	January 1, 2016
IFRS 10, and IAS 28- Amendments	Amendments address issues that have arisen in the context of applying the consolidation exception for investment entities.	January 1, 2016
Annual Improvements 2012-2014 Cycle	IFRS 5, IFRS 7, IAS 19, IAS 34.	January 1, 2016

The adoption of the standards, amendments and interpretations described above will not have a significant impact on the Interim Consolidated Financial Statements of Arauco.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

b) Standards, interpretations and amendments, the application of which is not yet mandatory, which have not been adopted in advance:

Standards and interpretations	Contents	Mandatory application for annual periods beginning on or after
IFRS 9	Financial Instruments The complete version of IFRS 9 replaces most of the guidance in IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.	January 1, 2018
IFRS 15	This standard defines a new model to recognized revenue from contracts with costumers.	January 1, 2018
IFRS 16	Leases Specifies guidelines to recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.	January 1, 2019
Amendments and improvements	Contents	Mandatory application for annual periods beginning on or after
IAS 7	Statement of Cash Flows Introduces additional disclosure that enable users of financial statements to evaluate changes in liabilities arising from financial activities.	January 1, 2017
IAS 12	Income taxes	January 1, 2017
	Clarifies the accounting for deferred tax assets relating to debt instruments measured at fair value.
IFRS 2	Share-based payment	January 1, 2018
	Clarifies the measurement of cash settled share-based payment transactions and the accounting for amendments that change such payments to equity instruments.

Arauco estimates that the adoption of standards, amendments and interpretations described above will not have a significant impact on the Interim Consolidated Financial Statements during the period of their initial application.

NOTE 2. CHANGES IN POLICIES AND ACCOUNTING ESTIMATES

There have been no changes in the treatment of estimates, amendments and accounting policies with respect to same period of last year.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 3. DISCLOSURE OF OTHER INFORMATION

a) Disclosure of Information on Issued Capital

At the date of these interim consolidated financial statements the share capital of Arauco is ThU.S.$353,618.

100% of Capital corresponds to ordinary shares

	09-30-2016	12-31-2015
Description of Ordinary Capital Share Types	100% of Capital corresponds to ordinary shares
Number of Authorized Shares by Type of Capital in Ordinary Shares	113,159,655
Nominal Value of Shares by Type of Capital in Ordinary Shares	ThU.S.$0.0031210 per share
Amount of Capital in Shares by Type of Ordinary Shares that Constitute Capital	ThU.S.$353,618
	09-30-2016	12-31-2015
Number of Shares Issued and Fully Paid by Type of Capital in Ordinary Shares	113,159,655

b) Dividends paid

The interim dividend paid in December 2015 was equivalent to 15% of the distributable net income calculated as of the end of September 2015 and was considered as a decrease in the statement of changes in equity.

The final dividend paid each year corresponds to the difference between the 40% of the prior year distributable net profit and the amount of the interim dividend paid.

The ThU.S.$59,145 (ThU.S.$116,213 as of September 30, 2015) presented in the statement of changes in equity correspond to the minimum dividend provision recorded for the period 2016.

On the Cash Flow Statement on Dividends Paid an amount of MU.S.$ 100,557 at September 30, 2016 (ThU.S.$99,064 at September 30, 2015) of which ThU.S.$99,221 (ThU.S.$98,072 at September 30, 2015) correspond to the payment of dividends of parental company.

The following are the dividends paid and per share amounts during the period 2015 and 2016:

Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Interim Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	05-11-2016
Amount of Dividend	ThU.S.$99,221
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share, Ordinary Shares	U.S.$0.87683

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Final Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	12-16-2015
Amount of Dividend	ThU.S.$43,580
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share	U.S.$0.38512

Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Final Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	05-12-2015
Amount of Dividend	ThU.S.$98,072
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share	U.S.$0.86667

c) Disclosure of Information on Reserves

Other reserves comprise reserves of exchange differences on translation, reserves of cash flow hedges and other reserves. Arauco does not have any restrictions associated with these reserves.

Reserves of exchange differences on translation

Reserves of exchange differences on translation correspond to exchange differences relating to the translation of the results and net assets of Arauco’s subsidiaries whose functional currency is other than Arauco’s presentation currency.

Reserves of cash flow hedges

Reserves of cash flow hedges correspond to the portion of net gain or loss of derivative financial instruments that complies with the requirements of hedge accounting at the end of each period.

Reserve of Actuarial Losses in Defined Benefit Plans

This corresponds to changes in the present value of the obligation for defined benefits resulting from experience adjustments (the effect of the differences between the previous actuarial assumptions and the events that occurred within the context of the plan) and the effects of the changes in the actuarial assumptions.

Other reserves

This mainly corresponds to the share of other comprehensive income of investments in associates and joint ventures.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

d) Other items in the Statement of Income

The table below sets forth other income, other expenses, finance income, finance costs and share of profit (loss) of associates and joint ventures as of September 30, 2016 and 2015:

	January - September						July - September
	Unaudited						Unaudited
	2016			2015			2016			2015
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Classes of Other Income
Other Income, Total		189,635			182,500			69,869			72,344
Gain from changes in fair value of biological assets (See note 20)		139,806			140,692			40,932			46,630
Net income from insurance compensation		2,752			1,473			526			30
Revenue from export promotion		1,797			2,168			668			644
Leases received		3,741			2,038			2,180			761
Gain on sales of assets		12,092			9,352			1,945			5,398
Access easement		3,560			7,596			3,474			7,596
Recovery of tax credits		981			4,947			981			4,947
Other operating results		24,906			14,234			19,163			6,338
Classes of Other Expenses by activity
Total of other expenses by activity		(43,878	)		(72,318	)		(10,467	)		(18,007	)
Depreciation		(976	)		(1,021	)		(344	)		(408	)
Legal payments		(630	)		(2,296	)		(233	)		(760	)
Impairment provision properties, plants and equipment and others		(3,460	)		(3,694	)		(1,582	)		(2,437	)
Plants stoppage operating expenses		(2,517	)		(2,902	)		(513	)		(285	)
Expenses projects		—			(417	)		—			(44	)
Loss of asset sales		(1,277	)		(1,530	)		(413	)		(717	)
Loss and repair of assets		(889	)		(286	)		(323	)		(121	)
Loss of forest due to fires		(2,669	)		(34,970	)		(605	)		(5,115	)
Other Taxes		(6,624	)		(7,303	)		(1,696	)		(1,651	)
Research and development expenses		(1,911	)		(3,624	)		(772	)		(2,463	)
Compensation and eviction		(3,777	)		(1,589	)		(1,323	)		(545	)
Fines, readjustments and interest		(842	)		(999	)		(539	)		(158	)
Loss on disposal of associates		(10,369	)		—			—			—
Other expenses (donations, repayments insurance )		(7,937	)		(11,687	)		(2,124	)		(3,303	)
Classes of financing income
Financing income, total		25,759			35,069			7,862			15,792
Financial income from mutual funds - deposits		8,762			9,166			2,454			3,639
Financial income resulting from swap - forward		11,546			5,572			3,477			4,962
Financial income resulting from loans with related companies		—			12,760			—			3,584
Other financial income		5,451			7,571			1,931			3,607
Classes of financing costs
Financing costs, Total		(200,455	)		(193,788	)		(64,685	)		(62,636	)
Interest expense, Banks loans		(26,268	)		(30,953	)		(9,352	)		(8,969	)
Interest expense, Bonds		(136,558	)		(143,691	)		(45,281	)		(45,912	)
Interest expense, financial instruments		(17,475	)		(3,184	)		1,363			(1,120	)
Other financial costs		(20,154	)		(15,960	)		(11,415	)		(6,635	)
Share of profit (loss) of associates and joint ventures accounted for using equity method
Total		14,003			1,255			3,972			2,241
Investments in associates		12,170			920			3,383			2,205
Joint ventures		1,833			335			589			36

34

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The analysis of expenses by nature contained in these interim consolidated financial statements is presented below:

	January - September					July - September
	Unaudited
Cost of sales	2016 ThU.S.$			2016 ThU.S.$		2016 ThU.S.$			2015 ThU.S.$
Timber		553,041			511,588		177,449			145,113
Forestry labor costs		443,319			478,564		168,026			164,470
Depreciation and amortization		277,483			277,323		93,497			94,922
Maintenance costs		231,643			221,567		79,031			67,023
Chemical costs		357,345			416,943		120,074			146,100
Sawmill Services		84,022			94,335		25,098			32,771
Others Raw Materials		172,266			106,414		61,548			41,612
Others Indirect costs		104,046			171,151		38,222			81,430
Energy and fuel		101,868			134,895		32,255			47,514
Cost of electricity		30,186			32,217		9,873			5,445
Wage and salaries		231,102			228,797		80,082			70,147
Total		2,586,321			2,673,794		885,155			896,547
	January - September					July - September
	Unaudited
Distribution cost	2016 ThU.S.$			2015 ThU.S.$		2016 ThU.S.$			2015 ThU.S.$
Selling costs		25,259			36,809		8,526			11,729
Commissions		10,461			11,979		3,321			3,969
Insurance		2,426			3,690		584			1,046
Provision for doubtful accounts receivable		(119	)		2,182		(94	)		333
Other selling costs		12,491			18,958		4,715			6,381
Shipping and freight costs		328,317			367,469		115,229			129,223
Port services		20,351			20,144		7,191			7,489
Freights		259,920			295,863		92,453			113,072
Other shipping and freight costs		48,046			51,462		15,585			8,662
Total		353,576			404,278		123,755			140,952
	January - September					July - September
	Unaudited
Administrative expenses	2016 ThU.S.$			2015 ThU.S.$		2016 ThU.S.$			2015 ThU.S.$
Wage and salaries		157,794			170,044		52,669			52,364
Marketing, advertising, promotion and publications expenses		7,277			7,236		2,638			2,379
Insurance		16,703			21,919		4,466			6,260
Depreciation and amortization		21,708			19,292		8,471			6,605
Computer services		26,717			23,244		10,379			6,480
Lease rentals (offices, warehouses and machinery)		12,676			10,073		4,316			2,974
Donations, contributions, scholarships		7,161			7,858		1,509			3,264
Fees (legal and technical advisories)		34,211			32,622		14,173			10,078
Property taxes, patents and municipality rights		16,285			16,814		6,056			6,254
Other administration expenses (travel within and outside the country, cleaning services, security, basic services)		86,137			95,530		30,176			25,608
Total		386,669			404,632		134,853			122,266

		January-September				July-September
		Unaudited
Expenses for	Note	2016 ThU.S.$		2015 ThU.S.$		2016 ThU.S.$		2015 ThU.S.$
Depreciations	7		291,677		289,889		99,165		99,132
Employee benefits	10		392,137		390,138		132,437		119,512
Amortization	19		10,111		8,999		3,606		2,973

35

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

e) Auditor Fees and Number of Employees (Not audited)

At the end of this period, the auditor’s fees and number of employees are as follows:

Auditors fees	09-30-2016 ThU.S.$
Audit services		1,613
Other services
Tax services		424
Others		271
TOTAL		2,308
Number of employees		No.
		14,748

NOTE 4. INVENTORIES

	09-30-2016
	Unaudited		12-31-2015
Components of Inventory	ThU.S.$		ThU.S.$
Raw materials		73,701		85,999
Production supplies		107,684		97,755
Products in progress		61,165		62,475
Finished goods		494,315		503,059
Spare Parts		172,742		160,700
Total Inventories		909,607		909,988

Inventories recognized as cost of sales at September 30, 2016 were ThU.S.$2,522,954 (ThU.S.$2,589,061 at September 30, 2015).

In order to have the inventories recorded at net realizable value at September 30, 2016, a net decrease of inventories was recognized associated with a higher provision of obsolescence of ThU.S.$1,915 (ThU.S.$2,487 at September 30, 2015). As of September 30, 2016, the amount of obsolescence provision is ThU.S.$22,017 (ThU.S.$20,102 at December 31, 2015).

At September 30, 2016 there were inventory write-offs of ThU.S.$1,335 (ThU.S.$3,811 at September 30, 2015)

The inventory obsolescence provision is calculated based on the sales conditions of products and age of inventory (inventory turnover).

As of the date of these interim consolidated financial statements, there are no inventories pledged as security to report.

Agricultural Products

Agricultural Products are mainly forestry products that are intended for sale in the normal course of our operations and are measured at fair value less costs to sell at the point of harvest at the end of each reporting period Agricultural products are classified as raw materials within the line item inventories.

36

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, bank checking account balances, time deposits, repurchase agreements and mutual funds. These are short-term highly liquid investments that are readily convertible to known amounts of cash, and are subject to an insignificant risk of changes in value.

The investment objective of time deposits and repurchase agreements is to maximize the amounts of cash surpluses in the short-term. These instruments are permitted under Arauco’s Investment Policy which allows investing in fixed income securities. These instruments have a maturity of less than three months from the date of acquisition.

Arauco invests in local and international mutual funds in order to maximize the returns of cash surpluses denominated in Chilean Pesos or in foreign currencies such as U.S. Dollars or Euros. These instruments are permitted under Arauco’s Investment Policy.

As of the date of these interim consolidated financial statements, there are no amounts of cash and cash equivalents with restrictions on use.

	09-30-2016 Unaudited		12-31-2015
Components of Cash and Cash Equivalents	ThU.S.$		ThU.S.$
Cash on hand		3,205		201
Bank checking account balances		159,035		143,123
Time deposits		138,618		159,912
Mutual funds		158,810		196,789
Total		459,668		500,025

The risk classification of the mutual funds in effect as of September 30, 2016 and December 31, 2015 is shown below.    

	September 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
AAAfm		155,063		196,749
AAfm		3,747		40
Total Mutual Funds		158,810		196,789

37

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 6. INCOME TAXES

The tax rates applicable in the countries in which Arauco operates are 24% in Chile, 35% in Argentina, 34% in Brazil, 25% in Uruguay and 34% in the United States (federal tax).

On September 29, 2014, the Official Gazette published Law No. 20,780, which introduced various amendments to the current income tax system, as well as to other taxes. The main amendment was the establishment of an option between two tax regimes: attributed income system and the partially integrated system. One of the effects of the regime selection is that it attaches a progressive increase in the First Category Tax for the fiscal years of 2014, 2015, 2016 and 2017 onwards, increasing to 21%, 22,5%, 24% y 25%, respectively, if the Company chooses the application of an attributed income system, or an increase to 21%, 22.5%, 24%, 25.5% y 27% for the fiscal years 2014, 2015, 2016, 2017 and thereafter, if the Company chooses the application of the partially integrated system.

Subsequently, on February 29, 2016, the Official Gazette publishes Law No. 20,899, which introduced amendments to Law No. 20,780. Among the main amendments is the incorporation of certain limitations for applying to the attributed income system, and therefore Arauco’s Chilean companies must apply the general rule, that is, the partially integrated system.

Deferred Tax Assets

The following table sets forth the deferred tax assets as of the dates indicated:

Deferred Tax Assets	09-30-2016 Unaudited ThU.S.$			12-31-2015 ThU.S.$
Deferred tax Assets relating to Provisions		6,314			13,498
Deferred tax Assets relating to Accrued Liabilities		10,513			8,535
Deferred tax Assets relating to Post-Employment benefits		17,411			15,480
Deferred tax Assets relating to Property, Plant and equipment		10,737			7,730
Deferred tax Assets relating to Financial Instruments		13,874			21,805
Deferred tax Assets relating to Tax Losses Carryforwards		35,192			35,751
Deferred tax Assets relating to Inventories		4,457			4,240
Deferred tax Assets relating to Recognitnion of Revenue		6,385			3,997
Deferred tax Assets relating to Allowance for Doubful Accounts		5,198			4,572
Intangible revaluation differences		29			56
Defferred tax Assets relating to Other Deductible Temporary Differences		29,543			24,587
Total Deferred Tax Assets		139,653			140,251
Netting presentation		(135,740	)		(136,516	)
Net effect		3,913			3,735

38

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Certain subsidiaries of Arauco, as of the date of these interim consolidated financial statements, present tax losses for which we estimate that, given the projection of future profits, will allow the recovery of these assets. The total amount of these tax losses is ThU.S.$116,365 (ThU.S.$112,383 at December 31, 2015), which are mainly originated by operational and financial losses.

In addition, as of the closing of these interim consolidated financial statements there are ThU.S.$ 80,988 (ThU.S.$ 114,507 at December 31, 2015) of non-recoverable tax losses from companies in Uruguay as joint operations based on the participation of Arauco, for which deferred tax assets have not been recognized. The estimated recovery period exceeds the expiry date of such tax losses.

Deferred Tax Liabilities

The following table sets forth the deferred tax liabilities as of the dates indicated:

	09-30-2016 Unaudited			12-31-2015
Deferred Tax Liabilities	ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, plant and equipment		922,917			930,608
Deferred tax Liabilities relating to Financial Instruments		4,921			6,376
Deferred tax Liabilities relating to Biological Assets		712,175			693,103
Deferred tax Liabilities relating to Inventory		36,126			31,912
Deferred tax Liabilities due to Prepaid Expenses		43,748			40,907
Deferred tax Liabilities due to Intangible Assets		27,158			26,419
Deferred tax Liabilities relating to Other Taxable Temporary Differences		26,186			26,203
Total Deferred Tax Liabilities		1,773,231			1,755,528
Netting presentation		(135,740	)		(136,516	)
Net effect		1,637,491			1,619,012

The effect of changes in current and deferred tax liabilities related to cash flow hedges corresponds to a credit of ThU.S.$8,171 as of September 30, 2016 (credit of ThU.S.$1,732 as of September 30, 2015), which is presented in consolidated statements of other comprehensive income and accumulated in Reserves for cash flow hedges in the consolidated statement of changes in equity.

39

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Reconciliation of deferred tax assets and liabilities

Unaudited	Opening Balance 01-01-2016		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 09-30-2016
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		13,498		(7,480	)		—			296			6,314
Deferred tax Assets relating to accrued liabilities		8,535		1,974			—			4			10,513
Deferred tax Assets relating to Post-Employment benefits		15,480		659			1,221			51			17,411
Deferred tax Assets relating to Property, Plant and equipment		7,730		3,007			—			—			10,737
Deferred tax Assets relating to Financial Instruments		21,805		1,556			(9,487	)		—			13,874
Deferred tax Assets relating to tax losses carryforwards		35,751		(3,827	)		—			3,268			35,192
Deferred tax assets relating to provisions for income		4,240		217			—			—			4,457
Deferred tax assets relating to provisions for income		3,997		2,388			—			—			6,385
Deferred tax assets relating to provision for doubful accounts		4,572		572			—			54			5,198
Intangible revaluation differences		56		(27	)		—			—			29
Deferred tax assets relating to other deductible temporary differences		24,587		3,392			—			1,564			29,543
Total deferred tax assets		140,251		2,431			(8,266	)		5,237			139,653
Unaudited	Opening Balance 01-01-2016		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 09-30-2016
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax liabilities relating to property, Plant and equipment		930,608		(13,062	)		—			5,371			922,917
Deferred tax liabilities relating to financial instruments		6,376		(1,455	)		—			—			4,921
Deferred tax liabilities relating to biological assets		693,103		5,033			—			14,039			712,175
Deferred tax liabilities relating to inventory		31,912		4,214			—			—			36,126
Deferred tax liabilities due to prepaid expenses		40,907		3,031			—			(190	)		43,748
Deferred tax liabilities due to intangible		26,419		(527	)		—			1,266			27,158
Deferred tax liabilities relating to other taxable temporary differences		26,203		(1,027	)		8			1,002			26,186
Total deferred tax liabilities		1,755,528		(3,793	)		8			21,488			1,773,231

40

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	Opening Balance 01-01-2015		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income		Increase (decrease) from business combinations		Increase (decrease) Net exchange differences			Closing balance 12-31-2015
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		14,923		(813	)		—		—		(612	)		13,498
Deferred tax Assets relating to accrued liabilities		11,120		(2,561	)		—		—		(24	)		8,535
Deferred tax Assets relating to Post-Employment benefits		13,859		971			692		—		(42	)		15,480
Deferred tax Assets relating to Property, Plant and equipment		11,199		(3,469	)		—		—		—			7,730
Deferred tax Assets relating to Financial Instruments		14,129		23			7,653		—		—			21,805
Deferred tax Assets relating to tax losses carryforwards		44,832		(959	)		—		—		(8,122	)		35,751
Deferred tax assets relating to provisions for income		3,157		1,487			—		—		(404	)		4,240
Deferred tax assets relating to provisions for income		5,827		(1,825	)		—		—		(5	)		3,997
Deferred tax assets relating to provision for doubful accounts		3,855		797			—		—		(80	)		4,572
Intangible revaluation differences		1,080		(1,024	)		—		—		—			56
Deferred tax assets relating to other deductible temporary differences		34,302		(8,892	)		—		—		(823	)		24,587
Total deferred tax assets		158,283		(16,265	)		8,345		—		(10,112	)		140,251
	Opening Balance 01-01-2015		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income		Increase (decrease) from business combinations		Increase (decrease) Net exchange differences			Closing balance 12-31-2015
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax liabilities relating to property, plant and equipment		941,666		5,221			—		—		(16,279	)		930,608
Deferred tax liabilities relating to financial instruments		4,906		1,470			—		—		—			6,376
Deferred tax liabilities relating to biological assets		681,505		18,823			—		16,051		(23,276	)		693,103
Deferred tax liabilities relating to inventory		25,688		6,224			—		—		—			31,912
Deferred tax liabilities due to prepaid expenses		40,888		(184	)		—		—		203			40,907
Deferred tax liabilities due to intangible		32,990		2,666			—		—		(9,237	)		26,419
Deferred tax liabilities relating to other taxable temporary differences		29,506		(7,961	)		—		—		4,658			26,203
Total deferred tax liabilities		1,757,149		26,259			—		16,051		(43,931	)		1,755,528

41

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Temporary Differences

The following tables summarize the deductible and taxable temporary differences:

	09-30-2016 Unaudited						12-31-2015
Detail of classes of Deferred Tax Temporary Differences	Deductible Difference ThU.S.$			Taxable Difference ThU.S.$			Deductible Difference ThU.S.$			Taxable Difference ThU.S.$
Deferred Tax Assets		104,461						104,500
Deferred Tax Assets - Tax losses		35,192						35,751
Deferred Tax Liabilities					1,773,231						1,755,528
Total		139,653			1,773,231			140,251			1,755,528
	January - September						July - September
	Unaudited
Detail of Temporary Difference Income and Loss Amounts	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Deferred Tax Assets		6,258			(1,419	)		4,019			1,541
Deferred Tax Assets - Tax losses		(3,827	)		(5,448	)		(919	)		(3,726	)
Deferred Tax Liabilities		3,793			(5,985	)		(1,803	)		3,199
Total		6,224			(12,852	)		1,297			1,014

Income Tax Expense

Income tax expense consists of the following:

	January - September						July - September
	Unaudited
Income Tax composition	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Current income tax expense		(56,730	)		(94,683	)		(9,393	)		(27,925	)
Tax benefit arising from unrecognized tax assets previously used to reduce current tax expense		—			1,749			—			583
Previous period current tax adjustments		(8,955	)		2,836			(9,442	)		—
Other current tax expenses		2,067			(608	)		(304	)		9
Current Tax Expense, Net		(63,618	)		(90,706	)		(19,139	)		(27,333	)
Deferred tax income (expense) relating to origination and reversal of temporary differences		10,051			(7,404	)		2,216			4,740
Tax benefit arising from previously unrecognized tax assets used to reduce deferred expense from taxes		(3,827	)		(5,448	)		(919	)		(3,726	)
Total deferred Tax Expense, Net		6,224			(12,852	)		1,297			1,014
Income Tax Expense, Total		(57,394	)		(103,558	)		(17,842	)		(26,319	)

42

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following table sets forth the current income tax expense by foreign and domestic companies at September 30, 2016 and 2015:

	January - September						July - September
	Unaudited
	2016			2015			2016			2015
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Foreign current income tax expense		(35,744	)		(37,569	)		(19,392	)		(10,478	)
Domestic current income tax expense		(27,874	)		(53,137	)		253			(16,855	)
Total current income tax expense		(63,618	)		(90,706	)		(19,139	)		(27,333	)
Foreign deferred tax expense		13,345			(5,599	)		16,847			(1,792	)
Domestic deferred tax expense		(7,121	)		(7,253	)		(15,550	)		2,806
Total deferred tax expense		6,224			(12,852	)		1,297			1,014
Total tax income (expense)		(57,394	)		(103,558	)		(17,842	)		(26,319	)

Reconciliation of income tax expense from statutory tax rate to the effective tax rate.

The reconciliation of income tax expense is as follows:

	January - September						July - September
	Unaudited
	2016			2015			2016			2015
Reconciliation of Income tax from Statutory Rate to Effective Tax Rate	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Tax Expense at applicable tax rate		(47,809	)		(85,919	)		(11,823	)		(25,429	)
Tax effect of foreign tax rates		(7,804	)		(7,770	)		(5,458	)		(773	)
Tax effect of revenues exempt from taxation		20,649			26,479			15,602			4,616
Tax effect of expense not deductible in determining taxable profit (tax loss)		(21,792	)		(28,463	)		(16,840	)		(2,340	)
Tax effect of a new evaluation of assets for deferred not recognized taxes		(235	)		—			(235	)		—
Tax rate effect from change in tax rate (opening balances)		(898	)		(1,728	)		141			(512	)
Tax rate effect of adjustments for current tax of prior periods		(8,955	)		2,836			(9,442	)		—
Other tax rate effects		9,450			(8,993	)		10,213			(1,881	)
Total adjustments to tax expense at applicable tax rate		(9,585	)		(17,639	)		(6,019	)		(890	)
Tax expense at effective tax rate		(57,394	)		(103,558	)		(17,842	)		(26,319	)

43

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

	09-30-2016 Unaudited			12-31-2015
Property, Plant and Equipment, Net	ThU.S.$			ThU.S.$
Construction in progress		361,302			251,519
Land		990,866			951,638
Buildings		2,164,377			2,182,643
Plant and equipment		3,230,774			3,346,675
Information technology equipment		23,637			26,210
Fixtures and fittings		9,939			11,860
Motor vehicles		16,973			16,721
Other property, plant and equipment		116,429			109,130
Total Net		6,914,297			6,896,396
Property, Plant and Equipment, Gross
Construction in progress		361,302			251,519
Land		990,866			951,638
Buildings		3,788,753			3,698,351
Plant and equipment		6,047,065			5,927,789
Information technology equipment		74,512			73,573
Fixtures and fittings		33,247			35,283
Motor vehicles		48,252			45,503
Other property, plant and equipment		139,090			131,894
Total Gross		11,483,087			11,115,550
Accumulated depreciation and impairment
Buildings		(1,624,376	)		(1,515,708	)
Plant and equipment		(2,816,291	)		(2,581,114	)
Information technology equipment		(50,875	)		(47,363	)
Fixtures and fittings		(23,308	)		(23,423	)
Motor vehicles		(31,279	)		(28,782	)
Other property, plant and equipment		(22,661	)		(22,764	)
Total		(4,568,790	)		(4,219,154	)

Description of Property, Plant and Equipment Pledged as Security for Liabilities

To date there are no significant assets pledged as collateral for these interim consolidated financial statements.

Commitments for project disbursements or for the acquisition of property, plant and equipment.

	09-30-2016 Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Amount committed for the acquisition of property, plant and equipment		130,735		109,713
	09-30-2016 Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Disbursements for property, plant and equipment under construction		188,965		215,035

44

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Movement on Property, Plant and Equipment

The following tables set forth the reconciliation of the carrying amount of property, plant and equipment as of September 30, 2016 and December 31, 2015:

Movement of Property, Plant and Equipment Unaudited	Construction in progress ThU.S.$			Land ThU.S.$			Buildings ThU.S.$			Plant and equipments ThU.S.$			IT Equipment ThU.S.$			Fixtures and fittings ThU.S.$			Motor vehicles ThU.S.$			Other Property, Plant and Equipment ThU.S.$			TOTAL ThU.S.$
Opening Balance 01-01-2016		251,519			951,638			2,182,643			3,346,675			26,210			11,860			16,721			109,130			6,896,396
Changes
Additions		188,965			7,608			6,143			67,352			342			90			2,662			12,649			285,811
Disposals		(44	)		(455	)		(443	)		(618	)		(105	)		—			(128	)		(2,699	)		(4,492	)
Retirements		(209	)		(33	)		(768	)		(1,165	)		(3	)		(7	)		(29	)		(269	)		(2,483	)
Depreciation		—			—			(89,890	)		(247,530	)		(3,901	)		(1,468	)		(2,979	)		(4,635	)		(350,403	)
Impairment loss recognized in profit or loss		—			—			9			(627	)		(7	)		(1	)		—			—			(626	)
Increase (decrease) through net exchange differences		(764	)		31,293			(1,669	)		57,370			117			82			135			3,189			89,753
Reclassification of assets held for sale		—			—			—			341			—			—			—			—			341
Increase (decrease) through transfers from construction in progress		(78,165	)		815			68,352			8,976			984			(617	)		591			(936	)		—
Total changes		109,783			39,228			(18,266	)		(115,901	)		(2,573	)		(1,921	)		252			7,299			17,901
Closing balance 09-30-2016		361,302			990,866			2,164,377			3,230,774			23,637			9,939			16,973			116,429			6,914,297
Movement of Property, Plant and Equipment	Construction in progress ThU.S.$			Land ThU.S.$			Buildings ThU.S.$			Plant and equipments ThU.S.$			IT Equipment ThU.S.$			Fixtures and fittings ThU.S.$			Motor vehicles ThU.S.$			Other Property, Plant and Equipment ThU.S.$			TOTAL ThU.S.$
Opening Balance 01-01-2015		265,440			949,531			2,172,177			3,565,502			28,521			11,654			17,346			109,412			7,119,583
Changes
Additions		215,035			50,504			17,360			139,749			2,178			2,234			1,829			9,774			438,663
Acquisitions through business combinations		—			—			1,474			7			—			15			—			—			1,496
Disposals		(20	)		(591	)		(456	)		(583	)		(78	)		(5	)		(432	)		(10	)		(2,175	)
Retirements		(4,596	)		(44	)		(1,389	)		(1,942	)		(5	)		(7	)		(101	)		(481	)		(8,565	)
Depreciation		—			—			(117,337	)		(320,135	)		(5,302	)		(2,980	)		(4,110	)		(5,915	)		(455,779	)
Impairment loss recognized in profit or loss		—			—			—			(4,065	)		—			—			—			—			(4,065	)
Increase (decrease) through net exchange differences		(4,432	)		(52,284	)		(30,258	)		(103,972	)		(290	)		(519	)		(300	)		(6,025	)		(198,080	)
Reclassification of assets held for sale		—			2,759			2,676			(117	)		—			—			—			—			5,318
Increase (decrease) through transfers from construction in progress		(219,908	)		1,763			138,396			72,231			1,186			1,468			2,489			2,375			—
Total changes		(13,921	)		2,107			10,466			(218,827	)		(2,311	)		206			(625	)		(282	)		(223,187	)
Closing balance 12-31-2015		251,519			951,638			2,182,643			3,346,675			26,210			11,860			16,721			109,130			6,896,396

45

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The depreciation expense for the period ending September 30, 2016 and 2015 is as follows:

	January-September Unaudited				July-September Unaudited
Depreciation for the year	2016 ThU.S.$		2015 ThU.S.$		2016 ThU.S.$		2015 ThU.S.$
Cost of sales		272,505		272,472		91,839		93,315
Administrative expenses		16,575		15,144		6,523		5,239
Other expenses		2,597		2,273		803		578
Total		291,677		289,889		99,165		99,132

The useful lives of property, plant and equipment are estimated based on the expected use of the assets. The average useful lives by asset class are as follows:

	Useful Life (Average)
Buildings		58
Plant and equipment		30
Information technology equipment		8
Fixtures and fittings		28
Motor vehicles		7
Other property, plant and equipment		14

See Note 12 for details of capitalized borrowing costs.

46

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 8. LEASES

Lessee

	09-30-2016 Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Property, Plant and Equipment under finance leases		129,792		132,836
Plant and equipment		129,792		132,836

Reconciliation of Financial Lease Minimum Payments:

	09-30-2016 Unaudited
Periods	Present Value ThU.S.$
Less than one year		44,163
Between one and five years		82,967
More than five years		—
Total		127,130
	12-31-2015
	Present Value
Periods	ThU.S.$
Less than one year		36,862
Between one and five years		90,697
More than five years		—
Total		127,559

Lease obligations are presented in the consolidated statement of financial position in line items “Other current financial liabilities” and “Other non-current financial liabilities” depending on their respective maturities as stated above.

47

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Lessor

Reconciliation of Financial Lease Minimum Payments:

	09-30-2016 Unaudited
Periods	Gross ThU.S.$		Interest ThU.S.$		Present Value ThU.S.$
Less than one year		606		—		606
Between one and five years		357		—		357
More than five years		—		—		—
Total		963		—		963
	12-31-2015
Periods	Gross ThU.S.$		Interest ThU.S.$		Present Value ThU.S.$
Less than one year		10		1		9
Between one and five years		6		—		6
More than five years		—		—		—
Total		16		1		15

Finance lease receivables are presented in the consolidated statement of financial position in line items “Trade and other current receivable” and “Trade and other non-current receivable” depending on their maturities stated above.

Arauco accounts for its lease contracts as finance leases. These lease contracts are for a term of less than five-years at market interest rates and leased assets are forestry machinery and equipment. They also include an early termination option, under general and special conditions stipulated in each contract.

Arauco holds leases as lessee and lessor, described in the previous tables, for which there are no impairment contingent payments or restrictions to report.

NOTE 9. REVENUE

	January – September				July – September
	Unaudited
Classes of revenue	2016 ThU.S.$		2016 ThU.S.$		2016 ThU.S.$		2016 ThU.S.$
Revenue from sales of goods		3,452,423		3,833,481		1,157,495		1,265,546
Revenue from rendering of services		88,358		106,470		29,975		20,345
Total		3,540,781		3,939,951		1,187,470		1,285,891

48

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 10. EMPLOYEE BENEFITS

Classes of Benefits and Expenses by Employee

	January - September				July - September
	Unaudited
	2016		2015		2016		2015
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Employee expenses		392,137		390,138		132,437		119,512
Wages and salaries		374,363		374,590		121,428		115,634
Severance indemnities		17,774		15,548		11,009		3,878

	09-30-2016	12-31-2015
Discount rate	4.51%	4.91%
Inflation	3.00%	2.95%
Annual rate of wage growth	5.22%	5.22%
Mortality rate	RV-2009	RV-2009

sensitivities to assumptions	Th.U.S.$
Discount rate
Increase in 100 bps		(4,724	)
Decrease in 100 bps		5,534
Wage growth rates
Increase in 100 bps		5,437
Decrease in 100 bps		(4,736	)

The following tables set forth the balances and the reconciliation of the present value of severance indemnities obligations as of September 30, 2016 and December 31, 2015:

	09-30-2016 Unaudited			12-31-2015
	ThU.S.$			ThU.S.$
Current		5,185			4,497
Non-current		59,788			51,936
Total		64,973			56,433
Reconciliation of the present value of severance indemnities obligation	09-30-2016 Unaudited ThU.S.$			12-31-2015 ThU.S.$
Opening balance		56,433			52,172
Current service cost		3,920			13,032
Interest cost		2,052			2,257
Gains or losses from changes in actuarial assumptions		2,160			(5,723	)
Actuarial gains and losses arising from experience		2,338			6,980
Benefits paid		(6,316	)		(3,482	)
Increase (decrease) for foreign currency exchange rates changes		4,386			(8,803	)
Closing balance		64,973			56,433

49

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 11. BALANCES IN FOREIGN CURRENCY AND EFFECT OF FOREIGN EXCHANGE DIFFERENCES.

	09-30-2016 Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Total Current Assets		2,595,599		2,686,412
Cash and Cash Equivalents		459,668		500,025
U.S Dollar		382,537		388,818
Euro		3,443		2,501
Brazilian Real		45,823		21,676
Argentine Pesos		4,896		40,573
Other currencies		3,375		2,979
Chilean Pesos		19,594		43,478
Other current financial assets		9,599		32,195
U.S Dollar		9,599		29,367
Argentine Pesos		—		2,828
Other current non-financial assets		177,645		133,956
U.S Dollar		100,340		55,365
Euros		76		82
Brazilian Real		18,261		16,505
Argentine Pesos		13,472		3,705
Other currencies		3,081		4,801
Chilean Pesos		42,415		53,280
U.F.		—		218
Trade and other current receivables		642,452		733,322
U.S Dollar		407,010		507,032
Euro		28,687		27,595
Brazilian Real		50,445		37,975
Argentine Pesos		23,907		23,016
Other currencies		18,963		14,091
Chilean Pesos		111,761		123,056
U.F.		1,679		557
Accounts receivable from related companies		3,678		3,124
U.S Dollar		290		21
Brazilian Real		506		995
Chilean Pesos		2,882		2,108
Current Inventories		909,607		909,988
U.S Dollar		868,353		871,629
Brazilian Real		41,254		38,359
Current biological assets		297,496		306,529
U.S Dollar		264,065		272,037
Brazilian Real		33,431		34,492
Current tax assets		92,338		64,079
U.S Dollar		224		5,464
Brazilian Real		3,629		5,243
Argentine Pesos		10		2,000
Other currencies		3,065		850
Chilean Pesos		85,410		50,522
Non-current assets or disposal groups classified as held for sale or as held for distribution to owners		3,116		3,194
U.S Dollar		3,116		3,194

50

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	09-30-2016 Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Total Non Current Assets		11,252,654		10,983,979
Other non-current financial assets		5,347		595
U.S Dollar		5,020		212
Argentine Pesos		327		383
Other non-current non-financial assets		129,900		125,516
U.S Dollar		94,618		114,164
Brazilian Real		4,498		2,987
Argentine Pesos		10,144		7,138
Other currencies		672		706
Chilean Pesos		19,968		521
Trade and other non-current receivables		15,547		15,270
U.S Dollar		7,642		9,976
Other currencies		768		729
Chilean Pesos		5,983		3,145
U.F.		1,154		1,420
Investments accounted for using equity method		438,494		264,812
U.S Dollar		278,058		122,483
Brazilian Real		160,436		142,329
Intangible assets other than goodwill		81,611		88,112
U.S Dollar		80,500		87,154
Brazilian Real		1,028		876
Chilean Pesos		83		82
Goodwill		75,071		69,475
U.S Dollar		42,558		42,445
Brazilian Real		32,513		27,030
Property, plant and equipment		6,914,297		6,896,396
U.S Dollar		6,383,805		6,448,616
Brazilian Real		525,384		442,959
Chilean Pesos		5,108		4,821
Non-current biological assets		3,588,474		3,520,068
U.S Dollar		3,200,014		3,297,710
Brazilian Real		388,460		222,358
Deferred tax assets		3,913		3,735
U.S Dollar		3,639		3,735
Other currencies		50		—
Chilean Pesos		224		—

51

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	Up to 90 days ThU.S.$		09-30-2016 Unaudited From 91 days to 1 year ThU.S.$		Total ThU.S.$		Up to 90 days ThU.S.$		12-31-2015 From 91 days to 1 year ThU.S.$		Total ThU.S.$
Total Liabilities, current		729,183		660,045		1,389,228		910,436		123,815		1,034,251
Other current financial liabilities		105,112		612,762		717,874		189,693		106,345		296,038
U.S Dollar		80,948		576,845		657,793		153,361		71,330		224,691
Brazilian Real		866		1,820		2,686		25,092		2,266		27,358
Argentine Pesos		75		32		107		—		356		356
Chilean Pesos		1,607		3,861		5,468		902		2,622		3,524
U.F.		21,616		30,204		51,820		10,338		29,771		40,109
Bank Loans		80,873		159,355		240,228		126,795		72,948		199,743
U.S Dollar		79,932		157,503		237,435		101,703		70,326		172,029
Brazilian Real		866		1,820		2,686		25,092		2,266		27,358
Argentine Pesos		75		32		107		—		356		356
Financial Leases		10,633		33,530		44,163		9,301		27,561		36,862
Chilean Pesos		1,607		3,861		5,468		902		2,622		3,524
U.F.		9,026		29,669		38,695		8,399		24,939		33,338
Other Loans		13,606		419,877		433,483		53,597		5,836		59,433
U.S Dollar		1,016		419,342		420,358		51,658		1,004		52,662
U.F.		12,590		535		13,125		1,939		4,832		6,771
Trade and other current payables		530,005		28,002		558,007		583,018		—		583,018
U.S Dollar		160,953		2,812		163,765		174,469		—		174,469
Euros		6,817		479		7,296		8,808		—		8,808
Brazilian Real		5,013		24,711		29,724		25,616		—		25,616
Argentine Pesos		34,976		—		34,976		27,068		—		27,068
Other currencies		15,180		—		15,180		17,619		—		17,619
Chilean Pesos		289,735		—		289,735		324,361		—		324,361
U.F.		17,331		—		17,331		5,077		—		5,077
Accounts payable to related companies		7,321		—		7,321		7,141		—		7,141
U.S Dollar		1,733		—		1,733		962		—		962
Chilean Pesos		5,588		—		5,588		6,179		—		6,179
Other current provisions		628		—		628		858		—		858
U.S Dollar		628		—		628		858		—		858
Current tax liabilities		8,887		—		8,887		10,030		946		10,976
U.S Dollar		4,373		—		4,373		6,380		—		6,380
Euros		1,755		—		1,755		1,093		—		1,093
Brazilian Real		1,708		—		1,708		530		—		530
Argentine Pesos		—		—		—		24		—		24
Other currencies		638		—		638		1,716		—		1,716
Chilean Pesos		413		—		413		287		946		1,233
Current provisions for employee benefits		5,043		142		5,185		1,751		2,746		4,497
Brazilian Real		—		—		—		—		—		—
Chilean Pesos		5,043		142		5,185		1,751		2,746		4,497
Other current non-financial liabilities		72,187		19,139		91,326		117,945		13,778		131,723
U.S Dollar		49,511		8,267		57,778		79,673		13,633		93,306
Euros		81		—		81		44		—		44
Brazilian Real		7,908		10,871		18,779		22,251		—		22,251
Argentine Pesos		5,080		—		5,080		4,428		139		4,567
Other currencies		3,392		—		3,392		3,704		—		3,704
Chilean Pesos		6,147		1		6,148		7,823		6		7,829
U.F.		68		—		68		22		—		22

52

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	From 13 months to 5 years ThU.S.$		09-30-2016 More than 5 years ThU.S.$		Total ThU.S.$		From 13 months to 5 years ThU.S.$		12-31-2015 More than 5 years ThU.S.$		Total ThU.S.$
Total non-current liabilities		3,639,070		1,888,514		5,527,584		3,732,206		2,257,489		5,989,695
Other non-current financial liabilities		2,049,555		1,681,949		3,731,504		2,141,600		2,095,365		4,236,965
U.S Dollar		1,608,752		1,074,321		2,683,073		1,748,723		1,525,269		3,273,992
Brazilian Real		17,142		1,158		18,300		13,953		1,929		15,882
Argentine Pesos		10		—		10		48		—		48
Chilean Pesos		13,074		—		13,074		10,455		—		10,455
U.F.		410,577		606,470		1,017,047		368,421		568,167		936,588
Bank Loans		625,562		92,231		717,793		648,017		149,782		797,799
U.S Dollar		608,410		91,073		699,483		634,016		147,853		781,869
Brazilian Real		17,142		1,158		18,300		13,953		1,929		15,882
Argentine Pesos		10		—		10		48		—		48
Financial Leases		82,967		—		82,967		90,697		—		90,697
Chilean Pesos		13,074		—		13,074		10,455		—		10,455
U.F.		69,893		—		69,893		80,242		—		80,242
Other Loans		1,341,026		1,589,718		2,930,744		1,402,886		1,945,583		3,348,469
U.S Dollar		1,000,342		983,248		1,983,590		1,114,707		1,377,416		2,492,123
U.F.		340,684		606,470		947,154		288,179		568,167		856,346
Other non-current provisions		38,686		—		38,686		34,541		—		34,541
U.S Dollar		1		—		1		4		—		4
Brazilian Real		5,467		—		5,467		4,410		—		4,410
Argentine Pesos		33,218		—		33,218		30,127		—		30,127
Deferred tax liabilities		1,490,197		147,294		1,637,491		1,456,888		162,124		1,619,012
U.S Dollar		1,411,131		128,089		1,539,220		1,373,597		162,124		1,535,721
Brazilian Real		79,066		19,205		98,271		83,291		—		83,291
Chilean Pesos		—		—		—		—		—		—
Non-current provisions for employee benefits		59,788		—		59,788		51,936		—		51,936
Other currencies		149		—		149		149		—		149
Chilean Pesos		59,639		—		59,639		51,787		—		51,787
Other non-current non-financial liabilities		844		59,271		60,115		47,241		—		47,241
U.S Dollar		243		—		243		392		—		392
Brazilian Real		—		59,271		59,271		46,043		—		46,043
Argentine Pesos		387		—		387		608		—		608
Chilean Pesos		210		—		210		195		—		195
U.F.		4		—		4		3		—		3

53

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The table below sets forth the subsidiaries that have determined a functional currency other than the U.S. Dollar as follows:

Subsidiary	Country	Functional Currency
Arauco do Brasil S.A.	Brazil	Brazilian Real
Arauco Forest Brasil S.A.	Brazil	Brazilian Real
Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real
Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real
Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real
Investigaciones Forestales Bioforest S.A.	Chile	Chilean Pesos
Consorcio Protección Fitosanitaria Forestal S.A. (Ex-Controladora de Plagas Forestales S.A.)	Chile	Chilean Pesos
Forestal Nuestra Señora del Carmen S.A.	Argentina	Argentine Pesos
Forestal Talavera S.A.	Argentina	Argentine Pesos
Greeneagro S.A.	Argentina	Argentine Pesos
Leasing Forestal S.A.	Argentina	Argentine Pesos
Savitar S.A.	Argentina	Argentine Pesos
Flakeboard Company Limited	Canada	Canadian Dollar

The table below shows a detail per company of the effect in the period of the Reserve of Exchange Differences resulting from the conversion of the controlling participation.

	January - September					July - September
	Unaudited
	2016		2015			2016			2015
	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$
Arauco Do Brasil S.A.		74,607		(161,273	)		(4,977	)		(93,329	)
Arauco Forest Brasil S.A.		69,581		(144,307	)		(3,680	)		(83,674	)
Arauco Florestal Arapoti S.A.		19,882		(44,665	)		(705	)		(25,803	)
Arauco Distribución S.A.		—		(4,079	)		—			(2,641	)
Arauco Argentina S.A.		5,187		(12,967	)		(405	)		(7,238	)
Flakeboard Company Limited		5,381		(13,425	)		(1,916	)		(6,535	)
Others		65		(201	)		(3	)		(211	)
Total reserve of exchange differences on translation		174,703		(380,917	)		(11,686	)		(219,431	)

Effect of foreign exchange rates changes

	January-September Unaudited						July-September Unaudited
	2016			2015			2016			2015
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Exchange differences recognized in profit or loss, except for those arising on financial instruments measured at fair value through profit or loss		(74	)		(27,478	)		(992	)		(22,563	)
Reserve of exchange differences on translation (with Non-controlling interests)		179,690			(392,119	)		(11,863	)		(225,907	)

54

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 12. BORROWING COSTS

Arauco capitalizes the cost of borrowing on current investment projects at effective interest rate.

	January – September						July – September
	Unaudited
	2016			2015			2016			2015
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Property, plant and equipment capitalized cost
Property, plant and equipment capitalized interest cost rate		5.08	%		4.82	%		5.08	%		4.87	%
Amount of the capitalized interest cost, property, presented as plant and equipment		2,001			1,467			908			357

NOTE 13. RELATED PARTIES

Related Party Disclosures

Related parties are those entities defined in IAS 24 and under the rules of the Chilean SVS and the Chilean Corporations Law.

The receivable and payable amounts among related parties at the end of each period correspond to commercial and financing transactions denominated in Chilean Pesos, U.S. dollars and Brazilian Real, where collection or payment deadlines are shown in the following tables and in general do not bear interest, except for financing transactions.

As of the date of these interim consolidated financial statements, the main transactions with related parties are related to fuel purchases with Compañía de Petróleos de Chile S.A. and sodium chlorate purchases at EKA Chile S.A.

As of the date of these interim consolidated financial statements, there are neither provisions for doubtful accounts nor any guarantees granted or received related to the balances with related parties.

Name of Group’s Main Shareholders

The ultimate shareholders of Arauco are Mrs. Maria Noseda Zambra de Angelini, Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi through Inversiones Angelini y Cia. Ltda.

Name of the Intermediate Controlling Entity that Produces interim Consolidated Financial Statements for Public Use

Empresas Copec S.A.

Compensation to Key Management Personnel

Compensation to key management personnel, including directors, managers and deputy managers, consist of a fixed monthly salary and an annual bonus subject to the results of the Company and the fulfillment of goals of the business as well as individual performance.

55

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Pricing Strategy Terms and Conditions Corresponding to Transactions with Related Parties

Related party transactions were made on terms of those prevailing under market conditions, with mutual independence of the parties.

The table below sets forth information about the Relationship between the Parent Company and its Subsidiaries

ID N°	Company Name	Country	Functional Currency	% Ownership interest 09-30-2016						% Ownership interest 12-31-2015
				Direct		Indirect		Total		Direct		Indirect		Total
-	Agenciamiento y Servicios Profesionales S.A.	Mexico	U.S. Dollar		0.0020		99.9970		99.9990		0.0020		99.9970		99.9990
-	Arauco Argentina S.A.	Argentina	U.S. Dollar		9.9753		90.0048		99.9801		9.9753		90.0048		99.9801
-	Arauco Australia Pty Ltd.	Australia	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
96547510-9	Arauco Bioenergía S.A.	Chile	U.S. Dollar		98.0000		1.9999		99.9999		98.0000		1.9999		99.9999
-	Arauco Colombia S.A.	Colombia	U.S. Dollar		1.4778		98.5204		99.9982		1.4778		98.5204		99.9982
-	Arauco do Brasil S.A.	Brazil	Brazilian Real		1.1624		98.8366		99.9990		1.2485		98.7505		99.9990
-	Arauco Europe Cooperatief U.A.	Netherlands	U.S. Dollar		0.4614		99.5376		99.9990		0.4843		99.5147		99.9990
-	Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real		—		79.9992		79.9992		—		79.9992		79.9992
-	Arauco Forest Brasil S.A.	Brazil	Brazilian Real		10.1297		89.8694		99.9991		10.1297		89.8694		99.9991
-	Arauco Middle East DMCC	Dubai	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Panels USA, LLC	USA	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Perú S.A.	Peru	U.S. Dollar		0.0013		99.9977		99.9990		0.0013		99.9977		99.9990
-	Arauco Wood Products, Inc.	USA	U.S. Dollar		0.0004		99.9986		99.9990		0.0004		99.9986		99.9990
-	Araucomex S.A. de C.V.	Mexico	U.S. Dollar		0.0005		99.9985		99.9990		0.0005		99.9985		99.9990
96657900-5	Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean Pesos		—		57.5404		57.5404		—		57.5404		57.5404
-	Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real		—		99.9789		99.9789		—		99.9789		99.9789
-	Flakeboard America Limited	USA	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Flakeboard Company Ltd.	Canada	Canadian Dollar		—		99.9990		99.9990		—		99.9990		99.9990
85805200-9	Forestal Arauco S.A.	Chile	U.S. Dollar		99.9484		—		99.9484		99.9484		—		99.9484
93838000-7	Forestal Cholguán S.A.	Chile	U.S. Dollar		—		98.4712		98.4712		—		98.4478		98.4478
-	Forestal Concepción S.A.	Panama	U.S. Dollar		0.0050		99.9940		99.9990		0.0050		99.9940		99.9990
78049140-K	Forestal Los Lagos S.A.	Chile	U.S. Dollar		—		79.9587		79.9587		—		79.9587		79.9587
-	Forestal Nuestra Señora del Carmen S.A.	Argentina	Argentine Pesos		—		99.9805		99.9805		—		99.9805		99.9805
-	Forestal Talavera S.A.	Argentina	Argentine Pesos		—		99.9942		99.9942		—		99.9942		99.9942
-	Greenagro S.A.	Argentina	Argentine Pesos		—		97.9805		97.9805		—		97.9805		97.9805
96563550-5	Inversiones Arauco Internacional Ltda.	Chile	U.S. Dollar		98.0186		1.9804		99.9990		98.0186		1.9804		99.9990
79990550-7	Investigaciones Forestales Bioforest S.A.	Chile	Chilean Pesos		1.0000		98.9489		99.9489		1.0000		98.9489		99.9489
-	Leasing Forestal S.A.	Argentina	Argentine Pesos		—		99.9801		99.9801		—		99.9801		99.9801
96510970-6	Maderas Arauco S.A. (Ex Paneles Arauco S.A.)	Chile	U.S. Dollar		99.0000		0.9995		99.9995		99.0000		0.9995		99.9995
-	Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real		—		99.9934		99.9934		—		99.9934		99.9934
-	Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real		—		99.9990		99.9990		—		99.9990		99.9990
-	Savitar S.A.	Argentina	Argentine Pesos		—		99.9841		99.9841		—		99.9841		99.9841
76375371-9	Servicios Aéreos Forestales Ltda.	Chile	U.S. Dollar		0.0100		99.9890		99.9990		0.0100		99.9890		99.9990
96637330-K	Servicios Logísticos Arauco S.A.	Chile	U.S. Dollar		45.0000		54.9997		99.9997		45.0000		54.9997		99.9997

The companies in the table below are classified as joint operations in accordance with IFRS 11. The assets, liabilities, income and expenses are recorded in relation to the Company’s ownership percentage in accordance with accounting standards applicable in each case.

ID N°	Company Name	Country	Functional Currency
-	Euforest S.A.	Uruguay	U.S. Dollar
-	Celulosa y Energía Punta Pereira S.A.	Uruguay	U.S. Dollar
-	Zona Franca Punta Pereira S.A.	Uruguay	U.S. Dollar
-	Forestal Cono Sur S.A.	Uruguay	U.S. Dollar
-	Stora Enso Uruguay S.A.	Uruguay	U.S. Dollar
-	El Esparragal Asociación Agraria de R.L.	Uruguay	U.S. Dollar
-	Ongar S.A.	Uruguay	U.S. Dollar
-	Terminal Logística e Industrial M’Bopicua S.A.	Uruguay	U.S. Dollar

56

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

There are no significant restrictions on the ability of subsidiaries to transfer funds to Arauco, in the form of cash dividends or repayment of loans and/or advances.

Employee Benefits for Key Management Personnel

	January – September Unaudited				July – September Unaudited
	2016 ThU.S.$		2015 ThU.S.$		2016 ThU.S.$		2015 ThU.S.$
Salaries and bonuses		56,991		51,028		17,670		14,612
Per diem compensation to members of the Board of Directors		1,209		832		587		266
Termination benefits		3,756		1,754		3,344		430
Total		61,956		53,614		21,601		15,308

Related Party Receivables, Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

09-30-2016 Unaudited ThU.S.$

12-31-2015 ThU.S.$

Forestal Mininco S.A

91.440.000-7

Common stockholder

Chile

Chilean pesos

30 days

107

44

Eka Chile S.A

99.500.140-3

Joint Venture

Chile

Chilean pesos

30 days

1,408

1,646

Stora Enso Arapoti Industria del Papel S.A

—

Associate

Brazil

Brazilian Real

—

472

Unilin Arauco Pisos Ltda.

—

Joint Venture

Brazil

Brazilian Real

30 days

506

523

Abastible S.A.

91.806.000-6

Common director

Chile

Chilean pesos

—

142

Fundación Educacional Arauco

71.625.000-8

Common director

Chile

Chilean pesos

30 days

1,367

276

Corpesca S.A

96.893.820-7

Common director

Chile

U.S. Dollar

55

—

Fundación Acerca Redes

65.097.218-K

Parent company is founder and contributor

Chile

U.S. Dollar

30 days

235

21

TOTAL

3,678

3,124

Related Party Payables, Current

Name of Related party	Tax ID No.	Nature of Relationship	Country	Currency	Maturity	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Compañía de Petróleos de Chile S.A.	99.520.000-7	Controlling Parent’s Subsidiary	Chile	Chilean pesos	30 days		5,567		6,057
Abastible S.A.	91.806.000-6	Controlling Parent’s Subsidiary	Chile	Chilean pesos	30 days		15		—
Red to Green S.A.(Ex-Sigma Servicios Informáticos S.A.)	86.370.800-1	Common director	Chile	Chilean pesos	30 days		5		—
Portaluppi, Guzman y Bezanilla Abogados	78.096.080-9	Common director	Chile	Chilean pesos			—		98
Empresa Nacional de Telecomunicaciones S.A.	92.580.000-7	Common stockholder	Chile	Chilean pesos	30 days		1		—
Puerto Lirquén S.A.	96.959.030-1	Associate	Chile	U.S. Dollar	30 days		927		851
Compañía Puerto de Coronel S.A.	79.895.330-3	Associate	Chile	U.S. Dollar	30 days		805		111
Colbún Transmisión S.A.	76.218.856-2	Common director	Chile	U.S. Dollar	30 days		1		—
Empresas Copec S.A.	90.690.000-9	Common director	Chile	Chilean pesos			—		24
TOTAL							7,321		7,141

57

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Related Party Transactions

Purchases

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Abastible S.A.	91.806.000-6	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel		1,549		2,503
Empresas Copec S.A	90.690.000-9	Controlling Parent	Chile	Chilean pesos	Management service		210		233
Compañía de Petróleos de Chile S.A.	99.520.000-7	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel and other		30,848		61,245
Compañía Puerto de Coronel S.A.	79.895.330-3	Associate	Chile	U.S. Dollar	Transport and stowage		6,907		10,917
Puerto Lirquén S.A.	96.959.030-1	Associate	Chile	U.S. Dollar	Port services		5,626		7,694
EKA Chile S.A.	99.500.140-3	Joint Venture	Chile	Chilean pesos	Sodium chlorate		36,363		39,362
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Wood and ships		1,834		2,018
Portaluppi, Guzman y Bezanilla Abogados	78.096.080-9	Common director	Chile	Chilean pesos	Legal services		928		1,312
Empresa Nacional de Telecomunicaciones S.A.	92.580.000-7	Common stockholder	Chile	Chilean pesos	Telephone services		364		552
CMPC Maderas S.A.	95.304.000-K	Common director	Chile	Chilean pesos	Wood and logs		270		267
Forestal Mininco S.A.	91.440.000-7	Common stockholder	Chile	Chilean pesos	Wood and logs		180		204
Red to Green S.A.(Ex-Sigma Servicios Informáticos S.A.)	86.370.800-1	Common director	Chile	Chilean pesos	Computer Services		237		59
Empresa de Residuos Resiter Ltda	89.696.400-3	Common director	Chile	Chilean pesos	Industrial Cleaning Services		—		-285
Empresas de Residuos Industriales Resiter Ltda	76.329.072-7	Common director	Chile	Chilean pesos	Industrial Cleaning Services		—		5,027
Resiter Uruguay S.A	—	Common director	Uruguay	U.S. Dollar	Service to collect solid waste		—		774
Colbún Transmisión S.A.	76.218.856-2	Common director	Chile	Chilean pesos	Electrical Power		312		447
CMPC Celulosa S.A.	96.532.330-9	Common director	Chile	Chilean pesos	Others purchases		3		2,217

Sales

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Colbún S.A.	96.505.760-9	Common director	Chile	Chilean pesos	Electrical Power		3,128		1,083
EKA Chile S.A.	99.500.140-3	Joint venture	Chile	Chilean pesos	Electrical Power		12,305		17,543
Stora Enso Arapoti Industria de Papel S.A.	—	Associate	Brazil	Brazilian Real	Wood		1,149		5,617
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Harvesting services, Wood and chips		12,062		19,328
Forestal Mininco S.A.	91.440.000-7	Common stockholder	Chile	Chilean pesos	Wood		47		311
Unilin Arauco Pisos Ltda.	—	Joint venture	Brazil	Brazilian Real	Wood		3,821		2,666

Other Transactions

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Novo Oeste Gestao de Ativo Florestais S.A.		Associate	Brazil	Brazilian Real	Loans (Capital and interest)		—		41,091

58

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 14. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Company mergers

On December 1, 2015 there was a merger among the affiliates Paneles Arauco S.A. (successor), Aserraderos Arauco S.A. and Arauco Distribución S.A. This transaction had no effect on results and was performed with a view to generate greater synergies, share best practices and achieve better results for our clients. There will be a progressive integration of the activities of sawmills, remanufacturing, plywood, panels and distribution under the same view, with products oriented to the furniture, construction, fitting and packaging industries.

Investments in Subsidiaries

In October 2015, the company acquired the remaining 51% of the interest ownership in Novo Oeste Gestao de Ativos Florestais S.A., in which it held, on December 31, 2015, a stake of 100% through Arauco’s subsidiaries in Brazil. Tables below show the acquired assets and liabilities at fair value, consideration paid and effects generated through the transaction.

Novo Oeste Gestao de Ativos Florestais	10-27-2015 Th.U.S.$
Cash and cash equivalents		427
Inventories		3,747
Accounts receivable from related companies, Current		39,917
Other Assets, Current		154
Current Assets, Total		44,245
Accounts receivable from related companies, Non-current		12,439
Other Assets, Non Current		—
Property, plant and equipment		1,496
Biological assets, Non-current		87,580
Non Current Assets, Total		101,515
Assets, Total		145,760
Trade and other current payables, Current		238
Current tax liabilities		3,449
Accounts payable to related companies, current		10
Current Liabilities, Total		3,697
Accounts payable to related companies, Non-current		137,193
Deferred tax liabilities		16,051
Non Current Libilities, Total		153,244
Liabilities, Total		156,941

The interest previously held by Novo Oeste Gestao de Ativos Florestais S.A. was measured at fair value, recognizing a gain in the other income line of ThU.S.$15,268. The price paid for the 51% interest was ThU.S.$995, generating a goodwill of ThU.S.$6,697, for which Arauco decided to recognize in the results because of the Company’s accumulated losses. The impairment loss is presented net from the abovementioned gain.

On August 13, 2015, the company Arauco Middle East DMCC was incorporated with a single contribution from Inversiones Arauco Internacional Limitada of 3,673,000 Dirham (ThU.S.$1,000). The corporate purpose of this company is the promotion of products and the management of Arauco’s customer relations in the Middle East.

59

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

On January 26, 2015 Arauco, through its subsidiaries in North America, acquired a melamine-based paper treatment plant located in Biscoe, North Carolina. The price paid was ThU.S.$9,522. The attached table displays the acquired assets at fair value and the price paid under the transaction:

	Th.U.S$
Inventories		372
Lands		597
Buildings		1,723
Plant and equipment		6,830
Value Paid, Total		9,522

The details of the subsidiaries included in the consolidation of Arauco are disclosed in Note 13.

60

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 15. INVESTMENTS IN ASSOCIATES

At September 30, 2016 and December 31, 2015 there are no new investments in associates to report.

The following tables set forth information about Investments in associates.

Name	Puertos y Logística S.A.
Country	Chile
Functional Currency	U.S. Dollar
Corporate purpose	Docking and warehousing operations for proprietary and third party use, cargo of all classes of goods, as well, as warehousing and transport operations.
Ownership interest (%)	20.2767%
	09-30-2016	12-31-2015
Carrying amount	ThU.S.$61,390	ThU.S.$58,922
Name	Inversiones Puerto Coronel S.A.
Country	Chile
Functional Currency	U.S. Dollar
Corporate purpose	Investments in movables and real estate, acquisition of companies, securities and investment instruments, investment management and development and/or participation in all kind of businesses and companies related to industrial, shipping, forestry and commercial activities.
Ownership interest (%)	50.0000%
	09-30-2016	12-31-2015
Carrying amount	ThU.S.$44,246	ThU.S.$43,200
Name	Servicios Corporativos Sercor S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Consulting services related to business management to Boards of Directors and Senior Management of all Arauco’s entities.
Ownership interest (%)	20.0000%
	09-30-2016	12-31-2015
Carrying amount	ThU.S.$ 253	ThU.S.$179
Name	Stora Enso Arapoti Industria de Papel S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Industrialization and commercialization of paper and cellulose, raw materials and by-products
Ownership interest (%)	20.0000%
	09-30-2016	12-31-2015
Carrying amount	—	ThU.S.$17,397

61

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Name	Genómica Forestal S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Developing forestry genomics, through the use of biotechnological, molecular and bioinformatics tools with the purpose of strengthening genetic programs so as to improve the competitive position of the Chilean forestry industry for priority tree species.
Ownership interest (%)	25.0000%
	09-30-2016	12-31-2015
Carrying amount	ThU.S.$ (1)	ThU.S.$16

Name	Consorcio Tecnológico Bioenercel S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Developing of technologies which will promote the development of a biofuels industry in Chile, obtained from lingo-cellulosic materials. The future execution of this sustainable project is financed by the Innova Chile Committee.
Ownership interest (%)	20.0000%
	09-30-2016	12-31-2015
Carrying amount	ThU.S.$67	ThU.S.$67

Name	Vale do Corisco S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Management of forestry activities.
Ownership interest (%)	49.0000%
	09-30-2016	12-31-2015
Carrying amount	ThU.S.$156,336	ThU.S.$121,360

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Summarized Financial Information of Associates

	Assets
09-30-2016 Unaudited	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$		Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		82,931			29		5,074			0			22,298			1		25			110,358
Non-current		562,485			88,545		734			0			400,328			345		78			1,052,515
Total		645,416			88,574		5,808			0			422,626			346		103			1,162,873
	Liabilities
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$		Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		58,876			82		3,597			0			3,572			7		7			66,141
Non-current		283,777			—		944			0			100,002			5		101			384,829
Equity		302,763			88,492		1,267			0			319,052			334		-5			711,903
Total		645,416			88,574		5,808			0			422,626			346		103			1,162,873
Revenues		83,962			2,653		3,478			492			30,258			—		80			120,923
Expenses		(71,898	)		—		(3,175	)		(6,320	)		(10,240	)		—		(155	)		(91,788	)
Profit or loss		12,064			2,653		303			(5,828	)		20,018			0		(75	)		29,135

	Assets
12-31-2015	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Novo Oeste Gestao de Ativos Florestais S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		90,896			29		4,174			59,594			—			14,736			1			44			169,474
Non-current		472,638			86,453		664			33,284			—			322,598			345			146			916,128
Total		563,534			86,482		4,838			92,878			—			337,334			346			190			1,085,602
	Liabilities
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Novo Oeste Gestao de Ativos Florestais S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		41,784			82		3,136			13,648			—			9,098			7			7			67,762
Non-current		231,160			—		808			7,094			—			80,563			5			118			319,748
Equity		290,590			86,400		894			72,136			—			247,673			334			65			698,092
Total		563,534			86,482		4,838			92,878			—			337,334			346			190			1,085,602
09-30-2015 (Unaudited)
Revenues		62,496			4,377		2,714			6,838			68			31,072			93			68			107,726
Expenses		(64,093	)		—		(3,827	)		(1,675	)		(17,503	)		(14,621	)		(122	)		(179	)		(102,020	)
Profit or loss		(1,597	)		4,377		(1,113	)		5,163			(17,435	)		16,451			(29	)		(111	)		5,706

63

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Reconciliation of Investment in Associates and Joint Ventures

	09-30-2016 ThU.S.$			12-31-2015 ThU.S.$
Opening balance as of January 1, 2016		264,812			326,045
Changes
Investments in associates, Additions		—			1,808
Investment in joint ventures, Additions		153,135			—
Disposals, Investments in associates		(10,369	)		—
Share of profit (loss) in investment in associates		12,170			5,573
Share of profit (loss) in investment in joint ventures		1,833			1,175
Dividends Received, Investments in Associates		(4,775	)		(18,396	)
Increase (Decrease) in foreign exchange currency on translation of Associates and Joint Ventures		20,740			(55,207	)
Other increase (decrease) in investment and associates and joint ventures		948			3,814
Total changes		173,682			(61,233	)
Ending balance		438,494			264,812
	09-30-2016 ThU.S.$			12-31-2015 ThU.S.$
Carrying amount of associates accounted for using equity method		262,292			241,140
Carrying amount of joint ventures accounted for using equity method		176,202			23,672
Total investment accounted for using equity method		438,494			264,812

NOTE 16. INTERESTS IN JOINT ARRANGEMENTS

Investments and contributions made

On May 31, 2016, Inversiones Arauco Internacional Limitada, Arauco’s subsidiary, acquired 50% of the shares of Tableros de Fibras S.A, a Spanish subsidiary of SONAE INDUSTRIA, SGPS, S.A. (“Sonae”), which as of such date changed its name to “Sonae Arauco S.A.”. The price paid by Arauco for the acquisition of 50% of the shares of Sonae Arauco was the amount of €137,500,000 (equivalent to MU.S.$153,135 at the acquisition date). The fair value of the investment acquired over Sonae Arauco SA, has been provisionally determined as of September 30, 2016 at MU.S.$153,135 and is subject to change, until the completion of the valuation of its net assets.

Sonae Arauco will produce and market wood panels, of the type of MDF, PB and OSB, and sawn timber, through the operation of 2 panel plants and one sawmill in Spain; 2 panel plants and one resin plant in Portugal; 4 panel plants in Germany and 2 panel plants in South Africa.

In the aggregate, the production capacity of Sonae Arauco is of approximately 1.45 million m3 of MDF, 2.27 million m3 of particle boards, 460,000 m3 of OSB and 100,000 m3 of sawn timber.

As of September 30, 2016, Arauco has not carried out any contributions to Uruguayan companies Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A. (MU.S.$82,943 as of December 31, 2015), with Arauco still holding 50% of control under a joint agreement.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The contributions made were invested in the construction of a last generation cellulose production plant, with a guaranteed annual capacity of 1.3 million tons, a port and an energy generation unit based on renewable resources, which is located in the town of Puerto Pereira, Province of Colonia, Uruguay.

The investments in Uruguay qualify as a joint operation. In relation to “other rights and contractual conditions”, the joint operation has the primary objective of providing the parties an output. As established in the “Pulp Supply Agreement”, both Arauco and its partner have the obligation to acquire 100% of the yearly pulp produced by the joint operation. Arauco has recognized the assets, liabilities, income and expenses associated with its interest ownership, as of January 1, 2013, pursuant to IFRS 11.

Furthermore, Arauco holds a 50% ownership interest in Unilin Arauco Pisos Laminados Ltda., a Brazilian company, and in Eka Chile S.A. (“Eka”), a company that sells sodium chlorate to cellulose plants in Chile. There is a contractual agreement with these companies whereby Arauco has engaged in an economic activity subject to common control, which is classified as a joint venture.

The following tables set forth summarized financial information of the more significant interests in joint arrangements, which qualify as joint operations:

	09-30-2016 (Unaudited)				12-31-2015
Celulosa y Energía Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		168,533		185,640		173,499		167,067
Non-current		21,225,310		35,424		2,192,148		885,723
Equity				1,372,779				1,312,857
Total Joint Arrangement		21,393,843		1,593,843		2,365,647		2,365,647
Investment		686,390				656,429

	09-30-2016 (Unaudited) ThU.S.$			30-09-2015 (Unaudited) sip
Income		491,909			493,420
Expenses		(437,565	)		(440,110	)
Joint Arrangement Net Income (Loss)		54,344			53,310

	09-30-2016 (Unaudited)				12-31-2015
Forestal Cono Sur S.A.(consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		22,253		21,153		23,267		21,495
Non-current		178,917		2,181		176,876		4,654
Equity				177,836				173,994
Total Joint Arrangement		201,170		201,170		200,143		200,143
Investment		88,918				86,997

	09-30-2016 (Unaudited) ThU.S.$			30-09-2015 (Unaudited) ThU.S.$
Income		3,940			5,966
Expenses		(99	)		(9,009	)
Joint Arrangement Net Income (Loss)		3,841			(3,043	)

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	09-30-2016 (Unaudited)				12-31-2015
Eufores S.A.(consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		179,779		205,579		158,735		187,311
Non-current		609,817		22,036		611,500		39,994
Equity				561,981				542,930
Total Joint Arrangement		789,596		789,596		770,235		770,235
Investment		280,991				271,465

	09-30-2016 (Unaudited) ThU.S.$			30-09-2015 (Unaudited) ThU.S.$
Income		208,609			211,392
Expenses		(189,557	)		(221,907	)
Joint Arrangement Net Income (Loss)		19,052			(10,515	)

	09-30-2016 (Unaudited)				12-31-2015
Zona Franca Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		4,797		86,050		11,582		71,202
Non-current		495,102		59,254		494,585		88,182
Equity				354,595				346,783
Total Joint Arrangement		499,899		499,899		506,167		506,167
Investment		177,298				173,392

	09-30-2016 (Unaudited) ThU.S.$			30-09-2015 (Unaudited) ThU.S.$
Income		26,096			14,559
Expenses		(18,285	)		(30,515	)
Joint Arrangement Net Income (Loss)		7,811			(15,956	)

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following tables set forth summarized financial information of the more significant interests in joint ventures:

	09-30-2016 (Unaudited)				12-31-2015
Unilin Arauco Pisos Ltda.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		7,607		3,727		5,943		2,304
Non-current		4,356		35		3,544		37
Equity				8,201				7,146
Total Joint Arrangement		11,963		11,963		9,487		9,487
Investment		4,101				3,573

	09-30-2016 (Unaudited) ThU.S.$			30-09-2015 (Unaudited) ThU.S.$
Income		75			112
Expenses		(436	)		(1,579	)
Joint Arrangement Net Income (Loss)		(361	)		(1,467	)

	09-30-2016 (Unaudited)				12-31-2015
Eka Chile S.A.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		18,958		4,927		23,457		8,365
Non-current		29,653		5,521		30,203		5,097
Equity				38,163				40,198
Total Joint Arrangement		48,611		48,611		53,660		53,660
Investment		19,082				20,099

	09-30-2016 (Unaudited) ThU.S.$			30-09-2015 (Unaudited) ThU.S.$
Income		37,384			30,686
Expenses		(33,358	)		(29,430	)
Joint Arrangement Net Income (Loss)		4,026			1,256

	09-30-2016 (Unaudited)
Sonae Arauco S.A.	Assets ThU.S.$		Liabilities ThU.S.$
Current		235,616		215,976
Non-current		566,677		353,901
Equity				232,416
Total Joint Arrangement		802,293		802,293
Net Assets		116,208
Adjustments to net assets		36,927
Investment		153,135

	09-30-2016 (Unaudited) ThU.S.$
Income		—
Expenses		—
Joint Arrangement Net Income (Loss)		—

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 17. IMPAIRMENT OF ASSETS

As of September 30, 2016 not new impairment provisions to report.

In 2015, a provision for the impairment of the Arapoti Sawmill in an amount of ThU.S.$2,428, was registered reducing the recoverable value for these assets to zero.

Disclosure of Impairment Losses of Assets

Provisions for impairment of property, plant and equipment due to technical obsolescence have been recorded as of September 30, 2016 and December 31, 2015 respectively, as shown below:

Disclosure of Asset Impairment
Principal classes of Assets affected by Impairment and Reversal of Losses	Machinery and Equipment
Principal Facts and Circumstances that lead to Recognizing Impairment and Reversal of losses	Technical Obsolescence and Claim
	09-30-2016	12-31-2015
Information relevant to the sum of all impairment	ThU.S.$4,984	ThU.S.$4,658

This impairment provision is being analyzed to determine the definitive write-off corresponding to the related assets.

Goodwill

Goodwill is allocated to the groups of cash-generating units that are expected to benefit from the synergies of the combination.

At the date of these interim consolidated financial statements, the balance of goodwill is ThU.S.$75,071 (ThU.S.$69,475, at December 31, 2015)

Of the total of goodwill, ThU.S.$39,743 (ThU.S.$39,631 as of December 31, 2015) are generated by the acquisition of “Flakeboard”, a company that, directly and/or through its subsidiaries, possesses and operates 7 panel plants, for which Arauco acquired and paid, on September 24, 2012, the price of ThU.S.$242,502 for the 100% interest ownerhip.

The recoverable amount for Flakeboard’s cash generating unit was determined based on the calculations of its value in use, and this calculation was made using cash flow projections covering a 5-year term, applying a real discount rate of 7.8% which reflects current market assessments for the Panels segment in North America.

The investment in the panel plant in Pien, Brazil generated a goodwill of ThU.S.$32,513 (ThU.S.$27,030 as of December 31, 2015).

The recoverable amount for the Pien plant’s cash generating unit was determined based on the calculations of its value in use, and this calculation was made using cash flow projections based on the operational plan approved by the Administration, covering a 5-year term, applying a 9% real discount rate that reflects current evaluations for the panel segment in Brazil.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As a result of the annual impairment test, the carrying value of the goodwill does not exceed their recoverable value, and therefore there is no need to recognize impairment losses.

As of September 30, 2016 and December 31, 2015, the variation of the balance in goodwill is only due to the translation adjustments as explained in the accounting policies.

NOTE 18. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES

The contingent liabilities for outstanding litigations are as follows:

Celulosa Arauco y Constitución S.A.

1. On August 25, 2005, the Chilean Servicio de Impuestos Internos (the “Chilean IRS”) issued tax resolutions No. 184 and No. 185 of 2005, objecting to certain income tax returns made by Arauco on April 16, 2001 and October 31, 2001, and furthermore, requested reimbursement from the Company for the tax returnes made in respect of certain claimed tax losses as well as the modification of the tax balance of retained earnings. On November 7, 2005, the Company requested a Review of the Supervision Action (Revisión de la Actuación Fiscalizadora, or “RAF”), which is an administrative review of the tax action brought by the Chilean IRS, and filed a claim disputing the abovementioned tax resolutions No. 184 and 185 of 2005. The RAF was resolved on January 9, 2009 by the Chilean IRS, which resolution only partially sustained the Company’s request. In response, the Company filed an additional complaint with regard to the portion of the RAF that was not granted by the administrative review. On February 19, 2010, the Court acknowledged receipt of the Company’s request. Subsequently, the tax authority issued a report and the Company commented on such report.

On September 26, 2014, Arauco requested the submission of this claim to the competent jurisdiction of the new Tax and Customs Courts. On October 10, 2014, Arauco’s request was granted. Currently the action is being considered by these new Courts under the Docket No. RUC 14-9-0002087-3. On March 20, 2015, the SII responded to the allegations submitted by Arauco against Liquidations No. 184 and 185 of 2005. Currently, the case’s evidentiary stage is due to begin.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

2. In conecction with Licancel Plant, on June 22, 2011, the Company was notified of a civil claim for compensation of prejudice for an alleged tort liability, filed by twelve fishermen of the Mataquito River before the Court of First Instance, Guarantee and Family of Licantén under Docket number 73-2011. The case arose out of dead fish allegedly found in the Mataquito River on June 5, 2007 caused by the Licancel Plant. The plaintiffs seek to be compensated for alleged damages that they had from the aforementioned event, including loss of profits, pain and suffering and an alleged contractual liability.

On October 21, 2015 the Court issued a definitive first instance decision partially admitting the claim, sentencing Celulosa Arauco y Constitución S.A. to pay each claimant – as non-monetary damages – the sum of $5,000,000 plus adjustments, as per the variation of the CPI, calculated as from May 2007 until the month of the actual payment. On November 16, 2015, the defendant challenged the definitive decision through the submission of a cassation appeal based on formal aspects and an ordinary appeal. In turn, the plaintiff

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

adhered to the appeal, seeking to have the amount of the non-monetary damages recognized by the first instance decision increased. Pending. (Court of Appeals Docket No. 60-2016).

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

3. Through Res. Ex. N° 1 issued by the Superintendence of the Environment (“SMA”) on January 8, 2016, notified on January 14, 2016, the SMA formulated 11 charges against the Company, due to alleged breaches of certain Environmental Qualification Resolutions for the Valdivia Plant and of DS No. 90/2000. The 11 charges were classified as follows by the SMA: 1 critical, 5 severe, 5 minor.

On February 12, 2016, the Company submitted its defenses. The SMA shall analyze and rule on the defenses, and it may request new information or open a term for providing evidence. Once these proceedings have been discharged, the SMA will issue a resolution that either absolves or sanctions the Company. The resolutions issued by the SMA may be appealed before the Environmental Court.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

4. Through Res. Ex. N° 1 of the SMA, dated February 17, 2016 notified on February 23, 2016, the SMA formulated 8 charges against the company due to alleged breaches of certain Environmental Qualification Resolutions for the Nueva Aldea Plant. The 8 charges were qualified by the SMA as follows: 7 severe and 1 minor.

On March 15, 2016, the company submitted - within the established term - a compliance program which contains 30 actions and goals, related to each one of the 8 alleged infringements. On July 15, 2016, the Exempted Resolution No. 11 of the SMA was notified, which approved the compliance program and suspended the punitive proceedings. If the program is satisfactorily implemented, it would be possible to conclude the proceedings without applying any sanctions.

On August 3, 2016, third-party complainants in the administrative proceeding filed a complaint appeal against Exempted Resolution No. 11 issued by the SMA, which approved the compliance program. The Third Environmental Court must issue a decision with regard to this complaint appeal.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

5. Through Exempted Resolution No. 1/File F-020-2016, dated May 6, 2016, the SMA formulated four charges against the company due to certain alleged breaches of the Environmental Qualification Resolutions of the Licancel Plant. The SMA classified the four charges as follows: 1 severe and 3 minor.

The company filed its defenses on June 8, 2016. On October 21, 2016, the SMA requested additional information from the company, which will be submitted in due time. Subsequently, the SMA could request additional information or open a term for the production of evidence. Once these proceedings have been completed, the SMA must issue a new resolution absolving or convicting the company. The SMA’s resolutions may be challenged before the Environmental Court.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Since the Company’s position is grounded in solid legal arguments, there is a reasonable margin for obtaining a favorable result for the Company.

6. Through Exempted Resolution No. 1/File F-031-2016, dated September 15, 2016, the SMA formulated three charges against the company due to certain alleged breaches of certain Environmental Qualification Resolutions of the Constitución Plant, and an alleged contravention of Law 19,300 resulting from a purported circumvention of the Environmental Assessment System. The SMA classified the three charges as follows: 1 severe and 2 minor.

On October 17, 2016, the company filed a Compliance Program containing 7 actions and objectives. This filing is pending before the SMA. If the compliance program is satisfactorily implemented, it would be possible to conclude the proceedings without the application of any sanctions.

Since the Company’s position is grounded in solid legal arguments, there is a reasonable margin for obtaining a favorable result for the Company.

Arauco Argentina S.A.

1. On December 14, 2007 the Federal Administration of Internal Revenue (Administración Federal de Ingresos Públicos)(“AFIP”) requested a determination, challenging the deductibility, as against Income Tax, of certain expenses, interests and exchange differences generated by Private Negotiable Obligations issued by the Company in 2001 and cancelled in 2007, for an amount of US$ 250,000,000.

This determination reached $417,908,207 (equivalent to MU.S.$ 27,296 as of September 30, 2016) for principal, compensatory interest and fines.

On February 11, 2008, the Company appealed before the National Tax Court (Tribunal Fiscal de la Nación) (“TFN”), which upheld the State’s determination on February 2010. The Company appealed this decision before the National Chamber of Appeals for Federal Administrative Disputes.

Likewise, the Company requested an interim measure of relief before the Chamber of Appeals, so that the Chamber may order the suspension of the determination’s enforceability while the final judgment is pending. On May 13, 2010, Chamber I of the National Chamber of Appeals for Federal Administrative Disputes approved the request, subject to the pledge of collateral, which collateral was furnished by the Company by means of Insurance Policy No. 86058, issued by Zurich Argentina Cia. de Seguros S.A. for $633,616,741 (equivalent to MU.S.$ 41,386 as of September 30, 2016).

The judgment of the Chamber of Appeals, issued in December 2012, was contrary to the company’s interests. The Company filed an Ordinary Appeal before the Supreme Court of Justice, which was authorized by the Chamber of Appeals, and an Extraordinary Appeal, which was duly noted by the Chamber for the relevant procedural phase.

During this entire process, the Company’s external advisors maintained their opinion that the Company had behaved within the limits of the law in its deduction of the interests, expenses and exchange differences that was challenged by the State, and that there were good changes that this determination issued by the AFIP would be rendered without effect.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

On July 22, 2016, Congress passed law No. 27,260, whose Title II, Book II establishes an Exceptional Regularization Regime for Tax, Social Security and Customs Obligations, for obligations that have been the subject matter of judicial proceedings (henceforth, the “Regularization Regime”).

The introduction of the Regularization Regime entails an exemption from the applicable fines as well as a portion of the interests. In order to enjoy these benefits, the taxpayer must unconditionally accept its counterparty’s claim in relation to the regularized obligations, as well as desist from and withdraw any action and right, including restitution actions, bearing the expense of litigation costs and expenses.

The legal counselors that have been intervening in the different stages of litigation have highlighted the very important economic advantages offered by the Regularization Regime in light of the contingency inherent to any judicial case.

On September 7, 2016, the Company materialized its application to the Regularization Regime before the AFIP, in connection to the obligations claimed in consideration to the adjustment conducted by the State regarding the Income Tax Statements filed between the years 2001 and 2004 and reported this situation to the Nation’s Supreme Court, consequently abandoning the Ordinary Appeal that had been promptly lodged.

As of this date, the updated amount for the contingency amounted to approximately $ 891,758,132 (equal to MU.S.$ 58,247 as of September 30, 2016), corresponding to principal, interest and fines. The Company decided to pay in cash, and the balance that was finally paid amounted to $ 248,503,504 (equal to MU.S.$ 16,231 as of September 30, 2016). Additionally, the Company shall assume the payment of all litigation costs and trial expenses, the sum of which was undetermined as of the date of these financial statements. On November 1, 2016, the Nation’s Supreme Court of Justice declared the abovementioned remedy’s abandonment and returned the file to the court of origin.

2. By way of Resolutions Nos. 952/2000 and 83/03, and within the context of the provisions of Law No. 25,080, the former Secretary for Agriculture, Ranching, Fishing and Foods approved the projects submitted by Arauco Argentina S.A. to build an MDF plant (boards) and a sawmill, along with the forestation of several hectares for supplying said industries.

In March of 2005, by way of Note No. 145/05, issued by the Undersecretary for Agriculture, Ranching and Forestation, the exemption to pay exportation duties granted to Arauco Argentina S.A. was suspended, as were the exemptions granted to all other companies benefited by this system under Law No. 25,080, a suspension which was implemented as a preventive measure, invoking the need to review the proceedings conducted in the respective case files. After the exhaustion of the administrative procedures, the measure is being argued by the company before the courts. In said context, on November 8, 2006, the V Chamber of the National Appeals Court for Adversarial Administrative and Federal Matters issued a ruling ordering that Arauco Argentina S.A. to continue to enjoy an exemption from paying the exportation duties, provided that it guarantee said duties by taking out warranty insurance. The judicial measure became effective beginning on March of 2007 by collateralization through the granting of bond (caución) policies for each shipment permits exempted from payment of export duty. Notwithstanding this ruling, the issuance of the ruling on the substantial issues of the matter is still pending. The company maintains an assignment of funds equivalent to ThU.S.$ 23,440 in connection to the aforementioned export duties, which is shown under not current provisions.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The export duties paid by the company while the benefit was suspended were allocated to the results of each financial year. As of this date, the company has submitted a claim against the National Government demanding the return of ThU.S.$6,555, plus interest accrued as from the serving of process of said claim, amount which corresponds to the Export Duties paid between March of 2005 and March of 2007 as a result of the benefit’s suspension.

In turn, during April of year 2005, the Secretary for Agriculture, Ranching, Fishing and Foods issued Resolution No. 260/2005, requiring that holders of any firms that had received the fiscal benefits granted under Law No. 25,080 should establish guarantees to cover the total amount of any such benefits, considering for such purposes all benefits that had been enjoyed until the date of their establishment. Arauco Argentina S.A. then proceeded to establish the required guarantees, which - as of the date of these financial statements - amount to Argentine Pesos 245,359,796 (ThU.S.$16,026 at September 30, 2016).

Arauco Argentina S.A. believes that it has complied with all of the obligations imposed upon it by the system set forth under Law No. 25,080.

3. On December 6, 2013, Arauco Argentina S.A. was served upon Resolution 803 issued by the Central Bank of the Republic of Argentina (BCRA) on November 22, 2013. By means of such resolution, the BCRA initiated Investigation No. 5581, whereby it is sought to determine the absence of currency inflow and liquidation, and the delayed inflow of currency arising from export operations.

On March 6, 2014, the BCRA notified Arauco Argentina S.A. that it had received the APSA’s response and was beginning the trial period. On June 18, 2014 the BCRA notified the company of the closure of the trial period. On June 26, 2014 APSA presented its answer. On October 6, 2014, the company was served with the ruling dated September 30, 2014, issued by the National Criminal and Economic Court No. 8, Secretary No. 16, through which it was notified that the court would analyze the case under Case File No. 1330/2014.

The resolution through which the Intervening Court declared the expiration of the criminal action based on the statute of limitations and acquitted the Company was issued on August 23, 2016

Arauco do Brasil S.A.

On November 8, 2012, the Brazilian tax authorities issued an Infringement Notice against one of our Brazilian subsidiaries, Arauco do Brasil S.A., for allegedly unpaid taxed owed by said company during the period from 2006 to 2010. Specifically, the tax authorities (i) objected to the deductibility of certain payments made, and expenses incurred (including the amortization of premiums, interest and litigation costs) by Arauco do Brasil between 2005 and 2010, and, (ii) argued that Arauco do Brasil made certain insufficient payments regarding the Brazilian Corporate Tax (“IRPJ”) and the Corporate Contribution over Net Profits (“CSLL”) during 2010.

On July 20, 2015, Arauco do Brasil was notified of the first-level administrative ruling which partially upheld the Infringement. Against this ruling, a Voluntary Appeal was filed seeking to revoke the Infringement Notice before the Brazilian Administrative Tax Council (Conselho

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Administrativo de Recursos Fiscais de Brasil or “CARF”), which is the second administrative level. As of the date of this report, the trial pertaining to this objection is still pending. The company believes that its challenge against the Infringement Notice is based on sound legal grounds and that a reasonable possibility exists that this matter will be resolved in favor of the company. However, if a favorable ruling is not obtained, it is possible that an obligation is generated in the aforementioned sums, plus interest and fines, up to the date on which the respective payment is made.

Forestal Arauco S.A.

1. On October 8, 2013, Bosques Arauco S.A., now Forestal Arauco S.A. was notified of a civil claim filed by Mr. Manuel Antonio Fren Casanova, requesting the court to declare the properties known as Cuyinco and Cuyinco Alto as two different properties and, therefore, to order the cancellation of the ownership registration in the name of Bosques Arauco S.A. found on N° 290 of page 266 of the Registry of Property kept by the Real Estate Registrar of Cuyinco Alto, on the grounds that, Bosques Arauco S.A. erroneously understood that its property, Cuyinco Alto of 4,600 hectares, would also encompass the land known as Cuyinco, which allegedly belongs to the claimant.

The claim was filed before the Civil Court of Lebu (Case File No. C-269-2013).

On October 27, 2015, the Court passed a first instance definitive judgment, dismissing the claim in its entirety. On November 16, 2015, the plaintiff challenged the first instance judgment by means of a cassation appeal based on substantial and procedural grounds. (Case Docket Court of Appeals No. 1956-2015). The Court of Appeals decided to send the case back to the first instance court, in order for the latter to issue a ruling regarding a witness disqualification that was not resolved in the original decision, thus completing the ruling. The first instance court, complying with the orders issued by the Court of Appeals of Concepción, decided to reject the witness disqualification filed against witness Mr. Gabriel Fernández P., and none of the parties objected to said decision. Thereafter, the case once again was remitted to the Court of Appeals of Concepción and the CONADI’s report was received. Currently, the case is being entertained by the Court of Appeals, pending a hearing and resolution of the appeal and formal cassation appeal filed in the trial. Pending.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

2. Maquinarias y Equipos Klenner Limitada filed a civil damages claim before the First Civil Court of Valdivia, Case File number C-375-2015, against Forestal Arauco S.A. The claim seeks compensation for alleged damages brought as a result of the termination of a service provision contract that took place on February 9, 2010

On February 6, 2015, the claim was served on Mr. Cristián Durán Silva, on behalf of Forestal Arauco S.A. On February 12, 2015, the company appeared submitting a motion to void the service of process, since Mr. Cristian Durán Silva was not the legal representative of Forestal Arauco S.A., and because the requirements of article 44 of the Code of Civil Procedure had not been fulfilled in this service of process.

The Court granted the plaintiff the legal term to submit its arguments in this regard, issuing a resolution dated February 17 of 2015. Moreover, the company required that proceedings be suspended while this matter was pending decision. The Court gave the floor to the plaintiff with regard to this request. In view of the foregoing, on February 24, 2015, the

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

company raised dilatory defenses, In view of the above, on February 24, 2015, the company filed dilatory defenses, which were dismissed by the Court on August 20, 2015. The decision whereby the defenses were dismissed was appealed by the defendant, and such appeal was ultimately dismissed by the Court of Appeals of Valdivia. On September 2, 2015, Forestal Arauco S.A. answered the claim. Subsequently, the plaintiff filed a reply, and the defendant filed the rejoinder. On October 1, 2015, a settlement hearing took place without any results.

The Court issued the ruling ordering the production of evidence. Both parties lodged a reconsideration appeal, with a secondary ordinary appeal, in an effort to amend the abovementioned ruling. The Court dismissed both reconsideration appeals and granted the secondary ordinary appeals. The Court of Appeals rejected both secondary appeals, and no variations were made to the ruling that ordered the production of evidence.

The period for producing evidence in the first instance stage commenced, and both parties submitted documents and testimonial evidence, and the court ordered hearings for the production of electronic evidence and the exhibition of certain documents. The defendant requested the court to issue a ruling ordering the parties to await a final award. The Court ordered that it first be certified that the period for producing evidence had expired. The Court issued a resolution whereby the trial stage of the case was closed and left its final judgment pending. On September 23, 2016, the Court decided to carry out an accounting assessment as a measure for an improved ruling, which was conducted on October 24, 2016. The Parties’ observations in this regard are still pending.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

3. On April 28, 2015, the company was notified of and answered the action for recovery submitted in ordinary proceedings by Mr. Rodrigo Huanquimilla Arcos and Mr. Mario Andrades Rojas, attorneys at law, on behalf of 24 members of the Arcos succession, who claiming to be owners of the estate that they identify as Hacienda Quivolgo, of 5,202 hectares, request that Forestal Celco S.A., currently Forestal Arauco S.A., be sentenced to return the abovementioned real property plus civil and natural fruits or revenues as well as any estates adhered to it, along with any damages that the real property may have suffered, with litigation costs. The company proceeded to answer the claim requesting that it be completely rejected, arguing that Forestal Celco S.A., currently Forestal Arauco S.A., is the sole and legitimate owner of the real property.

The Court issued the resolution that commenced the evidentiary stage and ordered that this trial be joined with case file No. C-54-2015, suspending the proceeding and ordering the parties to appoint a joint representative to act on behalf of both parties. The attorneys for both claimant parties conferred reciprocal powers to each other, and thus the Court deemed they had fulfilled the legal requirement. The defendant lodged an appeal against this ruling before the Court of Appeals of Talca. Likewise, the defendant lodged an appeal against the ruling that failed to decide the reconsideration appeal that had been previously filed against the ruling that ordered the production of evidence. The Court of Appeals dismissed both appeals.

In the first instance stage, the period for producing evidence commenced and both parties produced evidence. The period for producing evidence expired on May 9, 2016. Both parties have requested that the court issue a resolution whereby the trial stage be declared closed and the case ready for the issuance of the final judgment. The Court has rejected such petitions because a procedure in the case is currently pending. Case file C-334-2014 of the Civil Court of Constitución.

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

4. On April 6, 2015, the company was notified through a rogatory letter regarding the claim submitted by Mr. Gustavo Andrés Ochagavía Urrutia, attorney at law, acting on behalf of 23 members of the Arcos succession, who claim to be the owners of the estate that they identify as Hacienda Quivolgo, of 5,202 hectares, requesting that Forestal Celco S.A., currently Forestal Arauco S.A., be ordered to return the abovementioned real property plus civil and natural fruits or revenues as well as any estates adhered to it, along with any damages that the real property may have suffered, with litigation costs. They base their claim in that Forestal Celco S.A., currently Forestal Arauco S.A., is allegedly in possession but does not own the real property in question. On April 28, 2014, the company proceeded to answer the claim requesting that it be completely rejected, arguing that Forestal Celco S.A., currently Forestal Arauco S.A., is the sole and legitimate owner of the real property.

On January 6, 2016, the plaintiff was notified of the ruling which commences the trial period. On January 8, 2016, the defendant requested a consolidation of the proceedings with Case file 334-2014, as well as the suspension of the proceedings until this request is decided upon.

On January 12, 2016, the Court granted the plaintiff a term for issuing observations regarding the request for joinder of proceedings, and meanwhile suspended the procedure. The Court ordered this case file to be joined with the proceedings of case file No. C-334-2014. Case file C-54-2015 of the Civil Court of Constitución.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

At the end of each reporting period there are no other contingencies that might significantly affect the Company’s financial, position or results of operations.

Provisions recorded as of September 30, 2016 and December 31, 2015 are as follows:

	09-30-2016 Unaudited		12-31-2015
Classes of Provisions	ThU.S.$		ThU.S.$
Provisions, Current		628		858
Provisions for litigations		443		404
Other provisions		185		454
Provisions, non-Current		38,686		34,541
Provisions for litigations		15,244		10,996
Other provisions		23,442		23,545
Total Provisions		39,314		35,399

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	09-30-2016 Unaudited
Movements in Provisions	Litigations ThU.S.$			Other Provisions ThU.S.$			Total ThU.S.$
Opening balance		11,400			23,999			35,399
Changes in provisions
Increase in existing provisions		4,901			—			4,901
Used provisions		(408	)		(269	)		(677	)
Increase (decrease) in foreign currency exchange		(207	)		—			(207	)
Other Increases (Decreases)		1			(103	)		(102	)
Total Changes		4,287			(372	)		3,915
Closing balance		15,687			23,627			39,314

(*) The increase in legal claims is composed mainly of Th.U.S.$626 from Brazilian subsidiaries in connection with civil and labor lawsits, being the latter the most important. In addition there are ThU.S.$38 from Uruguay and ThU.S.$ 4,236 from Arauco Argentina in connection with labor lawsuits (2,409), the TFN lawsuit (1,480) and SES provision (707).

(**) The change of Other Provisions comprises mainly a reversal of existing provision of Th.U.S.$ 100 corresponding to Arauco Argentina.

	12-31-2015
Movements in Provisions	Litigations (*) ThU.S.$			Other Provisions (**) ThU.S.$			Total ThU.S.$
Opening balance		16,038			51,026			67,064
Changes in provisions
Increase in existing provisions		2,555			1,429			3,984
Used provisions		(2,990	)		—			(2,990	)
Increase (decrease) in foreign currency exchange		(5,163	)		—			(5,163	)
Other Increases (Decreases)		960			(28,456	)		(27,496	)
Total Changes		(4,638	)		(27,027	)		(31,665	)
Closing balance		11,400			23,999			35,399

Provisions for litigations are related to labor and tax claims whose payment period is uncertain. Other provisions mainly include the recognition of a liability related to investments in associates and joint ventures accounted under the equity method with net asset deficiency at the end of the reporting period.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 19. INTANGIBLE ASSETS

Classes of Intangible Assets, Net	09-30-2016 ThU.S.$			12-31-2015 ThU.S.$
Intangible assets, net		81,611			88,112
Computer software		18,068			21,251
Water rights		5,689			5,485
Customer		52,517			55,265
Other identifiable intangible assets		5,337			6,111
Classes of intangible Assets, Gross		146,870			142,704
Computer software		60,858			58,275
Water rights		5,689			5,485
Customer		71,749			70,676
Other identifiable intangible assets		8,574			8,268
Classes of accumulated amortization and impairment
Total accumulated amortization and impairment		(65,259	)		(54,592	)
Accumulated amortization and impairment, intangible assets		(65,259	)		(54,592	)
Computer software		(42,790	)		(37,024	)
Customer		(19,232	)		(15,411	)
Other identifiable intangible assets		(3,237	)		(2,157	)

Reconciliation of the carrying amount of intangible assets at the beginning and end of each reporting period balances

	09-30-2016 Unaudited
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rigths ThU.S.$			Customer ThU.S.$			Others ThU.S.$			TOTAL ThU.S.$
Opening Balance		21,251			5,485			55,265			6,111			88,112
Changes
Additions		1,465			204			—			189			1,858
Disposals		(20	)		—			—			—			(20	)
Amortization		(5,243	)		—			(3,472	)		(1,396	)		(10,111	)
Increase (decrease) in foreign currency conversion		331			—			724			433			1,488
Others Increases (Decreases)		284			—			—			—			284
Changes Total		(3,183	)		204			(2,748	)		(774	)		(6,501	)
Closing Balance		18,068			5,689			52,517			5,337			81,611
	12-31-2015
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rigths ThU.S.$			Customer ThU.S.$			Others ThU.S.$			TOTAL ThU.S.$
Opening Balance		18,224			5,442			63,164			6,428			93,258
Changes
Additions		9,638			66.00			—			690			10,394
Disposals		(73	)		—			—			(70	)		(143	)
Amortization		(6,448	)		(2.00	)		(4,819	)		(684	)		(11,953	)
Increase (decrease) in foreign currency conversion		(84	)		-21			(3,080	)		(253	)		(3,438	)
Changes Total		3,027			43			(7,899	)		(317	)		(5,146	)
Closing Balance		21,251			5,485			55,265			6,111			88,112

		Average
Computer Software	Years		5
Customer	Years		15
Brands	Years		7

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CELULOSA ARAUCO Y CONSTITUCION S.A.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The amortization of customer and computer software is presented in the Consolidated Statements of profit or loss under the Administrative Expenses line item.

NOTE 20. BIOLOGICAL ASSETS

Biological assets comprise forestry plantations, mainly radiata and taeda pine, and to a lesser extent eucalyptus. The plantations are located in Chile, Argentina, Brazil and Uruguay, with a total surface of 1.7 million hectares, out of which 1 million hectares are used for forestry planting, 409 thousand hectares are native forest, 190 thousand hectares are used for other purposes and 63 thousand hectares not yet planted.

As of September 30, 2016, the production volume of logs totaled 14.2 million cubic meters (14.8 million cubic meters as of September 30, 2015).

Measurements of fair value of Arauco’s biological assets are classified as Level 3, due to the fact that inputs are not observable. However, this information reflects the assumptions that market participants would use in pricing the asset, including assumptions about risk.

These unobservable inputs were developed using the best information available and includes internal data from Arauco. These unobservable inputs can be adjusted if the available information indicates that other market participants would use different information or there is something specific in Arauco that is not available to other market participants.

The main considerations in determining the fair value of biological assets include the following:

• Arauco uses discounted expected future cash flows of its forest plantations, which are based on a harvest projection date for all existing plantations.

• Current forestry plantations are projected based on a net volume that will not decrease, with a minimum growth equivalent to the current supply demand.

• Future plantations are not considered.

• The harvest of forestry plantations supplies raw materials for all other products that Arauco produces and trades. By directly controlling the development of forests that will be processed, Arauco ensures high quality timber for each of its products.

• Expected cash flows are determined in terms of harvest and expected sale of forestry products, associated with the demand from the Company’s own industrial centers and sales to third parties at market prices. Sales margin of the different products that are harvested in the forest is also considered in the valuation. The changes in the value of the plantations pursuant to the criteria defined above are accounted for in the results for the fiscal year, as established in IAS 41. These changes are presented in the Statement of profit or loss under the line item Other income per function, which as of September 30, 2016 amounted to ThU.S.$139,905 (ThU.S.$140,692 as of September 30, 2015). The appraisal of biological assets resulted in a greater cost of the lumber sold in comparison to the real incurred cost, which is presented included in the cost of sales which as of September 30, 2016 amounted to ThU.S.$150,903 (ThU.S.$142,427 as of September 30, 2015).

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

• Forestry plantations are harvested according to the needs of Arauco’s production plants.

• The discount rates used are 8% in Chile, Brazil and Uruguay, and 12% in Argentina.

• It is expected that prices of harvested timber are constant in real terms based on market prices.

• Cost expectations with respect to the lifetime of the forests are constant based on estimated costs included in the projections made by Arauco.

• The average crop age by species and country is:

	Chile		Argentina		Brazil		Uruguay
Pine		24		15		15		—
Eucalyptus		12		10		7		10

The following table sets forth changes in fair value of biological assets considering variations in significant assumptions considered in calculating the fair value of the assets:

		ThU.S.$
Discount rate	0.5		(113,584	)
	-0.5		120,186
Margins (%)	10		389,465
	-10		(389,465	)

Forestry plantations classified as current Biological assets are those to be harvested and sold within twelve months after the reporting period.

The Company has contracted fire insurance policies for its forestry plantations, which in conjunction with the Company’s resources and efficient protection measures for these forestry assets, allow financial and operational risks to be minimized.

Detail of Biological Assets Pledged as Security

As of September 30, 2016, there are no forestry plantations pledged as security.

Detail of Biological Assets with Restricted Ownership

As of the date of these interim consolidated financial statements, there are no biological assets with restricted ownership.

No significant government grants have been received.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Current and Non-Current Biological Assets

As of the date of these interim consolidated financial statements, the Current and Non-current biological assets are as follows:

	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Current		297,496		306,529
Non-current		3,588,474		3,520,068
Total		3,885,970		3,826,597

Reconciliation of carrying amount of biological assets

Movement	09-30-2016 Unaudited ThU.S.$
Opening Balance		3,826,597
Changes in Biological Assets
Additions		94,010
Decreases due to Sales		(765	)
Decreases due to Harvest		(244,194	)
Gain (losses) arising from changes in fair value less costs to sale		139,806
Increases (decreases) in Foreign Currency Translation		70,841
Other Increases (decreases)		2,344
Total Changes		59,373
Closing Balance		3,885,970
Movement	12-31-2015 ThU.S.$
Opening Balance		3,846,353
Changes in Biological Assets
Additions		215,557
Decreases due to Sales		(1,028	)
Decreases due to Harvest		(299,501	)
Gain (losses) arising from changes in fair value less costs to sale		210,479
Increases (decreases) in Foreign Currency Translation		(111,502	)
Loss of forest due to fires		(34,850	)
Other Increases (decreases)		1,089
Total Changes		(19,756	)
Closing Balance		3,826,597

As of the date of these interim consolidated financial statements, there are no disbursements related to the acquisition of biological assets.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 21. ENVIRONMENTAL MATTERS

Environment Management

For Arauco, sustainability means management strategy. This strategy incorporates values, commitments and standards, that together with the adoption of best practices as well as the use of the latest available technologies, seek to continuously improve the Company’s environmental management. It is the environmental department and each of its specialists that ensure these guidelines are met and are put in to practice in everyday company operations.

All of Arauco’s production units have certified environmental management systems, which reinforce the Company’s commitment to environmental performance and ensure the traceability of all raw materials used.

Arauco uses several supplies in its productive processes such as wood, chemical products, and water, etc., which in turn produce liquid and gas emissions. As a way to make the Company’s environmental management more efficient, significant progress has been made to reduce consumption and emissions.

Environmental investments have been made related to the control of atmospheric emissions, process improvements, water and waste management, as well as effluent treatment, in order to improve the environmental performance of all of Arauco’s business units.

Detail information of disbursements related to the environment

As of September 30, 2016 and December 31, 2015 Arauco has made and / or has committed the following disbursements by major environmental projects:

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

09/30/2016		Disbursements undertaken 2016					Committed Disbursements
Company	Name of project	State of project	Amount ThU.S.$		Asset Expense	Asset/expense destination item	Amount ThU.S.$		Estimated date
Arauco Do Brasil S.A.	Environmental improvement studies	In process		53	Assets	Property, plant and equipment		650		2016
Arauco Do Brasil S.A.	Environmental improvement studies	In process		166	Expense	Administration expenses		1,450		2017
Celulosa Arauco Y Constitucion S.A.	Investment projects for the control and management of gas emissions from industrial process	In process		840	Assets	Property, plant and equipment		2,221		2016
Celulosa Arauco Y Constitucion S.A.	Investment projects for the control and management of gas emissions from industrial process	In process		318	Assets	Property, plant and equipment		8,242		2018
Celulosa Arauco Y Constitucion S.A.	Environmental improvement studies	In process		1,460	Assets	Property, plant and equipment		6,528		2016
Celulosa Arauco Y Constitucion S.A.	Environmental improvement studies	In process		478	Assets	Property, plant and equipment		15,476		2018
Celulosa Arauco Y Constitucion S.A.	Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants	In process		33,527	Assets	Property, plant and equipment		82,625		2017
Celulosa Arauco Y Constitucion S.A.	Environmental improvement studies	In process		19,496	Expense	Operating cost		11,307		2016
Celulosa Arauco Y Constitucion S.A.	Expansion of solid industrial waste dumpsite for management of these in the future	In process		142	Assets	Property, plant and equipment		1,278		2016
Arauco Argentina S.A	Construction emisario	In process		8	Assets	Property, plant and equipment		797		2016
Arauco Argentina S.A	Expansion of solid industrial waste dumpsite for management of these in the future	In process		173	Assets	Property, plant and equipment		3,779		2016
Arauco Argentina S.A	Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants	In process		127	Assets	Property, plant and equipment		6,168		2016
Paneles Arauco S.A.	Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants	In process		980	Expense	Operating cost		327		2016
Paneles Arauco S.A.	Expansion of solid industrial waste dumpsite for management of these in the future	In process		371	Expense	Administration expenses		124		2016
Paneles Arauco S.A.	Environmental improvement studies	In process		1,104	Assets	Property, plant and equipment		257		2016
Forestal Arauco S.A. (Ex-Forestal Celco S.A.)	Environmental improvement studies	In process		465	Expense	Administration expenses		597		2016
Forestal los Lagos S.A	Environmental improvement studies	In process		170	Expense	Operating cost		38		2016
		TOTAL		59,878				141,864

83

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

12/31/2015

Disbursements undertaken 2015

Committed Disbursements

Company

Name of project

State of project

Amount ThU.S.$

Asset Expense

Asset/expense destination item

Amount ThU.S.$

Estimated date

Arauco Do Brasil S.A.

Environmental improvement studies

In process

32

Assets

Property, plant and equipment

220

2016

Arauco Do Brasil S.A.

Environmental improvement studies

In process

220

Expense

Administration expenses

699

2016

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of gas emissions from industrial process

In process

2,720

Assets

Property, plant and equipment

0

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

2,688

Assets

Property, plant and equipment

1,057

2016

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

Finished

4,818

Assets

Property, plant and equipment

0

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

Finished

244

Assets

Property, plant and equipment

0

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

6,668

Assets

Property, plant and equipment

113,321

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

Finished

27,868

Expense

Operating cost

0

Celulosa Arauco Y Constitucion S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

In process

2,122

Assets

Property, plant and equipment

1,420

2016

Arauco Argentina S.A

Construction emisario

In process

0

Assets

Property, plant and equipment

805

2016

Arauco Argentina S.A

Expansion of solid industrial waste dumpsite for management of these in the future

In process

165

Assets

Property, plant and equipment

3,952

2016

Arauco Argentina S.A

Environmental improvement studies

Finished

117

Assets

Property, plant and equipment

0

Arauco Argentina S.A

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

38

Assets

Property, plant and equipment

6,268

2016

Paneles Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

1,627

Expense

Operating cost

109

2016

Paneles Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

555

Assets

Property, plant and equipment

366

2016

Paneles Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

Finished

720

Assets

Property, plant and equipment

0

Paneles Arauco S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

In process

355

Expense

Administration expenses

355

2016

Forestal Arauco S.A. (Ex-Forestal Celco S.A.)

Environmental improvement studies

In process

613

Expense

Administration expenses

783

2016

Forestal los Lagos S.A

Environmental improvement studies

In process

206

Expense

Operating cost

208

2016

TOTAL

51,776

129,563

84

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 22. NON-CURRENT ASSETS HELD FOR SALE

Arauco decided to sell assets in previous years corresponding mainly to sawmills in Chile and remains committed to its sales plan.

By the end of fiscal year 2015, Paneles Arauco S.A. decided to reclassify to Properties, plant and equipment an amount of ThU.S.$5,429, since the Escuadron, La Araucana and Remanufactura Lomas Coloradas plants were used as warehouses for finished products. These assets consisted of buildings and saw mill equipment, which were shut down in preceding years.

The following table sets forth information on the main types of non-current assets held for sale:

	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Land		216		217
Buildings		1,122		1,122
Property, plant and equipment		1,778		1,855
Total		3,116		3,194

There were no significant effect on results related to the sale of assets held for sale on September 30, 2016 and December 31, 2015

85

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 23. FINANCIAL INSTRUMENTS

23.1 Classification

Arauco’s financial instruments as of September 30, 2016 and December 31, 2015, are displayed in the table below. Regarding those instruments valued at an amortized cost, as estimation of their reasonable value is displayed for informational purposes.

Financial Instruments Thousands of dollars	September 2016 Unaudited				December 2015
	Carrying amount		Fair Value		Carrying amount		Fair Value
Fair value through profit or loss (held for trading)		163,527		163,527		200,034		200,034
Forward		4,717		4,717		3,245		3,245
Mutual funds (2)		158,810		158,810		196,789		196,789
Loans and Accounts Receivables		962,535		962,535		1,054,952		1,054,952
Cash and cash equivalents		300,858		300,858		303,236		303,236
Cash		162,240		162,240		143,324		143,324
Time deposits		138,618		138,618		159,912		159,912
Agreements		—		—		—		—
Accounts Receivables (net)		657,999		657,999		748,592		748,592
Trades and other receivables		529,278		529,278		614,655		614,655
Lease receivable		963		963		15		15
Other receivables		127,758		127,758		133,922		133,922
Accounts receivable from related parties		3,678		3,678		3,124		3,124
Other Financial Assets (5)		14,573		14,573		29,545		29,545
Financial Liabilities at amortized cost (3)		4,907,882		5,260,839		4,895,594		5,095,197
Bonds issued denominated in U.S. dollars		2,297,123		2,480,063		2,317,216		2,409,538
Bonds issued denominated in U.F. (4)		960,280		1,078,934		863,118		923,775
Bank Loans in Dollars		936,918		991,627		953,898		1,004,792
Bank borrowing denominated in U.S. dollars		21,103		21,103		43,644		43,644
Financial Leasing		127,130		123,785		127,559		123,289
Trades and other Payables		558,007		558,006		583,018		583,018
Accounts payable to related parties		7,321		7,321		7,141		7,141
Financial liabilities at fair value through profit or loss		430		430		1,429		1,429
Hedging Liabilities		106,394		106,394		226,139		226,139

(1) Assets measured at fair value through profit or loss other than mutual funds classified as cash equivalents, are presented in the line item “other financial assets” in the consolidated statement of financial position.

(2) Although mutual funds are measured at fair value through profit or loss for purposes of the consolidated statement of financial position mutual funds are classified as “Cash and cash equivalents” due to the are highly liquid short term investment.

(3) Financial liabilities measured at amortized cost, other than “Trade and other payables” and derivatives are presented in the consolidated statement of financial position in the line item “Other financial liabilities” as current and non-current based on their maturity.

(4) The Unidad de Fomento (“UF”) is a unit of account that is linked to, and is adjusted daily to reflect changes in the Chilean consumer price index.

(5) Includes guarantee fund for derivatives which correspond to the collateral under swap agreements.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.2 Fair Value Hierarchy of Financial Assets and Liabilities

The assets and liabilities measured at fair value in the consolidated statements of financial position as of September 30, 2016, have been measured based on the valuation methodologies provided in IAS 39. The methodologies applied for each financial instrument are classified according to their hierarchy as follows:

• Level 1: Securities or quoted prices in active markets for identical assets and liabilities

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Financial Instruments	Fair Value				Fair value
Thousands of dollars	September 2016		Level 1		Level 2		Level 3
Financial assets measured at fair value
Derivates		4,717				4,717
Mutual Funds		158,810		158,810
Other financial assets		14,573		5,488		9,085
Financial liabilities measured at fair value
Bonds issued denominated in U.S. dollars		2,480,063		2,480,063
Bonds issued denominated in U.F.		1,078,934		1,078,934
Bank Loans in Dollars		991,627				991,627
Bank borrowing denominated in U.S. dollars		21,103				21,103
Financial Leasing		123,785				123,785
Hedging Liabilities		106,394				106,394
Financial liabilities at fair value through profit or loss		430				430

87

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.3 Explanation of the valuation of Financial Instruments.

Cash and cash equivalent and accounts receivable

The carrying amount of accounts receivable flows, cash and cash equivalents (including mutual funds), and other financial assets and liabilities approximate their fair value due to the short-term nature of such instruments.

Derivative financial instruments

Interest rate and currency swaps are valued under the cash flow discount method at the rate applicable according to the transaction’s risk, using an internal methodology based on the information obtained from Bloomberg. In this particular case, given that cross currency swaps correspond to future flows in UF and future flows in Dollars, Arauco calculates the current value of such flows by using 2 discount curves: the UF zero coupon curve and the Dollar zero coupon.

The fair value of the interest rate swap contracts is calculated by reference to the rate differential between the agreed upon rate and the market rate as of the end date of these financial statements.

The fair value of the currency forward contracts is calculated by reference to the current forward exchange rates of contracts with similar maturity profiles.

For the case of zero cost collar, the Bloomberg terminal is used to value Fuel Oil No. 6 options.

Financial Liabilities

The fair value of bonds issued was determined with reference to quoted market prices as they have standard terms and conditions.

The fair value of bank borrowings were determined based on discounted cash flow analysis, applying the corresponding discount yield curves to the remaining term to maturity.

Disclosures of the fair value of financial liabilities at amortized cost are determined via the use of discounted cash flows, calculated over variables of the observable markets as of the date of informing the consolidated financial statements, and correspond to Level 2 of the fair value hierarchy.

The following table shows compliance with financial covenants (level of indebtedness, exposed on point 23.9.3) required by domestic bond indentures:

	September 2016 ThU.S.$ Unaudited			December 2015 ThU.S.$
Financial debt, current		716,859			291,798
Financial debt, non-current		3,625,695			4,013,637
Total financial debt		4,342,554			4,305,435
Cash and cash equivalent		(459,668	)		(500,025	)
Net financial debt		3,882,886			3,805,410
Non-controlling interests		44,494			37,735
Equity attributable to owners of parent		6,886,947			6,608,710
Total equity		6,931,441			6,646,445
Debt to equity ratio		0.56			0.57

88

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following table sets forth a reconciliation between the financial liabilities and the statement of financial position as of September 30, 2016 and December 31, 2015:

Thousands of dollars	September 2016
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 13 months to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		12,590		419,877		432,467		1,235,217		1,589,718		2,824,935		3,257,402
Bank borrowing		80,873		159,355		240,228		625,562		92,231		717,793		958,021
Financial Leasing		10,633		33,530		44,163		82,967		—		82,967		127,130
Government loans		—		—		—		—		—		—		—
Swap and Forward		1,016		—		1,016		105,809		—		105,809		106,825
Other Financial Liabilities, Total (a)		105,112		612,762		717,874		2,049,555		1,681,949		3,731,504		4,449,378
Thousands of dollars	September 2016
	Up to 90 days		From 91 days to 1 year		Total Current		From 13 months to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		530,005		28,002		558,007		—		—		—		558,007
Related party payables		7,321		—		7,321		—		—		—		7,321
Accounts Payable, Total (b)		537,326		28,002		565,328		—		—		—		565,328
Financial Liabilities, Total (a) + (b)		642,438		640,764		1,283,202		2,049,555		1,681,949		3,731,504		5,014,706
Thousands of dollars	December 2015
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 13 months to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		49,357		5,836		55,193		1,179,558		1,945,583		3,125,141		3,180,334
Bank borrowings		126,795		72,948		199,743		648,017		149,782		797,799		997,542
Financial leasing		9,301		27,561		36,862		90,697		—		90,697		127,559
Government loans		—		0		0		—		—		—		0
Swap and Forward		4,240		—		4,240		223,328		—		223,328		227,568
Other Financial Liabilities, Total (a)		189,693		106,345		296,038		2,141,600		2,095,365		4,236,965		4,533,003
Thousands of dollars	December 2015
	Up to 90 days		From 91 days to 1 year		Total Current		From 13 months to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		583,018		0		583,018		—		—		—		583,018
Related party payables		7,141		—		7,141		—		—		—		7,141
Accounts Payable, Total (b)		590,159		0		590,159		—		—		—		590,159
Financial Liabilities, Total (a) + (b)		779,852		106,345		886,197		2,141,600		2,095,365		4,236,965		5,123,162

89

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.4 Derivative Financial Instruments

Hedging instruments recorded as of September 30, 2016 are cash flow hedges. Arauco uses derivatives for hedging purposes, such as cross currency swaps, currency and commodity forwards, interest rate swaps, and options. Depending on the fair value of each instrument, the position could be either an asset or a liability, and they are listed in the Statement of Financial Position under Other Non-current Financial Assets or Other Non-current Financial Liabilities, respectively. The effects for the period are presented under Equity as Other Comprehensive Income or the Statement of Comprehensive Income as Finance Income or Finance Costs, net of differences in exchange rate of the hedged items and the deferred tax.

A summary of the hedging instruments included in the Financial Position Statement as of the end of this period, is presented below:

Financial Instruments	Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		4,717
Derivatives-Uruguay (1)		4,717
Hedging Assets		4,740
Derivatives-Uruguay (1)		746
Zero Cost Collar		916
Cross Currency Swaps		3,078
Financial liabilities at fair value through profit or loss		(430	)
Forward-Colombia		(337	)
Derivatives-Uruguay (1)		(93	)
Hedging Liabilities		(106,394	)
Cross Currency Swaps		(104,974	)
Derivatives-Uruguay (1)		(1,420	)

(1) Include Swap and Forward from Uruguay tables.

90

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.4.1. Chile

Cross currency swaps

Arauco has exposure to cash flow variability in the exchange rate risk factor. This occurs mainly because of holding assets or liabilities in currencies other than the functional currency, creating variations that could affect the operation’s results.

Below are the cross currency swaps that Arauco has as of September 30, 2016 to cover the exposure to the exchange rate risk generated from bonds denominated in UF:

Bond	Institution	Amount U.S.$		Amount UF		Starting date		Ending date		Market Value U.S.$
F	Deutsche - England		43,618,307		1,000,000		10/30/2011		10/30/2021		(5,970,229	)
F	JP Morgan - N.A.		43,618,307		1,000,000		10/30/2011		10/30/2021		(5,836,619	)
F	Deutsche - England		37,977,065		1,000,000		04/30/2014		04/30/2019		1,690,986
F	BBVA - Chile		38,426,435		1,000,000		10/30/2014		04/30/2023		(519,863	)
F	BBVA - Chile		38,378,440		1,000,000		10/30/2014		04/30/2023		(134,538	)
F	Santander - Chile		37,977,065		1,000,000		10/30/2014		04/30/2023		414,360
F	BCI - Chile		37,621,562		1,000,000		10/30/2014		04/30/2023		973,136
J	Corpbanca - Chile		42,864,859		1,000,000		09/01/2010		09/01/2020		(5,992,460	)
J	BBVA - Chile		42,864,859		1,000,000		09/01/2010		09/01/2020		(5,992,460	)
J	Deutsche - England		42,864,859		1,000,000		09/01/2010		09/01/2020		(6,077,984	)
J	Santander - Spain		42,873,112		1,000,000		09/01/2010		09/01/2020		(5,950,897	)
J	BBVA - Chile		42,864,257		1,000,000		09/01/2010		09/01/2020		(5,804,177	)
P	Corpbanca - Chile		46,474,122		1,000,000		05/15/2012		11/15/2021		(7,770,432	)
P	JP Morgan - N.A.		47,163,640		1,000,000		11/15/2012		11/15/2021		(7,497,402	)
P	BBVA - Chile		42,412,852		1,000,000		11/15/2013		11/15/2023		(3,946,489	)
P	Santander - Chile		41,752,718		1,000,000		11/15/2013		11/15/2023		(2,925,274	)
P	Deutsche - England		41,752,718		1,000,000		11/15/2013		11/15/2023		(2,895,924	)
R	Santander - Chile		128,611,183		3,000,000		10/01/2014		04/01/2024		(18,777,808	)
R	JP Morgan - England		43,185,224		1,000,000		10/01/2014		04/01/2024		(5,628,921	)
R	Corpbanca - Chile		43,277,070		1,000,000		10/01/2014		04/01/2024		(5,611,054	)
Q	BCI - Chile		43,185,224		1,000,000		10/01/2014		04/01/2021		(3,869,642	)
Q	BCI - Chile		43,196,695		1,000,000		10/01/2014		04/01/2021		(3,771,329	)
											(101,895,021	)

Arauco needs to minimize the risk of exchange rate as it holds adjustable obligations in Chilean Pesos. The objective of this position in the swap is to eliminate the uncertainty of the exchange rate, exchanging the flows derived from obligations expressed in adjustable pesos of the bonds described above, with flows in U.S. dollars (Arauco’s functional currency), at a fixed and determined exchange rate as of the agreement’s execution date.

Through an effectiveness test, and pursuant to IFRS 39, we were able to validate that the aforementioned hedging instruments are highly effective within an acceptable range for Arauco, for the purposes of eliminating the uncertainty of the exchange rate in the commitments derived from the hedged object.

91

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Zero Cost Collars

Our results are exposed to changes the price of certain fuels. To minimize the risk we limited the volatility of future cash flows associated with the purchase of Fuel Oil No. 6 for year 2016 through zero cost collar contracts of this commodity. The Fuel Oil No. 6 is consumed in the process of pulp production.

Commodity

Institution

Amount U.S.$

Unit

Starting date

Ending date

Market Value U.S.$

Fuel Oil N°6

JP Morgan - U.K.

167

Miles Bbl.

07/01/2016

12/31/2016

915,728

915,728

23.4.1.3 Forward

There are no forward contracts of derivative financial instruments in effect at September 30, 2016.

23.4.2. Colombia

Forward contracts that are in force and effect, executed by Arauco Colombia as of September 30, 2016, are detailed in the following table:

Exchange rate	Institution		Amount U.S.$		Starting date		Ending date		Market Value U.S.$
USDCOP		BBVA Colombia		5,000,000		07/14/2016		10/11/2016		(144,094	)
USDCOP		Corpbanca Colombia		4,000,000		08/16/2016		11/09/2016		(90,557	)
USDCOP		Corpbanca Colombia		7,000,000		09/20/2016		12/12/2016		(102,549	)
										(337,199	)

23.4.3. Argentina

There are no contracts of derivative financial instruments in effect at September 30, 2016.

23.4.4. Uruguay

Forward

As of September 30, 2016, Arauco Uruguay maintains the following forward contracts in force and effect through a joint operation (50%) for the purposes of ensuring an exchange rate for sale of dollars:

Exchange rate	Institution		Notional		Market Value U.S.$
UYUUSD		Banco Santander Uy		18,350,000		2,888,424
UYUUSD		Citibank U.K.		1,500,000		205,217
UYUUSD		HSBC Uruguay		10,450,000		1,586,822
						4,680,463

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The results of Arauco Uruguay’s also face exposure to the price variation of certain fuels, as occurs with Fuel Oil N°6, which is used during the cellulose manufacturing process. In order to minimize this risk, the volatility of future flows associated to the purchase of Fuel Oil No. 6 for years 2016, 2017 and part of 2018 has been limited, through forwards of this commodity. The agreements that are in force and effect as of September 30, 2016, are detailed below:

Commodity	Institution		Notional		Market Value U.S.$
Fuel Oil N°6		JPMorgan Chase Bank, N.A.		6,454,160		109,542
Fuel Oil N°6		DNB Bank ASA		1,664,513		(60,738	)
Fuel Oil N°6		Citibank U.K.		1,002,874		38,343
						87,147

23.4.4.2 Swap

In addition, Arauco Uruguay´s maintains an Interest Rate Swap in force and effect, a derivative instrument which purpose is to set the interest rate of a variable rate debt in the same currency (USD). The valuation off this instrument as of September 30, 2016, is shown below:

Exchange rate	Institution	Notional		Market Value U.S.$
USD	DNB Bank ASA		59,077,208		(819,198	)

Note: the amount value and market value in the tables included in section 23.4.4 represent 50% of the total, reflecting the stake held by Arauco in the subsidiaries in Uruguay.

23.5 Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. In the consolidated statements of financial position they are included in line items “Cash and cash equivalents” (certain components of cash and cash equivalents), “Trade and Other Current/Non-Current Receivables” and ”Accounts receivable from related parties”.

Loans and receivables are measured at amortized cost using the effective interest method and are tested for impairment. Financial assets that are classified as loans and receivables are: cash and cash-equivalents, time deposits, repurchase agreements, trade and other current/non-current receivables, and account receivables from related parties.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of September 30, 2016, no provisions for impairment have been registered.

	September 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Loans and Accounts Receivables		962,535		1,054,952
Cash and cash equivalents		300,858		303,236
Cash		162,240		143,324
Time Deposits		138,618		159,912
Trade and other receivables (net)		661,677		751,716
Trades and Other receivables		529,278		614,655
Lease receivable		963		15
Other receivables		127,758		133,922
Accounts receivable from related parties		3,678		3,124

23.5.1. Cash and Cash Equivalents

Includes cash on hand, bank checking accounts balances and time deposits and other short term highly liquid investments with an original maturity of three months or less. They are short-term, highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value.

The composition of cash and cash equivalents (including the balance of mutual funds displayed in this note as valuation, instruments at fair value with profit or loss) at September 30, 2016 and December 31, 2015, classified by origin coins is as follow:

	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Cash and Cash Equivalents		459,668		500,025
US Dollar		382,537		388,818
Euro		3,443		2,501
Other currencies		54,094		65,228
Chilean pesos		19,594		43,478

23.5.2 Time Deposits and Repurchase Agreements: The investment objective of time deposits and repurchase agreements is to maximize in the short-term the amounts of cash surpluses. These instruments are authorized by Arauco’s Investment Policy, which allows investing in fixed income securities. These instruments have a maturity of less than three months from the date of acquisition.

23.5.3 Trades and Other Receivables: These represent enforceable rights for Arauco resulting from the normal course of the business.

23.5.4 Other Receivables: These correspond to receivables from sales, services or loans that are not considered within the normal course of the business.

The provision for doubtful accounts is presented as a deduction of trade and other receivables. The provision for doubtful accounts is established based on an analysis of the age of the portfolio and considering the insurance coverage on accounts receivable. Other conditions are assessed for example when there is objective evidence that Arauco will not receive payments under the original sale terms and when the customer is a party to a bankruptcy court agreement or cessation of payments, and is written-off when Arauco has exhausted all levels of recovery of the receivable in a reasonable time.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.5.5 Accounts receivable from related parties: Represent enforceable rights for Arauco resulting from the normal course of business, calling normal to the line of business, activity or purpose of explotation and financing, and which Arauco owns a non-controlling ownership of the counterparty.

The following table sets forth trade and other current/non-current receivables classified by currencies as of September 30, 2016 and December 31, 2015:

	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Trades and other current receivables		642,452		733,322
US Dollar		407,010		507,032
Euros		28,687		27,595
Other currencies		93,315		75,082
Chilean pesos		111,761		123,056
U.F.		1,679		557
Accounts receivable from related parties, current		3,678		3,124
US Dollar		290		21
Other currencies		506		995
Chilean pesos		2,882		2,108
Trade and other non-current receivables		15,547		15,270
US Dollar		7,642		9,976
Other currencies		768		729
Chilean pesos		5,983		3,145
U.F.		1,154		1,420

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.6 Total Financial Liabilities

Arauco’s financial liabilities to the date of these interim consolidated financial statements are as follows :

Financial Liabilities	September 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Total Financial Liabilities		5,014,707		5,123,162
Financial liabilities at fair value through profit or loss (held for trading)		430		1,429
Hedging Liabilities		106,394		226,139
Financial Liabilities Measured at Amortized Cost		4,907,883		4,895,594

The following table sets forth the current portion of the non-current bank borrowings and debt issued as of September 30, 2016 and December 31, 2015.

	September 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Bank borrowings - current portion		85,043		85,885
Bonds issued - current portion		157,508		55,193
Total		242,551		141,078

23.7 Financial Liabilities Measured at Amortized Cost

Financial liabilities correspond to non-derivative financial instruments with contractual cash-flow payments that can be either fixed or variable.

Also, this category includes those non-derivative financial liabilities for services or goods delivered to Arauco at the end of each reporting period that have not yet been paid. These amounts are not insured and are generally paid within thirty days after being recognized.

As the end of each reporting period, Arauco includes in this category bank borrowings, bonds issued denominated in U.S. Dollars and in UF, trade and other payables.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	Currency		09-30-2016		12-31-2015		09-30-2016		12-31-2015
			Unaudited				Unaudited
			Amortized Cost ThU.S.$				Fair Value ThU.S.$
Total Financial Liabilities				4,907,882		4,895,594		5,260,839		5,095,197
Bonds Issued		U.S. Dollar		2,297,123		2,317,216		2,480,063		2,409,538
Bonds Issued		U.F.		960,280		863,118		1,078,934		923,775
Bank borrowings		U.S. Dollar		936,918		953,898		991,627		1,004,792
Bank borrowings		Other currencies		21,103		43,644		21,103		43,644
Financial Leasing		Other currencies		108,588		113,580		105,752		109,796
Financial Leasing		Chilean pesos		18,542		13,979		18,033		13,493
Trades and Other Payables		U.S. Dollar		163,765		174,469		163,765		174,469
Trades and Other Payables		Euro		7,296		8,808		7,296		8,808
Trades and Other Payables		Other currencies		79,880		70,303		79,880		70,303
Trades and Other Payables		Chilean pesos		289,735		324,361		289,735		324,361
Trades and Other Payables		U.F.		17,331		5,077		17,330		5,077
Related party payables		U.S. Dollar		1,733		962		1,733		962
Related party payables		Chilean pesos		5,588		6,179		5,588		6,179

The financial liabilities at amortized cost presented in the consolidated statements of financial positions as of September 30, 2016 and December 31, 2015 are as follows:

Thousands of U.S. dollars	September 2016 Unaudited
	Current ThU.S.$		Non Current ThU.S.$		Total
Other financial liabilities		716,859		3,625,695		4,342,554
Trade and other payables		558,008		—		558,008
Related Party Payables		7,321		—		7,321
Total Financial Liabilities Measured at Amortized Cost		1,282,188		3,625,695		4,907,883
Thousands of U.S. dollars	December 2015
	Current ThU.S.$		Non Current ThU.S.$		Total
Other financial liabilities		291,798		4,013,637		4,305,435
Trade and other payables		583,018		—		583,018
Related Party Payables		7,141		—		7,141
Total Financial Liabilities Measured at Amortized Cost		881,957		4,013,637		4,895,594

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.8 Cash Flow Hedges Reserve Reconciliation

The following table sets forth the reconciliation balances of cash flow hedges presented in Other Comprehensive Income:

	January - September						July - September
	Unaudited						Unaudited
	2016			2015			2016			2015
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening balance		(55,396	)		(53,022	)		(53,315	)		(44,058	)
Fair value gains (losses) arising during the year		123,358			(114,879	)		40,383			(89,806	)
Exchange differences of bonds hedged		(90,340	)		103,497			(11,095	)		67,640
Finance costs		11,259			12,441			3,747			5,065
Settlements during the period		(10,658	)		(9,845	)		(2,539	)		(2,741	)
Deferred taxes		(8,171	)		1,732			(7,129	)		3,824
Closing balance		(29,948	)		(60,076	)		(29,948	)		(60,076	)

23.9 Capital Disclosures

23.9.1 Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco’s policies on capital management have the objective of:

a) Ensuring business continuity and normal operations in the long term;

b) Ensuring funding for new investments to achieve sustainable growth over time;

c) Keeping adequate capital structure considering all economic cycles that impact the business and the nature of the industry; and

d) Maximizing the Company’s value and providing an adequate return to shareholders.

23.9.2 Qualitative Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco determines and manages its capital structure based on its carrying amount of equity plus its financial debt (bank borrowings and bonds issued).

23.9.3 Quantitative Information on Capital Management

The following table sets forth the financial covenants that the Company has to comply with as part of the terms of certain of its obligations:

Instrument	September 2016 Unaudited Th.U.S.$		December 2015 Th.U.S.$		Interest coverage >= 2,0x	Debt level (1) <= 1,2x
Domestic bonds		960,280		863,118	N/A	ü
Syndicate Loan		300,061		298,316	ü	ü

N/R: Not required for the financial obligation

(1) Debt to equity ratio (financial debt divided by equity plus non-controlling interests)

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of September 30, 2016 and December 31, 2015, Arauco has complied with all of its financial covenants.

The following table sets forth the credit ratings of our debt instruments as of September 30, 2016, are as follows:

Instrument	Standard & Poor’s	Fitch Ratings	Moody’s	Feller Rate
Local bonds	-	AA -	-	AA -
Foreign bonds	BBB -	BBB	Baa3	-

Capitalization requirements are established based on the Company’s financial needs and on maintaining an adequate liquidity level and complying with financial covenants established in current debt arrangements. The Company manages its capital structure and makes adjustments based on the prevailing economic conditions in order to mitigate the risks associated with adverse market conditions, and based on opportunities that may arise to improve the Company’s level of liquidity.

The capitalization of Arauco as of September 30, 2016 and December 31, 2015 is as follows:

Thousands of dollars	September 2016 Unaudited		December 2015
Equity		6,931,441		6,646,445
Bank borrowings		958,021		997,542
Financial leasing		127,130		127,559
Bonds issued		3,257,403		3,180,334
Capital		11,273,995		10,951,880

23.10 Risk Management

Arauco’s financial instruments are exposed to various financial risks: credit risk, liquidity risk and market risk (including exchange rate risks, interest rate risks and price risks).

Arauco’s overall risk management program focuses on uncertainty in financial markets and aims to minimize potential adverse effects on Arauco’s financial profitability.

Arauco’s financial risk management is overseen by the Corporate Finance Department. This department identifies, assesses and hedges financial risks in close collaboration with Arauco’s operational units.

23.10.1 Type of Risk: Credit Risk

Description

Credit risk refers to financial uncertainty at different periods of time relating to the fulfillment of obligations with counterparties, at the time of exercising the contract rights to receive cash or other financial assets on behalf of Arauco.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Explanation of Credit Risk Exposure and How This Risk Arises

Arauco’s exposure to credit risk is directly related to each of its customer’s individual abilities to fulfill their contractual commitments, reflected in trade receivables.

Accounts exposed to credit of risk are: trade receivable, financial lease debtors and other debtors.

Arauco does not have a securitized portfolio.

	September 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Current Receivables
Trades receivables		527,286		614,623
Financial lease receivables		606		9
Other Debtors		114,560		118,690
Net subtotal		642,452		733,322
Trades receivables		537,755		625,201
Financial lease receivables		707		125
Other Debtors		120,581		127,856
Gross subtotal		659,043		753,182
Provision for doubtful trade receivables		10,469		10,578
Provision for doubtful lease receivables		101		116
Provision for doubtful other debtors		6,021		9,166
Subtotal Bad Debt		16,591		19,860
Non Current Receivables
Trades receivables		1,992		32
Financial lease receivables		357		6
Other Debtors		13,198		15,232
Net Subtotal		15,547		15,270
Trades receivables		1,992		32
Financial lease receivables		357		6
Other Debtors		13,198		15,232
Gross subtotal		15,547		15,270
Provision for doubtful trade receivables		—		—
Provision for doubtful lease receivables		—		—
Provision for doubtful other debtors		—		—
Subtotal Bad Debt		—		—

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

The Credit and Collections Sub-Division, dependent from the Treasury Division, is the area entrusted with minimizing the credit risk of the accounts receivable, supervising the delinquency of the accounts. The regulations and procedures applicable for the control and administration of the Arauco Group can be found in the Corporate Credit Policy.

As of September 30, 2016, Arauco’s balance for commercial Debtors was MU.S.$ 537,755 of which, according to the agreed sales conditions, 66.76% corresponded to sales on credit (open account), 29.42% to sales with letters of credit and 3.82% to other types of sales, distributed in 2,348 debtors. The client with the largest Open Account debt represented 2.32% of the total accounts receivable as of that date.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Below we provide detail regarding accounts receivable, classified in tranches.

September 30, 2016

Age of trade receivables
Days	Non-past due			1 to 30			31 to 60			61 to 90			91 to 120			121 to 150			151 to 180			181 to 210			211 to 250			More than 250			Total
ThU.S$		495,919			26,980			616			428			131			12			278			37			165			13,189			537,755
%		92.22	%		5.02	%		0.11	%		0.08	%		0.02	%		0.00	%		0.05	%		0.01	%		0.03	%		2.45	%		100	%

December 31, 2015

Age of trade receivables
Days	Non-past due			1 to 30			31 to 60			61 to 90			91 to 120			121 to 150			151 to 180			181 to 210			211 to 250			More than 250			Total
ThU.S$		571,499			18,927			2,303			2,332			363			168			1,102			1,413			1,444			25,650			625,201
%		91.41	%		3.03	%		0.37	%		0.37	%		0.06	%		0.03	%		0.18	%		0.23	%		0.23	%		4.10	%		100	%

Arauco does not conduct rescheduling or renegotiations with its clients that imply an amendment to the maturity of the invoices and, should it be necessary, any debt renegotiation with a client shall be analyzed on a case-by-case basis and subjected to the approval of the Corporate Finance Division.

Regarding the provisions from non-enforceable accounts, below we provide detail for the movements as of September 30, 2016 and December 31, 2015:

	09/30/2016 Unaudited ThU.S.$			12/31/2015 ThU.S.$
Opening balance		(19,860	)		(18,520	)
Increase		(1,263	)		(3,072	)
Reversal of impairment losses		4,532			1,732
Closing balance		(16,591	)		(19,860	)

Currently there is a policy for provisions for doubtful accounts receivable under IFRS for all the Arauco group companies.

Explanation regarding the Sales Risk with Letters of Credit

The sales with letters of credit mainly occur in markets in Asia and the Middle East. Periodically, a credit assessment is conducted regarding the banks that issue the letters of credit with the purpose of obtaining their score over the basis of risk-qualification ratings, country-specific risk and financial statements. The decision of approving the issuing bank or asking for confirmation of the letter of credit is made in consideration to this assessment.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Explanation of the Sales Risk with Letters of Credit

Sales on credit are subject to the credit limit for each customer. The approval or rejection of a credit limit for all term sales is conducted by the Corporate Credit Sub-Division, as well as by the Credit and Collections area for North America, Brazil and Argentina, which report to the Corporate Finance Division. The regulations and procedures applicable for the correct control and risk management over the sales on credit are ruled by the Credit Policy.

A procedure that must be applied by all the companies of the Arauco group has been established for the approval and/or modification of client credit lines. Credit line requests are entered to the SAP that analyzes all available information. Afterwards, the same are either approved or rejected in each one of the internal committees of each company belonging to the Arauco group, depending on the maximum amount authorized by the Credit Policy. Lines of credit are renewed during this internal process on a yearly basis.

All sales are automatically controlled by a credit verification system, which has been configured to block any orders from clients who are delinquent in a given percentage of a debt and/or from clients whose line of credit, as of the time of the product’s shipping, has been exceeded or is overdue.

In order to minimize the credit risk for term or Open Account sales, it is Arauco’s policy to take out insurance to cover the export sales of companies Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Forestal Arauco S.A., and Arauco do Brasil S.A., as well as the domestic sales of Arauco México S.A. de C.V., Arauco Wood Inc, Arauco Colombia S.A., Arauco Perú S.A., Arauco Panels USA LLC, Flakeboard Company Ltd., Flakeboard America Ltd., Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Arauco Florestal Arapoti, Arauco Forest Brasil S.A. and Arauco do Brasil S.A. Arauco works with credit insurance company Continental (AA- rating, as per risk rating companies Humphreys and Fitch Ratings). In order to cover the export sales and domestic sales of Arauco Argentina S.A., the preferred credit insurance company is Insur (a subsidiary of Continental in Argentina). Both companies grant a 90% coverage over the amount of each invoice, without deductibles, for registered clients and of 80% for non-registered clients. (Non-registered clients are those whose lines range between MU.S.$ 5 and MU.S.$ 50 (equivalent currency of their invoicing) of the local sales of companies Arauco Perú S.A., Arauco Colombia S.A., Arauco México S.A. de C.V., Arauco Do Brasil S.A., Arauco Argentina S.A. and Maderas Arauco S.A. Lines in excess of the aforesaid amounts correspond to registered clients.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As another way of minimizing risk and supporting a line of credit approved by the Credit Committee, Arauco holds guarantees such as mortgages, pledges, Standby letters of credit, bank performance bonds, checks, promissory notes, loans or any other that could be required under the laws of each country. The total amount held in guarantees amounts to US$77.1 million, effective as of September 2016, as summarized in the following chart. The procedure for guarantees is regulated by Arauco’s Policy on Guarantees, whose purpose is to control their accounting, due date and custody.

Guarantees Arauco Group ( ThU.S$)
Guarantees Debtors (received from clients)
Certificate of deposits	9,102	11.8	%
Standby	7,922	10.3	%
Promissory notes	44,470	57.7	%
Finance	4,345	5.6	%
Mortgage	8,649	11.2	%
Pledge	2,433	3.2	%
Promissory notes	200	0.3	%
Total Guarantees	77,121	100.0	%

The maximum exposure to credit risk is limited to the value at amortized cost of the Debtors’ account for sales registered as of the date of this report, minus the percentage of sales insured by the aforementioned credit insurance companies and the guarantees granted in favor of Arauco.

In summary, the open account debt covered by the various insurance policies and guarantees amounts to 98.9% and, therefore, Arauco’s portfolio exposure amounts to 1.1%.

Secured Open Account Receivables	ThU.S.$		%
Total open account receivables		259,001		100.00	%
Secured receivables(*)		355,052		98.9	%
Unsecured receivables		3,949		1.1	%

(*) Insured Debt is deemed to be the portion of accounts receivable that is covered by a credit company or by guarantees such as standby letters of credit, mortgages, performance bonds, among others

Investment Policy:

Arauco has an Investment Policy which identifies and limits the financial instruments and the entities into which the Arauco companies, in particular Celulosa Arauco y Constitucion S.A., are authorized to invest. The Company’s Treasury Department is centralized with operations in Chile. The Head Office is responsible for carrying out investments, cash flow surplus investments, and short and long term debt subscriptions. Exceptions to this rule are specific investments made through other companies where authorization is required from the Chief Financial Officer.

For financial instruments, the only permitted investments are fixed income investments with adequate liquidity. Each instrument has defined classifications and limits, depending on duration and type of issuer.

Regarding intermediaries (such as banks, securities brokers and dealers of mutual funds that are bank affiliates), a scoring methodology is used to determine the relative degree of risk of each intermediary based on their financial position and assign score points that result in a credit risk rating to each intermediary. Arauco uses this scoring system to determine its investment limits for each intermediary.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The required information to evaluate the various criteria are obtained from published financial statements from the banks under evaluation and from the credit risk ratings of short and long term debt securities obtained from rating agencies authorized by the Superintendency of Banks and Financial Institutions (Fitch Ratings Chile, Humphreys and Feller Rate).

The criteria evaluated are: Capital and Reserves, Current Ratio, Return on equity, Net Income to Operating income Ratio, Debt to Equity Ratio and the Credit Risk rating of each entity.

Any necessary exceptions regarding investment limits in each particular instrument or entity must have the authorization from Arauco’s Chief Financial Officer.

23.10.2 Type of Risk: Liquidity Risk

Description

This risk corresponds to Arauco’s ability to fulfill its financial obligations upon maturity.

Explanation of Liquidity Risk Exposure and How This Risk Arises

Arauco’s exposure to liquidity risk is mainly from its obligations to bondholders, banks and financial institutions, creditors and other payables. Liquidity risk may arise if Arauco is unable to meet the net cash flow requirements, which sustain its operations under both normal and exceptional circumstances.

Explanation of Objectives, Policies and Processes for Risk Management, and Measurement Methods

The Financial Management Department monitors on an ongoing basis the Company’s cash flow forecasts based on short and long term forecasts and available financing alternatives. In order to manage the risk level of financial assets, Arauco follows its investment policy.

104

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following tables detail Arauco’s liquidity analysis for its financial liabilities as of September 30, 2016 and December 31, 2015. The tables have been drawn up based on the contractual undiscounted cash outflows and their remaining contractual maturities:

September 30, 2016						Maturity														Total
Tax ID	Name		Currency		Name- Country Loans with banks	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate		Nominal rate
93.458.000-1		Celulosa Arauco y Constitución S.A.		U.S. Dollar	Scotiabank- Chile		1,290		—		304,590		—		—		—		—		1,290		304,590		1.53%		1.53%
93.458.000-1		Celulosa Arauco y Constitución S.A.		U.S. Dollar	Scotiabank- Chile		50,031		—		—		—		—		—		—		50,031		—		0.69%		0.69%
—		Arauco Argentina S.A.		U.S. Dollar	Banco Galicia- Argentina		—		5,006		—		—		—		—		—		5,006		—		2.00%		2.00%
—		Arauco Argentina S.A.		Argentine Pesos	Banco Macro- Argentina		11		32		10		—		—		—		—		43		10		15.25%		15.25%
—		Arauco Argentina S.A.		Argentine Pesos	Banco Galicia- Argentina		64		—		—		—		—		—		—		64		—		15.25%		15.25%
—		Zona Franca Punta Pereira		U.S. Dollar	Interamerican Development Bank		13		2,065		2,457		2,395		2,334		2,269		4,331		2,078		13,786		Libor + 2,05%		Libor + 2,05%
—		Zona Franca Punta Pereira		U.S. Dollar	Interamerican Development Bank		23		5,574		6,029		5,866		5,702		—		—		5,597		17,597		Libor + 1,80%		Libor + 1,80%
—		Zona Franca Punta Pereira		U.S. Dollar	BBVA		—		16,046		—		—		—		—		—		16,046		—		3.23%		Libor + 2%
—		Zona Franca Punta Pereira		U.S. Dollar	Citibank		2,520		—		—		—		—		—		—		2,520		—		2.95%		Libor + 2%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Finnish Export Credit		411		43,181		51,601		50,701		50,101		48,239		70,905		43,592		271,547		3.20%		3.20%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Interamerican Development bank		52		8,355		9,923		9,670		9,418		9,145		17,494		8,407		55,650		Libor + 2,05%		Libor + 2,05%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Interamerican Development bank		86		22,543		24,372		23,709		23,047		—		—		22,629		71,128		Libor + 1,80%		Libor + 1,80%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Dnb Nor Bank		13		—		—		—		—		—		—		13		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco Republica Oriental de Uruguay		12,695		24,501		—		—		—		—		—		37,196		—		Libor + 1,75%		Libor + 1,75%
—		Eufores S.A.		U.S. Dollar	Citibank		11		—		—		—		—		—		—		11		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco HSBC- Uruguay		1,202		—		—		—		—		—		—		1,202		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco Itau - Uruguay		5,042		10,060		—		—		—		—		—		15,102		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Heritage		1,351		—		—		—		—		—		—		1,351		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco Santander		—		20,071		—		—		—		—		—		20,071		—		Libor + 2,00%		Libor + 2,00%
—		Arauco Do Brasil S.A.		Brazilian Real	Banco ABC - Brazil		7		20		4		—		—		—		—		27		4		2.50%		2.50%
—		Arauco Do Brasil S.A.		Brazilian Real	Banco Bradesco		—		450		—		—		—		—		—		450		—		9.50%		9.50%
—		Arauco Do Brasil S.A.		Brazilian Real	Banco do Brasil		29		—		—		—		—		—		—		29		—		8.70%		8.70%
—		Arauco Do Brasil S.A.		U.S. Dollar	Banco JP Morgan		5,092		—		—		—		—		—		—		5,092		—		2.05%		2.05%
—		Arauco Do Brasil S.A.		Brazilian Real	Banco Votorantim		13		38		—		—		—		—		—		51		—		5.50%		5.50%
—		Arauco Do Brasil S.A.		Brazilian Real	Banco Santander		2		20		91		91		69		—		—		22		251		9.34%		9.34%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Itau		2		7		3		—		—		—		—		9		3		2.50%		2.50%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Itau		14		39		52		17		—		—		—		53		69		3.50%		3.50%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Bradesco		11		33		44		44		4		—		—		44		92		6.00%		6.00%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Bradesco		—		393		—		—		—		—		—		393		—		8.75%		8.75%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Votorantim		8		—		—		—		—		370		370		8		740		5.00%		5.00%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Safra		23		66		88		44		—		—		—		89		132		6.00%		6.00%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Safra		8		21		27		27		27		18		—		29		99		10.00%		10.00%
—		Arauco Florestal Arapoti S.A.		Brazilian Real	Banco Santander		15		20		34		34		30		—		—		35		98		9.22%		9.22%
—		Arauco Forest Brasil S.A.		Brazilian Real	Banco Bradesco		20		60		77		44		—		—		—		80		121		5.91%		5.91%
—		Arauco Forest Brasil S.A.		Brazilian Real	Banco Bradesco		394		—		—		—		—		—		—		394		—		8.75%		8.75%
—		Arauco Forest Brasil S.A.		Brazilian Real	Banco Itau -Brazil		4		12		5		—		—		—		—		16		5		2.50%		2.50%
—		Arauco Forest Brasil S.A.		Brazilian Real	Banco Votorantim - Brazil		188		521		694		578		—		328		328		709		1,928		8.59%		8.59%
—		Arauco Forest Brasil S.A.		U.S. Dollar	Banco Votorantim - Brazil		35		101		134		112		—		—		—		136		246		7.44%		7.44%
—		Arauco Forest Brasil S.A.		Brazilian Real	Banco Bndes Subcrédito A-B-D		3		—		—		—		—		460		460		3		920		9.82%		9.82%
—		Arauco Forest Brasil S.A.		U.S. Dollar	Banco Bndes Subcrédito C		4		—		—		—		—		132		160		4		292		7.05%		7.05%
—		Arauco Forest Brasil S.A.		Brazilian Real	Banco Santander		11		17		41		41		16		—		—		28		98		9.32%		9.32%
—		Arauco Forest Brasil S.A.		Brazilian Real	Banco John Deere		60		103		—		—		—		—		—		163		—		6.00%		6.00%
—		Mahal Emprendimientos Pat. S.A.		Brazilian Real	Bndes Subcrédito E-I		21		—		—		3,031		3,031		—		—		21		6,062		8.91%		8.91%
—		Mahal Emprendimientos Pat. S.A.		Brazilian Real	Bndes Subcrédito F-J		14		—		—		1,819		1,819		—		—		14		3,638		9.91%		9.91%
—		Mahal Emprendimientos Pat. S.A.		U.S. Dollar	Bndes Subcrédito G-K		61		—		—		1,867		2,037		168		—		61		4,072		7.05%		7.05%
—		Mahal Emprendimientos Pat. S.A.		Brazilian Real	Bndes Subcrédito H-L		19		—		—		2,020		2,020		—		—		19		4,040		11.11%		11.11%
					Total		80,873		159,355		400,276		102,110		99,655		61,129		94,048		240,228		757,218

105

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

September 30, 2016				Maturity														Total
Tax ID	Name	Currency	Name - Country Bonds	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate			Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		4,889		—		11,733		23,967		35,399		34,333		248,763		4,889		354,195		4.21	%		4.21	%
93.458.000-2	Celulosa Arauco y Constitución S.A.	UF	Barau-J		—		535		6,424		6,424		6,424		199,165		—		535		218,437		3.23	%		3.22	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-P		2,960		—		7,893		7,893		7,893		7,893		249,581		2,960		281,153		3.96	%		3.96	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		1,187		—		22,314		21,720		21,127		20,533		—		1,187		85,694		2.96	%		2.98	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-R		3,555		—		7,110		7,110		7,110		7,110		297,795		3,555		326,235		3.57	%		3.57	%
—	Arauco Argentina S.A.	U.S. Dollar	Bono 144 A - Argentina		—		274,960		—		—		—		—		—		274,960		—		6.39	%		6.38	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2019		—		6,142		36,250		36,250		497,811		—		—		6,142		570,311		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2nd Emission		—		125,323		—		—		—		—		—		125,323		—		7.50	%		7.50	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2021		—		3,889		20,000		20,000		20,000		406,721		—		3,889		466,721		5.02	%		5.00	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2022		—		5,278		23,750		23,750		23,750		23,750		504,547		5,278		599,547		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2024		—		3,750		22,500		22,500		22,500		22,500		569,327		3,750		659,327		4.52	%		4.50	%
			Total		12,591		419,877		157,974		169,614		642,014		722,005		1,870,013		432,468		3,561,620

September 30, 2016				Maturity														Total
Tax ID	Name	Currency	Name - Country Lease	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate	Nominal rate
85.805.200-9	Forestal Arauco S.A.	UF	Banco Santander		303		1,877		634		634		676		676		—		2,180		2,620	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,746		4,843		4,181		4,181		2,170		2,170		—		6,589		12,702	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		687		2,013		2,596		2,596		1,349		1,349		—		2,700		7,890	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		3,577		12,081		9,360		9,360		5,489		5,489		—		15,658		29,698	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,753		5,919		2,938		2,938		103		103		—		7,672		6,082	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		960		2,936		3,653		3,653		1,797		1,798		—		3,896		10,901	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		502		546		348		348		—		—		—		1,048		696	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		447		1,340		1,351		1,351		575		575		—		1,787		3,852	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Credito e Inversiones		658		1,975		2,573		2,573		1,690		1,690		—		2,633		8,526	—	—
			Total		10,633		33,530		27,634		27,634		13,849		13,850		—		44,163		82,967

As part of the policy of Arauco, it considers compliance with all Accounts Payable, whether with related (see Note 13) or third parties, within a period not exceeding 30 days.

106

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AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

December 31, 2015				Maturity														Total
Tax ID	Name	Currency	Name - Country Loans with banks	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate		Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Scotiabank- Chile		—		25		4,638		301,770		—		—		—		25		306,408		1.53%		Libor +0,70%
—	Arauco Argentina S.A.	Argentine Pesos	Banco Macro- Argentina		—		49		48		—		—		—		—		49		48		15.25%		15.25%
—	Arauco Argentina S.A.	Argentine Pesos	Banco Galicia- Argentina		—		307		—		—		—		—		—		307		—		15.25%		15.25%
—	Zona Franca Punta Pereira S.A.	U.S. Dollar	Interamerican Development Bank		1,163		1,023		2,450		2,396		2,343		2,289		6,514		2,186		15,992		Libor + 2,05%		Libor + 2,05%
—	Zona Franca Punta Pereira S.A.	U.S. Dollar	Interamerican Development Bank		166		2,777		6,076		5,934		5,794		5,652		—		2,943		23,456		Libor + 1,80%		Libor + 1,80%
—	Zona Franca Punta Pereira S.A.	U.S. Dollar	Banco Santander		20,013		—		—		—		—		—		—		20,013		—		Libor + 2,00%		Libor + 2,00%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Finnish Export Credit		25,810		20,354		52,288		51,368		50,477		49,694		118,826		46,164		322,653		3.20%		3.20%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Interamerican Development bank		4,706		4,126		9,900		9,680		9,460		9,242		26,298		8,832		64,580		Libor + 2,05%		Libor + 2,05%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Interamerican Development bank		675		11,220		24,566		23,991		23,417		22,843		—		11,895		94,817		Libor + 1,80%		Libor + 1,80%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Dnb Nor Bank		—		245		—		—		—		—		—		245		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco BBVA - Uruguay		16,115		—		—		—		—		—		—		16,115		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco Republica Oriental de Uruguay		16,689		18,555		—		—		—		—		—		35,244		—		Libor + 1,75%		Libor + 1,75%
—	Eufores S.A.	U.S. Dollar	Citibank		—		2,514		—		—		—		—		—		2,514		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco HSBC- Uruguay		1,201		—		—		—		—		—		—		1,201		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco Itau -Uruguay		5,065		5,004		—		—		—		—		—		10,069		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Heritage		1,357		—		—		—		—		—		—		1,357		—		Libor + 2,00%		Libor + 2,00%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco ABC		5		17		20		—		—		—		—		22		20		2.50%		2.50%
—	Arauco Do Brasil S.A.	U.S. Dollar	Banco Bradesco		831		—		—		—		—		—		—		831		—		1.80%		1.80%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Bradesco		3,960		1,256		—		—		—		—		—		5,216		—		8.75%		8.75%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco do Brasil - Brazil		23		72		—		—		—		—		—		95		—		8.70%		8.70%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco HSBC- Brazil		7,779		—		—		—		—		—		—		7,779		—		8.00%		8.00%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Itau -Brazil		47		43		—		—		—		—		—		90		—		8.43%		8.43%
—	Arauco Do Brasil S.A.	U.S. Dollar	Banco JP Morgan		7,912		4,356		—		—		—		—		—		12,268		—		1.71%		1.71%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Votorantim - Brazil		19		38		32		—		—		—		—		57		32		6.30%		6.30%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Santander		12,881		3		37		76		75		39		—		12,884		227		8.00%		8.00%
—	Arauco Do Brasil S.A.	Brazilian Real	Fundo de Desenvolvimiento Econom. - Brazil		7		27		7		—		—		—		—		34		7		0.00%		0.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		3		6		8		1		—		—		—		9		9		2.50%		2.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		12		31		43		43		3		—		—		43		89		3.50%		3.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Bradesco		11		27		37		37		31		—		—		38		105		6.00%		6.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Votorantim		—		14		—		—		—		—		617		14		617		5.00%		5.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		19		55		73		73		18		—		—		74		164		6.00%		5.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		6		17		23		23		23		24		9		23		102		10.00%		10.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		4		24		27		27		27		13		—		28		94		9.22%		9.22%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bradesco		—		66		—		—		—		144		—		66		144		7.81%		7.81%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bradesco		307		—		—		—		—		—		—		307		—		12.11%		12.11%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Itau -Brazil		9		13		—		86		14		—		—		22		100		5.52%		5.52%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Votorantim - Brazil		—		285		—		—		—		1,474		546		285		2,020		9.31%		9.31%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Votorantim - Brazil		—		62		—		—		—		347		—		62		347		9.00%		9.00%
—	Arauco Forest Brasil S.A.	Brazilian Real	Bndes		—		3		—		—		—		—		757		3		757		4.61%		4.61%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Bndes		—		4		—		—		—		6		289		4		295		10.80%		10.80%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Santander		—		16		—		—		—		96		—		16		96		9.50%		9.50%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco John Deere		—		207		—		—		—		—		—		207		—		6.00%		6.00%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito E-I		—		19		—		622		2,492		1,870		—		19		4,984		9.91%		9.91%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito F-J		—		12		—		374		1,496		1,122		—		12		2,992		10.91%		10.91%
—	Mahal Emprendimientos Pat. S.A.	U.S. Dollar	Bndes Subcrédito G-K		—		61		—		511		2,037		1,528		—		61		4,076		6.99%		6.99%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito H-L		—		15		—		444		1,646		1,233		—		15		3,323		12.11%		12.11%
			Total		126,795		72,948		100,273		397,456		99,353		97,616		153,856		199,743		848,554

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

December 31,2015				Maturity														Total
Tax ID	Name	Currency	Name - Country Bonds	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate			Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		—		1,771		10,625		10,625		32,403		31,438		239,473		1,771		324,564		4.24	%		4.25	%
93.458.000-2	Celulosa Arauco y Constitución S.A.	UF	Barau-J		1,939		—		5,818		5,818		5,818		186,141		—		1,939		203,595		3.23	%		3.22	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-P		—		913		7,147		7,147		7,147		7,147		229,723		913		258,311		3.96	%		3.96	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		—		538		11,266		19,979		19,442		18,905		9,251		538		78,843		2.96	%		2.98	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-R		—		1,610		6,439		6,439		6,439		6,439		272,750		1,610		298,506		3.57	%		3.57	%
—	Arauco Argentina S.A.	U.S. Dollar	Bono 144 A - Argentina		—		1,004		277,869		—		—		—		—		1,004		277,869		6.39	%		6.38	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2019		15,205		—		36,250		36,250		533,483		—		—		15,205		605,983		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2nd Emission		2,734		—		134,257		—		—		—		—		2,734		134,257		7.50	%		7.50	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2021		8,889		—		20,000		20,000		20,000		20,000		406,108		8,889		486,108		5.02	%		5.00	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2022		11,215		—		23,750		23,750		23,750		23,750		527,255		11,215		622,255		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2024		9,375		—		22,500		22,500		22,500		22,500		590,928		9,375		680,928		4.52	%		4.50	%
			Total		49,357		5,836		555,921		152,508		670,982		316,320		2,275,488		55,193		3,971,219

December 31, 2015				Maturity														Total
Tax ID	Name	Currency	Name - Country Lease	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate		Nominal rate
85.805.200-9	Forestal Arauco S.A.	UF	Banco Santander		338		904		650		650		3,362		—		—		1,242		4,662		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,303		4,370		4,875		4,875		6,059		—		—		5,673		15,809		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		361		1,160		1,471		1,471		1,957		—		—		1,521		4,899		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		4,026		11,489		11,301		11,301		12,650		—		—		15,515		35,252		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,814		5,344		4,490		4,490		3,374		—		—		7,158		12,354		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		557		1,672		2,129		2,129		3,008		—		—		2,229		7,266		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		172		517		575		576		—		—		—		689		1,151		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		262		704		824		824		365		—		—		966		2,013		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Credito e Inversiones		468		1,401		1,834		1,834		3,623		—		—		1,869		7,291		—		—
			Total		9,301		27,561		28,149		28,150		34,398		—		—		36,862		90,697

As part of the policy of Arauco, it considers compliance with all Accounts Payable, whether with related (see Note 13) or third parties, within a period not exceeding 30 days.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Guarantees

As of the date of these interim consolidated financial statements, Arauco has financial assets of approximately U.S.$58 million that have been pledged to third parties (beneficiaries), as direct guarantee. If Arauco does not fulfill its obligations, the guarantors could execute the guarantees.

As of September 30, 2016, the total assets pledged as an indirect guarantee were U.S.$783 million. In contrast to direct guarantees, indirect guarantees are given to secure obligations assumed by a third party.

On September 29, 2011, Arauco entered into a Security Agreement under which it granted a non-joint guarantee limited to 50% of the obligations of the Uruguayan companies (joint ventures) Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A., under the IDB Facility Agreement in the amount of up to U.S.$454 million and the Finnevera Guaranteed Facility Agreement in the amount of up to U.S.$900 million. Both loan agreements were signed with the International Development Bank. Such guarantee is included in the table below, under indirect guarantees.

Direct and indirect guarantees granted by Arauco:

DIRECT

Subsidiary	Guarantee	Assets Pledged	Currency	ThU.S.$	Guarantor
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	488	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	313	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	230	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	209	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	115	Directorate General of Maritime Territory and Merchant Marine
Arauco Forest Brasil S.A.	Mortgage Industrial Plant of Jaguariaíva of Arauco do Brasil	—	U.S. Dollar	47,228	BNDES
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	743	Bank John Deere S.A.
Arauco Forest Brasil S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	657	Bank Votorantim S.A.
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	137	BNDES
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	99	Bank Bradesco S.A.
Arauco do Brasil S.A.	Endorsement of ADB + Guarantee Letter AISA	—	U.S. Dollar	3,647	Bank Votorantim S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	461	Banco do Brasil S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	216	Bank Santander S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	205	Bank Votorantim S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	107	Bank ABC Brasil S.A.
Arauco Florestal Arapoti S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	749	Bank Votorantim S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	401	Bank Safra S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	207	Bank Itaú BBA S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	483	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	323	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	221	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	121	CODELCO S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	121	CODELCO S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	99	Minera Spence S.A
		Total		57,580
INDIRECT
Subsidiary	Guarantee	Assets Pledged	Currency	ThU.S.$	Guarantor
Celulosa Arauco y Constitución S.A.	Suretyship not supportive and cumulative	—	U.S. Dollar	494,468	Joint Ventures (Uruguay)
Celulosa Arauco y Constitución S.A.	Full Guarantee	—	U.S. Dollar	270,000	Arauco Argentina (bondholders)
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	U.S. Dollar	4,362	Arauco Forest Brasil y Mahal (Brazil))
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Brazilian Real	14,659	Arauco Forest Brasil y Mahal (Brazil)
		Total		783,489

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.10.3 Type of Risk: Market Risk – Exchange Rate

Description

Market risk arises from the probability of being affected by losses from fluctuations in currencies exchange rates in which assets and liabilities are denominated, in a functional currency other than the functional currency of Arauco.

Explanation of Currency Risk Exposure and How This Risk Arises

Arauco is exposed to the foreign currency risk from currency fluctuations arising from sales, purchases and obligations undertaken in foreign currencies, such as the Chilean Peso, Euro, Brazilian Real or other foreign currencies. In the case of significant exchange rate variations, the Chilean Peso is the currency that represents the main currency risk. See Note 11 for details assets and liabilities classified by currency.

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

Arauco performs sensitivity analyses to measure the currency risk over the EBITDA and Net Income.

Sensitivity analysis considers a variation of +/- 10% of the exchange rate over the Chilean Peso. This fluctuation range is considered possible given current market conditions as of the date of these financial statements. With all other variables at a constant rate, a U.S. Dollar exchange rate variation of +/- 10% in relation to the Chilean Peso would mean a change in the net income after tax +/- 1.75% (equivalent to ThU.S.$ +/- 5.1), and +/- 0.05% of equity (equivalent to ThU.S.$ +/- 3.0).

Additionally, a sensitivity analysis is carried out assuming a variation of +/- 10% in the closing exchange rate on the Brazilian Real, which is considered a possible range of fluctuation given the market conditions as of the date of these financial statements. With all the other variables constant, a variation of +/- 10% in the exchange rate of the dollar on the Brazilian Real would mean a variation on the net income after tax +/- 0.25% (equivalent to ThU.S.$707) and a change on the equity of +/- 0.01% (equivalent to ThU.S.$424).

23.10.4 Type of Risk: Market Risk – Interest rate risk

Description

Interest rate risk refers to the sensitivity of the value of financial assets and liabilities in terms of interest rate fluctuations.

Explanation of Interest Rate Risk Exposure and How This Risk Arises

Arauco is exposed to risks due to interest rate fluctuations for bonds issued, bank borrowings and financial instruments that bear interest at a variable rate.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

Arauco completes its risk analysis by reviewing its exposure to changes in interest rates. As of September 30, 2016, 13% our financial debt accrues interest at variable rates. A change of +/- 10% in the interest rate is considered a possible range of fluctuation. Such market conditions would affect the income after tax at rate of +/- 0.71% (equivalent to ThU.S.$-/+ 2.0) and +/- 0.02% (equivalent to ThU.S.$-/+ 1.2) on equity.

Thousands of dollars	September 2016 Unaudited		Total
Fixed rate		3,768,733		86.8	%
Bonds issued		3,257,403
Bank borrowings (*)		384,200
Financial leasing		127,130
Variable rate		573,821		13.2	%
Bonds issued		0
Loans with Banks		573,821
Total		4,342,554		100.0	%
Thousands of dollars	December 2015		Total
Fixed rate		3,689,719		85.7	%
Bonds issued		3,180,334
Bank borrowings (*)		381,826
Financial leasing		127,559
Variable rate		615,716		14.3	%
Bonds issued		0
Loans with Banks		615,716
Total		4,305,435		100.0	%

(*) Includes variable rate bank borrowings changed by fixed rate swaps.

23.10.5 Type of Risk: Market Risk – Price of Pulp Risks

Description

Pulp prices are determined by world and regional market conditions. Prices fluctuate based on demand, production capacity, commercial strategies adopted by large-scale forestry companies, pulp and paper producers and by the availability of substitutes.

Explanation of Price Risk Exposure and How This Risk Arises

Pulp prices are reflected in revenue from sales and directly affect the net income for the period.

As of September 30, 2016, revenue due to pulp sales accounted for 44.9% of total sales. Pulp prices are fixed on a monthly basis in accordance with the market. Forward contracts or other financial instruments are not used for pulp sales.

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

This risk is approached in different ways. Arauco has a team of specialists who perform periodic market and competition analyses, providing tools to analyze and evaluate trends and adjust forecasts. Similarly, Arauco performs price financial sensitivity analysis in order to take the necessary safeguards to confront different scenarios in the best possible manner.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Sensitivity analysis considers a variation of +/- 10% in the average pulp price, a possible fluctuation range given current market conditions at the date of the closing balance. With all other variables constant, a variation of +/- 10% in the average pulp price would mean an EBITDA annual variation of 4.33% (equivalent to MU.S.$ 47.22), on the income after tax and +/- 11,02% (equivalent to MU.S.$35.3) and +/- 0.34% (equivalent to MU.S.$21.2) on equity.

NOTE 24. OPERATING SEGMENTS

The main products that generate revenue for each operating segment are described as follows:

• Pulp: The main products sold by this operating segment are long fiber bleached pulp (BSKP), short fiber bleached pulp (BHKP), long fiber raw pulp (UKP), and pulp fluff.

• Timber: The range of products sold by this operating segment are plywood panels, MDF panels (medium density fiberboard), Hardboard Panels, PB Panels (agglomerated different sizes of sawn wood and remanufactured products such as moldings, precut pieces and finger joints.

The Wood segment was created following the merger of the companies indicated in Note 14, which resulted in the merger of the previous sawmills and boards segments. Disclosures made as of September 30, 2015, have been reformulated for comparative purposes.

• Forestry: This operating segment produces and sells sawn logs, pulpable logs, posts and chips made from owned forests of Radiata and Taeda pine, eucalyptus globulus and nitens forests. Additionally, purchases logs and woodchip from third parties, which it sells to its other operating segment.

Pulp

The Pulp operating segment uses wood exclusively from pine and eucalyptus plantations for the production of different classes of wood cellulose or pulp. Bleached pulp is mainly used as raw material for producing printing and writing paper, as well as toilet paper and high quality wrapping paper. Unbleached pulp is used to produce packing paper, filters, fiber cement products, dielectric paper and others. On the other hand, fluff pulp is mainly used in the production of diapers and female hygiene products.

Arauco has seven plants, five in Chile, one in Argentina and one in Uruguay and they have a total production capacity of approximately 3.9 million tons per year. Pulp is sold in more than 45 countries, mainly in Asia and Europe.

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Timber

The Panels operating segment produces a wide range of panel products and several kinds of moldings aimed at the furniture, decoration and construction industries. It consists of 17 industrial plants: 5 in Chile, 2 in Argentina, 2 in Brazil, and 8 plants around USA and Canada. The Company has a total annual production capacity of 6.7 million cubic meters of PBO, MDF, Hardboards, plywood and moldings.

The Sawn Timber operating segment produces a wide range of wood and remanufactured products with different kinds of uses and appearances, which include a wide variety of uses in the furniture, packing, construction and refurbishing industries.

With 9 saw mills in operation (8 in Chile and 1 in Argentina), the Company has a production capacity of 3 million cubic meters of sawn wood.

Furthermore, the Company has 5 remanufacturing plants, 4 in Chile and 1 in Argentina. These plants reprocess sawn wood and produce high quality remanufactured products, such as finger joint and solid moldings as well as precut pieces.

Forestry

The Forestry operating segment is Arauco’s core business. It provides raw materials for all products manufactured and sold by the Company. By directly controlling the growth of the forests to be processed, Arauco guarantees itself quality wood for each of its products.

Arauco holds forestry assets distributed throughout Chile, Argentina, Brazil and Uruguay, reaching 1.7 million hectares, of which 1 million hectares are used for plantations, 409 thousand hectares for native forests, 190 thousand hectares for other uses and 63 thousand hectares are to be planted.

Arauco’s principal plantations consist of radiata and taeda pine and eucalyptus to a lesser degree. These are species that have fast growth rates and short harvest cycles compared with other long fiber commercial woods.

Arauco has no customers representing 10% or more of its revenues.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Below, please find summarized information concerning the assets, liabilities and profits and losses at the end of each period, by segments. The profit (loss) of each segment informed takes into consideration that taxes and income and financial costs have not been allocated to the various segments, and are shown as part of the Corporate’s segment:

Period ended September 30, 2016 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		1,588,710		68,976		1,865,010			18,085			—			3,540,781			—			3,540,781
Revenues from transactions with other operating segments		31,155		802,896		5,128			24,810			—			863,989			(863,989	)		—
Finance income												25,759			25,759						25,759
Finance costs												(200,455	)		(200,455	)					(200,455	)
Net finance costs												(174,696	)		(174,696	)					(174,696	)
Depreciation and amortizations		176,355		14,927		103,839			1,925			4,741			301,787						301,787
Sum of significant income accounts		88		152,840		243			—			—			153,171						153,171
Sum of significant expense accounts		—		2,669		12,007			—			—			14,676						14,676
Profit (loss) of each reportable segment		244,782		69,610		120,543			(2,754	)		(290,370	)		141,811						141,811
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates												12,170			12,170						12,170
Joint ventures						(180	)					2,013			1,833						1,833
Income tax expense						—						(57,394	)		(57,394	)					(57,394	)
Geographical information on revenues
Revenue – Chilean entities		1,293,961		34,873		946,635			480						2,275,949						2,275,949
Revenue – Foreign entities		294,749		34,103		918,375			17,605						1,264,832						1,264,832
Total Ordinary Income		1,588,710		68,976		1,865,010			18,085						3,540,781						3,540,781

114

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Period ended September 30, 2016 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$		Total ThU.S.$
Amounts of additions to non-current assets
Acquisition of property, plant and equipment and biological assets		137,323		139,121		68,344		1,494		1,919		348,201		—		348,201
Acquisition and contribution of investments in associates and joint venture		—		—		153,135		—		—		153,135		—		153,135

Period ended September 30, 2016	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,076,019		5,540,702		2,493,845		32,615		745,596		13,888,777		(40,524	)		13,848,253
Segments assets (excluding deferred tax assets)		5,076,019		5,540,702		2,493,845		32,615		741,667		13,884,848		(40,524	)		13,844,324
Deferred tax assets										3,929		3,929		—			3,929
Investments accounted through equity method
Associates		—		156,335		—		—		105,957		262,292					262,292
Joint Ventures		—		—		157,236		—		18,966		176,202					176,202
Segment liabilities		292,808		146,788		295,967		11,827		6,169,422		6,916,812					6,916,812
Segments liabilities (excluding deferred tax liabilities)		292,808		146,788		295,967		11,827		4,532,587		5,279,977					5,279,977
Deferred tax liabilities		—		—		—		—		1,636,835		1,636,835					1,636,835
Geographical information on non-current assets
Chile		2,551,791		3,542,015		730,579		125		132,769		6,957,279		(3,592	)		6,953,687
Foreign countries		1,743,932		1,515,327		988,539		23,250		27,919		4,298,967		—			4,298,967
Non-current assets, Total		4,295,723		5,057,342		1,719,118		23,375		160,688		11,256,246		(3,592	)		11,252,654

115

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Quarter July-September 2016 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		521,428		21,925		638,065			6,052			—			1,187,470			—			1,187,470
Revenues from transactions with other operating segments		11,026		247,785		2,008			8,094			—			268,913			(268,913	)		—
Finance income												7,862			7,862						7,862
Finance costs												(64,685	)		(64,685	)					(64,685	)
Net finance costs												(56,823	)		(56,823	)					(56,823	)
Depreciation and amortizations		57,626		5,411		37,551			600			1,582			102,770						102,770
Sum of significant income accounts		0		45,805		100			0			0			45,905						45,905
Sum of significant expense accounts		0		2,669		655			0			0			3,324						3,324
Profit (loss) of each reportable segment		77,226		969		47,227			(1,037	)		(92,961	)		31,424						31,424
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates												3,384			3,384						3,384
Joint ventures						(21	)					609			588						588
Income tax expense												(17,842	)		(17,842	)					(17,842	)
Geographical information on revenues
Revenue – Chilean entities		416,910		8,348		318,165			164						743,587						743,587
Revenue – Foreign entities		104,518		13,577		319,900			5,888						443,883						443,883
Total Ordinary Income		521,428		21,925		638,065			6,052						1,187,470						1,187,470

116

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Quarter July-September 2016 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Amounts of additions to non-current assets (*)
Acquisition of property, plant and equipment and biological assets		61,913			42,547			23,674			226			646			129,006			—		129,006
Acquisition and contribution of investments in associates and joint venture																						—
Segment Cash Flows
Cash Flows from (used in) Operating Activities		91,728			63,979			108,411			(1,095	)		(119,368	)		143,655					143,655
Cash flows (used in) investing activities		(62,244	)		(41,423	)		(25,066	)		(226	)		4,087			(124,872	)				(124,872	)
Cash flows from (used in) Financing Activities		(63,058	)		19,777			(282	)		0			(35,731	)		(79,294	)				(79,294	)
Net increase (decrease) in Cash and Cash Equivalents		(33,574	)		42,333			83,063			(1,321	)		(151,012	)		(60,511	)				(60,511	)

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Period ended September 30, 2015 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$		Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		1,794,026		88,325		2,031,729			25,871		—			3,939,951			—			3,939,951
Revenues from transactions with other operating segments		33,263		389,431		8,161			24,705		—			455,560			(455,560	)		—
Finance income											35,069			35,069						35,069
Finance costs											(193,788	)		(193,788	)					(193,788	)
Net finance costs											(158,719	)		(158,719	)					(158,719	)
Depreciation and amortizations		171,467		13,547		105,846			2,952		5,075			298,887						298,887
Sum of significant income accounts		124		149,063		4,578			—		—			153,765						153,765
Sum of significant expense accounts		—		34,970		—			—		—			34,970						34,970
Profit (loss) of each reportable segment		355,845		76,772		219,102			1,240		(374,375	)		278,584						278,584
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates											920			920						920
Joint ventures						(293	)				628			335						335
Income tax expense											(103,558	)		(103,558	)					(103,558	)
Geographical information on revenues
Revenue – Chilean entities		1,471,361		51,503		1,024,472			1,275					2,548,611						2,548,611
Revenue – Foreign entities		322,665		36,822		1,007,257			24,596					1,391,340						1,391,340
Total Ordinary Income		1,794,026		88,325		2,031,729			25,871					3,939,951						3,939,951

Period ended September 30, 2015	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$		Total ThU.S.$
Amounts of additions to non-current assets (*)
Acquisition of property, plant and equipment and biological assets		163,001		142,396		76,185		1,402		2,290		385,274		—		385,274
Acquisition and contribution of investments in associates and joint venture																—

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Year ended December 31, 2015 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,172,095		5,471,322		2,374,134		31,679		669,703		13,718,933		(48,542	)		13,670,391
Segments assets (excluding deferred tax assets)		5,172,095		5,471,322		2,374,134		31,679		665,968		13,715,198		(48,542	)		13,666,656
Deferred tax assets										3,735		3,735					3,735
Investments accounted through equity method
Associates				121,359		—		—		119,781		241,140					241,140
Joint Ventures				—		3,573		—		20,099		23,672					23,672
Segment liabilities		318,880		147,432		269,963		11,526		6,276,145		7,023,946					7,023,946
Segments liabilities (excluding deferred tax liabilities)		318,880		147,432		269,963		11,526		4,657,133		5,404,934					5,404,934
Deferred tax liabilities										1,619,012		1,619,012					1,619,012
Geographical information on non-current assets
Chile		2,565,307		3,536,372		758,936		30		128,185		6,988,830		(2,955	)		6,985,875
Foreign countries		1,782,286		1,313,685		735,924		23,406		142,803		3,998,104		—			3,998,104
Non-current assets, Total		4,347,593		4,850,057		1,494,860		23,436		270,988		10,986,934		(2,955	)		10,983,979

119

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Quarter July-September 2015 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		587,597		24,252		666,485			7,557						1,285,891			—			1,285,891
Revenues from transactions with other operating segments		10,101		135,977		2,860			8,571						157,509			(157,509	)		—
Finance income												15,792			15,792						15,792
Finance costs												(62,636	)		(62,636	)					(62,636	)
Net finance costs												(46,844	)		(46,844	)					(46,844	)
Depreciation and amortizations		58,990		6,000		34,375			983			1,756			102,104						102,104
Sum of significant income accounts				53,815		3,643									57,458						57,458
Sum of significant expense accounts				5,113											5,113						5,113
Profit (loss) of each reportable segment		110,358		26,538		68,161			(440	)		(117,639	)		86,978						86,978
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates												2,205			2,205						2,205
Joint ventures						(99	)					135			36						36
Income tax expense												(26,319	)		(26,319	)					(26,319	)
Geographical information on revenues
Revenue – Chilean entities		477,961		12,672		335,945			987						827,565						827,565
Revenue – Foreign entities		109,636		11,580		330,540			6,570						458,326						458,326
Total Ordinary Income		587,597		24,252		666,485			7,557						1,285,891						1,285,891

120

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Quarter July-September 2015 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$	Total ThU.S.$
Amounts of additions to non-current assets (*)
Acquisition of property, plant and equipment and biological assets		32,384			46,839			23,734			425			103			103,485				103,485
Acquisition and contribution of investments in associates and joint venture																					—
Segment Cash Flows
Cash Flows from (used in) Operating Activities		56,222			118,472			67,103			89			(2,472	)		239,414				239,414
Cash flows (used in) investing activities		(27,295	)		(45,259	)		(19,181	)		(425	)		(3,655	)		(95,815	)			(95,815	)
Cash flows from (used in) Financing Activities		(28,947	)		898			(36,990	)		0			(41,588	)		(106,627	)			(106,627	)
Net increase (decrease) in Cash and Cash Equivalents		(20	)		74,111			10,932			(336	)		(47,715	)		36,972				36,972

121

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following is a breakdown of cash flows by segment, which is presented in a complementary to required by local requirements:

Period ended September 30, 2016 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$	Total ThU.S.$
Cash Flows by segments
Cash Flows from (used in) Operating Activities		433,019			187,905			274,382			2,271			(300,203	)		597,374				597,374
Cash flows (used in) investing activities		(139,637	)		(115,312	)		(227,900	)		(1,494	)		1,939			(482,404	)			(482,404	)
Cash flows from (used in) Financing Activities		(92,006	)		5,772			(36,235	)		0			(25,683	)		(148,152	)			(148,152	)
Net increase (decrease) in Cash and Cash Equivalents		201,376			78,365			10,247			777			(323,947	)		(33,182	)			(33,182	)
Period ended September 30, 2015 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$	Total ThU.S.$
Cash Flows by segments
Cash Flows from (used in) Operating Activities		228,015			220,848			258,159			3,418			(22,435	)		688,005				688,005
Cash flows (used in) investing activities		(165,412	)		(129,844	)		(69,724	)		(1,402	)		(30,190	)		(396,572	)			(396,572	)
Cash flows from (used in) Financing Activities		(57,895	)		15,284			(150,842	)					(520,050	)		(713,503	)			(713,503	)
Net increase (decrease) in Cash and Cash Equivalents		4,708			106,288			37,593			2,016			(572,675	)		(422,070	)			(422,070	)

122

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Information required by geographic area:

	Geographical area
2016 unaudited	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues at 09-30-2016		2,275,949		271,821		272,331		589,696		130,984		3,540,781
Revenues quarter July – September 2016		743,587		102,076		97,014		199,376		45,417		1,187,470
Non-current Assets at 09-30-2016 other than tax deferred		6,949,836		944,813		1,158,172		379,238		1,816,666		11,248,725

	Geographical area
2015 unaudited	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues at 09-30-2015		2,548,611		347,166		310,076		603,531		130,567		3,939,951
Revenues quarter July – September 2015		827,565		114,804		92,941		201,313		49,268		1,285,891
Non-current Assets at 09-30-2015 other than tax deferred		6,986,236		978,285		837,886		364,889		1,812,948		10,980,244

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September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 25. OTHER NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES

Current non-financial assets	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Roads to amortize current		42,962		47,731
Prepayment to amortize (insurance + others)		65,371		20,398
Recoverable taxes (Relating to purchases)		63,716		62,468
Other current non-financial assets		5,596		3,359
Total		177,645		133,956
Non current non-financial assets	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Roads to amortize, non current		111,322		111,319
Guarantee values		3,024		2,635
Recoverable taxes (Relating to purchases)		11,240		7,767
Other non current non-financial assets		4,314		3,795
Total		129,900		125,516
Current non-financial liabilities	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Provision of minimum dividend (1)		61,804		102,305
ICMS tax payable		9,964		6,172
Other tax payable		16,956		19,442
Other Current non-financial liabilities		2,602		3,804
Total		91,326		131,723

(1) Provision includes a minimum dividend of subsidiary minority.

Non current non-financial liabilities	09-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
ICMS tax payable		58,596		45,365
Other non-current non financial liabilities		1,519		1,876
Total		60,115		47,241

124

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 26. DISTRIBUTABLE NET INCOME AND EARNINGS PER SHARE

Distributable net income

As a general policy, the Board of Directors of Arauco agreed that the net income to be distributed as dividend is determined based on realized net gains/(losses) of any relevant variations in the value of unrealized assets and liabilities, which are excluded from the calculation of net income during the period such changes are made.

As a result of the foregoing, for purposes of determining the distributable net income of the Company, which is the same considered for calculating the minimum dividend required and additional dividend, the following unrealized gains/losses are excluded from the net income for the year:

1) Unrealized gains/losses relating to the fair value recorded for forestry assets under IAS 41, adding them back to distributable net income when they are realized through sale or disposed of by other means.

2) Those generated through the acquisition of entities. These results will be added back to net income when they are realized through sale.

The deferred taxes associated with the amounts described in 1) and 2) above are also excluded.

The following table details the adjustments made for the determination of distributable net income as September 30, 2016 and 2015 in order to determine the provision of 40% of the distributable net income for each year:

Unaudited	Distributable Net Income ThU.S.$
Net income attributable to owners of parent at 09-30-2016		140,222
Adjustments:
Biological Assets
Unrealized gains/losses		(138,439	)
Realized gains/losses		150,696
Deferred income taxes		(4,618	)
Total adjustments		7,639
Distributable Net Income at 09-30-2016		147,861

Unaudited	Distributable Net Profit ThU.S.$
Net income attributable to owners of parent at 09-30-2015		276,107
Adjustments
Biological Assets
Unrealized		(138,759	)
Realized		159,915
Deferred income taxes		(6,731	)
Total adjustments		14,425
Distributable Net Income at 09-30-2015		290,532

The Company expects to maintain its policy of distributing 40% of its net distributable income as dividends for all future fiscal years, but will also consider the alternative of distributing a provisional dividend at year end.

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Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of September 30, 2016 in the Classified Statement of Financial Position, under the line item Other Ordinary Non-Financial Liabilities for an amount of ThU.S.$91,326, a total of ThU.S.$59,144 correspond to a provision for the minimum dividend for 2016 period, both corresponding to the Parent Company.

Basic and diluted earnings per share

Basic earnings per share are calculated by dividing the profit or loss attributable to ordinary equity holders of parent by the weighted average number of ordinary shares outstanding. Arauco does not have any shares with potential dilutive effect.

	January-September				July-September
	Unaudited				Unaudited
	2016 ThU.S.$		2015 ThU.S.$		2016 ThU.S.$		2015 ThU.S.$
Profit or loss attributable to ordinary equity holder of parent		140,222		276,107		31,138		86,204
Weighted average of number of shares		113,159,655		113,159,655		113,159,655		113,159,655
Basic earnings per share (in U.S.$ per share)		1.24		2.44		0.28		0.76

NOTE 27. SUBSEQUENT EVENTS

1) On October 25, 2016, the commencement of the construction of the “MDP Grayling” project was approved, which will be located in the State of Michigan, United States of America (the “Project”). The Project will be developed by the North American subsidiary Flakeboard America Limited.

Said Project consists of the construction and operation of a plant that will manufacture MDP boards or panels (medium-density particle boards). The Project’s production capacity is expected to be 800,000 m3 of finished product per year, of which approximately 300,000 m3 shall be coated with melamine-impregnated paper.

It is estimated that the Project shall begin operations by the end of year 2018, and that its sales will exceed US$ 200,000,000 per year.

The execution of this Project requires an estimated investment of US$ 400,000,000, which shall be financed with in-house resources.

Arauco estimates that this Project shall cause positive effects on the Company’s results, although, for the time being, these effects are not quantifiable.

126

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

September 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

2) The authorization for the issuance and publication of these interim consolidated financial statements for the period between January 1 and September 30, 2016 was approved by the Board of Directors of Arauco at the Extraordinary Session No. 558 held on November 11, 2016.

Subsequent to September 30, 2016 and until the date of issuance of these interim consolidated financial statements, there have been no events, other than those discussed above, that could materially affect the presentation of these financial statements.

127

Celulosa Arauco y Constitución S.A.

Third Quarter 2016 Results

November 14, 2016

1

HIGHLIGHTS

REVENUES U.S.$ 1,187.5 MILLION

Arauco’s revenues reached U.S.$ 1,187.5 million during the third quarter of 2016, a 1.6% decrease compared to the U.S.$ 1,207.3 million obtained in the second quarter of 2016.

NET INCOME U.S.$ 31.4 MILLION

Net income reached U.S.$ 31.4 million, a decrease of 45.3% or U.S.$ 26.1 million compared to the U.S.$ 57.5 million obtained in the second quarter of 2016.

ADJUSTED EBITDA U.S.$ 256.1 MILLION

Adjusted EBITDA reached U.S.$ 256.1 million, a decrease of 9.6% or U.S.$ 27.2 million compared to the U.S.$ 283.4 million obtained during the second quarter of 2016.

NET FINANCIAL DEBT/ LTM ADJUSTED EBITDA

Net Financial Debt / LTM⁽¹⁾ Adjusted EBITDA ratio reached 3.6x in this quarter, an increase of 0.2x compared to the 3.4x obtained in the second quarter of 2016.

(1) LTM = Last Twelve Months

CAPEX

CAPEX reached U.S.$ 129.0 million, a decrease of 52.5% or U.S.$ 142.8 million compared to the U.S.$ 271.8 million during the second quarter of 2016.

Conference Call

Friday, November 18^th, 2016

13:00 Santiago Time

11:00 Eastern Time (New York)

Please Dial:

+1 (844) 839 2184 from USA

+1 (412) 317 2505 from other countries

Password: Arauco

For further information, please contact:

Marcelo Bennett

marcelo.bennett@arauco.cl

Phone: (562) 2461 7309

Fernanda Paz Vásquez

fernanda.vasquez@arauco.cl

Phone: (562) 2461 7494

investor_relations@arauco.cl

For more details on Arauco´s financial statements please refer to www.svs.cl or www.arauco.cl

Readers are referred to the documents filed by Arauco with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F that identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Arauco on the date hereof and Arauco does not assume any obligation to update such statements. References herein to “U.S.$” are to United States dollars. Discrepancies in any table between totals and sums of the amounts listed are due to rounding. This report is unaudited.

2

OVERVIEW

Arauco’s third quarter results were modest, with revenues slightly decreasing 1.6% or U.S.$ 1,187.5 million during the third quarter of the year. As a consequence, our Adjusted EBITDA reached U.S.$ 256.1 million this quarter.

Fundamentals in the softwood and hardwood pulp markets were relatively weak as supply remained plentiful, but the general mood remains optimistic. Arauco was able to concrete a few price hikes, and Chinese demand is starting to pick up. New pulp capacity coming in has shown its effects in both fibers, and the market is holding its breath to discern the impact of the new pulp mills coming in the next few months, especially with the pulp mill in Indonesia.

Our wood products business showed mixed results, with some prices increasing in detriment of lower sales volume. The overall effect was that revenues remained unchanged with respect to the previous quarter, increasing 0.5%.

Arauco´s Free Cash Flow during this quarter was U.S.$ 11.0 million, thanks to lower payments in investment and financing activities. Net Debt decreased by U.S.$ 20.1 million, mainly from a lower accrued interest as year-end approaches. A lower Adjusted EBITDA offset our lower Net debt over the last twelve months, which increased our leverage to 3.6 times from the 3.4 times previously recorded last quarter.

Adjusted EBITDA and EBITDA Margin

(In U.S.$ Millions)

3

INCOME STATEMENT

Net income for the third quarter of 2016 was U.S.$ 31.4 million, a decrease of 45.3% or U.S.$ 26.0 million compared to the U.S.$ 57.5 million obtained in the second quarter of this year.

In U.S.$ Millions	Q3 2016			Q2 2016			QoQ
Revenue		1,187.5			1,207.3			-1.6	%
Cost of sales		(885.2	)		(874.6	)		1.2	%
Distribution costs		(123.8	)		(119.6	)		3.4	%
Administrative expenses		(134.9	)		(139.1	)		-3.1	%
Other income		69.9			61.7			13.2	%
Other expenses		(10.5	)		(12.9	)		-18.9	%
Financial income		7.9			6.6			19.4	%
Financial costs		(64.7	)		(65.5	)		-1.2	%
Participation in (loss) profit in associates and joint ventures accounted through equity method		4.0			6.0			-33.7	%
Exchange rate differences		(1.0	)		(0.2	)		419.4	%
Income before income tax		49.3			69.7			-29.3	%
Income tax		(17.8	)		(12.2	)		46.4	%
Net income		31.4			57.5			-45.3	%

Revenues reached U.S.$ 1,187.5 million during the third quarter of 2016 compared with the U.S.$ 1,207.3 million in the previous quarter, impacted by the lower revenues in our pulp and forestry business segments. Wood products remained stable compared to last quarter, slightly adjusting upward by 0.5%. Revenue from our energy sales decreased by 9.2% compared to last quarter, with lower prices having more impact than lower sales volume, the latter varying minimally. Average prices in our pulp business decreased 3.7% compared to last quarter, while sales volume slightly adjusted downward 0.2%. In our wood products business, average prices increased 0.9% compared to last quarter, and sales volume remained stable. The following table shows a breakdown of our revenue sales distributed by business segment:

In U.S.$ Millions	Q3 2016		Q2 2016		QoQ
Pulp(*)		521.4		541.5		-3.7	%
Wood Products(*)		638.1		635.2		0.5	%
Forestry		21.9		24.8		-11.6	%
Others		6.1		5.8		3.8	%
Total		1,187.5		1,207.3		-1.6	%

(*) Pulp and Wood division sales include energy

Sales by Business Segment 3Q 2016

4

Cost of sales for the third quarter of the year reached U.S.$ 885.2 million, U.S.$ 10.5 million or 1.2% higher than the U.S.$ 874.6 million obtained in the second quarter of 2016. Forestry labor costs increased by 17.0% or U.S.$ 24.5 million, mainly due to an accounting adjustment for amortizations of road constructions in forestry lands older than five years. Other raw materials and indirect costs also increased 6.7% or U.S.$ 6.2 million with respect to last quarter, because of an accounting adjustment as well. On the other hand, the items with the most decline in absolute value were timber; sawmill services, and energy and fuel, in line with the overall decline in sales volume in both the pulp and wood products segment.

In U.S.$ Millions	Q3 2016		Q2 2016		QoQ
Timber		177.4		186.7		-5.0	%
Forestry costs		168.0		143.6		17.0	%
Depreciation and amortization		93.5		96.6		-3.2	%
Maintenance costs		79.0		80.8		-2.2	%
Chemical costs		120.1		119.3		0.6	%
Sawmill services		25.1		31.1		-19.3	%
Other raw materials and indirect costs		99.8		93.5		6.7	%
Energy and fuel		32.3		37.2		-13.3	%
Cost of electricity		9.9		8.9		10.8	%
Wage, salaries and severance indemnities		80.1		76.9		4.1	%
Cost of Sales		885.2		874.6		1.2	%

Administrative expenses overall decreased by 3.1% or U.S.$ 4.3 million, mainly as a result of a 10.6% or U.S.$ 6.2 million decline in wage, salaries and severance indemnities. This decline is a consequence of a reversal of provisions, specifically pertaining the “SES Project”, a cost reduction initiative implemented in Chile, Argentina, and Brazil. The organizational simplification phase was completed during September of this year, and we have already begun working on the next phase, which involves the review of purchases and contracts. Insurance also decreased 29.3% or U.S$ 1.9 million since there was a renegotiation of the group insurance policy, favoring Arauco. In terms of increases this quarter, there was an increase of 39.6% or U.S.$ 4.0 million in fees compared to last quarter, due to expenses related to the “SES Project”.

In U.S.$ Millions	Q3 2016		Q2 2016		QoQ
Wage, salaries and severance indemnities		52.6		58.9		-10.6	%
Marketing, advertising, promotion and publications expenses		2.6		2.3		13.9	%
Insurance		4.5		6.3		-29.3	%
Depreciation and amortization		8.5		7.1		18.8	%
Computer services		10.4		10.7		-2.9	%
Lease rentals (offices, warehouses and machinery)		4.3		5.1		-15.2	%
Donations, contributions, scholarships		1.5		2.8		-46.6	%
Fees (legal and technical advisories)		14.2		10.1		39.6	%
Property taxes, patents and municipality rights		6.1		6.5		-6.5	%
Other administration expenses		30.2		29.2		3.3	%
Administrative Expenses		134.9		139.1		-3.1	%

5

Distribution costs increased 3.4% or U.S.$ 4.1 million, mostly due to an increase in freights costs of U.S$ 5.7 million or 6.5% compared to the previous quarter, mainly because Arauco Argentina increased exports to the Chinese markets during this quarter.

In U.S.$ Millions	Q3 2016		Q2 2016		QoQ
Commissions		3.3		3.6		-8.3	%
Insurance		0.6		0.9		-36.7	%
Other selling costs		4.6		4.6		0.3	%
Port services		7.2		6.8		6.1	%
Freights		92.5		86.8		6.5	%
Other shipping and freight costs		15.6		16.9		-8.0	%
Distribution Costs		123.8		119.6		3.4	%

As a percentage, administrative expenses and distribution costs combined were 21.8%, showing an upward trend compared to the 21.4% in the previous quarter, and an upward trend compared to 19.4% in the quarter before that.

Other income rose 13.2% or U.S.$ 8.1 million this quarter. Other operating results increased U.S.$ 15.3 million due to the reversal of a provision. On the other hand, gain from changes in fair value of biological assets decreased 15.4% or U.S.$ 7.5 million compared to last quarter because of accounting adjustments in Brazil.

In U.S.$ Millions	Q3 2016		Q2 2016		QoQ
Gain from changes in fair value of biological assets		40.9		48.4		-15.4	%
Net income from insurance compensation		0.5		0.8		-31.7	%
Leases received		2.2		0.7		193.8	%
Gains on sales of assets		1.9		7.3		-73.2	%
Access easement		3.5		0.1		—
Recovery of tax credits		1.0		—		—
Other operating results		19.8		4.5		—
Other Income		69.9		61.7		13.2	%

6

Other expenses fell overall 18.9% or U.S.$ 2.4 million. There were minor variations in terms of absolute value, but the two largest variations downward were Provision for forestry fire losses for U.S.$ 1.5 million and Other taxes for U.S.$ 1.4 million. The differences in these expenses affected operations in Chile, with Other taxes varying due to payment of withholding taxes.

In U.S.$ Millions	Q3 2016		Q2 2016			QoQ
Depreciation		0.3		0.3			9.6	%
Legal payments		0.2		(0.9	)		-127.0	%
Impairment provision property, plant and equipment and others		1.6		1.0			66.4	%
Plants stoppage operating expenses		0.5		0.5			10.3	%
Gain (loss) from asset sales		0.4		0.6			-29.3	%
Loss of assets		0.3		0.3			-3.3	%
Provision for forestry fire losses		0.6		2.1			-70.7	%
Other taxes		1.7		3.1			-44.7	%
Research and development expenses		0.8		0.6			34.0	%
Compensation and eviction		1.3		2.3			-41.3	%
Fines, readjustments and interest		0.5		0.2			257.0	%
Other expenses (donations, repayments insurance)		2.1		3.0			-29.3	%
Other expenses		10.5		12.9			-18.9	%

Foreign exchange differences showed a loss of U.S.$ 1.0 million, a U.S.$ 0.8 million difference when compared to the previous quarter that ended at U.S.$ 0.2 million. The movement of the Chilean Peso and Argentina Peso affect our cash and cash equivalents as well as our receivables, among other items. This quarter the Chilean Peso depreciated by 0.2% against the U.S. dollar, which was greatly offset by the 1.3% appreciation of the Argentine Peso. The Brazilian Real appreciated 0.8% throughout this quarter, gaining 0.8% in value against the U.S. dollar, which in turn positively affected our U.S. dollar-denominated debt in that country.

7

ADJUSTED EBITDA

Adjusted EBITDA for the third quarter of 2016 was U.S.$ 256.1 million, 9.6% or U.S.$ 27.2 million lower than the US$ 283.4 million reached during the previous quarter. In terms of Adjusted EBITDA by business, during the third quarter of the year we had a decrease in our pulp, wood and forestry divisions of 15.2%, 3.3% and 32.0% respectively. Pulp EBITDA was impacted by prices, which continue an overall downward trend in both fibers. Forestry EBITDA was impacted by an accounting adjustment in forestry road costs. On the other hand, corporate and consolidation adjustments increased by U.S.$ 20.4 million, driven by one-time provision adjustments that occurred during this quarter, mainly due to the strategic initiative SES.

In U.S. Millions	Q3 2016			Q2 2016			Q3 2015			QoQ			YoY
Net Income		31.4			57.5			87.0			-45.3	%		-63.9	%
Financial costs		64.7			65.5			62.6			-1.2	%		3.3	%
Financial income		(7.9	)		(6.6	)		(15.8	)		19.4	%		-50.2	%
Income tax		17.8			12.2			26.3			46.4	%		-32.2	%
EBIT		106.1			128.6			160.1			-17.5	%		-33.8	%
Depreciation & amortization		102.8			104.5			102.1			-1.6	%		0.7	%
EBITDA		208.9			233.0			262.2			-10.4	%		-20.4	%
Fair value cost of timber harvested		86.6			96.5			81.3			-10.2	%		6.5	%
Gain from changes in fair value of biological assets		(40.9	)		(48.4	)		(46.6	)		-15.4	%		-12.2	%
Exchange rate differences		1.0			0.2			22.6			419.4	%		-95.6	%
Others (*)		0.6			2.1			5.1			-70.7	%		-88.2	%
Adjusted EBITDA		256.1			283.4			324.6			-9.6	%		-21.1	%

(*) Includes provision from forestry fire losses.

Adjusted EBITDA Variation by Business Segment Q2 2016 – Q3 2016

(In U.S.$ Millions)

8

FORESTRY BUSINESS

The Adjusted EBITDA for our forestry business reached U.S.$ 49.6 million during this quarter, which translates to a 32.0% or U.S.$ 23.3 million decrease compared to the previous quarter.

Adjusted EBITDA for Forestry Business

(In U.S.$ Millions)

During the third quarter, our forestry production was 5.3 million m3, a 5.5% decrease compared to the 5.6 million m3 produced in the previous quarter. Sales volume decreased by 0.5% from 7.7 million m3 to 7.6 million m3.

Production, Purchases and Sales Volume

(In Thousands m³)

9

PULP BUSINESS

The Adjusted EBITDA for our pulp business reached U.S.$ 119.2 million during this quarter, which translates to a 15.2% decrease or U.S.$ 21.4 million compared to the previous quarter.

Adjusted EBITDA for Pulp Business

(In U.S.$ Million)

Global Pulp Demand Change Q2 2016 – Q3 2016     Production and Sales Volume (In Thousands AdT)   During the third quarter, prices dipped to the lowest levels during this year, although the mood has improved at quarter-end. Among other factors, growing supply from Europe and North America increased long fiber producer stocks by two days, while new supply from Brazil enabled short fiber producer stocks to increase by six days. Seasonality effects in the Northern hemisphere did not help matters, as the summer months brought with them less demand. Compared to the same quarter of last year, inventory levels for long fiber remained at similar levels, while hardwood levels increased by 10 days.   Despite leading price recoveries during the last quarter, this quarter Asia suffered a setback in prices, with China leading the way. Overall prices declined 6% in both fibers, which translated in adjustments of U.S.$ 25 to U.S.$ 30 in long fiber prices, and U.S.$30 to U.S.$ 40 in short fiber prices. The price gap between both fibers remained wide, with long fiber U.S.$ 110 above short fiber prices, incentivizing a higher use of short fiber over long fiber. The effect of additional volume from North America also pressured prices, although this new supply is planned to produce fluff pulp in the medium and long term as the fluff market develops and deepens. In the meantime, Asian markets remain attractive to enter rapidly and compete via prices to sell this excess supply. Printing and writing paper demand remained active, and exports increased as the local currency in Asian countries depreciated against the U.S. dollar.   The European market suffered minor adjustments of approximately 2% to 3% in both fibers, translating into a decline of U.S.$ 10 for long fiber prices and U.S.$ 20 for short fiber prices. Although the factors pressuring prices are similar to those affecting Asia, price declines were not as pronounced, especially since Asian prices recovered much more during the second quarter compared to European prices. Paper markets remained stagnant and even tissue producers experienced price slumps.

Markets in Latin America continued to be active, with the exception of Brazil with lower than average pulp prices due to the aggressive position of new supply within the country took within the local market. Middle Eastern markets followed global tendencies and special discount in spot prices were frequent in order to divert excess supply from more important and regular markets.

During this quarter, our production levels were normal, with maintenances stoppages in our Licancel Pulp Mill in July and Line 2 of our Arauco Pulp Mill at the end of August, both lasting approximately two weeks.

10

WOOD PRODUCTS BUSINESS

The Adjusted EBITDA for our wood products business reached U.S.$ 85.4 million during this quarter, which translates to a 3.3% decrease or U.S.$ 2.9 million compared to the previous quarter.

Adjusted EBITDA for Wood Product Business

(In U.S.$ Millions)

Changes in Volume Sales by Market Q2 2016 – Q3 2016     Production and Sales Volume: Panels (In Thousands m³)     Production and Sales Volume: Sawn Timber (In Thousands m³)   Our wood products segment showed mixed results during the third quarter, which overall maintained revenues stable compared to last quarter. Revenues of this segment adjusted of 0.5% upward, reaching U.S.$ 638.1 million. Prices improved in some regions, especially in Chilean and Brazilian markets. However, this price improvement was in detriment of sales volume, with both markets declining by 10.8% and 7.2% in sales volume, respectively. The opposite effect occurred in Argentina and other markets, with prices slightly dipping in favor of increased sales volume.   Within the panels market, there were overall stronger price increases than decreases throughout all markets, with the exception of Brazil which saw a minor decline in prices in MDF and PBO. Higher local competition within this market added pressure to prices in this country. The depreciation of the Brazilian real against the U.S. dollar also gave way to lower returns in U.S. dollar terms for exports. Our melamine products, however, were well positioned and continued to reap the benefits. In North America, MDF had a positively sloped demand throughout the quarter, and imports from our production facilities in Brazil, Argentina and Chile increased in order to meet this higher demand. Particleboard sales did not fare as well, but maintained somewhat similar levels in terms of price and volume compared to last quarter. Sales in Mexico prospered and prices remained stable this quarter despite new MDF mills starting up locally. Products that differentiate us from our competitors, such as our melamine products, helped maintain sales volume. In Argentina, there was an upsurge in sales volume, despite exports being difficult to concrete. MDF moldings have also regained strength across markets.   Furthermore, sawn timber markets continued to recover. Asia and Oceania, one of our stronger markets within sawn timber sales showed a healthy demand, with China and Korea showing stable prices and sales volume. In the United States and Canada, Arauco was able to regain market position in Araucoply, as there was a stronger demand for these products throughout the region. This effect was slightly offset by higher sales volume from Latin American countries. Price hikes in pine moldings, though modest, have yet to affect our bottom line. Middle Eastern markets continue to show favorable results, expanding Arauco´s client base in India and consolidating price increases. Other markets, such as Latin America and the Caribbean and Europe, have shown stability, with plywood picking up strength in the latter.

11

CAPITAL EXPENDITURES

US$ Millions	Q3 2016		Q2 2016		Q3 2015		YTD 2016		YTD 2015
Cash flows used in purchase of associates and joint ventures		—		153.1		—		153.1		—
Purchase and sales of property, plant and equipment		97.6		82.2		62.6		243.0		258.9
Purchase and sales of intangible assets		0.2		1.1		0.9		1.9		2.8
Purchase of other long-term assets		31.2		35.4		39.9		103.3		123.5
Total CAPEX		129.0		271.8		103.4		501.3		385.2

During this quarter, capital expenditures decreased by U.S.$ 142.8 million or 52.5% compared to the second quarter of 2016. The cash disbursement of € 137.5 million at the end of May for 50% in the Sonae Arauco joint venture increased capital expenditures during last quarter, which amounted to approximately U.S. 153.1 million. The water effluent treatment system also disbursed cash payments of U.S.$ 17.5 million, accumulating U.S.$ 33.3 million in capital expenditures up to September of this year. There were minor improvements in Arauco North America across various mills, including a mill water infrastructure in Duraflake and preliminary expenses for the new particleboard mill in Michigan, totaling approximately U.S.$ 12.6 million in cash disbursements this quarter. Argentina also had minor improvements which totaled U.S.$ 6.1 million. Plantations of biological assets across all countries amounted to U.S.$ 31.1 million. The maintenance stoppage in our Licancel Pulp Mill and Line 2 of our Arauco Pulp Mill during this quarter cost a total of U.S.$ 22.2 million. The remaining CAPEX pertains to sustaining business investments.

12

FREE CASH FLOW

During this quarter, cash provided by operating activities decreased U.S.$ 99.3 million, mainly due to lower Adjusted EBITDA and seasonally higher interest payments every third quarter. In terms of Cash used by investment activities, capital expenditures were lower during this quarter in comparison to the second quarter, due to the cash disbursement for the Sonae Arauco joint venture in May 2016. In addition, cash used by financing activities during this quarter was U.S.$ 0.6 million, lower than last quarter’s U.S.$ 99.8 million which included dividend payments.

US$ Millions	Q3 2016			Q2 2016			Q3 2015
Adjusted EBITDA		256.1			283.4			324.6
Working Capital Variation		(1.0	)		39.2			73.5
Interest paid and received		(68.8	)		(22.4	)		(69.2	)
Income tax paid		(36.4	)		(21.4	)		(15.1	)
Other cash inflows (outflows)		(6.2	)		(35.8	)		(69.7	)
Cash from Operations		143.7			243.0			244.1
Capex		(129.0	)		(271.8	)		(103.4	)
Proceeds from investment activities		3.0			5.7			1.0
Other inflows of cash, net		1.2			5.5			6.6
Cash from Investment Activities		(124.9	)		(260.6	)		(95.8	)
Dividends paid		(0.3	)		(100.3	)		(0.4	)
Other inflows of cash, net		(0.3	)		0.4			(0.1	)
Cash from (used) in financing activities - Net of proceeds and repayments		(0.6	)		(99.8	)		(0.5	)
Effect of exchange rate changes on cash and cash equivalents		(7.2	)		6.6			(20.0	)
Free Cash Flow		11.0			(110.8	)		127.8

Net Debt Variation Q2 2016 – Q3 2016

(In U.S.$ Million)

13

FINANCIAL DEBT AND CASH

Arauco’s financial debt as of September 30, 2016 reached U.S.$ 4,342.6 million, a decrease of 2.0% or U.S.$ 87.8 million when compared to June 30, 2016. Our consolidated net financial debt decreased 0.5% or U.S.$ 20.1 million when compared with June 2016, while cash and cash equivalents decreased by U.S.$ 67.7 million.

Our leverage, measured as Net Financial Debt/LTM Adjusted EBITDA, increased compared to last quarter from 3.4 times to 3.6 times.

	September		June		September
US$ Millions	2016		2016		2015
Short term financial debt		716.9		647.8		319.7
Long term financial debt		3,625.7		3,782.5		4,008.1
TOTAL FINANCIAL DEBT		4,342.6		4,430.3		4,327.7
Cash and cash equivalents		459.7		527.4		528.9
NET FINANCIAL DEBT		3,882.9		3,902.9		3,798.9

Net Financial Debt and Leverage

(In U.S.$ Million)

Debt by Currency	Debt by Instrument

(*) UF is a Chilean monetary unit indexed to inflation.

14

Financial Debt Profile

For the remainder of the year, bank obligations (which include accrued interest) sum up a total of U.S.$ 91.5 million, which include the following maturities: U.S.$ 23.4 million in loans to Montes del Plata, U.S.$ 51.3 million from pre export financing loans, U.S.$ 10.6 million in leasing in Chile, and U.S.$6.1 in our Brazilian subsidiaries. The remaining years have not undergone any major changes in financial obligations as compared to the previous quarter.

Financial Obligation by Year

(In U.S.$ Million)

Cash

Our cash position was U.S.$ 459.7 million at the end of the third quarter, which is a U.S.$ 67.7 million or 12.8% decrease compared to the end of the second quarter of 2016. Main cash disbursements during this quarter include a seasonal increase in the amount of interest paid of approximately U.S.$ 46.4 million compared to last quarter, as well as seasonally higher payments to suppliers and personnel, which increased by U.S.$ 79.0 million. These disbursements were offset by lower capital expenditures after the payment for 50% of Sonae Arauco during the second quarter of this year.

Cash by Currency	Cash by Instrument

15

THIRD QUARTER AND SUBSEQUENT EVENTS AND NEWS

MDP Grayling project approved by Arauco Board of Directors

In October of this year, the project to build a new particleboard mill in Grayling Michigan was approved by Arauco’s Board of Directors, as well as state and local agencies. This mill will be North America’s largest single continuous particleboard press, with an annual capacity of 800,000 m3 of particleboard production, along with full lamination capabilities. Total investment amounts to U.S.$ 400 million. During construction, the project will create approximately 300 jobs in the Crawford County Township, and will create 250 jobs once in operation. Logistically, this mill will have an advantageous position of board supply to the region, positively impacting our customer network. Project is estimated to start up late 2018, and yearly sales estimated at U.S.$ 200 million per year once it is in full swing. Groundwork has already begun.

16

FINANCIAL STATEMENTS

Income Statement

US$ Millions	Q3 2016			Q2 2016			Q3 2015
Revenue		1,187.5			1,207.3			1,285.9
Cost of sales		(885.2	)		(874.6	)		(896.5	)
Gross profit		302.3			332.6			389.3
Other income		69.9			61.7			72.3
Distribution costs		(123.8	)		(119.6	)		(141.0	)
Administrative expenses		(134.9	)		(139.1	)		(122.3	)
Other expenses		(10.5	)		(12.9	)		(18.0	)
Financial income		7.9			6.6			15.8
Financial costs		(64.7	)		(65.5	)		(62.6	)
Participation in (loss) profit in associates and joint ventures accounted through equity method		4.0			6.0			2.2
Exchange rate differences		(1.0	)		(0.2	)		(22.6	)
Income before income tax		49.3			69.7			113.3
Income tax		(17.8	)		(12.2	)		(26.3	)
Net income		31.4			57.5			87.0
Profit attributable to parent company		31.1			56.9			86.2
Profit attributable to non-parent company		0.3			0.6			0.8

17

Balance Sheet

US$ Millions	Q3 2016		Q2 2016		Q3 2015
Cash and cash equivalents		459.7		527.4		528.9
Other financial current assets		9.6		10.7		46.0
Other current non-financial assets		177.6		158.4		196.9
Trade and other receivables-net		642.5		667.8		736.2
Related party receivables		3.7		3.7		3.6
Inventories		909.6		908.5		896.2
Biological assets, current		297.5		324.9		249.0
Tax assets		92.3		80.2		34.2
Non-Current Assets classified as held for sale		3.1		2.8		8.1
Total Current Assets		2,595.6		2,684.4		2,699.1
Other non-current financial assets		5.3		3.4		0.0
Other non-current and non-financial assets		129.9		129.2		99.8
Non-current receivables		15.5		17.8		157.1
Investments accounted through equity method		438.5		437.3		262.0
Intangible assets		81.6		84.8		83.9
Goodwill		75.1		75.5		69.1
Property, plant and equipment		6,914.3		6,945.1		6,850.8
Biological assets, non-current		3,588.5		3,578.3		3,454.6
Deferred tax assets		3.9		3.9		148.0
Total Non-Current Assets		11,252.7		11,275.5		11,125.4
TOTAL ASSETS		13,848.3		13,959.9		13,824.5
Other financial liabilities, current		717.9		649.5		324.5
Trade and other payables		558.0		583.4		621.9
Related party payables		7.3		7.3		8.9
Other provisions, current		0.6		0.8		0.5
Tax liabilities		8.9		9.7		15.5
Current provision for employee benefits		5.2		5.3		4.2
Other non-financial liabilities, current		91.3		79.5		168.6
Total Current Liabilities		1,389.2		1,335.5		1,144.0
Other non-current financial liabilities		3,731.5		3,927.3		4,233.9
Other provisions, non-current		38.7		36.1		59.8
Deferred tax liabilities		1,637.5		1,636.8		1,718.2
Non-current provision for employee benefits		59.8		60.3		49.2
Other non-financial liabilities, non-current		60.1		59.9		43.6
Total Non-Current Liabilities		5,527.6		5,720.5		6,104.7
Non-parent participation		44.5		43.7		37.4
Net equity attributable to parent company		6,886.9		6,860.1		6,538.5
TOTAL LIABILITIES AND EQUITY		13,848.3		13,959.9		13,824.5

18

Cash Flow Statement

US$ Millions	Q3 2016			Q2 2016			Q3 2015
Receipts from sales of goods and rendering of services		1,308.9			1,263.6			1,492.3
Other cash receipts (payments)		70.7			68.4			35.1
Payments of suppliers and personnel (less)		(1,127.2	)		(1,048.2	)		(1,204.7	)
Interest paid and received		(68.8	)		(22.4	)		(69.2	)
Income tax paid		(36.4	)		(21.4	)		(15.1	)
Other (outflows) inflows of cash, net		(3.6	)		3.0			4.2
Net Cash Provided by (Used in) Operating Activities		143.7			243.0			244.1
Capital Expenditures		(129.0	)		(271.8	)		(103.4	)
Other investment cash flows		4.1			11.2			7.6
Net Cash Provided by (Used in) Investing Activities		(124.9	)		(260.6	)		(95.8	)
Proceeds from borrowings		175.5			158.5			47.8
Repayments of borrowings		(254.2	)		(163.0	)		(153.9	)
Dividends paid		(0.3	)		(100.3	)		(0.4	)
Other inflows of cash, net		(0.3	)		0.4			(0.1	)
Net Cash Provided by (Used in) Financing Activities		(79.3	)		(104.4	)		(106.6	)
Total Cash Inflow (Outflow) of the Period		(60.5	)		(121.9	)		41.7
Effect of exchange rate changes on cash and cash equivalents		(7.2	)		6.6			(20.0	)
Cash and Cash equivalents at beginning of the period		527.4			642.7			511.9
Cash and Cash Equivalents at end of the Period		459.7			527.4			533.6

19

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.

	Celulosa Arauco y Constitución, S.A.
	(Registrant)
Date: December 7, 2016	By:	/s/ Matías Domeyko Cassel
	Name:	Matías Domeyko Cassel
	Title:	Chief Executive Officer