-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SpBUDqdqCUxkIR2y1k8djBuCEwRgn1r5fFMW7FsRzyE5sOgpoCFjIWtw2SdPKXBL eTGkrxy94TAD0fApUCgM1Q== 0001157523-05-007174.txt : 20050808 0001157523-05-007174.hdr.sgml : 20050808 20050808130434 ACCESSION NUMBER: 0001157523-05-007174 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050808 FILED AS OF DATE: 20050808 DATE AS OF CHANGE: 20050808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENARIS SA CENTRAL INDEX KEY: 0001190723 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31518 FILM NUMBER: 051005210 BUSINESS ADDRESS: STREET 1: 420 FIFTH AVENUE STREET 2: 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 212-376-6500 MAIL ADDRESS: STREET 1: 23 AVENUE MONTEREY CITY: LUXEMBOURG STATE: N4 ZIP: L 2086 6-K 1 a4948011.txt TENARIS, S.A. 6-K FORM 6 - K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a - 16 or 15d - 16 of the Securities Exchange Act of 1934 As of August 8, 2005 TENARIS, S.A. (Translation of Registrant's name into English) TENARIS, S.A. 46a, Avenue John F. Kennedy L-1855 Luxembourg (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F. Form 20-F X Form 40-F --- --- Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934. Yes No --- --- If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- . The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended. This report contains Tenaris' consolidated condensed interim financial statements as of June 30, 2005. 2 TENARIS S.A. CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS JUNE 30, 2005 46a, Avenue John F. Kennedy - 2nd Floor. L - 1855 Luxembourg 3
Consolidated condensed interim income statement (all amounts in thousands of U.S. dollars, unless otherwise stated) Three-month period ended Six-month period ended June 30, June 30, ------------------------------------------- Notes 2005 2004 2005 2004 ------------------------------------------- (Unaudited) Net sales 3 1,744,311 996,849 3,197,238 1,856,195 Cost of sales 4 (1,043,774) (677,655)(1,908,902)(1,298,112) ------------------------------------------- Gross profit 700,537 319,194 1,288,336 558,083 Selling, general and administrative expenses 5 (212,510) (167,547) (397,593) (307,365) Other operating income (expense), net 2,602 2,065 5,569 5,565 ------------------------------------------- Operating income 490,629 153,712 896,312 256,283 Financial income (expense), net 6 (42,643) (3,885) (84,450) (19,323) ------------------------------------------- Income before equity in earnings (losses) of associated companies and income tax 447,986 149,827 811,862 236,960 Equity in earnings (losses) of associated companies 38,279 40,130 68,442 39,669 ------------------------------------------- Income before income tax 486,265 189,957 880,304 276,629 Income tax (144,645) (60,911) (258,714) (99,980) ------------------------------------------- Income for the period (1) 341,620 129,046 621,590 176,649 ------------------------------------------- Attributable to (1): Equity holders of the Company 313,456 127,314 577,690 175,682 Minority interest 28,164 1,732 43,900 967 ------------------------------------------- 341,620 129,046 621,590 176,649 ------------------------------------------- Earnings per share attributable to the equity holders of the Company during the period (1) Weighted average number of ordinary shares in issue (thousands) 1,180,537 1,180,537 1,180,537 1,180,477 Earnings per share (U.S. dollars per share) 0.27 0.11 0.49 0.15 (1) Prior to December 31, 2004 minority interest was shown in the income statement before net income, as required by International Financial Reporting Standards in effect. For periods beginning on or after January 1, 2005, IAS 1 (revised) requires that income for the period as shown on the income statement not exclude minority interest. Earnings per share, however, continue to be calculated on the basis of net income attributable solely to the equity holders of the Company (see Note 2 (a)). The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of the Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document.
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Consolidated condensed interim balance sheet (all amounts in thousands of U.S. dollars) At June 30, 2005 At December 31, 2004 -------------------- -------------------- Notes (Unaudited) ASSETS Non-current assets Property, plant and equipment, net 8 2,209,065 2,164,601 Intangible assets, net (see Note 2 (b)) 8 161,607 49,211 Investments in associated companies 224,685 99,451 Other investments 25,225 24,395 Deferred tax assets 171,900 161,173 Receivables 35,317 2,827,799 151,365 2,650,196 ---------- ---------- Current assets Inventories 1,389,631 1,269,470 Receivables and prepayments 167,647 279,450 Current tax assets 95,911 94,996 Trade receivables 1,258,981 936,931 Other investments 5,000 119,666 Cash and cash equivalents 450,586 3,367,756 311,579 3,012,092 -------------------- -------------------- Total assets 6,195,555 5,662,288 ========== ========= EQUITY (see Note 2 (a)) Capital and reserves attributable to the Company's equity holders Share capital 1,180,537 1,180,537 Legal reserves 118,054 118,054 Share premium 609,733 609,733 Other distributable reserve - 82 Currency translation adjustments (51,622) (30,020) Retained earnings 1,106,574 2,963,276 617,538 2,495,924 ---------- ---------- Minority interest 217,880 165,271 ---------- ---------- Total equity 3,181,156 2,661,195 ---------- ---------- LIABILITIES Non-current liabilities Borrowings 682,551 420,751 Deferred tax liabilities 362,331 371,975 Other liabilities 164,599 172,442 Provisions 41,469 31,776 Trade payables 3,963 1,254,913 4,303 1,001,247 ---------- ---------- Current liabilities Borrowings 481,972 838,591 Current tax liabilities 262,302 222,735 Other liabilities 180,867 194,945 Provisions 30,307 42,636 Customer advances 109,427 108,847 Trade payables 694,611 1,759,486 592,092 1,999,846 -------------------- -------------------- Total liabilities 3,014,399 3,001,093 ---------- ---------- Total equity and liabilities 6,195,555 5,662,288 ========== ========= Contingencies, commitments and restrictions to the distribution of profits are disclosed in Note 9. The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of the Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document.
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Consolidated condensed interim statement of changes in equity (all amounts in thousands of U.S. dollars) Attributable to equity holders of the Company --------------------------------------------------------------------- Minority Other Currency Retained Interest Share Legal Share Distributable translation Earnings (see Capital Reserves Premium Reserve(*) adjustments (*) Note 2) Total ----------------------------------------------------------------------------------------- (Unaudited) Balance at January 1, 2005 1,180,537 118,054 609,733 82 (30,020) 617,538 165,271 2,661,195 Effect of adopting IFRS 3 (see Note 2 (b)) - - - - - 110,775 - 110,775 ----------------------------------------------------------------------------------------- Adjusted balance at January 1, 2005 1,180,537 118,054 609,733 82 (30,020) 728,313 165,271 2,771,970 Currency translation differences - - - - (21,602) - 10,453 (11,149) Acquisition and increase of minority interest - - - - - - 986 986 Dividends paid in cash - - - (82) - (199,429) (2,730) (202,241) Income for the period - - - - - 577,690 43,900 621,590 ----------------------------------------------------------------------------------------- Balance at June 30, 2005 1,180,537 118,054 609,733 - (51,622)1,106,574 217,880 3,181,156 ----------------------------------------------------------------------------------------- Attributable to equity holders of the Company --------------------------------------------------------------------- Minority Other Currency Retained Interest Share Legal Share Distributable translation Earnings (see Capital Reserves Premium Reserve(*) adjustments (*) Note 2) Total ----------------------------------------------------------------------------------------- (Unaudited) Balance at January 1, 2004 1,180,288 118,029 609,269 96,555 (34,194)(128,667) 119,984 1,961,264 Currency translation differences - - - - (23,364) - (5,852) (29,216) Capital Increase and acquisition of minority interest 249 25 464 82 - - (742) 78 Dividends paid in cash - - - (96,555) - (38,498) (23) (135,076) Income for the period - - - - - 175,682 967 176,649 ---------------------------------------------------------------------------------------- Balance at June 30, 2004 1,180,537 118,054 609,733 82 (57,558) 8,517 114,334 1,973,699 ---------------------------------------------------------------------------------------- (*) The Distributable Reserve and Retained Earnings calculated according to Luxembourg Law are disclosed in Note 9 (v). The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of the Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document.
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Consolidated condensed interim cash flow statement Six-month period ended June 30, ------------------ (all amounts in thousands of U.S. dollars) 2005 2004 ------------------ (Unaudited) Cash flows from operating activities Income for the period 621,590 176,649 Adjustments for: Depreciation and amortization 103,743 101,829 Income tax accruals less payments 35,756 8,110 Equity in (earnings) of associated companies (68,442) (39,669) Interest accruals less payments, net 6,210 2,993 Changes in provisions (2,636) (962) Proceeds from Fintecna arbitration award net of BHP settlement (See Note 9 (i)) 66,594 - Changes in working capital (334,106)(311,021) Currency translation adjustment and others 16,979 (20,829) ------------------ Net cash provided by (used in) operating activities 445,688 (82,900) ================== Cash flows from investing activities Capital expenditures (131,634) (82,783) Capital increase and acquisitions of subsidiaries and associated companies (see Note 10) (47,930) (188) Cost of disposition of property, plant and equipment and intangible assets 2,890 8,969 Dividends and distributions received from associated companies 41,118 16,802 Changes in restricted bank deposits 9,634 - Reimbursement from trust funds 119,666 - ------------------ Net cash used in investing activities (6,256) (57,200) ================== Cash flows from financing activities Dividends paid (199,511)(135,053) Dividends paid to minority interest in subsidiaries (2,730) (23) Proceeds from borrowings 645,763 341,471 Repayments of borrowings (734,247) (51,720) ------------------ Net cash (used in) provided by financing activities (290,725) 154,675 ------------------ Increase in cash and cash equivalents 148,707 14,575 Movement in cash and cash equivalents At beginning of the period 293,824 238,030 Effect of exchange rate changes (12,247) 2,700 Increase in cash and cash equivalents 148,707 14,575 ------------------ At June 30, 430,284 255,305 ================== Cash and cash equivalents At June 30, ---------------- 2005 2004 ---------------- Cash and bank deposits 450,586 268,969 Bank overdrafts (16,436) (13,664) Restricted bank deposits (3,866) - ---------------- 430,284 255,305 ================ The accompanying notes are an integral part of these consolidated condensed interim financial statements. The Report of the Independent Registered Public Accounting Firm on these consolidated condensed interim financial statements is issued as a separate document.
7 NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS Index to the notes to the consolidated condensed interim financial statements 1 Basis of presentation 2 Impact of New Accounting Pronouncements: International Financial Reporting Standards 3 Segment information 4 Cost of sales 5 Selling, general and administrative expenses 6 Financial income (expenses), net 7 Dividends per share 8 Property, plant and equipment and Intangible assets, net 9 Contingencies, commitments and restrictions to the distribution of profits 10 Business acquisitions, incorporation of subsidiaries and other significant events 11 Related party disclosures NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (In the notes all amounts are shown in U.S. dollars, unless otherwise stated) 1 Basis of presentation Tenaris S.A. (the "Company" or "Tenaris"), a Luxembourg corporation (societe anonyme holding), was incorporated on December 17, 2001 to hold investments in steel pipe manufacturing and distributing companies. The Company consolidates the financial statements of Tenaris subsidiary companies, as detailed in Note 32 to audited Consolidated Financial Statements for the year ended December 31, 2004, and modified as discussed in Note 10 to these Consolidated Condensed Interim Financial Statements. These consolidated condensed interim financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting". The accounting policies used in the preparation of these consolidated condensed interim financial statements are consistent with those used in the audited consolidated financial statements for the year ended December 31, 2004, except for the impact of changes resulting from the adoption of new accounting pronouncements, as discussed in Note 2. These consolidated condensed interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2004. Certain comparative amounts have been reclassified to conform to changes in presentation in the current period. The preparation of consolidated condensed interim financial statements requires management to make estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet dates, and also the reported amounts of revenues and expenses for the reported periods. Actual results may differ from these estimates. Material intercompany transactions and balances between Tenaris's subsidiaries have been eliminated in consolidation. However, the fact that the functional currency of the Company's subsidiaries differ from each other results in the generation of foreign exchange gains (losses) that are included in the consolidated condensed interim income statement under "Financial income (expense), net". These consolidated condensed interim financial statements were approved by the Board of Directors of Tenaris on August 4, 2005. 2 Impact of New Accounting Pronouncements: International Financial Reporting Standards In December 2003, as a part of the IASB's project to improve International Financial Reporting Standards, the IASB released revisions to certain standards including: IAS 1, "Presentation of Financial Statements"; IAS 16, "Property, Plant and Equipment"; IAS 24, "Related Party Disclosures" and IAS 33, "Earnings per Share". The revised standards apply to annual periods beginning on or after January 1, 2005 and have been adopted in accordance with the respective transition provisions. In addition, during 2004 International Financial Reporting Standard (IFRS) 3, "Business Combinations" was issued. The main impacts to the Company's consolidated financial statements are: 8 (a) Presentation of minority interest IAS 1 (revised) requires disclosure on the face of the income statement of an entity's income or loss for the period and the allocation of that amount between "income or loss attributable to minority interest" and "income or loss attributable to equity holders of the Company". Earnings per share continue to be calculated on the basis of net income attributable solely to the equity holders of the entity. Also, for periods beginning on or after January 1, 2005 minority interest is included within equity in the consolidated balance sheet and is no longer shown as a separate category in the Liabilities section of the balance sheet. This change resulted in an increase of U.S. $165.3 million in the Company's reported equity at January 1, 2005. (b) Goodwill and negative goodwill Prior to January 1, 2005 goodwill was amortized on a straight line basis over its estimated useful life, not to exceed 15 years, and tested for impairment at each balance sheet date in the event indicators of impairment were present. As required by IFRS 3, the Company ceased amortization of goodwill for periods beginning on or after January 1, 2005. In addition, accumulated amortization as of December 31, 2004 has been netted against the cost of the goodwill. Furthermore, for years ending on or after December 31, 2005 goodwill is required to be tested annually for impairment, as well as when there are indicators of impairment. Amortization of goodwill expense included in the six-month period ended June 30, 2004 amounted to U.S. $5.9 million. IFRS 3 also requires accumulated negative goodwill at December 31, 2004 to be derecognized through an adjustment to retained earnings. The derecognition of negative goodwill in this manner resulted in an increase of U.S. $110.8 million in the beginning balance of the Company's equity at January 1, 2005. Amortization of negative goodwill income included in the six-month period ended June 30, 2004 amounted to U.S. $5.7 million. (c) Financial instruments: recognition and measurement In accordance with the transition provisions of IAS 39 (revised), the Company designated financial assets previously recognized as "available for sale" as "financial assets carried at fair value through profit or loss". Accordingly, the Company changed the classification of these financial assets using the new designation in its financial statements. Adoption of new or revised standards has been made in accordance with the respective transition provisions. 3 Segment information Primary reporting format: business segments
(all amounts in thousands of U.S. dollars) ------------------------------------------------ Welded & Other Metallic Seamless Products Energy Other Total ------------------------------------------------ Six-month period ended June 30, 2005 (Unaudited) Net sales 2,413,116 415,866 256,193 112,063 3,197,238 Cost of sales (1,320,512)(273,314)(248,406)(66,670)(1,908,902) ------------------------------------------------ Gross profit 1,092,604 142,552 7,787 45,393 1,288,336 Depreciation and amortization 88,851 7,356 1,570 5,966 103,743 Six-month period ended June 30, 2004 Net sales 1,472,469 156,224 196,727 30,775 1,856,195 Cost of sales (973,249)(116,220)(190,461)(18,182)(1,298,112) ------------------------------------------------ Gross profit 499,220 40,004 6,266 12,593 558,083 Depreciation and amortization 91,619 6,056 1,949 2,205 101,829
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Secondary reporting format: geographical segments (all amounts in thousands of U.S. dollars) Middle Far East South North East & & America Europe America Africa Oceania Total -------------------------------------------------- Six-month period ended June 30, 2005 (Unaudited) Net sales 884,884 789,659 879,846 360,206 282,643 3,197,238 Depreciation and amortization 41,578 35,471 23,472 30 3,192 103,743 Six-month period ended June 30, 2004 Net sales 362,789 593,340 479,133 230,083 190,850 1,856,195 Depreciation and amortization 47,916 31,225 19,425 16 3,247 101,829
Allocation of net sales to geographical segments is based on the customers' location. Allocation of depreciation and amortization is based on the geographical location of the underlying assets.
4 Cost of sales Six-month period ended June 30, --------------------- (all amounts in thousands of U.S. dollars) 2005 2004 --------------------- (Unaudited) Inventories at the beginning of the period 1,269,470 831,879 Plus: Charges of the period Raw materials, energy, consumables and other 1,513,516 936,795 Services and fees 153,656 122,564 Labor cost 201,826 174,686 Depreciation of property, plant and equipment 89,219 86,712 Amortization of intangible assets 3,541 5,132 Maintenance expenses 50,039 37,749 Provisions for contingencies 1,200 155 Allowance for obsolescence 1,202 10,517 Taxes 1,477 1,194 Other 13,387 7,382 --------------------- 2,029,063 1,382,886 Less: Inventories at the end of the period (1,389,631) (916,653) --------------------- 1,908,902 1,298,112 =====================
10 5 Selling, general and administrative expenses Six-month period ended June 30, ------------------------- (all amounts in thousands of U.S. dollars) 2005 2004 ------------------------- (Unaudited) Services and fees 63,130 55,832 Labor cost 97,324 70,486 Depreciation of property, plant and equipment 5,014 4,918 Amortization of intangible assets 5,969 5,067 Commissions, freight and other selling expenses 144,549 115,327 Provisions for contingencies 5,439 4,571 Allowances for doubtful accounts 6,936 4,796 Taxes 40,189 26,301 Other 29,043 20,067 ------------------------- 397,593 307,365 ------------------------- 6 Financial income (expense), net Six-month period ended June 30, ------------------------- (all amounts in thousands of U.S. dollars) 2005 2004 ------------------------- (Unaudited) Interest expense (29,746) (19,224) Interest income 8,781 6,883 Net foreign exchange transaction losses and changes in fair value of derivative instruments (66,564) (12,746) Other 3,079 5,764 ------------------------- (84,450) (19,323) ------------------------- 7 Dividends per share Dividends paid in 2005 and 2004 were approximately U.S. $199.5 million and U.S. $135.1 million, respectively, corresponding to U.S. $0.169 and U.S. $ 0.114 per share, respectively. 8 Property, plant and equipment and Intangible assets, net Net Property, Plant and Net Intangible Equipment Assets ---------------- -------------- (all amounts in thousands of U.S. (Unaudited) (Unaudited) dollars) Six-month period ended June 30, 2005 Opening net book amount 2,164,601 49,211 Effect of adopting IFRS 3 (see Note 2 (b)) - 110,775 Currency translation differences (47,805) (255) Transfers 3 (3) Additions 122,784 8,850 Disposals (2,858) (32) Increase due to business acquisition 66,573 2,571 Depreciation/ Amortization charge (94,233) (9,510) ---------------- -------------- At June 30, 2005 2,209,065 161,607 ---------------- -------------- 11 9 Contingencies, commitments and restrictions to the distribution of profits This note should be read in conjunction with Note 25 included in the Company's audited consolidated financial statements for the year ended December 31, 2004. Significant changes or events since the date of the annual report are the following: (i) Arbitration proceeding against Fintecna On December 28, 2004, an arbitral tribunal rendered a final award in the arbitration proceeding against Fintecna S.p.A. ("Fintecna"), an Italian state-owned entity and successor to ILVA S.p.A, the former owner of Dalmine S.p.A. ("Dalmine"). In this arbitration proceeding, Tenaris sought indemnification from Fintecna for amounts paid or payable by Dalmine to a consortium led by BHP Billiton Petroleum Ltd. ("BHP") as indemnification for the failure of an underwater pipeline manufactured and sold prior to the privatization of Dalmine. Pursuant to this final award, Fintecna paid Tenaris a total amount of euros 93.8 million (approximately U.S. $124.9 million) on March 15, 2005. In addition, on March 29, 2005, Tenaris prepaid a total of British pounds 30.4 million plus interest (approximately U.S. $57.0 million) corresponding to payment in full of its liability under the terms of the settlement agreement with BHP. As a result of these settlements, the arbitration proceedings have been definitively concluded and Tenaris has no further oustanding obligations under the BHP settlement agreement. (ii) Capitalization of Convertible Debt of Consorcio Siderurgia Amazonia, Ltd. ("Amazonia") On February 3, 2005, Ylopa Servicos de Consultadoria Lda. ("Ylopa") exercised its option to convert the convertible debt it held in Amazonia into common stock. As a result, Tenaris' ownership stake in Amazonia increased from 14.5% to 21.2%, and its indirect ownership in Siderurgica del Orinoco C.A. ("Sidor") increased from 8.7% to 12.6%. On May 18, 2005, the Company announced that it will exchange its 12.6% indirect equity interest in Sidor, held through its ownership stakes in Amazonia, and its equity interest in Ylopa, for shares in the new company in which the Techint group has announced it intends to consolidate its Latin American holdings in flat and long steel producers. The exchange will be made at a value to be determined by an internationally recognized investment bank which will be specifically engaged for this purpose. As of the date of these financial statements, this independent valuation has not been completed. (iii) Tax matters: Application of inflationary adjustment correction deduction On February 11, 2005, Siderca S.A.I.C. ("Siderca") was granted the right to participate in the promotional tax regime established by Argentine Law 25,924 under which it could potentially earn certain tax benefits. As a condition to receive these benefits, Siderca withdrew its claim against the Argentine fiscal authorities seeking relief through the application of the inflationary adjustment correction in the calculation of its income tax liability for the year ended December 31, 2002. On February 21, 2005, Siderca paid ARP $69.4 million (U.S. $23.8 million). No charges against income resulted from this payment, as Tenaris had previously recorded a provision related to this matter. (iv) Commitments a) On March 15, 2005 Complejo Siderurgico de Guayana C.A. ("Comsigua") prepaid 100% of the amount owed to the International Finance Corporation ("IFC"), for approximately U.S. $42.5 million, related with project financing loans. Tenaris has applied to the IFC for release from its proportional guarantee commitment of Comsigua's project loan. b) As discussed in Note 25 to the audited Consolidated Financial Statements for the year ended December 31, 2004, Dalmine Energie S.p.A. entered into two agreements with Eni S.p.A. Gas & Power Division for the purchase of natural gas with certain take-or-pay provisions. The outstanding value of these commitments at June 30, 2005 amount to approximately euros 938.0 million (approximately U.S. $1,134 million). (v) Restrictions to the distribution of profits and payment of dividends As of June 30, 2005, shareholders' equity as defined under Luxembourg law and regulations consisted of the following: 12 (all amounts in thousands of U.S. dollars) Share capital 1,180,537 Legal reserve 118,054 Share premium 609,733 Retained earnings including net income for the six month period ended June 30, 2005 581,620 --------------- Total shareholders equity according to Luxembourg law 2,489,944 =============== At least 5% of the net income per year as calculated in accordance with Luxembourg law and regulations must be allocated to the creation of a legal reserve equivalent to 10% of share capital. As of June 30, 2005, this reserve is fully allocated and additional allocations to the reserve are not required under Luxembourg law. Dividends may not be paid from this reserve. Tenaris may pay dividends to the extent that it has distributable retained earnings and distributable reserve calculated in accordance with Luxembourg law and regulations. At June 30, 2005, the distributable reserve, including retained earnings, of Tenaris under Luxembourg law totalled U.S. $581.6 million, as detailed below. (all amounts in thousands of U.S. dollars) Distributable reserve at December 31, 2004 under Luxembourg law 536,541 Dividends and distributions received 183,089 Other income and expenses for the six-month period ended June 30, 2005 61,501 Dividends paid (199,511) --------------- Distributable reserve at June 30, 2005 under Luxembourg law 581,620 --------------- 10 Business acquisitions, incorporation of subsidiaries and other significant events (a) The financial assets held in trust funds at December 31, 2004 (U.S. $119.7 million) were received in shares of two wholly-owned Chilean subsidiaries (Inversiones Berna S.A. and Inversiones Lucerna S.A.) on January 1, 2005. (b) On May 4, 2005, the Company completed the acquisition of 97% of the equity in S.C. Donasid S.A., a Romanian steel producer, for approximately U.S. $47.9 million in cash and assumed liabilities. The shares of Siprofer A.G. and Donasid Service s.r.l. were also acquired as part of this transaction. The assets and liabilities arising from the acquisitions are as a follows: Six-month period ended June 30, 2005 ---------------------- (all amounts in thousands of U.S. dollars) (Unaudited) ---------------------- Other assets and liabilities (net) (42,822) Property, plant and equipment 66,573 Goodwill 2,571 ---------------------- Net assets acquired 26,322 Minority Interest (986) ---------------------- Purchase consideration 25,336 Liabilities paid as part of purchase agreement 22,594 ---------------------- Total disbursement related to S.C. Donasid S.A. and related companies 47,930 ====================== 13 (c) On May 18, 2005, Siat S.A., a subsidiary of Tenaris, and Acindar Industria Argentina de Aceros S.A. ("Acindar") signed a letter of intent pursuant to which Siat confirmed its intention to acquire Acindar's welded pipe assets and facilities located in Villa Constitucion, province of Santa Fe, Argentina, for approximately U.S. $28.0 million. Completion of this acquisition is subject to due diligence findings and negotiation of definitive documentation and other precedent conditions, including the approval of the Argentine antitrust authorities (Comision Nacional de Defensa de la Competencia). 11 Related party disclosures The Company is controlled by I.I.I. Industrial Investments Inc. which owns 60.2% of Tenaris's shares and voting rights. The remaining 39.8% is publicly traded. The ultimate controlling entity of the Company is Rocca & Partners S.A., a British Virgin Islands corporation. Transactions and balances disclosed as with "Associated" companies are those with companies in which Tenaris owns 20% to 50% of the voting rights or over which Tenaris exerts significant influence, but does not have control. All other transactions with related parties which are not Associated and which are not consolidated are disclosed as "Other". The following transactions were carried out with related parties: (all amounts in thousands of U.S. dollars) Six-month period ended June 30, 2005 Associated (1) Other Total (i) Transactions (a) Sales of goods and services Sales of goods 51,322 42,806 94,128 Sales of services 1,541 4,800 6,341 ------------------------------------- 52,863 47,606 100,469 ===================================== (b) Purchases of goods and services Purchases of goods 21,079 21,821 42,900 Purchases of services 9,835 25,285 35,120 ------------------------------------- 30,914 47,106 78,020 ===================================== (all amounts in thousands of U.S. dollars) Six-month period ended June 30, 2004 Associated (1) Other Total (i) Transactions (a) Sales of goods and services Sales of goods 2,383 21,951 24,334 Sales of services 3,330 4,978 8,308 ------------------------------------- 5,713 26,929 32,642 ===================================== (b) Purchases of goods and services Purchases of goods 11,424 15,383 26,807 Purchases of services 255 22,334 22,589 ------------------------------------- 11,679 37,717 49,396 ===================================== 14 At June 30, 2005 Associated (1) Other Total ------------------------------------- (ii) Period-end balances (a) Related to sales/purchases of goods/services Receivables from related parties 36,703 23,957 60,660 Payables to related parties (25,924) (8,806) (34,730) ------------------------------------- 10,779 15,151 25,930 ===================================== (b) Other balances Receivables 23,728 - 23,728 (c) Financial debt Borrowings (2) (53,330) - (53,330) At December 31, 2004 Associated (1) Other Total ------------------------------------- (ii) Period-end balances (a) Related to sales/purchases of goods/services Receivables from related parties 25,593 27,070 52,663 Payables to related parties (4,914) (12,487) (17,401) ------------------------------------- 20,679 14,583 35,262 ===================================== (b) Cash and cash equivalents Time deposits - 6 6 (c) Other balances Trust fund - 119,666 119,666 Convertible debt instruments - Ylopa 121,955 - 121,955 (d) Financial debt Borrowings (3) (51,457) (5,449) (56,906) (1) Includes Condusid C.A., Ylopa Servicios de Consultadoria Ltda., Consorcio Siderurgia Amazonia Ltd. and Sidor C.A. (2) Borrowings from Sidor to Matesi, Materiales Siderurgicos S.A. (3) Includes borrowings from Sidor to Matesi, Materiales Siderurgicos S.A. (U.S. $51.5 million at December 31, 2004) (iii) Officers and director's compensation The aggregate compensation of the directors and executive officers earned during the six-month period ended June 30, 2005 amounted to U.S. $6.2 million. Carlos Condorelli Chief Financial Officer 15 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: August 8, 2005 Tenaris, S.A. By: /s/ Cecilia Bilesio - ----------------------- Cecilia Bilesio Corporate Secretary 16 -----END PRIVACY-ENHANCED MESSAGE-----