As filed with the Securities and Exchange Commission on June 29, 2005.

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

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FORM 20-F


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Commission file number 1-12010

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MASISA S.A.


MASISA S.A.
(Translation of Registrants name into English)

Republic of Chile

(Jurisdiction of incorporation or organization)

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Av. Apoquindo 3650, Piso 10, Las Condes, Santiago, Chile


Securities registered or to be registered pursuant to Section 12(b) or the Act:

|                           |  |                         
|-------------------------- |  | ------------------------
|Title of                   |  | Name of each exchange on
|Each class                 |  | which registered        
|                           |  |                         
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|American Depositary Shares |  | New York Stock Exchange 
|Common Stock               |  | New York Stock Exchange*

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Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close
of the period covered by the annual report:

Common Stock: 928,514,743

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes         
         No


Indicate by check mark which financial statements item the registrant has elected to follow:

Item 17  
         Item 18


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|TABLE OF CONTENTS                                                                    
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|PART I                                                                               
|                                                                                     
|Item 1.Identity of Directors, Senior Management and Advisers                         
|Item 2.Offer Statistics and Expected Timetable                                       
|Item 3.Key Information                                                               
|Item 4.Information on the Company                                                    
|PART II                                                                              
|                                                                                     
|Item 5.Operating and Financial Review and Prospects                                  
|Item 6.Directors, Senior Management and Employees                                    
|PART III                                                                             
|                                                                                     
|Item 7.Major Shareholders and Related Party Transactions                             
|Item 8. Financial Information                                                        
|Item 9.The Offer and Listing                                                         
|Item 10. Additional Information                                                      
|Item 11. Quantitative and Qualitative Disclosure About Market Risk                   
|Item 12. Description of Securities Other than Equity Securities                      
|Item 13. Default, Dividend Arrearages and Delinquencies                              
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
|Item 15. Controls and Procedures                                                     
|Item 16A. Audit Committee Financial Expert                                           
|Item 16B. Code of Ethics                                                             
|Item 16C. Principal Accountant Fees and Services                                     
|Item 16D. Exemptions from the Listing Standards for Audit Committees                 
|Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers      
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|PART IV                                                                              
|Item 17. Financial Statements                                                        
|Item 18. Financial Statements                                                        
|Item 19. Exhibits                                                                    
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PRESENTATION OF INFORMATION

On April 12 and April 13, 2005, respectively, the shareholders of Masisa S.A. (together with its consolidated subsidiaries, Masisa or the Company), a publicly-held corporation (sociedad
anónima) organized under the laws of the Republic of Chile (Chile) and Terranova S.A., also a publicly-held corporation organized under the laws of Chile (together with its consolidated subsidiaries, Terranova),
approved the merger by incorporation of Masisa into and with Terranova. The completion of the merger was subject to certain conditions, established at the respective Extraordinary Shareholders Meetings of Masisa and Terranova to approve the
merger, with respect to the exercise of withdrawal rights. Those conditions were satisfied and the merger became effective on May 31, 2005. As a consequence, Masisa no longer exists. Terranova continues as the surviving entity and is the legal
successor of Masisa for all purposes. However, shares and American depositary shares (ADSs) of Masisa have not yet been exchanged for shares and ADSs of Terranova and that exchange will not occur until Terranova has completed certain
additional filings and obtained certain approvals related to the issuance of its shares and ADSs in exchange for shares and ADSs of Masisa. It typically takes between 60 and 90 days after the date of the last of the shareholder meetings at which the
merger is first approved to complete this process. Although we cannot predict the exact amount of time that will be required to make or obtain the various filings and approvals, we expect to complete this process and exchange shares and ADSs of
Masisa for shares and ADSs of Terranova in early July 2005. Until the share exchange occurs, each such share and ADS of Masisa outstanding represents only the right to receive upon exchange 2.56 shares or 1.536 ADSs of Terranova, respectively.

At the same shareholder meetings of Masisa and Terranova at which the merger was approved, the shareholders of each company also approved changing the name of the merged company from Terranova S.A. to Masisa S.A. The
name change is now effective and Terranovas name in all of its future filings with the U.S. Securities and Exchange Commission (the SEC) will be Masisa S.A. However, because this document reports on 2004, prior to the approval and
effective date of the merger, this document uses the terms Terranova and Masisa as described in the following paragraph.

Except as otherwise specifically noted, Masisa, as well as the Company, we, our, us and similar words in this document refer to Masisa S.A. and its
consolidated subsidiaries before the effective date of the merger and separate from the other businesses of Terranova, and where such words are used in respect of periods after the merger they shall refer to the businesses of Masisa S.A and its
consolidated subsidiaries that were merged into Terranova. Prior to the consummation of the merger of Masisa into and with Terranova in 2005, and for the entire 2004 reporting period, Terranova owned 52.43% of the shares of Masisa and Masisa was one
of Terranovas consolidated subsidiaries. When we describe Terranova we include Masisa and its consolidated subsidiaries in that description.

In this Annual Report, unless otherwise specified, all references to U.S. dollars, dollars or US$ are to United States dollars, references to Chilean pesos,
pesos or Ch$ are to Chilean pesos, references to the Consumer Price Index or CPI are to the Indice de Precios al Consumidor published by the Chilean Instituto Nacional de
Estadísticas (Chilean National Institute of Statistics) and references to UF or Unidades de Fomento are to Unidades de Fomento, a Chilean financial index adjusted for changes in the CPI.
Unless otherwise specified, financial data in the Consolidated Financial Statements and elsewhere in this Annual Report are presented in accordance with accounting principles generally accepted in Chile (Chilean GAAP). Chilean GAAP
differs in certain significant respects from accounting principles generally accepted in the United States (U.S. GAAP). Note 23 of the Consolidated Financial Statements (Note 23) provides a description of the principal
differences between Chilean GAAP and U.S. GAAP and contains a reconciliation to U.S. GAAP of total shareholders equity as of December 31, 2003 and 2004 and the Companys net income for each of the last three years in the period ended
December 31, 2004.

On April 10, 2003, the Servicio de Impuestos Internos (the Chilean Internal Revenue Service or SII) authorized Masisa to maintain its accounting records in U.S. dollars as of January 1,
2003. On October 10, 2003, the Superintendencia de Valores y Seguros (the Chilean Securities and Insurance Authority or SVS) authorized the Company to present its annual and quarterly statutory financial statements in
U.S. dollars. The Companys functional currency has not changed and remains the U.S. dollar. In accordance with Chilean GAAP, the Consolidated Balance Sheets, Statements of Income and Cash Flows as of and for the year ended December 31, 2002
and 2001 previously presented in Chilean pesos were recast in accordance with accounting principles generally accepted in Chile to be presented in U.S. dollars using the exchange rates as of

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December 31, 2002 and 2001, respectively. The exchange rates used for this purpose as of December 31, 2002 and 2001 were Ch$718.61 and Ch$654.79, respectively. See Note 23 of the Consolidated Financial Statements for a description and quantification
of the differences between U.S. GAAP and Chilean GAAP related to the process of recasting the financial statements for periods prior to January 1, 2003.

This Annual Report contains statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear throughout this Annual Report and
include statements regarding the intent, belief or current expectations of the Company and its management, including with respect to

- the Companys business, plans and operations,
- trends affecting the Companys financial condition or results of such operations and
- the future impact of competition and regulations.

Such forward looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ from those described in such forward looking statements included in this Annual Report, depending upon a number
of factors, including without limitation

- the ability of Terranova, the Company's successor by merger, to implement its business plan,
- the nature and extent of future competition in the Companys principal markets and
- political, economic and demographic developments in Chile, Argentina, Brazil, Mexico, Peru and other markets.

See Item 5. Operating and Financial Review and Prospects for further discussion of factors that could cause such material differences.



Each hectare equals approximately 2.471 acres, each kilometer equals approximately 0.621 miles, each cubic meter equals approximately 35.315 cubic feet or 1.308 cubic yards and each
metric ton equals 1,000 kilograms or approximately 2,205 pounds.

Percentages and certain amounts contained in this Annual Report have been rounded for ease of presentation. Any discrepancies in any figure between totals and the sums of the amounts presented are due to rounding.

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Table of Contents

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

Selected Financial Data

The table below presents selected consolidated financial information derived from the Consolidated Financial Statements of the Company for each of the periods indicated. The following information should be read in
conjunction with and is qualified in its entirety by reference to the Consolidated Financial Statements, including the Notes thereto, included in Item 18 and Operating and Financial Review and Prospects included in Item 5. The Consolidated Financial
Statements of the Company are prepared in accordance with Chilean GAAP. Chilean GAAP differs in certain significant respects from U.S. GAAP. Note 23 to the Consolidated Financial Statements provides a description of the principal differences between
Chilean GAAP and U.S. GAAP, as they relate to the Company, and a reconciliation to U.S. GAAP of total shareholders equity as of December 31, 2002, 2003 and 2004 and net income for each of the three years in the period ended December 31, 2004.

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SELECTED FINANCIAL INFORMATION(1)

|                                                           |  |                                           |  |         |  |         |  |         |  |        
|---------------------------------------------------------- |  | ----------------------------------------- |  | ------- |  | ------- |  | ------- |  | -------
|                                                           |  | As of and for the year ended December 31,
|                                                           |  |                                          
|                                                           |  | 2000                                      |  | 2001    |  | 2002    |  | 2003    |  | 2004   
|                                                           |  |                                           |  |         |  |         |  |         |  |        
|                                                          
|(in millions of US$, except per share and per ADS amounts) |  | US$                                       |  | US$     |  | US$     |  | US$     |  | US$    
|                                                           |  |                                           |  |         |  |         |  |         |  |        
|INCOME STATEMENT DATA                                      |  |                                           |  |         |  |         |  |         |  |        
|Chilean GAAP;                                              |  |                                           |  |         |  |         |  |         |  |        
|Net sales                                                  |  | 194.3                                     |  | 236.3   |  | 225.4   |  | 281.8   |  | 397.3  
|Operating income                                           |  | 45.8                                      |  | 43.2    |  | 29.8    |  | 25.3    |  | 71.1   
|Non-operating results, net                                 |  | -8.1                                      |  | -13.7   |  | -9.6    |  | -12.7   |  | -21.8  
|Income taxes                                               |  | -7.8                                      |  | 0.6     |  | -7.0    |  | -1.7    |  | -6.6   
|Net income                                                 |  | 29.5                                      |  | 31.4    |  | 14.6    |  | 9.6     |  | 41.6   
|Net earnings per share (2)                                 |  | 0.04                                      |  | 0.03    |  | 0.02    |  | 0.01    |  | 0.045  
|Net earnings per ADS (3)                                   |  | 1.05                                      |  | 1.02    |  | 0.47    |  | 0.31    |  | 1.344  
|Dividends per share (2)                                    |  | 0.014                                     |  | 0.009   |  | 0.005   |  | 0.004   |  | 0.013  
|Dividends per ADS (3)                                      |  | 0.41                                      |  | 0.28    |  | 0.14    |  | 0.12    |  | 0.403  
|U.S. GAAP;                                                 |  |                                           |  |         |  |         |  |         |  |        
|Net sales                                                  |  | 194.3                                     |  | 236.3   |  | 225.4   |  | 281.8   |  | 397.3  
|Operating income                                           |  | 41.5                                      |  | 28.0    |  | 31.0    |  | 24.1    |  | 65.5   
|Non-operating results, net                                 |  | -5.5                                      |  | 2.1     |  | -8.3    |  | -14.1   |  | -17.7  
|Income taxes                                               |  | -10.3                                     |  | -0.5    |  | -5.3    |  | 1.1     |  | -6.5   
|Net income                                                 |  | 25.6                                      |  | 29.6    |  | 17.3    |  | 11.1    |  | 41.3   
|Basic and diluted earnings per share                       |  | 0.03                                      |  | 0.03    |  | 0.02    |  | 0.01    |  | 0.044  
|Net earnings per ADS (3)                                   |  | 0.92                                      |  | 0.96    |  | 0.56    |  | 0.36    |  | 1.335  
|Weighted average number of shares (in thousands)           |  | 840,500                                   |  | 923,141 |  | 928,515 |  | 928,515 |  | 928,515
|BALANCE SHEET DATA                                         |  |                                           |  |         |  |         |  |         |  |        
|Chilean GAAP                                               |  |                                           |  |         |  |         |  |         |  |        
|Total assets                                               |  | 741.6                                     |  | 884.7   |  | 793.5   |  | 866.8   |  | 894.5  
|Long-term liabilities                                      |  | 204.0                                     |  | 307.9   |  | 196.5   |  | 224.1   |  | 236.7  
|Shareholders equity                                       |  | 410.1                                     |  | 440.7   |  | 435.3   |  | 452.2   |  | 500.5  
|U.S. GAAP                                                  |  |                                           |  |         |  |         |  |         |  |        
|Total assets                                               |  | 752.2                                     |  | 883.2   |  | 803.4   |  | 863.6   |  | 872.9  
|Long-term liabilities                                      |  | 189.6                                     |  | 293.5   |  | 183.8   |  | 214.2   |  | 222.0  
|Shareholders equity                                       |  | 397.4                                     |  | 415.3   |  | 428.1   |  | 436.3   |  | 458.7  



|(1) | The Company changed its reporting currency to US dollars beginning January 1, 2003 (see Note 2 to the Consolidated Financial Statements). The Chilean GAAP financial information for the years 2000, 2001 and 2002 has been recast in accordance with
Chilean GAAP using year-end exchange rates of Ch$573.65, Ch$654.79 and Ch$718.61, respectively. The historical U.S. GAAP information for the period 2000 to 2002 has been remeasured in accordance with US GAAP (see Note 23 to the Consolidated
Financial Statements). Financial information for 2000 is not consolidated with Forestal Tornagaleones S.A. Effective January 1, 2001, the Company accounts for Forestal Tornagaleones S.A. as a consolidated subsidiary in accordance with Chilean GAAP
(see Note 2 to the Consolidated Financial Statements).
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|(2) | Under Chilean GAAP, there are no authoritative pronouncements relating to the calculation of earnings per share. For comparative purposes, the calculation has been based on the same number of weighted average shares outstanding as used for the U.S.
GAAP calculation. For more information see Note 23(2)(a) to the Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3) | Per ADS amounts are determined by multiplying per share amounts by 30, because one ADS is equal to 30 shares of Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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Exchange Rates

The following table sets forth, for the periods indicated, the low, high and average Observed Exchange Rates as reported by the Central Bank, expressed in pesos per U.S. dollar.

|                        |  |                                          |  |         |  |           
|----------------------- |  | ---------------------------------------- |  | ------- |  | ----------
|Period                  |  | Daily Observed Exchange Rate Ch$ per US$
|                        |  |                                          |  |        
|Year Ended December 31, |  | Low(1)                                   |  | High(1) |  | Average(2)
|                        |  |                                          |  |         |  |           
|2000                    |  | 501.04                                   |  | 580.37  |  | 542.08    
|2001                    |  | 557.13                                   |  | 716.62  |  | 637.57    
|2002                    |  | 641.75                                   |  | 756.56  |  | 692.32    
|2003                    |  | 593.10                                   |  | 758.21  |  | 686.89    
|2004                    |  | 557.40                                   |  | 649.45  |  | 611.11    



|(1) | Rates shown are the actual low and high, on a day-by-day basis, for each period.
|--- | --------------------------------------------------------------------------------
|(2) | Average of month-end rates.                                                     
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|               |  |                                          |  |        
|-------------- |  | ---------------------------------------- |  | -------
|               |  | Daily Observed Exchange Rate Ch$ per US$
|               |  |                                         
|               |  | Low(1)                                   |  | High(1)
|               |  |                                          |  |        
|2004:          |  |                                          |  |        
|              
|December 2005: |  | 557.40                                   |  | 597.27 
|January        |  | 560.30                                   |  | 586.18 
|February       |  | 563.22                                   |  | 583.84 
|March          |  | 578.60                                   |  | 591.69 
|April          |  | 572.75                                   |  | 588.95 
|May            |  | 570.83                                   |  | 583.59 



|(1) | Rates shown are the actual low and high, on a day-by-day basis, for each period.
|--- | --------------------------------------------------------------------------------
|   

The observed exchange rate as would be used for accounting purposes, on December 31, 2004 was Ch$557.4 = US$1.00.

Effective as of May 31, 2005 we merged with and into Terranova S.A. As a consequence of the merger, Masisa no longer exists. Terranova continued as the surviving entity and is our legal successor for all purposes.
However, shares and American depositary shares (ADSs) of Masisa have not yet been exchanged for shares and ADSs of Terranova and that exchange will not occur until Terranova has completed certain additional filings and obtained certain
approvals related to the issuance of its shares and ADSs in exchange for shares and ADSs of Masisa. Each such share and ADS of Masisa outstanding as of the date of this document represents only the right to receive upon exchange 2.56 shares or 1.536
ADSs of Terranova, respectively.

The following risk factors will continue to be applicable to shares and ADSs of Masisa only until the exchange of such shares and ADSs for shares and ADSs of Terranova. A discussion of risk factors related to the
ownership of Terranovas securities is included in the Annual Report on Form 20-F filed by Terranova for 2004.

The Company is dependent on the furniture and construction industry

The Companys sales of its products are dependent to a significant degree on the level of activity in the furniture manufacturing and construction industries. The Company expanded its production capacity for
medium-density fiberboard (MDF), particle board, oriented strand board (OSB) and MDF moldings in the expectation of growth in demand. However, there can be no assurance that any such growth in demand from companies in
these

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industries will occur. Weakness in the economies of countries in which the Company sells its products is likely to have a material adverse effect on the construction, home building and remodeling industries, as well as on the demand for furniture
items manufactured with the Companys products.

Currently, the Company produces a significant portion of the particle board and MDF manufactured in Chile and Argentina, as well as the MDF manufactured in Brazil and the particle board manufactured in Mexico. In
addition the Company is the only producer of OSB in Brazil. No assurance can be given that the Company will not face increased competition in the future in Chile or any other country in which the Company operates from domestic or foreign
competitors, some of which may have greater financial resources than the Company. Currently the MDF production capacity in Brazil is increasing as MDF producers enter the market. Additionally, new MDF plants in Argentina and Chile, have increased
production capacity in countries in which domestic production already exceeded local sales, thus increasing market pressure on the Company to export products it produces in those markets. There can be no assurance that the Company will maintain or
increase its domestic or export market positions. In addition, the Companys board products compete with other types of board products, such as gypsum, asbestos-cement and plywood. There can be no assurance about how successfully the
Companys products will compete with such other types of board products. An increase in competition in the particle board market, the MDF market, the OSB market or the board products market taken as a whole could adversely affect both the
Companys share of those markets and the price at which the Company is able to sell its products.

The Company may not be able to effectively manage its growth

Rapid growth of the Company may strain existing management resources and operational, financial and management information systems and controls. Expansion also will require additional skilled personnel, equipment and
facilities, as well as upgrading of the internal audit function and the implementation of more detailed long-term budgeting procedures. An inability to hire skilled personnel or to secure the required equipment and facilities efficiently and in a
cost-effective manner may adversely affect the Companys ability to achieve its growth plans and sustain or increase its profitability.

The Company could be adversely affected if it encounters labor relations problems with its unionized employees

Approximately 53% of the Companys employees in Chile are union members, while in Argentina and Brazil, the Companys employees are governed by collective bargaining agreements negotiated on an industry-wide
basis. In Mexico 34% of the Companys employees are union members and are subject to collective bargaining agreements negotiated on an industry wide basis. Although the Company has never experienced a work stoppage that has had a material
effect on its operations and its relations with unions have generally been good, future strikes or any other types of conflict with the unions and/or personnel may have a material adverse effect on the Company. See Item 6. Directors, Senior
Management and Employees for further discussion on the Companys employees.

Increases in the level of environmental regulation could raise the Companys costs

Environmental regulations may be strengthened over time in Latin America. There can be no assurance that any increased regulation of matters relating to the protection of the environment will not have a material adverse
effect on the Company.

Increases in the level of environmental concern among the Companys customers and in general could raise the Companys costs

Environmental concern among the Companys customers and in general may increase over time in Latin America or in countries to which the Company exports its products. There can be no assurance that any increase in
market pressures to produce in a more environmentally sustainable products will not have a material adverse effect on the Company.

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Risks Related to the Companys Common Stock and ADSs

The market for the Companys ADSs and common shares could become illiquid and volatile

The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. Because of the limited trading market for the Companys common stock, a
holder of American Depositary Shares (ADSs) may have a limited ability to sell ADSs or common stock obtained upon withdrawal from the ADR facility in the amount and at the price and time that it desires. This limited trading market may
also increase the volatility of the price of the ADSs.

Holders of ADSs may be adversely affected by currency devaluations and foreign exchange fluctuations

If the value of the peso falls relative to the U.S. dollar, the value of the ADSs and any distributions to be received from the depositary for the ADSs could be adversely affected. Cash distributions made in respect of
the ADSs are received by the depositary in pesos, are then converted by the depositary into U.S. dollars at the then prevailing exchange rate and distributed to the holders of the ADSs. In addition, the depositary will incur foreign currency
conversion costs (to be borne by the holders of the ADSs) in connection with the foreign currency conversion and subsequent distribution of dividends or other payments with respect to ADSs.

Future changes in Chilean foreign investment controls and withholding taxes could negatively affect non-Chilean residents that invest in the Companys shares

Equity investments in Chile by persons who are not Chilean residents are generally subject to various exchange control regulations that govern the repatriation of investments and the earnings on them. There can be no
assurance that additional Chilean restrictions applicable to the holders of ADSs, the disposition of underlying common shares, the repatriation of the proceeds from such acquisition or disposition or the payment of dividends will not be imposed in
the future, nor can there be any assessment as to the duration or impact of such restrictions if imposed.

The market price of the Companys securities may be adversely affected by developments in other emerging markets

The Company conducts substantially all of its operations in the emerging markets of Latin America. As a result, economic and political developments in these countries, including future economic crises and political
instability, could have a material adverse effect on the Companys business and results of operations.

The market value of securities of Chilean companies is, to varying degrees, affected by economic and market conditions in other emerging market countries. Although economic conditions in these other countries may differ
significantly from economic conditions in Chile, investors reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Chilean issuers. There can be no assurance that events in
other countries, particularly Argentina and other emerging market countries, will not adversely affect the market value of, or market for, the Companys common stock or ADSs.

The Company is not required to disclose as much information to investors as a U.S. issuer

The corporate disclosure requirements applicable to the Company may not be equivalent to the requirements applicable to a U.S. company and, as a result, you may receive less information about the Company than you might
otherwise receive in connection with a comparable U.S. company. The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act). However, the periodic disclosure
required of foreign issuers under the Exchange Act is more limited than the periodic disclosure required of U.S. issuers. Publicly available information about issuers of securities listed on Chilean stock exchanges also provides less detail in
certain respects than the information that is regularly published by or about listed companies in the United States or in certain other countries. Furthermore, the regulatory environment of the Chilean securities markets and of the activities of
investors in such markets is not as highly regulated and supervised and differs in certain respects from the regulatory environment of the securities markets in the United States.

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Risks Related to Our Forestry Operations

Adverse climate conditions, wind storms, fires, disease, pests and other natural threats could adversely affect our forests.

Our forests are subject to a number of naturally occurring threats such as fire, adverse climate, wind, disease and other pests. Damage caused by strong windstorms, such as uprooting and stem breakage is considered by
management to be a major natural risk to our forests. Fire is a risk to all of our forests, warehouses and operations. Accumulation of combustible raw materials and possible deficiencies in our preparation for fires could cause fire hazards and no
preventative measures can provide assurance that fires will not occur. We may experience fire in the future and such a fire may materially adversely affect us. Disease and pests are another risk to our forests and plantations. Disease or pests may
have a material adverse effect on our forests and plantations in the future. Other risks to our forests include, but are not limited to, losses caused by earthquakes, floods and other non-man-made catastrophic events.

We may experience difficulties with the quality of service provided by some of our contractors and our forestry operations could be adversely affected.

We rely on third-party contractors to develop and administer a substantial portion of our forestry operations. The contracted services provided by third-party contractors focus on maintenance and repair services as well
as harvesting and trucking, among others. In various countries where we operate, we are involved in developing services by contracting companies that assist us in achieving these operational goals. If our service contractors do not continue to
fulfill past quality levels, our forestry operations could be adversely affected.

A downturn in the Chilean economy may adversely affect the Company

The Company conducts a large part of its operations in Chile, and accordingly, the results of the Companys operations and financial condition are sensitive to and dependent upon the level of economic activity in
Chile. While Chiles gross domestic product (GDP) grew at the average rate of approximately 2.6% over the five-year period from 1998 to 2003 and grew an estimated 6.1% in 2004, there can be no assurance that such annual growth will
continue in the future, nor can the Company give assurances that future developments in or affecting the Chilean economy will not impair its ability to proceed with its business plan or materially adversely affect its business, financial condition
or results of operations.

Political developments in Chile may adversely affect the Company

The business strategies, financial condition and results of operations of the Company could be adversely affected by changes in policies of the Chilean government (which has exercised and continues to exercise a
substantial influence over many aspects of the private sector), other political developments in or affecting Chile, and regulatory and legal changes or administrative practices of Chilean authorities, over which the Company has no control.

Currency devaluations and foreign exchange fluctuations may adversely affect the Company

Changes in the value of the Chilean peso and other currencies in which the Company completes transactions against the U.S. dollar could adversely affect the Companys financial condition and results of operations.
The Chilean peso has been subject to large nominal devaluation events in the past, including an approximate 17.4% nominal increase against the U.S. dollar from December 31, 2001 to December 31, 2002 (the last day in 2001 and 2002, respectively, for
which the Observed Exchange Rates were reported). The Chilean peso increased approximately 17.4% nominally against the U.S. dollar from December 31, 2002 to December 31, 2003, and 6.1% from December 31, 2003 to December 31, 2004 (the last day in
2002, 2003 and 2004, respectively, for which the Observed Exchange Rates were reported). The value of the Chilean peso against the U.S. dollar may fluctuate significantly in the future. See Item 3. Key InformationExchange
Rates. Historically, a significant part of the Companys indebtedness has been denominated in U.S. dollars, while certain part of its revenues and

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operating expenses have been denominated in pesos. If the pesos value declines against the dollar, the Company will need more pesos to repay the same amount of dollar-denominated debt. As a result, fluctuations in the Chilean peso/U.S. dollar
exchange rate may affect the Companys financial condition and results of operations.

In particular, because the Companys costs are largely incurred in U.S. dollars (or in Chilean pesos at prices tied to dollar denominated world prices) and certain of its income derived from Chilean operations is
denominated in Chilean pesos, a significant devaluation of the peso against the dollar could have an adverse impact on the Companys results of operation to the extent that the Company is unable to pass along increases in its costs of
production in the form of higher prices for its products.

High levels of inflation in Chile could adversely affect the Companys business

A recurrence of the high levels of inflation Chile has experienced in the past could have an adverse impact on the Companys business, financial condition and results of operations and on the value of the
Companys common shares and of the ADSs representing the common shares. The annual rate of inflation in Chile (as measured by changes in the Consumer Price Index of December and as reported by the Chilean National Institute of Statistics) was
4.5% in 2000, 2.6% in 2001, 2.8% in 2002, 1.1% in 2003 and 2.4% in 2004. The Company cannot assure you that Chilean inflation will not change significantly from current levels.

Conflict with native communities in Chile could threaten a portion of our forestry assets.

Chilean law protects the rights of indigenous people. Since 1992, disputes have arisen among Chiles indigenous communities and the forestry industry. In most of the disputes, communities are claiming rights to
ancestral lands or rights based on titles granted by decree at the beginning of the 19th Century. Although we are currently named in one land dispute with communities, now we dont have the risk of significant indigenous conflicts, because our
lands are outside the conflict area. However, we cannot assure you that in the near future the conflict area will not extend to the area of our properties. A deterioration of our relationship with indigenous peoples of Chile could affect our
forestry operations and have an adverse effect on our company.

Energy shortages and increased energy costs could adversely affect the Companys business

Starting in April 2004, Argentina began restricting deliveries of natural gas to Chile due to supply and distribution problems in Argentina, Chiles principal supplier. A significant portion of Chiles
electricity is produced from natural gas. Any shortage of natural gas could force Chiles electric utilities to use costlier coal or petroleum based fuels to produce electricity or cause disruptions in the supply of electricity. Higher
electricity costs or disruptions in the supply of electricity or natural gas could adversely affect the Companys financial condition and results of operations.

Risks Relating to the Companys Operations Outside of Chile

The Companys operations outside of Chile expose us to economic, social, and political instability in foreign countries

The Company has expanded its operations to Argentina, Brazil, and Mexico, opened commercial offices in Peru and Ecuador, and managed operations in Venezuela and may continue expanding its operations in those and other
regional markets, if and when opportunities arise. The construction and operation of systems in these markets involve regulatory and governmental requirements that may be different from those in Chile. Economic, social, and political instability in
foreign countries could have a material adverse effect on the Companys revenues and profitability. The Company may also be adversely affected by foreign governmental regulations, fluctuations in foreign currency rates, taxation, and
difficulties in managing international operations

Argentinean political and economic conditions, may have a direct and adverse impact on our Argentinean operations.

Because a significant part of our operations and customers are located in Argentina, our financial condition and results of operations are in part dependent on Argentinas economy. From 1999 until 2002, the
Argentinean

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economy was in an economic recession. In 2002, the Argentinean economy experienced critical difficulties. During the first six months of 2002, the Argentinean government eliminated the U.S. dollar-Argentinean peso parity resulting in a devaluation
of Argentinas currency in 2002 of 237%. Additionally, the Argentinean government imposed restrictions on cash withdrawals from bank accounts, on transfers of funds from Argentinean to foreign accounts and publicly announced its inability to
pay its debt to foreign lenders. During 2002, Argentina also experienced higher rates of unemployment and a general inflation of prices. Consequently, Argentinas country risk rose to record high levels. In 2003, the economy began
to recover and some of the government financial restrictions were lifted.

Because our business strategy in Argentina is to some extent focused on anticipated growth in demand for particle board and MDF, rather than seeking to capture market-share from existing producers and, in spite of our
efforts to switch local sales to exports, if Argentinas economic environment does not continue to improve or if demand for products and services remains depressed, our Argentinean operations and results of operations could be further
negatively affected. In addition, governmental measures or other factors may not improve Argentinas economy or improvement in Argentinas economy may not promote an increase in the demand for particle board and/or MDF. Moreover, we face
direct competition from other Argentinean producers of wood board, both in Argentina or in neighboring markets such as Chile.

Brazilian political and economic conditions may have a direct and adverse impact on our Brazilian operations.

Because a significant part of our operations and customers are located in Brazil, our financial condition and results of operations are in part dependent on economic activity in Brazil, including the rate of economic
growth and its impact on demand for our products. The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes drastic changes in monetary, fiscal, taxation, credit, tariff, wage and price controls and other
policies in order to influence the course of Brazils economy. Economic weakness could be prolonged or become more severe in the future. Continued economic weakness and intervention by the Brazilian government in the Brazilian economy may lead
to shortfalls in our revenues and have an adverse impact on the market value of our common stock or ADSs.

Mexican political and economic conditions may have a direct and adverse impact on our Mexican operations.

Because a part of our operations and customers are located in Mexico, our financial condition and results of operations are in part dependent on the Mexican economy and political climate.

In recent history, Mexico has experienced periods of slow or negative economic growth, high inflation and large devaluations in the Mexican peso. Similar events in the future could adversely affect our Mexican
operations and our results of operations or financial condition in general.

The Mexican national elections held in July 2000 ended 71 years of rule of the Institutional Revolutionary Party with the election of president Vicente Fox, a member of the National Action Party, and resulted in the
increased representation of opposition parties in the Mexican Congress and in mayoral and gubernatorial positions. Such multi-party rule is still relatively new in Mexico and could result in economic or political conditions that materially and
adversely affect our business and operations in Mexico.

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Masisa S.A., or Masisa Chile, was a sociedad anónima abierta organized under the laws of Chile and was created in 1964 in the city of Valdivia, Chile as the legal successor to Fábrica de Maderas Aglomeradas, Ltda. Masisa
Chiles name was changed from Maderas y Sintéticos Sociedad Anónima Masisa to Masisa S.A. on May 15, 1998. From 1986 to July 2002 the Company was controlled by a privately-held Chilean industrial group consisting of Inversiones
Pathfinder Chile S.A. (Pathfinder) and its subsidiaries (collectively with Pathfinder, the Pathfinder Group). From 1986 until 2000, the Pathfinder Group held its shares in the Company through Pathfinder and its substantially
wholly-owned subsidiary, Inversiones Coigüe Dos S.A. (Coigüe). In August 2000, Pathfinder and Coigüe transferred all of their Masisa S.A. shares to a wholly-owned subsidiary of Pathfinder, Maspanel S.A. On July 22, 2002,
Terranova, one of the companies belonging to the GrupoNueva group, acquired 43.16% of the Common Stock of Masisa Chile from Maspanel S.A. and became Masisa Chiles majority and controlling shareholder. As a result of that acquisition, a
previous subscription for, and subsequent open market purchases of, shares of Masisa Chile, in 2004 and prior to the merger described in "Merger with Terranova" in this same section, Terranova owned 52.43 % of the Common Stock of Masisa Chile.
On May 31, 2005, Masisa merged with and into Terranova. As a consequence of the merger, Masisa no longer exists and Terranova continues as the surviving entity and is our legal successor for all purposes. Descriptions of Masisa or the Company in
respect of periods after the merger refer to the businesses of Masisa S.A and its consolidated subsidiaries that were merged into Terranova. For additional information see "Merger with Terranova." During 2004 and prior to the merger in 2005,
Masisa Chiles legal domicile was Valdivia, Chile, and its principal executive offices were located at Av. Apoquindo 3650, Piso 10, Las Condes, Santiago, Chile. Its telephone number was 56-(2) 707-8800. Masisa Chiles agent in the United
States is CT Corporation System, which is located at 111 Eighth Avenue, 13th Floor, New York, New York 10011.

The Company is a leading producer of particle board, MDF and OSB in Latin America, with US$397.3 million in total net consolidated sales in 2004. The Companys production facilities are located in Chile, Argentina,
Brazil and Mexico, and the principal markets for its products are Chile, Argentina, Brazil, and Mexico. The principal consumers for both particle board and MDF are the furniture manufacturing and construction industries, and the principal consumers
for OSB are the construction and packaging industries. Consolidated sales of particle board accounted for approximately 27.9% of the Companys total consolidated net sales revenue in 2004, with raw, melamine-laminated and wood-veneered particle
board accounting for approximately 9.4%, 17.3%, and 1.2% of the Companys net sales revenue, respectively. Consolidated sales of MDF accounted for approximately 45.4% of the Companys consolidated net sales revenue in 2004, with raw and
coated (melamine-laminated and wood-veneered) MDF accounting for approximately 32.7% and 12.7% of the Companys net sales, respectively. Consolidated sales of OSB accounted for approximately 13.7% of the Companys consolidated net sales
revenue in 2004.

The Company also sells complementary products, such as board finishes and wood doors. Through its subsidiary Forestal Tornagaleones S.A. (Forestal), the Company sells timber and other wood products.

According to Company estimates, in Chile, Masisa is the leading producer of raw, melamine-laminated and wood-veneered particle board in 2004.

The Company commenced MDF production in Chile in February 1996 and now has a consolidated production capacity of 300,000 cubic meters. Masisas products are sold in Chile through independent distributors and
Company-franchised stores named Placacentros, primarily to furniture manufacturers and to the construction industry.

The Companys Argentinean subsidiary, Masisa Argentina S.A. (Masisa Argentina), produces raw and melamine-laminated particle board, as well as MDF, thin-MDF boards and MDF moldings, in Argentina. Masisa
Argentina commenced production of particle board in June 1994 and currently has two production lines with a total installed capacity of 185,000 cubic meters per year. In September 1995, Masisa Argentina started producing MDF at a plant with a
capacity of 150,000 cubic meters per year. In October 2001, Masisa Argentina produced the first board at its newly constructed Thin-MDF plant, which became fully operational by mid-2002 and has a total installed capacity of 120,000 cubic meters per
year. In January 2003, Masisa Argentina began producing pre-painted MDF moldings on a new line with an estimated production capacity of 36,000 cubic meters per year.

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Until Celulosa Arauco y Constitución S.A. (Arauco) opened its new MDF plant in Argentina in April 2002, in addition to the Company there was only one other producer of MDF in Argentina. This enabled
Masisa to rapidly become a major producer in Argentinas MDF market. As in Chile, the Company sold its products in Argentina through both independent distributors and Placacentros.

In addition, during 2004, approximately 48.4% (compared to 63% in 2003) of Masisa Argentinas particle board and MDF physical volume of sales (in cubic meters) was to export markets, with approximately 68%
(compared to 53% in 2003) of those export sales going to Brazil. The decrease in total export volume to Brazil as a percentage of total volume in 2004 compared to 2003 was due primarily to the moderate recovery of the local market in Argentina in
2004 following the devaluation and crisis in 2002. The recovery in Argentina, therefore, had the effect of reversing some of the export substitution experienced in 2002 when local Argentinean sales were depressed and the Company was able to offset
local sales losses by taking advantage of the devaluation of the Argentinean peso to increase exports of its products from Argentina.

The Companys Brazilian subsidiary, Masisa do Brasil Ltda. (Masisa Brazil), was originally established in 1995 as a subsidiary of Masisa Argentina to conduct commercial and distribution activities in
Brazil through its warehouses and distribution centers. During December 2001, Masisa Brazil underwent a corporate reorganization and became a controlled subsidiary of Masisa Inversiones Ltda. (Masisa Inversiones), a wholly-owned
subsidiary of Masisa. In 1999, Masisa Brazil began construction on an MDF plant with a total installed production capacity of 240,000 cubic meters per year. The plant began its start-up phase in December of 2000, and reached full production during
the second half of 2001. During the second half of 2000, Masisa Brazil began construction of an OSB plant. This plant, which has a total installed capacity of 350,000 cubic meters per year, produced its first OSB boards in November 2001. The OSB
plant became fully operational during the fourth quarter of 2002. Masisa Brazil estimates that, as a result of being the first to market OSB in Brazil, it currently has virtually the entire market share of OSB sales in that country. Additionally,
Masisa Brazil significantly increased exports of OSB to the United States due to significant increases in U.S. pricing in the last half of the year.

In August 2001, the Company established a subsidiary in Mexico, Maderas y Sintéticos de Mexico, S.A. de C.V. (Masisa Mexico). On January 8, 2002, through Masisa Mexico, the Company acquired a particle
board plant located in the city of Durango, Mexico, after agreeing with Weyerhaeuser Company Limited to purchase the plant from its subsidiary, MacMillian Guadiana. The Company acquired the plant for approximately US$15.4 million which was financed
with cash on hand and short- and long-term bank loans. The Durango plant has two production lines with an aggregate capacity of 120,000 cubic meters per year, and a small melamine-laminating line with a capacity of approximately 21,600 cubic meters
per year. Through Masisa Mexico the Company provided technical support services and marketing and distribution activities in Mexico.

In October 2002, the Company entered into a management contract pursuant to which the Company managed Fibranova C.A., an indirect Venezuelan subsidiary of Terranova. This contract became effective on January 1, 2003 and
continued in effect until the effective date of the merger on May 31, 2005. Upon completion of the merger by incorporation of Masisa into and with Terranova, this contract expired. Under the contract, the Company was paid for its management services
an amount equal to 8% of the Fibranova C.A.s annual operating result. See Related Party Transactions under Item 7.

On April 12 and April 13, 2005, respectively, the shareholders of Masisa and Terranova approved the merger by incorporation of Masisa into and with Terranova. The completion of the merger was subject to certain
conditions, established at the respective Extraordinary Shareholders Meetings of Masisa and Terranova to approve the merger, with respect to the exercise of withdrawal rights. Those conditions were satisfied and the merger became effective on
May 31, 2005. As a consequence, Masisa no longer exists. Terranova continues as the surviving entity and is the legal successor of Masisa for all purposes. However, shares and ADSs of Masisa have not yet been exchanged for shares and ADSs of
Terranova and that exchange will not occur until Terranova has completed certain additional filings and obtained certain approvals related to the issuance of its shares and ADSs in exchange for shares and ADSs of Masisa. It typically takes between
60 and 90 days after the date of the last of the shareholder meetings at which the merger is first approved to complete this process. Although we cannot predict the exact amount of time that will be required to make or obtain the various filings and
approvals, we expect to complete this

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process and exchange shares and ADSs of Masisa for shares and ADSs of Terranova in early July 2005. Until the share exchange occurs, each such share and ADS of Masisa outstanding represents only the right to receive upon exchange 2.56 shares or
1.536 ADSs of Terranova, respectively.

At the same shareholder meetings of Masisa and Terranova at which the merger was approved, the shareholders of each company also approved changing the name of the merged company from Terranova S.A. to Masisa S.A. The
name change is now effective and Terranovas name in all of its future filings with the SEC will be Masisa S.A. However, because this document reports on 2004, prior to the approval and effective date of the merger, this document uses the terms
Terranova and Masisa as described in Presentation of Information on page (iii) of this document.

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In addition to manufacturing particle board, MDF and OSB, through subsidiaries and joint ventures, the Company engages in several related operations. As indicated in the following chart, manufacturing operations are
conducted by Masisa and a number of its subsidiaries; however, most of the Companys sales to third parties are made through Masisa Chile, Masisa Argentina, Masisa Brazil and Masisa Mexico. The principal exception is Forestal, which is directly
responsible for selling its own products. Although Masisa S.A. ceased to exist on May 31, 2005, as a consequence of its merger with Terranova, the former subsidiaries, joint ventures and businesses of Masisa continue as subsidiaries, joint ventures
and businesses of Terranova.

MASISA  CORPORATE STRUCTURE



|(1) | Parent company which also owned and operated particle board manufacturing facilities in Valdivia, Chile. In Valdivia, the Company owned and operated facilities that produce doors, wood veneer and wood-veneered particle board. The Company also
operated Masisa ́s Concepción and Inversiones Coronel facilities. Masisa S.A. was a corporation organized under the laws of Chile.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | A consolidated special-purpose company for raising funds off-shore. Masisa Overseas Ltd. is organized under the laws of the Cayman Islands.                                                                                                                                                                                                                                         
|(3) | A consolidated special-purpose company for investment activities, formerly named Inversiones Químicas Limitada. Masisa Inversiones Ltda. is organized under the laws of Chile.                                                                                                                                                                                                      
|   

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|(4)  | A consolidated special-purpose company for investment activities which also owns an MDF manufacturing facility in Cabrero and leases a saw mill and remanufacturing plant that produces moldings and edge-glued panels. Inversiones Coronel Ltda. is
organized under the laws of Chile.                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5)  | Owns and manages forest holdings in Chile. Forestal Tornagaleones S.A. is organized under the laws of Chile.                                                                                                                                                                                                                          
|(6)  | Owns particle board facilities in Chiguayante as well as particle board and MDF manufacturing facilities in Coronel, Chile. Masisa Concepción Ltda. is organized under the laws of Chile.                                                                                                                                             
|(7)  | Joint-venture holding company. Inversiones Industriales S.A., which does business under the name Indusa, is organized under the laws of Chile.                                                                                                                                                                                        
|(8)  | Owns and manages forest holdings in Argentina. Forestal Argentina S.A. is organized under the laws of Argentina.                                                                                                                                                                                                                      
|(9)  | Owns and operates MDF and particle board manufacturing facilities, as well as melamine-laminating facilities and a molding facility, in Concordia, Argentina. Masisa Argentinas headquarters are located in Buenos Aires. Masisa Argentina S.A. is
organized under the laws of Argentina.                                            
|(10) | Owns and operates a wood-chipping mill in Valdivia, Chile. Forestal Río Calle-Calle S.A. is organized under the laws of Chile.                                                                                                                                                                                                        
|(11) | Owns and operates MDF and OSB manufacturing facilities, as well as a melamine-laminating facility in the state of Paraná, Brazil. Masisa do Brasil Ltda. also leases and operates two warehouses and distribution centers and carries on marketing
activities in Brazil. Masisa do Brasil Ltda. is organized under the laws of Brazil.
|(12) | Owns and operates a particle board manufacturing facility in Durango, Mexico. Maderas y Sintéticos de México S.A. de C.V. is organized under the laws of Mexico.                                                                                                                                                                      
|(13) | Established to conduct marketing activities in Peru. Maderas y Sintéticos del Perú S.A.C. is organized under the laws of Peru.                                                                                                                                                                                                        
|(14) | Established to conduct marketing activities in Ecuador. Masisa Ecuador S.A. is organized under the laws of Ecuador.                                                                                                                                                                                                                   
|(15) | A joint venture company organized under the laws of Mexico to conduct business activities related to the Mexican wood market.                                                                                                                                                                                                         
|(16) | Established to provide various management and consulting services in Mexico. Maderas y Sintéticos Servicios S.A. de C.V. is organized under the laws of Mexico.                                                                                                                                                                       
|(17) | Established to manufacture wooden component parts and pieces for the construction and furniture industries. Masisa Partes y Piezas Ltda. is organized under the laws of Chile.                                                                                                                                                        
|(18) | A consolidated special-purpose company for investment activities. Inversiones Calle Calle is organized under the laws of Chile.                                                                                                                                                                                                       
|(19) | A joint venture company established to carry on wood industrial activities. Forestal Calle Calle is organized under the laws of Chile.                                                                                                                                                                                                
|    

Masisa S.A. beneficially owned as of May 30, 2005, the last day before the legal effective date of Masisas merger with Terranova, directly or indirectly, 100% of its subsidiaries Masisa Overseas Ltd., Masisa
Inversiones, Inversiones Coronel Ltda. (Inversiones Coronel), Masisa Concepción Ltda. (Masisa Concepción), Masisa Argentina, Masisa Brazil, Masisa Mexico, Maderas y Sintéticos Servicios S.A. de C.V.
(Masisa Services), Maderas y Sintéticos del Perú S.A.C. (Masisa Peru), Masisa Ecuador S.A. (Masisa Ecuador) and Masisa Partes y Piezas Ltda. (Masisa Partes y Piezas).

As of May 30, 2005, the Company had a 60.45% interest in its formerly wholly owned Chilean subsidiary, Forestal. The minority ownership interest in Forestal is shared between OPERS International Timber Fund IA, L.P.,
formerly Xylem Fund IA, L.P. (Xylem-IA) (34.45%), an investment fund managed by Fondo de Inversión de Desarollo de Empresas CMB-Prime (CMB-Prime) (5.09%), a Chilean institutional investor. In addition to its forest
holdings, Forestal owns, directly or indirectly, 50.1% of its Argentinean subsidiary, Forestal Argentina S.A. (Forestal Argentina), the primary assets of which are forest properties in Argentina. The minority interest in Forestal
Argentina is held by Xylem Chile Ltd. (29.15%), and other minority shareholders (20.75%) . For more information on the Companys forest holdings, see Forestry and Wood Chipping Businesses.

The Company also owned as of May 31, 2005, a 50% interest in Masnova de México S.A. de C.V. (Masnova), a joint venture company created in December 2001 to market and sell the Companys exports to
the Mexican market. The remaining 50% of Masnova is owned by Forestal Terranova México S.A. de C.V., an affiliate of Terranova. Masnova has not had significant operating activities since Terranova became the controlling shareholder of Masisa,
and is expected to be dissolved during the remaining of 2005.

The Company also owned as of May 31, 2005, a 50% interest in Inversiones Industriales, S.A. (Indusa), a joint venture holding company, whose subsidiary, Forestal Río Calle-Calle S.A. (Forestal
Rio Calle-Calle) owns a wood chipping mill in Corral, near Valdivia, Chile. Masisa also participated in the joint venture company Inversiones Calle Calle S.A. (Inversiones Calle Calle), in equal parts with Indusa. The remaining 50%
of Indusa is owned by Inversiones Fariza Chile Ltda. (32.5%) and Inversiones Forestales CCA S.A. (Inversiones Forestales) (17.5%); neither company is related to Masisa. Additionally, the Company owned as of May 31, 2005, a 9.09% interest
in Forestal Calle-Calle S.A. (Forestal Calle-Calle) through its subsidiary Inversiones Coronel. The remaining interest in Forestal Calle-Calle is held by Forestal Rio Calle-Calle (81.81%) and other minority shareholders (9.09%) .

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The Companys business strategy is to build and operate world-class wood panel production facilities in areas of Latin America where tree-growing conditions can provide an environmentally-friendly, long-term,
low-cost supply of wood. The Company implements its business strategy by seeking to:

- Establish and maintain market leadership in the markets in which it is present by introducing high quality products and continuing its ongoing commitment to implementing high standards of efficiency in the production and delivery of wood panel
products.
- Ensure that our forestry assets and production facilities and processes are maintained and operated in accordance with internationally accepted sustainable development principles.
- Expand sales in Latin American and other markets by capitalizing upon its experience and success over the years in expanding into and diversifying its export markets.
- Strengthen its existing brand names.
- Focus its product mix towards increasing sales of its higher margin products, especially melamine- laminated particle board and MDF.
- Further develop its Placacentro program, as set forth below, in Chile, Brazil, Argentina, Peru, Mexico, Ecuador, Paraguay, Colombia, Venezuela, and Uruguay and extend it to other Latin American markets.
- Expand into new businesses which have significant synergies with the Companys core business, such as the production of OSB or other types of wood boards that can complement the Companys existing product mix.

The Company considers Latin America its natural market. During 1999, the Company began construction of a new MDF production facility in Brazil because it believed that its production facilities in Argentina and Chile,
from which the Brazilian market had been supplied, did not have sufficient production capacity to supply the expected future growth in Brazilian demand. The facility started operating in December 2000 and reached full production by July 2001. To
strengthen its competitive position in Brazil, the Company decided to build a new OSB plant in Ponta Grossa. This new plant produced its first OSB boards in November 2001, and became fully operational during the fourth quarter of 2002. In October
2001, the Company started to operate its new thin-MDF line in Argentina. This plant, which complemented Masisas product mix, became fully operational by mid-2002. In addition, the Company organized Masisa Peru and Masisa Ecuador to conduct the
Companys commercial operations in those countries. Likewise, in August 2001, the Company established its Mexican subsidiary, Masisa Mexico, and in January 2002 acquired a particle board plant in that country. This acquisition represented
Masisas first entry into the direct supply of wood boards in Mexico.

Masisa seeks to satisfy consumer needs and offer solutions to problems in construction and furniture manufacturing in each of the markets that it serviced. The Company regularly met with furniture manufacturers in an
effort to increase the usage of its products. The Company also intends to further develop its Placacentro program in Chile, Brazil, Argentina, Peru, Mexico, Ecuador, Paraguay, Colombia, Venezuela, and Uruguay and also to start developing it in other
countries. Placacentros are retail furniture supply stores which are franchised by the Company. Placacentros are independently owned and operated, and offer a wide variety of products that can be used by carpenters and artisans to manufacture
furniture. During 2002, the Company started developing the Placacentro distribution network in Mexico, Ecuador, Panama and Paraguay. Colombia, Guatemala, Uruguay and Venezuela were added to the Placacentro network in 2003. As of June 20, 2005, 51
Placacentros stores were open in Chile, 37 in Argentina, 20 in Peru, 33 in Brazil, 59 in Mexico, 13 in Ecuador, 3 in Paraguay, 14 in Colombia, 17 in Venezuela, and 1 in Uruguay. The Company expects to open a total of approximately 47 new stores
primarily in these and other Latin American countries during the rest of 2005. The Company believes that expansion of this program will further enhance its brand names and the distribution of its products. The Company also believes that Argentina,
Brazil, Peru and Mexico have housing shortages and, in general, represent underdeveloped markets for its products.

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The following tables show our material properties, excluding our forestry holdings, as of December 31, 2004, and includes information regarding the size (in square meters) and use of the properties, as well as whether
the properties were leased, owned or service agreements. Service agreements are contracts to use a variable amount of space or services in a facility managed by a service provider and therefore do not constitute a lease. For information regarding
our forestry holdings, see Forestry and Wood Chipping Businesses.

OTHER LAND / PROPERTIES

|                                    |  |         |  |                                    
|----------------------------------- |  | ------- |  | -----------------------------------
|                                    |  |         |  |                                    
|                                    |  | Leased/ |  | Size                               
|Location                            |  | Owned   |  | (square meters)                    
|                                    |  |         |  |                                    
|Chile                               |  |         |  |                                    
|                                   
|Administrative Offices              |  |         |  |                                    
|Santiago (Apoquindo)                |  | Owned   |  | 1,565                              
|Santiago (Santa Maria)              |  | Owned   |  | 1,515                              
|Production Facilities               |  |         |  |                                    
|Cabrero                             |  | Owned   |  | 26,391                             
|Concepción (Chiguayante)            |  | Owned   |  | 12,321                             
|Concepción (Coronel)                |  | Owned   |  | 28,877                             
|Valdivia (Valdivia)                 |  | Owned   |  | 37,651                             
|Valdivia (Carlos Puschmann)         |  | Owned   |  | 12,429                             
|Distribution Centers and Warehouses |  |         |  |                                    
|Antofagasta                         |  | Service |  | 2,125                              
|Concepción                          |  | Owned   |  | 3,009                              
|Concepción (Cintac)                 |  | Service |  | 7,000                              
|Santiago                            |  | Service |  | 10,000                             
|Valdivia                            |  | Service |  | 3,176                              
|                                   
|Brazil                              |  |         |  |                                    
|                                   
|Administrative Offices              |  |         |  |                                    
|Curitiba                            |  | Leased  |  | 339                                
|Paraná                              |  | Owned   |  | (included in production facilities)
|Rio Grande do Sul                   |  | Leased  |  | 80                                 
|Production Facilities               |  |         |  |                                    
|Paraná                              |  | Owned   |  | 29,456                             
|Distribution Centers and Warehouses |  |         |  |                                    
|Novo Hamburgo                       |  | Leased  |  | 4,200                              
|Paraná                              |  | Owned   |  | (included in production facilities)
|                                   
|Mexico                              |  |         |  |                                    
|                                   
|Administrative Offices              |  |         |  |                                    
|México D.F. - Masisa                |  | Leased  |  | 271                                
|Production Facilities               |  |         |  |                                    
|Durango - Masisa                    |  | Owned   |  | 32,000                             
|Distribution Centers and Warehouses |  |         |  |                                    
|Altamira, Tamaulipas - Masisa       |  | Leased  |  | 10,000                             
|Durango - Masisa                    |  | Owned   |  | 12,600                             
|México D.F. - Masisa                |  | Leased  |  | 1,500                              

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OTHER LAND / PROPERTIES

|                                    |  |         |  |                
|----------------------------------- |  | ------- |  | ---------------
|                                    |  |         |  |                
|                                    |  | Leased/ |  | Size           
|Location                            |  | Owned   |  | (square meters)
|                                    |  |         |  |                
|Argentina                           |  |         |  |                
|Administrative Offices              |  |         |  |                
|Buenos Aires - Masisa               |  | Leased  |  | 600            
|Production Facilities               |  |         |  |                
|Entre Ríos - Masisa                 |  | Owned   |  | 57,400         
|Distribution Centers and Warehouses |  |         |  |                
|Entre Ríos - Masisa                 |  | Service |  | 1,800          
|                                   
|Peru                                |  |         |  |                
|Administrative Offices              |  |         |  |                
|Lima - Masisa                       |  | Leased  |  | 136            
|Distribution Centers and Warehouses |  |         |  |                
|Lima - Masisa                       |  | Service |  | 3,000          
|                                   
|Ecuador                             |  |         |  |                
|Administrative Offices              |  |         |  |                
|Guayaquil - Masisa                  |  | Leased  |  | 90             
|Distribution Centers and Warehouses |  |         |  |                
|Guayaquil - Masisa                  |  | Service |  | 3,000          
|                                    |  |         |  |                



We do not believe that there are any environmental issues affecting any of our properties that are material to our business. A discussion of environmental issues that affected our business generally is presented below
under Environmental Issues.

The following table shows the net sales of each of the Companys principal products as a percentage of the Companys total consolidated net sales for the years ended 2002, 2003 and 2004.

THE COMPANYS PRODUCTS(1)(as a percentage of consolidated net sales)

|                          |  |        |  |        |  |       
|------------------------- |  | ------ |  | ------ |  | ------
|                          |  |        |  |        |  |       
|                          |  | 2002   |  | 2003   |  | 2004  
|                          |  |        |  |        |  |       
|Raw Particle Board        |  | 14.1%  |  | 10.9%  |  | 9.4%  
|Coated Particle Board (2) |  | 24.6%  |  | 21.8%  |  | 18.5% 
|Raw MDF                   |  | 44.1%  |  | 36.6%  |  | 32.7% 
|Coated MDF (2)            |  | 7.1%   |  | 11.4%  |  | 12.7% 
|OSB                       |  | 3.8%   |  | 9.8%   |  | 13.7% 
|Doors                     |  | 1.0%   |  | 0.8%   |  | 0.6%  
|Timber                    |  | 5.3%   |  | 5.9%   |  | 5.2%  
|Other Products (3)        |  | 0.0%   |  | 2.7%   |  | 7.1%  
|                          |  |        |  |        |  |       
|Total                     |  | 100.0% |  | 100.0% |  | 100.0%
|                          |  |        |  |        |  |       

|(1) | The Companys consolidated net sales for 2002, 2003 and 2004, respectively, were US$225.4 million, US$281.8 million and US$397.3 million.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes melamine-laminated and wood-veneered boards.                                                                                    
|(3) | Other Products include MDF moldings in 2003 and 2004. The Company did not produce or sell MDF moldings prior to 2003.                    
|   

Particle Board. In 2004, particle board accounted for approximately 28% of the Companys net sales revenue. The principal types of particle board produced by the Company are raw particle board,
melamine-laminated particle board and wood-veneered particle board. Raw particle board is manufactured by mixing wood chips, wood shavings and sawdust with adhesives and rolling or pressing the mixture into large flat sheets of varying sizes and
thickness, which are then cut, quality-analyzed and packaged. Every board is automatically marked to indicate its date of manufacture, type, facility where produced, dimensions and thickness. Raw particle board is used in a variety of applications
in the construction industry, such as ceilings, walls, floors and closets, and is also widely used in the manufacture of furniture. The Company produces different types of raw particle board that are marketed under the brand names Placa
Masisa, Masisa Panel, Ecoplac, Facilplac, and HR100, each of which is suited to a different task or market segment. In 2004, raw particle board sales accounted for approximately 9.4% of the

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Companys consolidated net sales revenue and 17.6% of total board sales by physical volume in cubic meters compared to 11% and 19%, respectively, in 2003. Approximately 50% of the Companys raw particle board production by volume was used
in the production of melamine-laminated and wood-veneered particle board. Exports of raw particle board from Chile and Argentina to other countries accounted for approximately 26% and 23% of raw particle board sales by volume in 2004 and 2003
respectively. In 2004, most of the Companys particle board sales in Mexico were supplied by Masisa Mexicos production facilities.

Particle board competes, in certain uses, with gypsum and asbestos-cement boards, as well as solid wood, plywood, fiber board (including both hard board and MDF) and OSB. MDF and particle board are competing products in
some applications in the furniture industry. Lumber, asbestos-cement and gypsum board are the main competing products in the construction industry. Plywood may also be substituted for particle board, MDF and OSB in certain applications.

MDF (Medium Density Fiberboard). The Company commenced commercial production of MDF in Argentina in September 1995 and in Chile in February 1996. In December 2000, the Company began production of MDF in Brazil,
and in October 2001, the Companys thin-MDF plant in Argentina produced its first boards. MDF is manufactured by removing the cellulose fibers from wood chips, mixing the wood fiber pulp with adhesives and forming the mixture into flat sheets
which are dried, heated, pressed, cooled, cut to size and finished. MDF has broad applications in furniture, cabinet and millwork manufacturing. Machining qualities make MDF well-suited for the production of pieces with critically shaped and
profiled edges. Its uniformly dense surface gives superior results when grain-printed or painted. MDF shapes and routs with precision, drills easily and cuts cleanly. It is an effective core material for high-pressure laminates, fast-cycle melamine
and veneers. Compared to the production of particle board, the MDF production process requires higher-quality wood, a greater quantity of adhesives and more energy. Due to its higher production costs, MDF generally commands a higher price than
particle board of the same thickness. The Company produces all the standard thicknesses and densities of MDF, including thin-MDF, some melamine-laminated MDF and a small amount of wood-veneered MDF. The Company markets its MDF under the brand name
MDF Masisa. In 2004, MDF sales represented approximately 45% of the Companys consolidated net sales and 50% of total board sales by physical volume in cubic meters compared to 48% and 49%, in 2003. Exports of MDF from Chile,
Argentina and Brazil to other countries accounted for 33% of MDF sales by volume in 2004 compared to 45% in 2003.

Melamine-Laminated Boards. Melamine-laminated boards are either raw particle boards or MDF boards covered on one or both sides with paper impregnated with melamine, a plastic laminate. Most melamine-laminated
boards sold by the Company are particle board based and sold under the brand name Masisa Melamina. Melamine-laminated MDF is sold under the brand name MDF Masisa Recubierto. the Company's Melamine-laminated boards are
available in a wide variety of colors and textures, including simulated wood, although white remains the Companys best seller. Melamine-laminated boards are widely used in the manufacture of furniture and cabinets and are also used in
construction for walls, counters and in other applications. In 1997, the Company introduced a high density MDF to be used for flooring. Melamine-laminated board sales generate a higher margin than raw particle board or raw MDF sales. In 2004,
melamine-laminated board sales accounted for approximately 30% of the Companys consolidated net sales revenue and 27% of total board sales by physical volume in cubic meters. For 2004, approximately 47% of consolidated particle board sales by
volume and 21% of consolidated MDF sales by volume were melamine-laminated. Exports of melamine-laminated board from Chile and Argentina to other countries accounted for approximately 35% of melamine-laminated board sales by volume in 2004.

Wood-Veneered Boards. This product is only produced by the Company in Chile and consists of raw particle board or MDF to which a thin layer of natural wood veneer (eucalyptus or other fine woods) is bonded.
Wood-veneered particle board is generally used for purposes similar to those of melamine-laminated particle board, but it is more expensive. In 2004, sales of wood-veneered board accounted for approximately 1.5% of the Companys consolidated
net sales by value and 1.2% of total board sales by physical volume in cubic meters. Wood-veneered board is sold under the brand name Masisa Enchapada. Only a small portion of the Companys MDF sold in 2004 (0.4% by volume) was
wood-veneered. Approximately 2.7% of the Companys particle board sold in 2004 by volume was wood-veneered. Exports of wood-veneered board from Chile to other countries accounted for approximately 1.6% of wood-veneered board sales by volume in
2004.

OSB (Oriented Strand Board). OSB boards are structural panel boards manufactured with aligned wood shavings, which are glued together, mixed and arranged in several layers using chemical adhesives. The layers
are

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later hot-pressed, which offers excellent resistance and strength to the boards. OSBs outstanding physical-mechanical properties make the boards highly suitable for use in applications requiring great structural resistance, such as occur in
the construction and packaging industries. The Companys OSB boards are marketed under the Masisa OSB brand name, and are manufactured in the plant that the Company owns in Brazil. In 2004, OSB sales represented approximately 13% of
the Companys consolidated net sales and 15% of total board sales by physical volume in cubic meters compared to approximately 10% and 12%, respectively, in 2003. Exports of OSB from Brazil to other countries accounted for 72% of OSB sales by
volume in 2004 compared to 39% in 2003. This increase in OSB exports from Brazil in 2004 was due primarily to an increase in exports to the US market where prices for OSB products increased significantly in the second half of the year.

Doors. The Company manufactures doors in Chile, which are marketed under the brand name Exit. The manufacture of doors is the most labor intensive of the Companys businesses. Most of the
Companys doors consists of plywood bonded to a solid wood frame. A much smaller percentage was manufactured using particle board or MDF instead of plywood. Doors manufactured by the Company are made with a cardboard honeycomb core. Doors are
mainly sold plain but certain finishes and enhancements, such as applied wood veneer and wood moldings, are available upon request. In 2004, door sales remained relatively stable, representing approximately 0.6% of the Companys consolidated
net sales revenue compared to 0.8% in 2003. There are no significant export sales of doors in 2004 and 2003.

Timber. The Company sells timber through its subsidiary, Forestal. While Forestal initially focused its activities on the supply of wood to Masisa, because of an abundant supply of inexpensive scrap wood, wood
shavings and sawdust where the Company has operating facilities, it now sells most of its timber primarily to unaffiliated third parties. All of the timber which Forestal currently provides to the Company is sold at market prices. In 2004, timber
sales remained relatively stable, representing approximately 5.2% of the Companys consolidated net sales revenue compared to 5.9% in 2003.

Other Products. The Company manufactures wood veneer as a complement to its principal products and distributed furniture hardware. The Company also began manufacturing MDF moldings in Argentina in January 2003
and in Chile during the last quarter of 2004. In the last quarter of 2002, Masisa Partes y Piezas started to sell furniture parts with custom designs to manufacturers. In 2004, MDF molding sales reached almost 6% of consolidated net sales and other
products, taken together accounted for 7% of consolidated net sales.

The following table shows the Companys sales of particle board, MDF and OSB by physical volume in cubic meters for each year during the five-year period from 2000 through 2004. For each year, sales of particle
board and MDF are broken down between raw board sales and coated (including both melamine-laminated and wood-veneered) board sales.

MASISATOTAL CONSOLIDATED BOARD SALES(cubic meters)

|                         |  |         |  |           |  |           |  |           |  |          
|------------------------ |  | ------- |  | --------- |  | --------- |  | --------- |  | ---------
|                         |  |         |  |           |  |           |  |           |  |          
|                         |  | 2000    |  | 2001      |  | 2002      |  | 2003      |  | 2004     
|                         |  |         |  |           |  |           |  |           |  |          
|                        
|Raw Particle Board       |  | 237,252 |  | 241,156   |  | 289,120   |  | 278,134   |  | 289,966  
|Coated Particle Board(1) |  | 238,125 |  | 224,072   |  | 249,138   |  | 273,858   |  | 290,096  
|Total Particle Board     |  | 475,376 |  | 465,227   |  | 538,258   |  | 551,992   |  | 580,062  
|                        
|Raw MDF                  |  | 292,092 |  | 529,066   |  | 600,156   |  | 579,836   |  | 641,749  
|Coated MDF(1)            |  | 46,072  |  | 66,209    |  | 74,247    |  | 125,567   |  | 174,821  
|Total MDF                |  | 338,164 |  | 595,275   |  | 674,403   |  | 705,403   |  | 816,570  
|                        
|Oriented Strand Board    |  | 2,135   |  | 5,561     |  | 89,357    |  | 178,050   |  | 247,074  
|                         |  |         |  |           |  |           |  |           |  |          
|                        
|Total                    |  | 815,675 |  | 1,066,063 |  | 1,302,018 |  | 1,435,445 |  | 1,643,706
|                         |  |         |  |           |  |           |  |           |  |          

|(1) | Includes both melamine-laminated and wood-veneered boards.
|--- | ----------------------------------------------------------

The Companys sales of particle board and MDF, which increased by 11% in volume in 2004 as compared to 2003, as well as sales of the Companys other products, were dependent to a significant extent on the
state of the economies in Chile, Argentina, Brazil and Mexico, the Companys principal markets. In particular, sales of these

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products were related to the levels of activity in the construction and furniture manufacturing industries in those countries. An economic downturn in any of those countries is likely to materially adversely affect its construction industry, and
demand for furniture products and, accordingly, sales of the Companys products. The construction and furniture manufacturing industries in those countries were the principal users of the Companys products. See Item 5: Operating and
Financial Review and Prospects. There is no material seasonality in our businesses.

The following table shows the net sales in each of the Companys markets as a percentage of the Companys total consolidated net sales for the three years ended December 31, 2002, 2003 and 2004.

THE COMPANYS MARKETS(1)(as a percentage of consolidated net sales)

|              |  |        |  |        |  |       
|------------- |  | ------ |  | ------ |  | ------
|              |  |        |  |        |  |       
|              |  | 2002   |  | 2003   |  | 2004  
|              |  |        |  |        |  |       
|Chile         |  | 36.1%  |  | 27.2%  |  | 24.1% 
|Argentina     |  | 7.0%   |  | 10.2%  |  | 10.9% 
|Brazil        |  | 22.1%  |  | 26.3%  |  | 22.3% 
|Mexico        |  | 12.2%  |  | 13.4%  |  | 14.3% 
|United Status |  | 1.5%   |  | 4.8%   |  | 14.5% 
|Peru          |  | 3.1%   |  | 3.3%   |  | 3.0%  
|Other Markets |  | 18.0%  |  | 14.9%  |  | 10.9% 
|              |  |        |  |        |  |       
|Total         |  | 100.0% |  | 100.0% |  | 100.0%
|              |  |        |  |        |  |       

|(1) | The Companys consolidated net sales for 2002, 2003 and 2004, respectively, were US$225.4 million, US$281.8 million and US$397.3 million.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------
|   

General. In 2004, GDP grew 6.1%, inflation was 1.1%, the trade balance surplus was US$6.9 billion and the unemployment rate was 7.8% as of December 31, 2004. Chiles economy experienced moderate growth as a
result of generally improved global economic conditions. However, the unemployment rate in Chile remained relatively high. The Companys board sales in Chile increased from US$67.4 million in 2003 to US$86.0 million in 2004.

The following table shows the Companys sales of particle board, MDF and OSB in Chile in dollars for the years indicated.

CHILEMASISA BOARD SALES(millions of US$)

|               |  |                                 |  |      |  |      |  |      |  |     
|-------------- |  | ------------------------------- |  | ---- |  | ---- |  | ---- |  | ----
|               |  |                                 |  |      |  |     
|               |  | For the year ended December 31,
|               |  |                                 |  |      |  |     
|               |  | 2000                            |  | 2001 |  | 2002 |  | 2003 |  | 2004
|               |  |                                 |  |      |  |     
|Particle Board |  | 62.5                            |  | 52.3 |  | 46.3 |  | 42.0 |  | 49.9
|MDF            |  | 21.8                            |  | 38.9 |  | 27.1 |  | 22.8 |  | 34.7
|OSB            |  | 0.6                             |  | 0.4  |  | 1.0  |  | 2.6  |  | 1.4 
|               |  |                                 |  |      |  |     
|Total          |  | 85.0                            |  | 91.6 |  | 74.5 |  | 67.4 |  | 86.0
|               |  |                                 |  |      |  |     

Marketing and Distribution. Most of the Companys products are sold in Chile through approximately 170 independent distributors serving the construction and furniture manufacturing industries. A small
portion of the Companys products are sold directly to furniture manufacturers. The Companys 30 largest customers, in terms of sales revenue, accounted for approximately 79% of sales in Chile in 2004. The largest customer did not account
for more than approximately 12% of such sales. The Companys principal Chilean customers are Arauco Distribución S.A., Easy S.A., Electrocom S.A., Maderama, Paneles Arauco S.A., Maderas Imperial Ltda., Polincay Export Ltda., Silva y
Compañía Ltda., Sodimac S.A., Yousef Comercial Ltda. In 2004, furniture continued to be one of the leading products imported to Chile, competing with the furniture products of Chilean producers which formed a significant part of our
customer base. Specifically, ready-to-assemble furniture products are becoming an increasingly popular import in Chile, although they account for a relatively small portion of current furniture sales in Chile. We work through our
Placacentros to assist our customers in developing ways to use our products to respond to changing market conditions such as these. Although we believe that, under current market conditions, the loss of any one distributor or customer would not have
a material adverse effect on us, there can be no assurance that any

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such loss in the future will not have such a material adverse effect. The Companys products are stored in four warehouses and sales offices throughout Chile and are shipped mainly by truck to domestic customer locations. Shipments to the
Antofagasta warehouse, in the northern part of Chile, are also delivered by ship.

In 1991, the Company commenced its Placacentro program in order to broaden its distribution channels, increase demand for its products and remain in close contact with its customers. Placacentros are independently owned
and operated retail furniture supply stores that are franchised by the Company. Placacentro stores are required to carry the full range of the Companys products and to display such products in the manner directed by the Company. Placacentro
owners received technical assistance from the Company and are permitted to carry other manufacturers products with certain limitations. The Company does not derive any license fees or revenues from Placacentro stores other than through the
sale of its products.

Placacentros are an important part of the Companys marketing strategy of maintaining close ties to furniture manufacturers and retail customers. The goal of Masisas Placacentro strategy is to increase the
per capita consumption of the Companys products and to create competitive advantages to address current and future competition. As of June 20, 2005, there were 51 Placacentro stores in Chile. The Company expects to open one new Placacentro
store in Chile during the second half of 2005. The Placacentro chain is the largest chain of stores in the country in terms of sales to furniture manufacturers and small contractors. Of the Companys volume sales in the Chilean market in 2004,
approximately 25% were to Placacentros. The remainder were direct sales and sales to other distributors.

Particle Board Market. The Company manufactured raw, melamine-laminated and wood veneered particle board in Chile. Our total particle board sales in 2004 were US$49.9 million compared to US$42.0 million in 2003
due to higher physical volume sales and prices.

Río Itata, which has an installed production capacity of approximately 30,000 cubic meters per year, is the only competitor in the particle board production industry in Chile. The excess of local supply over
local demand is exported.

Due to the economic crisis in Argentina in 2002, which reduced particle board consumption in Argentina to nearly half its 2001 level, and the devaluation of the Argentinean peso, some Argentinean manufacturers began to
export part of their production to the Chilean market. This resulted in price pressure for all competitors in Chile. The Company believes that the excess capacity in particle board production in Chile and the resulting price pressure, combined with
high transport costs for particle board imports, are the primary factors that discouraged imports to Chile of particle boards in previous years. The situation experienced in 2002 was unique and as the Argentinean economy and consumption began to
recover in the second half of 2003 and continued its recovery during 2004, the situation started to return to prior levels. However, there can be no assurance that significant price pressure from imports of particle board into Chile will not occur
in the future.

MDF Market. Masisa manufactures MDF boards in Chile. The Chilean MDF market is relatively undeveloped compared to the European and North American markets. Although the first Chilean MDF plant did not begin
production until 1988, the market has exhibited strong growth since then. Nevertheless, Chilean MDF producers devote most of their production to exports. Our total MDF board sales in 2004 were US$34.7 million compared to US$22.8 million in 2003 as a
result of higher physical volume sales and prices.

Masisas only established competitor in the Chilean MDF market is Paneles Arauco S.A. which has an annual production capacity of approximately 390,000 cubic meters.

Doors Market. The majority of the Companys door sales are in the Chilean domestic market. Complete statistics on the overall Chilean door market are not available. The Company believes that until 1997 it
controlled a substantial percentage of the smaller Chilean market for highly decorated doors. However, due to that markets limited size, the Company decided in 1998 to simplify its product assortment by concentrating on doors that could be
produced with more automated procedures. During 2004 door sales were US$2.0 million, maintaining the same sales level as 2003. This was the result of a 10.8% decrease in terms of volume offset by a small price rise.

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General. In 2004, GDP grew 9.0%, inflation was 6.1%, the trade balance surplus was US$12.1 billion and the unemployment rate was 12.1% as of December, 2004. The Argentinean economy showed strong growth in the
last half of 2003 and 2004 after several years of economic crisis. After depreciating by 237% in 2002, the Argentinean peso appreciated moderately in 2003 and has since stabilized. Additionally, most of the restrictions on cash withdrawals from bank
accounts and on transfers of funds from Argentinean to foreign accounts that were imposed during the 2002 economic crisis had been lifted by the end of 2003. However, the government still remains in default on most of its debt due to its inability
to repay its debt to foreign lenders. Although 2003 and 2004 demonstrated that the economic situation in Argentina has improved, there still remain significant economic and political risks. No assurance can be given that governmental measures or
other factors will continue to improve Argentinas economy or that general improvement in its economy will lead to an increase in the demand for particle board and/or MDF.

The following table shows our MDF, particle board, OSB and MDF moldings sales in the Argentinean market for the periods indicated.

ARGENTINA MASISA BOARD SALES(millions of US$)

|               |  |                                 |  |      |  |      |  |      |  |     
|-------------- |  | ------------------------------- |  | ---- |  | ---- |  | ---- |  | ----
|               |  |                                 |  |      |  |     
|               |  | For the year ended December 31,
|               |  |                                 |  |      |  |     
|               |  | 2000                            |  | 2001 |  | 2002 |  | 2003 |  | 2004
|               |  |                                 |  |      |  |     
|Particle Board |  | 19.7                            |  | 16.5 |  | 5.7  |  | 10.6 |  | 15.8
|MDF            |  | 32.9                            |  | 32.2 |  | 8.6  |  | 14.7 |  | 21.4
|OSB            |  |                                |  |     |  | 0.4  |  | 1.6  |  | 1.9 
|               |  |                                 |  |      |  |     
|Total          |  | 52.6                            |  | 48.7 |  | 14.7 |  | 26.9 |  | 39.0
|               |  |                                 |  |      |  |     

Marketing and Distribution. Despite the cost and difficulty of shipping goods across the Andes mountain range (where the mountain road passes are frequently closed during winter) and the import tariffs to which
the Companys goods were subject when shipped into Argentina, the Company exported from Chile small quantities of particle board to Argentina for a number of years prior to the establishment of Masisa Argentina and its commencement of particle
board production in Argentina. The costs and difficulties of doing business in Argentina from Chile, coupled with the Companys expectations regarding the Argentinean economy and favorable tree-growing conditions, convinced the Company that it
would be better positioned to exploit what it believed to be an underdeveloped market by producing particle board and MDF in Argentina. Moreover, the Company believed that if it did not serve the Argentinean market through production facilities in
Argentina, other producers would be more likely to enter the market (thereby diminishing the Companys ability to export Chilean production to Argentina and enter the market in the future) and possibly compete with the Company in its principal
market in Chile. Accordingly, in 1992, the Company established Masisa Argentina, which commenced production of particle board in June 1994 and of MDF in 1995.

Masisa sells particle board and MDF to Argentinean furniture manufacturers through approximately 150 distributors. In 2004, approximately 69% of Masisas sales revenue in the Argentinean market was generated by the
20 principal distributors. The largest customer did not account for more than approximately 9% of these sales. Masisas principal distributors in Argentina are Amiano S.R.L., Cencosud S.A., Distribuidora Aglolam S.A., Distribuidora Argentina de
Chapas S.A.C., Distribuidora Placasur S.A., Dolinsky S.A., Madergold S.A., NBC Maderas S.R.L., Sacheco S.A. and Trumar S.A.I.C. In Argentina, Masisa sells directly from its Concordia production facility and products are shipped mainly by truck to
customer locations in Argentina.

Given the successful development of Masisas Placacentro program in Chile and Peru, Masisa Argentina started to develop this distribution channel in 2000. As of June 20, 2005, 37 stores have been opened in
Argentina. Masisa Argentina expects to open approximately 5 new stores in Argentina in the second half of 2005. Of Masisas sales in Argentina in 2004, approximately 42% were through Placacentros.

The Company is pursuing several strategies in Argentina to encourage the use of Masisas particle board and MDF products in lieu of other materials. As in Chile, Masisa holds regular meetings with Argentinean
furniture

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manufacturers, offers service and technical assistance to these consumers and regularly participates in trade fairs and furniture shows. In addition, Masisa offers technical training courses for Masisa-product installers.

Masisa has focused its marketing efforts on furniture and cabinet manufacturers and on the construction industry. After devaluation of the Argentinean peso in 2002 and in response to the adverse macroeconomic scenario
in Argentina, Masisa Argentina redirected the majority of production from its Argentinean operations to export markets primarily in Brazil, Mexico, the United States and the Far East. However, with the recovery of the Argentinean local market,
Masisa reversed this trend.

Particle Board Market. Argentina has more than twice the population of Chile and has a significant housing deficit. However, following the devaluation of its currency, Argentinas per capita income was
reduced to half of its pre-devaluation levels. Argentinas domestic particle board consumption has a substantial increase from 2003 but it is still below its pre-devaluation level. We expect that future demand for Masisas products in
Argentina will be largely dependent upon the growth of the Argentinean economy and particularly on the growth of the Argentinean construction and furniture manufacturing industries.

The Company is one of the three largest particle board manufacturers in the Argentinean market. Masisas principal Argentinean competitors in particle board are Faplac S.A., Sadepan Latinoamericana S.A. and
Cuyoplacas S.A. The other smaller Argentinean particle board producers, such as Tableros del Paraná S.A. have a minimal market presence and use older and less efficient technology than Masisa utilizes at its Concordia facility. The Company
also believes Masisas cost of production is lower than that of its Argentinean competitors. As in Chile, however, particle board products compete with other types of board products, such as gypsum, as well as solid wood and plywood.

Our total particle board sales in 2004 were US$15.8 million compared to US$10.6 million in 2003, due to higher demand for these products as a result of the economic recovery in 2004. The large increase in sales in 2004
and in 2003 followed a steep decline in 2002, when, in order to minimize the impact of the devaluation, Masisa Argentina shifted the main part of its domestic sales of particle board to exports.

MDF Market. Masisa has continued to actively develop the market for this product through advertising campaigns, events held directly with the customers and Masisas participation in trade shows, all of which
are designed to demonstrate the boards quality and multiple uses for furniture manufacturers, architects and decorators.

Masisa is the largest MDF manufacturer in the Argentinean market. Our total MDF board sales in 2004 were US$21.4 million compared to US$14.7 million in 2003. As in the case of particle board, the increase in sales was
due to higher demand for these products as a result of the economic recovery in Argentina that began in 2003 and continued through 2004. The large increase in sales in 2003 followed a steep decline in 2002, when, in order to minimize the impact of
the devaluation, Masisa Argentina shifted the main part of its domestic sales of MDF to exports. The Argentinean MDF market was a fast-growing market that expanded approximately 530% between 1995 and 1999. However, the economic crisis of 2002
adversely affected the market. In 2003, the market expanded rapidly compared to 2002. We believe the positive growth trend in the economy will continue in the short-term and that the market for wood board products will continue to recover as a
result. However, there can be no assurance that the economy will continue to recover or that sales of wood board products will increase as a result.Consumption is still below its pre-crisis levels and historic highs.

During 2002, due primarily to its increased competitiveness in foreign markets as a result of Argentinas currency devaluation and Masisa Argentinas ability to utilize Masisas business networks abroad,
approximately 68% of Masisa Argentinas consolidated net sales of particle boards and MDF were exports, primarily to Brazil, as well as other export markets. Although this allowed Masisa to partially offset the effects of the Argentinean crisis
and avoid shutting down any of its production lines, due to the lower margins for Masisa Argentinas products in exports markets compared with Argentinean markets under normal economic conditions, Masisa returned to domestic Argentinean sales
as the Argentinean market began to recover. There can be no assurance that favorable economic conditions in Argentina will enable Masisas profits to recover to their pre-crisis levels.

In 2000, Masisa Argentina began construction of a new thin-MDF plant at the Concordia Industrial Complex in Argentina. The new plant has an installed production capacity of 120,000 cubic meters per year. The plant
produced its first boards in October 2001 and became fully operational by mid-2002. By 2003, the Company

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had approximately 270,000 cubic meters of total MDF installed capacity in Argentina, including capacity from the new thin-MDF plant.

In March 2002, Masisa Argentina commenced construction of its first line of pre-painted MDF moldings in Argentina at the Concordia Complex. The molding line, with an estimated production capacity of 36,000 cubic meters
per year, started its production in January 2003 and reached full production capacity during the second quarter of 2003. An additional 36,000 cubic meters of production capacity was added during 2004. Production at the molding plant will primarily
be directed to export markets.

Although this plant began operating at a difficult time for the Argentinean economy, the facilitys geographic location, the Companys export experience and the favorable export conditions created by the
devaluation of the Argentinean peso provide favorable market conditions for export to Latin American and world markets generally.

In the first half of 2002 Alto Paraná S.A. (Paneles Araucos formal name in Argentina) began operations at its new MDF plant in Argentina with an estimated annual capacity of 240,000 cubic meters. At the
present time, in addition to Alto Paraná, there is only one other competitor in this market, Tableros Guillermina S.A., which has an annual production capacity of approximately 40,000 cubic meters. Although the Company believes that market
prospects for wood board products in Argentina will improve, there can be no assurance that the Company will be able to operate its Argentinean plants profitably.

General. In 2004, GDP grew 5.2%, inflation was 6.3%, the trade balance surplus was US$33.7 billion and the unemployment rate was 9.6% as of December 31, 2004. During 2004, the Brazilian economy experienced a
moderate recovery following a mild contraction in 2003.

The following table shows the Companys board sales in the Brazilian market in dollar terms for the years indicated. The figures reflect exports from the Companys Chilean and Argentinean production facilities
sold in Brazil, as well as the production from Masisa Brazils MDF and OSB plants, which commenced operations in December 2000 and November 2001, respectively.

BRAZIL 
MASISA BOARD SALES(millions of US$)

|               |  |                                 |  |      |  |      |  |      |  |     
|-------------- |  | ------------------------------- |  | ---- |  | ---- |  | ---- |  | ----
|               |  |                                 |  |      |  |     
|               |  | For the year ended December 31,
|               |  |                                 |  |      |  |     
|               |  | 2000                            |  | 2001 |  | 2002 |  | 2003 |  | 2004
|               |  |                                 |  |      |  |     
|Particle Board |  | 12.8                            |  | 9.2  |  | 9.3  |  | 11.1 |  | 9.2 
|MDF            |  | 19.2                            |  | 36.2 |  | 32.9 |  | 47.0 |  | 65.5
|OSB            |  |                                |  | 0.5  |  | 6.1  |  | 13.6 |  | 10.7
|               |  |                                 |  |      |  |     
|Total          |  | 32.0                            |  | 46.0 |  | 48.3 |  | 71.8 |  | 85.5
|               |  |                                 |  |      |  |     

Marketing and Distribution. The Company established Masisa Brazil in 1995. Masisa Brazil has already achieved a significant position as a particle board and MDF supplier to southern Brazils furniture
industry.

Masisa supplies and delivers particle board to the Brazilian market principally by truck from Masisa Argentinas Concordia plant. The strategic location of the Concordia Plant and the establishment of MERCOSUR have
made Brazil a favored market for Masisa Argentinas exports. In the past, MDF was supplied to the Brazilian market from both the Argentinean Concordia plant and the Chilean Coronel plant, but since 2001 these exports have been gradually
replaced by production from the new MDF plant located in Ponta Grossa, Brazil. The Ponta Grossa MDF plant has an installed capacity of 240,000 cubic meters per year and was inaugurated in April 2001.

The Companys combined sales in Brazil of particle board, MDF and OSB reached US$85.5million in 2004, representing a 19% increase compared to 2003. Particle board sales decreased by 17% to US$9.2 million in 2004
from US$11.1 million in 2003. MDF sales increased by 39% to US$65.5 million in 2004. OSB sales decreased to US$10.7 million in 2004 compared to the US$13.6 million in 2003. This decrease was due mainly to an increase in exports of OSB to the United
States.

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From 2002 to 2003, total sales of particle board increased, principally as a result of an increase in sales of coated particle board. From 2003 to 2004, total sales of particle board decreased, principally as a result
of a decrease in sales of coated particle board offset by an increase in coated particle board price. From 2002 to 2003, there was an increase in sales of both raw and coated MDF, although coated MDF sales increased at a higher rate. From 2003 to
2004, there was an increase in sales of both raw and coated MDF, although coated MDF sales increased at a higher rate.

The Company has two commercial offices located in Curitiba, state of Paraná, and Bento Gonçalves, state of Rio Grande do Sul, approximately 900 kilometers from Concordia. A significant portion of the
Brazilian furniture manufacturing industry is concentrated in the Bento Gonçalves region.

During 1998, the Company closed a distribution warehouse in Bento Gonçalves, but three new distribution warehouses were opened in the cities of Novo Hamburgo, Curitiba and Vitória, in the states of Rio
Grande do Sul, Paraná and Espírito Santo, respectively. This shift in warehousing was undertaken in order to implement a more effective distribution system within Brazil. During 2002, the Company closed the Vitoria warehouse to finish
improvements in the distribution system. There were no warehouses opened or closed during 2003 and 2004.

In November 2001, Masisa began test production of the first OSB boards in a new plant in the Ponta Grossa industrial complex. This OSB plant, which Masisa started to construct in mid-2000, has an annual installed
capacity of 350,000 cubic meters and required an investment of approximately US$64 million, all of which was financed internally. The Ponta Grossa OSB plant is the first of its type in Brazil.

Due to the large size of Brazilian manufacturers, sales in Brazil are primarily made directly to the manufacturers. There are generally no independent distributor chains for these materials. However, in order to meet
the needs of carpenters, architects and decorators, Masisa has established a sales and marketing network that has been in place since 1996. In addition, in 2003 the Company opened 12 new Placacentro stores in the central and southern regions of
Brazil, as part of its policy of developing distribution networks as a strategy for penetrating the markets where it is present. The Company had opened 33 Placacentro stores in Brazil as of June 20, 2005, and expects to open approximately 9 new
stores in Brazil during the rest of 2005. During 2004, 17% of all the Masisa Brazils sales were through Placacentros.

Currently Masisa sells MDF and OSB through 270 and 70 distributors, respectively, in Brazil. In 2004, approximately 20% of Masisas sales revenue in the Brazilian market was generated by 20 of its customers and our
largest single customer did not account for more than approximately 2% of those sales. Masisas principal customers in Brazil are A. Romanzza Moveis Ltda., Bertolini S/A, Leo Madeiras Maq. e Ferrag. Ltda., Madcompen o Atacadao Comp. Ltda., and
Todeschini S/A Industria e Comercio

The Company also believes that adapting finance and administrative management to local conditions is necessary to successfully compete in Brazil. Accordingly, in late 1997, the Company established a finance and
administrative office in Curitiba, Paraná.

The Company is expending considerable effort to develop its sales in Brazil by, among other activities, opening distribution warehouses, expanding its customer base and participating in promotional activities,
expositions and trade shows. Although the Company believes that market prospects for MDF and OSB in Brazil are good, there can be no assurance that the Company will be able to operate its Brazilian plants profitably.

Particle Board Market. Particle board consumption in Brazil is relatively low. Since Brazil has a population more than ten times greater than that of Chile, Masisa views Brazil as an attractive market for
particle board. Currently, there are a number of Brazilian particle board producers with efficient operations, including Duratex, (644,000 cubic meters of capacity), Satipel (570,000 cubic meters), Berneck (530,000 cubic meters), Placas do
Paraná (300,000 cubic meters), Eucatex (270,000 cubic meters), and Tafisa (239,000 cubic meters). Masisa estimates particle board consumption increasedin Brazil in 2004 compared to 2003 levels, and that long-term market prospects for
this product in Brazil are good.

MDF Market. Before the commencement of test production at its MDF plant in Ponta Grossa, Brazil, the Company supplied the Brazilian market solely through imports from Chile and Argentina. After the MDF plant
became fully operational in the third quarter of 2001, the Company significantly increased MDF sales in Brazil. As

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regards to competitors, the first Brazilian producer of MDF, Duratex, began production in 1997 and currently has an annual production capacity of approximately 630,000 cubic meters of which 400,000 was added in 2003. In late 1998, Tafisa Brasil
opened an MDF facility with an annual production capacity of 145,000 cubic meters, and during 2001 increased their capacity to 350,000 cubic meters through the addition of a new plant. Another competitor, Placas do Paraná, began operating a
new MDF plant during December 2001, with an estimated installed capacity of 200,000 cubic meters per year. The Isdra Group opened a new plant in 2003 with an estimated annual capacity of 180,000 cubic meters. Since the third quarter of 1997, the MDF
production from these competitor plants has adversely affected the Companys sales to Brazil. The Company believes that long-term market prospects for this product in the Brazilian market are good. Based in part on its experience in the
Argentinean market, the Company believes that the MDF market will expand rapidly in Brazil as MDF became more widely available as a result of the new domestic MDF production capacity in Brazil.

OSB Market. In December 2001, Masisa began test production of the first OSB boards in a new plant in the Ponta Grossa industrial complex. This OSB plant, which Masisa started to construct in mid-2000, has an
annual installed capacity of 350,000 cubic meters. The plant, which involved an internally financed investment of nearly US$64 million, is the first of its type in Brazil. OSB boards are used in the construction, packing and furniture industry in
applications that require great structural strength. The Ponta Grossa plants production targets both internal consumption and exports. This increase in sales of OSB in 2004 compared to 2003 was due primarily to an increase in exports of OSB to
the U.S. market.

General. In 2004 GDP grew of 4.4%, inflation was 5.2%, while the trade balance deficit was US$8.1 billion and the unemployment rate was 3.8% as of December 31, 2004.

MEXICO(1)MASISA BOARD SALES(millions of US$)

|               |  |                                 |  |      |  |      |  |     
|-------------- |  | ------------------------------- |  | ---- |  | ---- |  | ----
|              
|               |  | For the year ended December 31,
|              
|               |  | 2001                            |  | 2002 |  | 2003 |  | 2004
|              
|Particle Board |  |                                |  | 14.8 |  | 15.3 |  | 21.7
|MDF            |  | 4.2                             |  | 11.9 |  | 15.5 |  | 22.4
|OSB            |  |                                |  | 0.5  |  | 3.0  |  | 3.4 
|              
|Total          |  | 4.2                             |  | 27.2 |  | 33.8 |  | 44.1
|              

Marketing and Distribution. In August 2001, the Company established Masisa Mexico as a vehicle for entering the Mexican wood products market. On January 8, 2002, Masisa Mexico acquired a particle board plant
located in Durango, Mexico, from MacMillan Guadiana, a subsidiary of the US forestry company Weyerhaeuser Company Limited. This plant has an installed capacity of 120,000 cubic meters per year. With this acquisition, the Company now supplies
particle boards to the Mexican market mainly from the Durango plants production. The Company imports MDF and OSB into the Mexican market from its plants in Chile, Argentina and Brazil, and also from the Fibranova plant in Venezuela. The
Companys net sales in Mexico during 2004 represented 14.3% of the Companys consolidated net sales. Because Mexico has a population more than six times greater than Chiles, board consumption levels that are currently substantially
smaller than Chiles and the growing scarcity and increasing cost of sawn lumber, the principal competing product of the Companys wood boards, the Company believes the Mexican market has substantial potential for increased consumption of
wood boards, whether produced locally at the Durango plant or imported from Masisa plants in Chile, Argentina or Brazil.

Currently the Company sells particle board and MDF to Mexican furniture manufacturers directly and through distributors, with a total of 251 customers. In 2004, approximately 81% of Masisas sales revenue in the
Mexican market was generated by the 63 principal customers, and the largest single customer did not account for more than approximately 10% of these sales. Masisas principal distributors in Mexico are Mexicana Pacific S.A. de C.V., Maximaderas
S.A. de C.V., Mexlam S.A. de C.V., Perez Gavilan S.A. de C.V., Perlo S.A. de C.V., Promotora Grocer S.A. de C.V., Tableros del Norte S.A. de C.V., Triplay Market S.A. de C.V., Triplay y Tableros de Ecatepec S.A. de C.V.

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In 2003 and 2004, Masisa successfully expanded its Placacentros network in Mexico. Masisa Mexico had opened 59 stores throughout the country as of June 20, 2005, and expects to open approximately 11 new stores in Mexico
during the remainder of 2005. We intend to open an additional 20 Placacentros in Mexico in 2006. Masisa Mexicoestimates that the furniture industry in Mexico represents approximately 80% of particle board and MDF consumption in that country,
and that approximately 50% of the furniture market is comprised of small and medium-sized manufacturers. In 2004, approximately 34% of Masisa Mexicos total volume sales were made through Placacentros.

Particle Board Market. Particle board per capita consumption in Mexico is relatively low in comparison with other countries. Our total sales of particle board in 2004 were US$21.7 million compared to US$15.3
million for the same period in 2003. This increase was mainly due to higher physical volume sales and prices. Our main competitors in this market are Paneles Ponderosa S.A. de C.V., Rexcel S.A. de C.V., and Duraplay S.A. de C.V.

MDF Market. The Company traditionally supplied the Mexican MDF market from its Chilean, and to a lesser degree, Argentinean facilities. Since 2002, the Fibranova plant in Venezuela has also exported MDF to
Mexico. Our total sales of MDF in 2004 were US$22.4 million compared to US$15.5 million in 2003. This increase was due mainly to higher physical volume sales and prices. Our principal competitors in this market are Paneles Arauco S.A., MJB S.A. de
C.V. and Maderas Conglomeradas S.A. de C.V.

United StatesGeneral

In 2004, GDP grew 4.4%, inflation was 3.3%, the trade balance deficit was US$617.7 billion and the unemployment rate was 5.4% as of December 31, 2004. The U.S. economy experienced moderate growth as a result of an
increase in customer demand and business investment spending.

The following table shows our sales of MDF and OSB in the United States in dollars for the periods indicated.

UNITED STATES
MASISA BOARD SALES(millions of US$)

|               |  |                                 |  |      |  |     
|-------------- |  | ------------------------------- |  | ---- |  | ----
|               |  |                                 |  |      |  |     
|               |  | For the year ended December 31,
|               |  |                                 |  |     
|               |  | 2002                            |  | 2003 |  | 2004
|               |  |                                 |  |      |  |     
|Particle Board |  |                                |  | 0.0  |  | 1.4 
|MDF            |  | 3.4                             |  | 2.8  |  | 2.9 
|OSB            |  |                                |  | 5.9  |  | 30.8
|               |  |                                 |  |      |  |     
|Total          |  | 3.4                             |  | 8.8  |  | 35.1
|               |  |                                 |  |      |  |     

Beginning in 2005, Masisa Brazils began marketing most of its OSB sales in the United States through Terranova Forest Products. Our OSB sales in the United States increased by 422% in dollar terms, from US$5.9
million in 2003 to US$30.8 million in 2004 principally due to the record high prices for OSB in the United States and higher volume.

Masisas MDF moulding sales in the United States increased by 206% in dollar terms, from US$4.7 million in 2003 to US$14.4 million in 2004 principally due to our increased production from our first MDF mouldings
line in Argentina, the addition of a second line in Argentina and a new line in Chile.

During 2004, our MDF sales in the United States increased by 4% in dollar terms, from US$2.8 million in 2003 to US$2.9 in 2004. Our MDF sales in the United States primarily represent sales of excess Chilean MDF
production.

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Marketing and Distribution. The Company serves the Peruvian market with particle board and MDF products mainly through exports from Masisa Chile. The Company established its Peruvian subsidiary, Masisa Peru, in
1999 to conduct commercial and distribution activities in that country. As of December 31, 2004, almost all products sold by the Company in Peru were imported from Chile except for OSB products, which are imported from Brazil.

During 1999, the Placacentro network was extended to Peru. As of June 20, 2005, Masisa Peru had opened a total of 20 stores. Masisa Peru expects to open approximately 2 new stores during the remainder of 2005,
increasing the total number of Placacentros in Peru to 22.

Particle Board and MDF Markets. Consumption of particle board and MDF in Peru is relatively low. The Company estimates that total particle board and MDF consumption in Peru was 2.3 and 0.7 cubic meters per
thousand inhabitants, respectively, in 2004. Our board sales in Peru increased by 26.7% from US$9.2 million in 2003 to US$11.6 million in 2004 principally due to deeper market penetration of MDF board products, and strong demand for particle board.

In Peru, there is currently only one local particle board producer, Tableros Peruanos, with an annual installed capacity of 12,500 cubic meters per year the majority of which is produced with sugar cane bagasse,
resulting a slightly different and lower quality board. Foreign particle board products are imported mainly from Chile (Masisa) and Ecuador (Aglomerados Cotopaxi S.A. and Novopan del Ecuador S.A.). Because there is no local producer of MDF in Peru,
it is also imported from producers in Chile (Masisa and Arauco) and Ecuador (Cotopaxi).

The Company generally achieves higher margins from the sale of its principal products in the markets in which it participates directly (Chile, Argentina, Brazil, Peru and Mexico) than from exports through third parties.
Accordingly, the Company has traditionally preferred to satisfy demand in these markets first, and then export any surplus products. Despite this policy, Masisa has constructed a solid business network outside the markets in which it directly
participates in order to diversify its market risk and to enable it to respond promptly to changes in market conditions in Chile, Argentina, Brazil, Peru and Mexico. After the political and economical crisis began in Argentina in 2002, the Company
utilized this export network and experience to substitute sales to foreign markets for lost sales in the Argentinean market. This was possible as a result of the increased competitiveness of products produced in Argentina resulting from the currency
devaluation in that country. Approximately 11% of the Companys total 2004 consolidated revenues were derived from Chilean, Argentinean, Brazilian and Mexican export sales to markets other than Chile, Argentina, Brazil, Peru, United States and
Mexico, compared to the approximately 20% represented by such sales in 2003.

The Company established its Ecuadorian subsidiary, Masisa Ecuador, in October 2002 to conduct commercial and distribution activities in that country. The Company serves the Ecuadorian market with particle board and MDF
products mainly through exports from Masisa Chile. There are two producers of particle boards in Ecuador, Aglomerados Cotopaxi S.A. and Novopan del Ecuador S.A., each with an annual installed capacity of 40,000 cubic meters. The only MDF producer is
Cotopaxi, also with an annual capacity of 45,000 cubic meters.

Masisa has faced intense market competition, as well as excess supply of some board products, in its export markets. This has encouraged the Company to follow a strategy of emphasizing product quality and market
segmentation for both particle board and MDF. Since 1999, the Company continues to recover its exports to Asian countries, which decreased significantly in 1998 and 1999 as a result of the crisis in certain Asian countries that commenced in 1997.
Thus, the Companys sales to Asian countries in 2004 accounted for 4.5% of the net consolidated sales of the Company. As previously mentioned, because Argentinean and Brazilian demand consumed virtually all of the production of Masisa Argentina
and Masisa Brazil until 2001, most of the products exported to these other markets that year came from the Companys Chilean plants. After the devaluation of the Argentinean peso in January 2002 and the increased cost benefit to the Company
from producing boards in Argentina, Masisa Argentina began exporting its products to new markets, including Asia.

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For a discussion of our capital expenditures and the method of financing those expenditures, see Item 5Liquidity and Capital ResourcesInvesting Activities.

The Company owns and operates production facilities in Chile, Argentina, Brazil and Mexico. Its Chilean production facilities are located in Valdivia, Coronel, Cabrero, and Chiguayante. Its Argentinean production
facilities are located in Concordia. Its Brazilian production facilities are located in Ponta Grossa. Its Mexican production facilities are located in Durango. Together, these facilities have a consolidated annual production capacity of 735,000
cubic meters of particle board, 810,000 cubic meters of MDF and 350,000 cubic meters of OSB.

The following is a brief description of production processes for the Companys principal products.

Particle Board. The production process employed to manufacture raw particle board varies to some degree at each of the Companys particle board facilities. The following is a description of the production
process employed at Masisas Coronel facility, which is the same process used at its Valdivia and Concordia facilities. The first step is the purchase of wood particles in the form of chips, wood shavings and sawdust or their production by the
Company from scraps of lumber and small logs. The wood particles are then put into drying machines to remove water. The dried wood particles are then placed into a gluing machine where they are mixed with chemical adhesives. The mass of wood
particles mixed with adhesives is then formed into boards, with the larger particles positioned in the inside of the board and the smaller particles dispersed on the top and bottom surfaces of the board. Depending upon which production line is
utilized, the formed boards are then either rolled or pressed in order to compress the particles to the desired board thickness and then heated to 190 degrees Celsius (374 degrees Fahrenheit) by steam heat. The compressed and heated particle board
is then cooled. After cooling, the particle board is cut to size, stored to facilitate adhesive stabilization and then sanded. Before and after sanding, the particle boards are visually inspected and graded for quality. Any damaged boards are
removed and burned as fuel or used as packaging material.

MDF. The production process for MDF starts with clean chips and a small proportion of sawdust and wood shavings that are defibrated. The result is a fiber pulp that is then mixed with chemical adhesives. The
wood-fiber and adhesive mixture is dried in a high temperature flash-tube. The fiber is then distributed uniformly in a mat forming station. The boards produced by the forming station are passed through a precompressor to a continuous hot press. The
compressed MDF is then cooled. After cooling, the MDF board is cut to size, stored for 48 hours to facilitate adhesive stabilization and sanded.

Oriented Strand Boards (OSB). The production process for OSB begins with obtaining thin logs. Logs are debarked, sawn and reduced to thin wood strands. The strands are put into a drying machine to remove humidity
from the wood, so as to avoid shrinkage and swelling during use. The dried wood strands are placed into a blending machine where they are mixed with chemical adhesives. The resin-blended strands are then mechanically aligned into several layers in a
forming line, with each layer laid down separately along the conveyor belt, to build up a mat. This mat is compressed and heated in the main press to form the boards. The compressed and heated boards are then cooled, and after passing through a
finishing line, are packaged ready for sale.

Melamine Lamination Process. The melamine lamination process is a separate manufacturing process in which raw particle and MDF boards produced by the Company are hot pressed with melamine-impregnated paper
prepared on a melamine impregnation line. This process requires special quality control procedures, both in the production of the raw materials and in the process itself, to obtain a correctly finished product.

Wood Veneering Process. The production of wood-veneered boards is also a separate process similar to the melamine-laminating process, but instead of melamine-impregnated paper the raw boards are covered by a thin
layer of natural wood (veneer). This process is more expensive than melamine lamination.

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The Companys Chilean board manufacturing facilities in Cabrero, Coronel, Chiguayante and Valdivia currently have an aggregate annual production capacity of approximately 430,000 cubic meters of particle board and
300,000 cubic meters of MDF.

The following table shows the product and the installed annual production capacity in cubic meters as of December 31, 2004, for each of our Chilean production lines.

CHILEWOOD PRODUCTS PRODUCTION LINES

|            |  |               |  |                     |  |                 
|----------- |  | ------------- |  | ------------------- |  | ----------------
|            |  |               |  |                     |  |                 
|            |  |               |  |                     |  | Annual installed
|Plant       |  | Line          |  | Product             |  | capacity(1)     
|            |  |               |  |                     |  |                 
|Cabrero     |  | MDF           |  | MDF                 |  | 160,000         
|            |  | MDF mouldings |  | MDF mouldings       |  | 23,000          
|            |  |               |  |                     |  |                 
|Chiguayante |  | Line 1        |  | Particle board      |  | 90,000          
|            |  | Laminating    |  | Melamine board      |  | 45,000          
|            |  |               |  |                     |  |                 
|Coronel     |  | Line 1        |  | Particle board      |  | 95,000          
|            |  | Line 2        |  | Particle board      |  | 65,000          
|            |  | MDF           |  | MDF                 |  | 140,000         
|            |  | Laminating    |  | Melamine board      |  | 110,000         
|Puschmann   |  | Line 1        |  | Particle board      |  | 90,000          
|            |  |               |  |                     |  |                 
|Valdivia    |  | Line 1        |  | Particle board      |  | 90,000          
|            |  | Laminating    |  | Melamine board      |  | 35,000          
|            |  | Veneering     |  | Wood-veneered board |  | 40,000          
|            |  | Doors         |  | Fiberboard doors    |  | 500,000         
|            |  |               |  |                     |  |                 

|(1) | Units are in cubic meters, except fiberboard doors, which are in square meters. The annual installed capacity may vary slightly depending upon the thickness of the boards produced and other production factors. Actual production can exceed capacity
because capacity is estimated assuming an average board thickness and actual board thickness may vary.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

Coronel. The Companys Coronel industrial site, which is located near the city of Concepción, 320 miles south of Santiago, has two particle board lines, one MDF line and one melamine-laminating line
(which includes a melamine impregnating line).

The Companys Coronel facility has two particle board production lines having an aggregate annual production capacity of approximately 160,000 cubic meters: one for thin particle board (65,000 cubic meters per year
capacity) and another for thicker boards (95,000 cubic meters per year capacity).

The Coronel MDF facility commenced operations in January 1996, and has a production capacity of approximately 140,000 cubic meters of MDF per year.

A new melamine-laminating line in the Coronel plant with an annual production capacity of 110,000 cubic meters came into full operation in 2003. This plant increases melamine production in response to increased supply
needs resulting from the development of the Placacentros network and other anticipated needs for such boards in local and export markets. The total cost of the new line was approximately US$3.3 million, all of which was internally financed.

Chiguayante. The Companys Chiguayante facility is only 16 miles from its Coronel facility. The Chiguayante facility has a single particle board line with the capacity to produce approximately 90,000 cubic
meters per year. An upgrade of the facility in 1994 converted the Chiguayante facility into a modern and efficient facility which manufactures particle board of similar quality to that produced at the Coronel facility. During 1998, automation and
improvements to instruments were made in order to allow the facilitys production lines to operate with greater electronic support.

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The Chiguayante plant also possesses a melamine-laminating line that has an annual capacity of approximately 45,000 cubic meters.

Cabrero. This plant, formerly called Fibranova, was acquired by the Company in September 2000 and has been operating since August 1992. It has a single MDF board line with an annual production capacity of 160,000
cubic meters. Additionally, in order to produce a greater quantity of value added products, we added an MDF molding line with an annual production capacity of 23,000 cubic meters which began production in June 2004.

Valdivia. The Company has two production complexes in Valdivia, a city located approximately 520 miles south of Santiago. The main facility is referred to as the Valdivia plant, which has an annual
capacity of approximately 90,000 cubic meters of particle board. The second facility is named Puschmann, in memory of Carlos Puschmann, a distinguished employee who passed away in 1999.

The Valdivia plants machinery employs a process similar to the particle board production facilities in Coronel and Concordia, Argentina. In addition to producing raw particle board, the Valdivia plant produces
melamine-laminated boards, wood-veneered particle board and all of the doors and strips of wood veneer produced by Masisa Chile. Additionally, the melamine-laminating line purchased from Infodema was moved to the Companys Valdivia plant and
has been operating at full capacity since February 1999. For more detailed information, see Puschmann Plant description.

Both the melamine-laminating line and the wood-veneering line use raw boards produced in Masisas other plants to produce coated boards. The melamine-laminating line and the wood-veneering line have estimated
annual production capacities of 35,000 cubic meters and 40,000 cubic meters, respectively. Actual production can exceed capacity because capacity is estimated assuming an average board thickness and actual board thickness may vary. Masisas
door production line is located in the same facility and has an estimated annual production capacity of 500,000 square meters.

Puschmann. The Puschmann plant was acquired in August 1998 when the Company purchased the assets of Tableros Nobel S.A. (Nobel), which was a wholly-owned subsidiary of Infodema S.A.
(Infodema) for US$17 million. The Nobel assets included a particle board plant and a melamine-laminating line, which was moved to the Valdivia plant after the acquisition. The acquisition was internally financed. As part of the
transaction, the Company also extended loans to Infodema for an aggregate amount of US$4.5 million, which were guaranteed by Infodemas manufacturing board facilities and forestry lands, of which the outstanding portion was repaid in 2003.

The capacity utilization rate for Masisas particle board production facilities in Chile was 83% in 2004, compared to 75% in 2003 and 84% in 2002. The capacity utilization rate for Masisas MDF production
facilities in Chile was 103% in 2004, compared to 94% in 2003 and 98% in 2002. Actual production can exceed capacity because capacity is estimated assuming an average board thickness and actual board thickness may vary.

Masisa Argentinas board manufacturing lines currently have an aggregate annual production capacity of approximately 185,000 and 270,000 cubic meters of particle board and MDF, respectively, as indicated in the
table below.

The following table shows the product and the installed annual production capacity in cubic meters as of December 31, 2004, for each of our Argentinean production lines.

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ARGENTINA
PRODUCTION LINES

|          |  |            |  |                         |  |                 
|--------- |  | ---------- |  | ----------------------- |  | ----------------
|          |  |            |  |                         |  |                 
|          |  |            |  |                         |  | Annual installed
|          |  |            |  |                         |  | capacity(1)     
|Plant     |  | Line       |  | Product                 |  | (cubic meters)  
|          |  |            |  |                         |  |                 
|Concordia |  | Line 1     |  | Particle Board          |  | 160,000         
|          |  | Line 2     |  | Particle Board          |  | 25,000          
|          |  | MDF        |  | MDF                     |  | 150,000         
|          |  | Thin-MDF   |  | Thin-MDF                |  | 120,000         
|          |  | Laminating |  | Melamine Board          |  | 200,000         
|          |  | Foil       |  | Foil Lined Board        |  | 48,000          
|          |  | Molding    |  | Prepainted MDF Moldings |  | 72,000          
|          |  |            |  |                         |  |                 
|Total     |  |            |  | Particle Board          |  | 185,000         
|          |  |            |  | MDF                     |  | 270,000         
|          |  |            |  |                         |  |                 

|(1) | The annual installed capacity may vary slightly depending upon the thickness of the boards and other production factors. Actual production can exceed capacity because capacity is estimated assuming an average board thickness and actual board
thickness may vary.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

Masisa Argentinas production facilities are located in Concordia, an industrial town in the Province of Entre Ríos on the Uruguay River, approximately 250 miles north of Buenos Aires. The Concordia particle
board production facility has the capacity to produce 185,000 cubic meters per year of raw particle board in two lines. The particle board line for thin particle board (under 9 mm) has an annual capacity of 25,000 cubic meters per year. The particle
board line for greater board thickness has an annual capacity of 160,000 cubic meters per year. The Concordia facility commenced operations in June 1994. The capacity utilization rate for Masisa Argentinas particle board production facilities
was 81% in 2004 compared to 77% in 2003 and 73% in 2002.

In September 1995, Masisa Argentina completed the installation of an MDF facility adjacent to its particle board facilities. This MDF facilitys capacity was increased from 120,000 cubic meters to 138,000 cubic
meters during 1997 and its production capacity was again increased to 150,000 cubic meters during 1999.

In October 2001, Masisa Argentina completed the construction of a thin-MDF plant at the Concordia Industrial Complex. The plant, which became fully operational by mid-2002, has an installed capacity of 120,000 cubic
meters per year, and represents an investment of approximately US$30 million, which was financed internally. The capacity utilization rate for Masisa Argentinas MDF production facilities was 93% in 2004 compared to 85% in 2003 and 77% in 2002.

The Concordia plant also includes a melamine-laminating line with an installed capacity of 200,000 cubic meters per year, and a new foil lining process with an installed capacity of 48,000 cubic meters per year.

In March 2002, Masisa Argentina commenced construction of its first line of pre-painted MDF moldings in Argentina at the Concordia Complex. The molding line, with an estimated production capacity of 36,000 cubic meters
per year, started its production in January 2003. The molding line represents an investment of approximately US$1.8 million and was financed internally. Production at the molding plant will primarily be directed to the United States. This line
became fully operational during the second quarter of 2003. An additional 36,000 cubic meters of production capacity was added during 2004. The capacity utilization rate for Masisa Argentinas MDF mouldings production facilities was 72% in 2004
compared to 49% in 2003.

Masisa Brazil board manufacturing lines currently have an aggregate annual production capacity of approximately 240,000 cubic meters of MDF and 350,000 cubic meters of OSB, as indicated in the table below.

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BRAZIL 
PRODUCTION LINES

|             |  |            |  |                |  |                 
|------------ |  | ---------- |  | -------------- |  | ----------------
|             |  |            |  |                |  |                 
|             |  |            |  |                |  | Annual installed
|             |  |            |  |                |  | capacity(1)     
|Plant        |  | Line       |  | Product        |  | (cubic meters)  
|             |  |            |  |                |  |                 
|Ponta Grossa |  | Line 1     |  | MDF            |  | 240,000         
|             |  | OSB        |  | OSB            |  | 350,000         
|             |  | Laminating |  | Melamine Board |  | 110,000         
|             |  |            |  |                |  |                 
|Total        |  |            |  | MDF            |  | 240,000         
|             |  |            |  | OSB            |  | 350,000         
|             |  |            |  |                |  |                 

|(1) | The annual installed capacity may vary slightly depending upon the thickness of the boards and other production factors. Actual production can exceed capacity because capacity is estimated assuming an average board thickness and actual board
thickness may vary.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

In December 2000, Masisa Brazil finished the construction of its MDF production facility, located in the city of Ponta Grossa, in the State of Paraná. This facility has an annual installed capacity of 240,000
cubic meters per year and reached full production during the second half of 2001. The capacity utilization rate for Masisa Brazils MDF production facilities was 108% in 2004 compared to 101% in 2003. Actual production can exceed capacity
because capacity is estimated assuming an average board thickness and actual board thickness may vary. In the same complex, Masisa Brazil finished construction in May 2001 of a melamine-laminating plant that is used for coating MDF and particle
board at an estimated total cost of US$4 million. The MDF plant was financed with cash on hand and short- and long-term bank financing. This laminating plant has a production capacity of approximately 110,000 cubic meters per year.

In December 2001, Masisa Brazil produced the first OSB boards in its new plant in the Ponta Grossa Industrial Complex. The plant cost approximately US$64 million, has an annual installed capacity of 350,000 cubic meters
and became fully operational during the fourth quarter of 2002. The OSB plant was financed with cash on hand and short and long-term bank financing. In 2001, this plant had no significant production of OSB The capacity utilization rate for Masisa
Brazil OSB production facilities in Brazil was 71% in 2004 and 48% in 2003. The capacity utilization rate in 2002 is not meaningful because the plant was not fully operational until the fourth quarter of 2002. The OSB plants production was
adjusted to correspond to the demand generated by this product. Because OSB is a new product in Brazil, the Company expects demand to increase as the market becomes better educated about its various uses.

Although Masisa Brazilbelieves that market prospects for MDF and OSB in Brazil are good, there can be no assurance that Masisa Brazilwill be able to profitably operate its Brazilian plants or that an
economic, political or market event will not adversely affect its development or operation.

In December 2001, Masisa reached an agreement with Weyerhaeuser Company Limited, a United States Company engaged in the forestry business, to purchase the particle board plant of its subsidiary, MacMillan Guadiana,
located in the city of Durango, Mexico. The plant has a total installed capacity of 120,000 cubic meters per year in two independent production lines, as indicated in the table below. The acquired plant also includes a small melamine-laminating
line, with a total installed capacity of 21,600 cubic meters per year. In February 2005, a melamine-laminating line, which was brought from Chile, began operating.

The following table shows the product and the installed annual production capacity in cubic meters as of December 31, 2004, for each of our Mexican production lines.

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MEXICO
  PRODUCTION LINES


|        |  |            |  |                |  |                 
|------- |  | ---------- |  | -------------- |  | ----------------
|        |  |            |  |                |  |                 
|        |  |            |  |                |  | Annual installed
|        |  |            |  |                |  | capacity(1)     
|Plant   |  | Line       |  | Product        |  | (cubic meters)  
|        |  |            |  |                |  |                 
|Durango |  | Line 1     |  | Particle Board |  | 60,000          
|        |  | Line 2     |  | Particle Board |  | 60,000          
|        |  | Laminating |  | Melamine Board |  | 60,000          
|        |  | Laminating |  | Melamine Board |  | 21,600          
|        |  |            |  |                |  |                 
|Total   |  |            |  | Particle Board |  | 120,000         
|        |  |            |  |                |  |                 

|(1) | The annual installed capacity may vary slightly depending upon the thickness of the boards and other production factors. Actual production can exceed capacity because capacity is estimated assuming an average board thickness and actual board
thickness may vary.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

The Company, through Masisa Mexico, purchased the Durango plant on January 8, 2002 for approximately US$15.4 million. In 2002, the Company invested approximately US$4 million in technology and equipment in order to
increase production and improve quality. The Durango acquisition was financed with cash on hand and short and long-term bank financing. The capacity utilization rate for Masisa Mexicos particle board production facilities was 91% in 2004
compared to 71% in 2003. The capacity utilization rate in 2002 is not meaningful because the plant was not fully operational during all of 2002. Most of the 2004 and2003 production at this plant was directed toward the local market. Although
Masisa Mexico believes that market prospects for particle board in Mexico are good, there can be no assurance that Masisa Mexicowill be able to profitably operate its Mexican plant or that economic, political or market events will
not adversely affect the plants development or operation.

We insure our assets and operations against a variety of risks associated with our business activities. The types and amounts of coverage we maintain depends on the kind of facility or asset being insured as well as its
location. These plans included insurance policies against fire damage, loss attributed to natural disasters, risks related to the construction of projects, losses resulting from delays in commencing such projects and business interruption.

In Chile, we maintain coverage of our fixed assets in an aggregate amount of US$267.8 million. This amount includes US$65.0 million for losses on our plantations, US$184.7 million for losses due to interruptions in the
operations of our plants and broken equipment and US$18.1 million covering liabilities arising out of civil corporate responsibility claims.

In Brazil, we maintain coverage of our fixed assets in an aggregate amount of US$222.8 million. This amount includes US$35.1 million for losses on our plantations, US$173.7 million for losses due to interruptions in the
operations of our plants and broken equipment and US$14.0 million covering liabilities arising out of civil corporate responsibility claims.

In Argentina, we maintain coverage of our fixed assets in an aggregate amount of US$249.6 million. This amount includes US$40.1 million for losses on our plantations, US$196.5 million for losses due to interruptions in
the operations of our plants and broken equipment and US$13.0 million covering liabilities arising out of civil corporate responsibility claims.

In Mexico, we maintain coverage of our fixed assets in an aggregate amount of US$37.7 million. This amount includes US$25.3 million for losses due to interruptions in the operations of our plants and broken equipment
and US$12.4 million covering liabilities arising out of civil corporate responsibility claims.

As of December 31, 2004, a high number of our personnel have travel and life insurance. The Company, through third parties, also carries insurance in Peru and Ecuador for the value of its products located in those
countries.

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The most significant direct costs associated with the production of particle board, MDF and OSB in connection with the Masisa operations are chemicals, wood, labor and energy.

For the year ended December 31, 2004 chemical adhesives used in the production of particle board and MDF in Chile and Argentina were manufactured by the chemical plants of Georgia Pacific Resinas Ltda. (formerly GPM)
and Resinas Concordia S.A., respectively. These two plants also manufactured most of the chemical catalysts used by the Company in those countries. Until early 2001, Masisa had a 50% interest in both companies under a joint venture with
Georgia-Pacific. In January 2001 the Company sold its participation in those companies to Georgia-Pacific. However, before this transaction, Masisa Chile and Masisa Argentina reached long-term resin supply contracts with GPM and Resinas Concordia
S.A. to ensure the normal supply of resins for existing and future operations, including calculations for future growth of the Company in Chile and Argentina. In Brazil, the principal chemical adhesives used in the production of MDF and OSB were
supplied by Borden Química Indústria e Com. Ltd. and Synteko Produtos Químicos S.A. In Mexico, the principal chemical adhesives used in the production of the particle boards were supplied by Dynea Mexico S.A. de C.V.

The Company believes that the market for the chemicals the Masisa operations need is sufficiently competitive and accessible such that it could satisfy its chemical requirements through other suppliers on terms similar
to those obtained from its current suppliers. There is more than one producer of chemical raw materials in each country in which Masisa has industrial facilities, granting it flexibility as to its suppliers. Masisa also has a number of suppliers for
the raw materials used in its production processes. Masisa believed that the loss of any one of these suppliers, individually, would not have a material adverse effect on the Company. Raw materials are also available from countries in the region as
well as more distant ones, such as the United States and Japan.

Historically, Forestal provided Masisas Chilean plants with small supplies of wood, however Masisa has not purchased any wood from Forestal since 2000. In Argentina, approximately 92% of the wood consumed by
Masisa Argentina in 2003 was purchased from several unrelated saw mills and forest growers and the other 8% of the wood was purchased from Forestal Argentina. The wood consumed by Masisa for the production of MDF in Brazil was purchased either from
owned forests or several unrelated saw mills and forest growers. With respect to the particle board plant in Mexico, Masisa also obtains wood from suppliers that serviced the plant under its previous ownership.

Masisa does not use material amounts of native wood for its production processes. With respect to wood supply, Masisa has several alternatives in forestry companies, including its subsidiaries Forestal and Forestal
Argentina. The Company may also obtain supplies from the forest plantations that it owns in Brazil.

In general, the prices of raw materials used by Masisa in its forestry operations are relatively stable. The prices of raw materials Masisa uses depend on factors such as wood, pulp and oil prices and tend to fluctuate
according to economic cycles and world supply. For example, wood prices increased by approximately 15% during 2004 due to higher demand for wood based products and higher transportation cost due to higher energy costs. The price of resin increased
by approximately 33% during 2004 as a result of higher oil prices.

Masisa has a long-term resin supply contract with Georgia Pacific Resins Ltd. in Chile to ensure the normal supply of resins for existing and future operations, taking into account the future growth of the company. The
estimated amount of payments to be made under the contract in 2005 is US$33 million. The contract is not a financial obligation since it does not oblige the Company to purchase a minimum amount from Georgia Pacific Resins Ltd. In Argentina, Resina
Concordia, an affiliate of Georgia-Pacific Resins Ltd., supplies Masisa with resin.

The steam used by Masisa in its manufacturing operations is largely generated by burning its own scrap wood and defective wood products. Other energy requirements, such as electricity, are obtained from commercial
suppliers.

Masisas principal suppliers in Chile, Argentina, Brazil and Mexico and the products or raw materials they supplies to the Company in connection its business are listed in the following table:

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PRINCIPAL SUPPLIERS OF RAW MATERIALS FOR MASISA BUSINESS

|                             |  |                      |  |                                      |  |                  
|---------------------------- |  | -------------------- |  | ------------------------------------ |  | -----------------
|                             |  |                      |  |                                      |  |                  
|CHILE                        |  | PRODUCT              |  | ARGENTINA                            |  | PRODUCT          
|                             |  |                      |  |                                      |  |                  
|Terranova S.A                |  | Wood                 |  | Forestal Argentina S.A               |  | Wood             
|Aserraderos Arauco S.A       |  | Wood                 |  | H.B. Fuller Argentina S.A.I.C        |  | Moldings Adhesive
|Derquim S.A                  |  | Paraffin Emulsion    |  | Isogama Industria Química Ltda       |  | Paraffin Emulsion
|Interforest S.A              |  | Wood                 |  | Lamigraf S.A                         |  | Paper            
|Georgia  Pacific Resinas    |  |                      |  | Masa Decor S.A                       |  | Paper            
|Ltda                         |  | Resins               |  |                                      |  |                  
|Heninrich Wemhöner GMBH      |  |                      |  | MD Papéis Ltda                       |  | Paper            
|& CO. KG                     |  | Industrial Machinery |  |                                      |  |                  
|Lamigraf S.A                 |  | Paper                |  | Multilogística S.A                   |  | Shipping Line    
|Masa Decor S.A               |  | Paper                |  | Resinas Concordia                    |  | Resins           
|Oxiquim S.A                  |  | Resins               |  | Schattdecor                          |  | Paper            
|Technocell Dekor             |  | Paper                |  | SIA Ltd                              |  | Sanding Belts    
|                             |  |                      |  |                                      |  |                  
|                            
|                            
|BRAZIL                       |  | PRODUCT              |  | MEXICO                               |  | PRODUCT          
|                             |  |                      |  |                                      |  |                  
|Aguia Florestal Industria de |  |                      |  | Aprovechamientos Forestales Auro     |  | Wood             
|Madeira                      |  | Wood                 |  |                                      |  |                  
|Araupel S.A                  |  | Wood                 |  | Casco Impregnated Papers             |  | Impregnated Paper
|Bayer do Brasil              |  | Polyurethane Resins  |  | Combustibles Industriales de Durango |  | Fuel             
|Borden Química e Industria e |  |                      |  | Dynea de Mexico, S.A. de C.V         |  | Resins           
|Com Ltd                      |  | Resins               |  |                                      |  |                  
|Dynea Brasil S.A             |  | Impregnated Paper    |  | Exxonmobil de Mexico, S.A. de C.V    |  | Paraffin Emulsion
|Isogama Industria Qupimica   |  |                      |  | Masa Decor S.A                       |  | Paper            
|LTDA                         |  | Paraffin Emulsion    |  |                                      |  |                  
|Madereira Rickli LTDA        |  | Wood                 |  | Pinelli Universal, S.A. de C.V       |  | Wood             
|Magor LTDA                   |  | Wood                 |  | Interprint Inc                       |  | Paper            
|Synteko Produtos Químicos    |  |                      |  | Transportes Jaessa Amador            |  | Transport Line   
|S.A                          |  | Resins               |  |                                      |  |                  
|Terranova Brasil             |  | Wood                 |  | Zamudio Esquivel José Luis           |  | Hoist Service    
|                             |  |                      |  |                                      |  |                  

The Companys research and development efforts do not involve material expenditures, as the Company relies primarily on technology and equipment purchased or licensed from foreign companies.

The following table sets out the number of hectares and types of uses of our land holdings and rights at December 31, 2004 for each of our forestry operations.

|                          |  |                 |  |           |  |        |  |             
|------------------------- |  | --------------- |  | --------- |  | ------ |  | ------------
|                          |  | Forestry Assets
|                          |  |                 |  |           |  |       
|                          |  | Chile           |  | Argentina |  | Brazil |  | Consolidated
|                          |  |                 |  |           |  |        |  |             
|                         
|Total Forestry Holdings   |  | 44,320          |  | 47,980    |  | 13,811 |  | 106,111     
|Owned                     |  | 44,124          |  | 47,980    |  | 11,899 |  | 104,003     
|Rights/Leased             |  | 196             |  |          |  | 1,912  |  | 2,108       
|Total planted land        |  | 22,589          |  | 33,415    |  | 8,484  |  | 64,488      
|Plantations:              |  |                 |  |           |  |        |  |             
|Radiata / Oregon Pine (1) |  | 18,989          |  |          |  |       |  | 18,989      
|Taeda / elliotti pine     |  |                |  | 10,864    |  | 8,484  |  | 19,348      
|Eucalyptus                |  | 3,599           |  | 22,550    |  |       |  | 26,149      
|To be replanted           |  | 1,212           |  | 4,814     |  | 104    |  | 6,130       
|Protected lands           |  | 9,467           |  | 2,347     |  | 2,265  |  | 14,079      
|Native forests            |  | 9,957           |  |          |  |       |  | 9,957       
|Other (Araucaria          |  | 1,095           |  | 7,405     |  | 5      |  | 8,505       

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|                       |  |   |  |   |  |       |  |      
|---------------------- |  | - |  | - |  | ----- |  | -----
|connifer)              |  |   |  |   |  |       |  |      
|Legal reserve          |  |  |  |  |  | 2,410 |  | 2,410
|Roads, encampments and |  |   |  |   |  |       |  |      
|other uses             |  |  |  |  |  | 543   |  | 543  



|(1) | Of this amount, 750 hectares are planted with other species, including 230 hectares of Oregon Pine.
|--- | ---------------------------------------------------------------------------------------------------

Forestal Tornagaleones S.A. As of May 30, 2005, the Company owned a 60.45% interest in Forestal, which was created in 1967 for the purpose of planting, managing and harvesting forests on properties owned both by
the Company and third parties in Chile. Originally, the Company sought to utilize Forestals holdings of forest lands as insurance against decreases in the supply or increases in the market price of wood needed for its production facilities in
Chile. However, due to the abundant supply of inexpensive scrap wood, wood shavings and sawdust for use in its operations in Chile, the Company purchases from Forestal and uses, for the most part, only small logs and tree branches which have
relatively low commercial value. Forestal sells its higher value products primarily to third parties. In 2004, Forestal Argentina sold approximately 15% of its Argentinean timber production to the Company, while no significant production was sold by
Forestal to Masisa Chile. During 2004, only 8% of the wood consumed by the Company in Argentina was purchased from Forestal Argentina. In 2004, Forestal had sales of US$19.5 million on a consolidated basis (including Forestal Argentina).

For the reasons explained above and in order to enhance Forestals timberland in Chile and to create Forestals Argentinean subsidiary, in 1995 the Company sold a 41% interest in Forestal to Xylem-IA for US$35
million. In March 1996, Masisa Chile reduced its holdings of Forestal to 54.0% when it sold a 5% interest in Forestal to CMB-Prime, a Chilean institutional investor, for approximately US$4.3 million. In August 1996, Masisa Chile sold a 0.5% interest
in Forestal to Rawson Investment Limited (Rawson), a private foreign investor, for approximately US$475,000. In May 1998, Rawson sold the 0.5% interest in Forestal back to Masisa Chile for approximately US$522,060. On June 27, 2002,
after Forestals capital increase, Masisa increased its interest in Forestal to 57.89% of Forestal common stock, at a cost of US$4.3 million. On August 14, 2002, following an additional capital increase by Forestal, Masisa increased its
participation in Forestal to 60.45% of its outstanding common stock, at a cost of US$3.0 million. Forestals two minority shareholders, Xylem-IA and CBM-Prime hold, respectively, 34.45% and 5.09% of Forestals capital stock.

In addition to serving as a potential source of raw materials for the Company in the event of a wood shortage in Chile and prior to Xylem-IAs investment, Forestal acted as a vehicle through which the Company could
invest in forest properties and aim to achieve profits from the sale of timber and/or land from the harvesting of trees. Since the Xylem-IA investment, Forestal has invested in forest properties for the purpose of gaining profits through the sale of
timber and forest. As a result, Forestal has increased the scope of its activities in Chile and changed its forestry management criteria. By the end of 2004, Forestals total forestry plantations in southern Chile reached 22,589 hectares, of
which approximately 18,239 hectares are Radiata, Oregon and other Pine species, 3,599 hectares are Eucalyptus globulus and Eucalyptus nitens and 750 hectares of other species. The total volume of Forestals log sales in Chile in 2004 was
235,159 cubic meters, harvesting the same amount of cubic meters. In 2003, Forestals log sales were 249,570 cubic meters in Chile. The total forest land holdings of Forestal in Chile as of December 31, 2004 were approximately 45,531 hectares.

Forestal Argentina S.A. As concerns forestry operations outside of Chile, by the end of 1995, Masisa Argentina owned approximately 10,885 hectares of forest plantations and fallow land in Argentina. In December
1995, Masisa Argentinas Board of Directors approved the sale of all of its forest holdings to Forestal Argentina S.A., then a wholly-owned subsidiary of Forestal. This sale was completed in March 1996 for a purchase price of approximately
US$28.5 million.

In November 1996, Forestal Argentina increased its capital by approximately US$11.0 million through investments by Chilean private and institutional investors. As a result, Forestals interest in Forestal Argentina
was reduced to 64.5% .

In November 1997, Forestal Argentina increased its capital by US$24.2 million, US$17.0 million of which was subscribed by Xylem-IIA and US$7.2 million of which was subscribed by Forestal. As a result, Forestals
interest in Forestal Argentina was reduced to 50.1% . Additionally, in November 1997, Forestal, along with the other shareholders of Forestal Argentina, entered into a Shareholders Agreement providing for (i) Forestal to maintain

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control of Forestal Argentina until November 6, 2007, (ii) a right of first purchase for Forestal Argentina shareholders if any other shareholder sells its shares and (iii) other related matters.

Since 1996, Forestal Argentina has increased its forest holdings from the original 10,885 hectares purchased from Masisa to a total of 47,980 hectares as of December 31, 2004. Forestal Argentinas total forest
holdings in Argentina at the end of 2004 consisted of 22,550 hectares of Eucalyptus plantations, 10,864 hectares of Taeda and Eliotti Pine plantations, 4,815 hectares of land to be replanted and 9,752 hectares of ecological reserved areas firebreaks
and roads. Forestal Argentina harvested and sold a total of 487,128 cubic meters of logs in 2004, of which approximately 36% were Eucalyptus and 64% were Pine.

Masisa do Brasil Ltd. As of December 31, 2001, Masisa had become directly involved in the forestry business in Brazil, with approximately 13,531 hectares under its management. As of December 31, 2004, Masisa
owned 11,899 hectares in Brazil, including 8,484 hectares are of Taeda and Eliotti Pine plantations and 6245 hectares of ecological reserved areas, firebreaks and roads. Masisa Brazil harvested 198,119 cubic meters of logs in 2004.

Chemical supplies are a significant cost in manufacturing particle board and MDF and are an important factor in establishing the quality of the Companys products. The Company was involved in a joint venture
started in September 1998 with Georgia-Pacific, Inc., a subsidiary of the Georgia-Pacific Corporation (Georgia Pacific). The joint venture was conducted through two companies, GPM in Chile and Resinas Concordia in Argentina, in which
Masisa and Georgia-Pacific both had a 50% interest. The Company was also party to a shareholders agreement with Georgia-Pacific which included an option for Masisa to sell, and an option for Georgia-Pacific to purchase, the remaining 50% of
the shares of the joint venture entities under certain conditions on terms similar to the original share purchase and other customary provisions. In January 2001, Masisa decided to execute its option to sell its participation in the joint venture
chemical business to Georgia-Pacific. On January 17, 2001, Inversiones Coronel Ltda. and Masisa Inversiones sold to Georgia-Pacific Resins Inc., a subsidiary of Georgia-Pacific, their participation in GPM in Chile and Resinas Concordia in Argentina
for US$28.9 million. The Company utilized proceeds from these sales to finance operations relating to its core wood board business.

Masisa Chile and Masisa Argentina executed long-term resins supply contracts with GPM and Resinas Concordia, respectively, to ensure the normal supply of resins for existing operations and for future growth of the
Companys operations. The supply contracts remain in full force after the sale of Masisas participation in the joint venture.

At present, all of the adhesives and chemical products needed for the melamine impregnating line of Masisa in Chile and Argentina are mainly purchased from GPM and Resinas Concordia. Certain adhesives needed for door
production are purchased from other sources in Chile.

Masisa is dedicated to the sustainable growth of all its operations and seeks to achieve a positive balance between economic, social and environmental objectives. Our business philosophy is based on sustainable
development principles, and our policy is to maintain high standards of environmental performance and to comply with all applicable environmental laws and regulations. Together with the start up phase of the MDF lines in Chile in 1996, Masisa
created an Environmental Department in response for Masisas growing concern for environmental issues. Masisa has developed primary waste water treatment processes in certain plants to reduce its production processes environmental impact.
During 1999, new special ventilation insulation systems were completed in the Chiguayante plant in Chile. A secondary waste treatment plant for the MDF line in Argentina was completed in 2000.

Certifications: The ISO 14,001 certification is a voluntary procedure in which an operations environmental practices are evaluated against a specified set of criteria. By the end 2003, Masisa had completed
the implementation of the ISO 14,001 in all of its industrial operations in Argentina, Brazil, Mexico, and Chile, in addition to its forestry operations in Brazil and in its Chilean subsidiary Forestal Tornagaleones. Masisa's Brazilian forestry
operations and Forestal Tornagaleones also obtained the FSC certification for their plantations. As of March 2005, our industrial

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operations in Argentina, Brazil, Mexico, and Chile, in addition to its forestry operations in Brazil, had certified their health and safety management systems under OHSAS 18,001 as well. Our forestry operations in Argentina will achieve FSC
certification during 2006.

In addition, in 2003, all of Masisas MDF production plants obtained the Certificate for Recycled Content granted by the Scientific Certification System (SCS). This certificate confirms that
the raw material used in production comes from material recycled from other forestry processes. This practice helps reduce the demand for forestry resources, recycle materials considered waste in other lines of business and reduce manufacturing
costs.

We are subject to environmental regulation in the countries in which we operate. Such regulations cover, among other things, the discharge of water, and water and air pollution. A discussion of the specific
environmental regulations for each country in which Masisa's operations are located is set forth below.

Chile: Masisa, like other Chilean companies, is subject to several national and local environmental laws, regulations, decrees and municipal ordinances concerning, among other things, discharges into air and
water, handling and disposal of solid and hazardous wastes, and health. Chilean environmental regulations have become increasingly stringent in recent years, particularly for the approval of new projects, and this trend is likely to continue. Masisa
has made and will continue to make substantial expenditures to comply with such environmental laws, regulations, decrees and ordinances.

Chilean legislation to which Masisa is subject include the Chilean Environmental Basic Law (Law 19,300 of 1994), based upon article 19 No. 8 of the National Constitution, which establishes the general structure of the
Chilean environmental law. Law 19,300 defines the Government agencies responsible, among other things, for evaluating environmental impact studies, overseeing the implementation of projects in accordance with their environmental impact statements,
and coordinating environmental regulations. These agencies are Comisión Nacional del Medio Ambiente - (National Environmental Commission or CONAMA), and Comisiones Regionales del Medio Ambiente - Regional
Environmental Commissions or COREMA-, which are agencies of the Ministerio Secretaría General de la Presidencia -(the Ministry of the Presidency).

Masisa is subject to other regulations, such as DS 146 (Ministry of Health) on environmental noise, DS 185 (Mining Ministry) on air emissions of particulate matter, DS 90 (Ministry of the Presidency), DS 609 (Public
Works Ministry), DFL 725 (Ministry of Health), and DS 46 (Ministry of the Presidency) on discharges to water, DS 594 (Ministry of Health), DS 148 (Ministry of Health), and DS 298 (Transportation Ministry) on handling and transportation of waste and
hazardous waste, and DFL 1 (Ministry of Health), DFL 725 (Ministry of Health), and DS 594 (Ministry of Health) on health issues in the work place. Regulation DS 95 (Ministry of the Presidency) requires Masisa, and all companies in Chile, to conduct
environmental impact studies of any future projects or activities that may effect the environment.

Additionally, affected persons, including private citizens, public agencies, and local governmental authorities, can sue under the Chilean Environmental Basic Law to enforce environmental compliance. Enforcement
remedies include temporary or permanent closure of facilities and fines. Private citizens are also allowed to object to the plans or environmental impact studies submitted by project owners.

Brazil: The MDF and OSB facilities constructed in Brazil include state-of-the-art solid and liquid waste treatment plants. Based on these investments, the Environmental Institute of Paraná issued an
Installation Authorization, certifying that all the current Brazilian environmental requirements have been met. Masisa Brazil believes that it is in material compliance with all environmental laws and regulations affecting its facilities
and products. In addition, because Masisas Brazil production processes are based on wood from planted trees and because substantially all of its forestry operations involve planted trees, Masisa Brazil does not believe that there are any
material environmental concerns applicable to it that result from the use of natural forest resources.

Laws 6938/81 and 9605/98 give the general framework for environmental legislation in Brazil. Other norms applicable to Masisa Brazil include Resolution SEMA 41/02, which defines norms for air emissions, Law 9433/97 and
Resolution CONAMA 20/86 which regulate effluents to water, and Law 12493/99 that regulates management of waste and dangerous waste.

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Mexico: Masisas plant in Durango possesses an Environmental License (Licencia Ambiental Única) from the State of Durango, and had obtained ISO 14,001 and OHSAS 18,001 certification. Masisa
believes that it is in material compliance with all environmental laws and regulations affecting its facilities and products in Mexico. Masisa's operations in Mexico are subject to the National Environmental Law - 2001 (Ley General de Equilibrio
Ecológico y la Protección al Medio Ambiente), and to the local Environmental Law issued by the State of Durango (Ley de Recursos Naturales y Medio Ambiente del Estado de Durango  2001). Norm STPS regulates air
emissions, and Federal Laws 052 and 054 regulate management of dangerous waste. Water management is regulated by the National Water Law of 2003, and the Federal Rule on Wastewater Control of 2003 (Reglamento del Gobierno del Estado sobre Control
de Aguas Residuales).

Argentina: Masisa Argentina has obtained its ISO 14,001 and OHSAS 18,001 certification, and made new investments in management of wastewater to allow its re-utilization. All the industrial navies have ventilation
systems, except the moulding plant, which will be installed during 2005. Masisa also possesses  Sanitary Authorization from the Department of Development, Ecology and Environmental Control from the Province of Entre Ríos.

All companies in Argentina, including Masisa, are subject to several national and local environmental laws, regulations, decrees and municipal ordinances concerning, among other things, discharges into air and water,
handling and disposal of solid and hazardous wastes, and health. Provincial Law No. 6260 Contamination Prevention by the Industries with its Reglamentary Decree No. 5837 regulates the wastewater discharges and air quality, solid waste
handling, noises and vibrations. National Law No. 24051 Hazardous Wastes  generation, handling, transport and treatment and its Reglamentary Decree No. 831 regulate the management of hazardous wastes and air emissions.

Masisa, as part of the GrupoNueva group, is dedicated to the sustainable growth of all its operations, including economic, social and environmental endeavors. As a result of this commitment, Masisa published its first
Sustainability Report in 2004, which brings Masisa up to the standards of the other companies in the GrupoNueva group.

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PART II

Item 5. Operating and Financial Review and Prospects

The Operating and Financial Review and Prospects begins with a brief Overview of our business and products, the most important events affecting our financial performance for the years ended December 31, 2004, 2003 and
2002 and other issues which are material to a readers understanding of the information presented in this section. The Overview concludes with our business outlook for the year 2005 and an overview of significant factors affecting the
comparability of our historical results of operations and financial condition for each of the periods compared in our Results of Operations discussion. This is followed by a discussion of our Results of Operations for the year ended December 31,
2004 compared to the same period in 2003 and for the year ended December 31, 2003 compared to 2002. The next section provides an analysis of our Liquidity and Capital Resources, including changes in our balance sheet and cash flows, and discusses
our financial commitments. The last two sections discuss the impact of inflation and currency devaluation on our results and our critical accounting policies.

The following discussion is based upon, and should be read in conjunction with, our Consolidated Financial Statements, including the Notes thereto, included elsewhere in this document and particularly in the
Business Outlook section.

The Companys primary source of revenue is the sale of particle board, MDF and OSB wood products. The Companys business strategy is to be the leader and world-class producer of wood board in Latin
America while expanding and diversifying its export markets. The Companys operations are located in regions with access to environmentally-friendly, long-term, low cost supplies of wood. Recently, the Company has sought to focus its product
mix to include higher margin products such as melamine-laminated wood paneling and expand into new products, such as OSB and MDF mouldings, that have significant synergies with the Companys core business.

The Company has designed a focused medium and long-term strategy.The specific focus of the Companys medium and long-term strategy is to:

- Strengthen commercial and production leadership in the Latin America board industry
- Further develop distribution channels and market segments to increase the value provided to customers
- Offer a greater variety of products and higher value products that meet customer needs and conform to international standards

The Company generates revenue and has production facilities in four principal markets  Chile, Argentina, Brazil and Mexico. While the Company also exports to other Latin American and world wide markets, its
performance in its principal markets is, and will continue to be, fundamental to its strategy and results of operations. In an effort to diversify, the Company recently expanded its distribution channels to non-principal markets by opening new
commercial offices and increasing the number of Placacentro stores throughout Latin America.

Regional economic conditions have a significant impact on the Companys business. Demand for the Companys products is influenced significantly by growth in the construction and furniture industries,
which are highly correlated with regional economic conditions. During the recent economic weakness in Argentina, the construction sector was, in particular, significantly affected. Also, in Chile, the construction sector has, until

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recently, lagged GDP growth. Despite the improvement of economic conditions shown in two of the Companys primary markets in 2004, Argentina and Brazil, we can not assure that these conditions will continue in 2005.

Most of the Companys products are commodity products and subject to competition from manufacturers in the region and to a certain extent worldwide. In particular, supply factors that have affected or are
likely to affect our results of operations are the increased MDF installed capacity of our competitors in Chile and Brazil. In addition, although the recent import substitution of particle board from Argentina has largely stopped, there can be no
assurance that economic downturns in Latin America and our other markets will not lead to the import by competitors of low cost products into the markets in which we sell our products. Also, in Brazil, we have experienced strong growth in OSB sales
where our Masisa business is the only OSB producer. There can be no assurance that competitors will not enter this market and adversely affect the OSB prices and our results.

Prices for the Companys products have historically been volatile and the Company, like other competitors in the industry, has limited control over the degree and timing of price fluctuations of its
products. To a certain extent, product pricing depends on the supply of building products in the Companys region. Recently, the Company has experienced price pressure on the Chilean particle board market due to imports from Argentina and
industry over capacity in certain regions such as Chile. In addition, prices for its products are also influenced by worldwide prices, which until the second half of 2003, were relatively depressed. During the first quarter of 2004, the Company
benefited from a high OSB price cycle in the US market, which has subsequently moderated.

The Companys sales and transactions occur in an array of markets and represent a portfolio of currencies. The majority of the Companys sales and transactions are indexed to U.S. dollars in the short-
and medium-term, although, currency depreciation in any particular market can significantly decrease net sales when translated into U.S. dollars. However, devaluation can also increase competitiveness and ability to export, although at generally
lower prices than in the local market. Currency exchange volatility significantly influences the Companys results of operations and has, in recent years, been especially volatile and had a negative impact on the Companys performance.
Currency volatility is often correlated with regional economic conditions but can also be affected by world events such as terrorism and global economic shocks.

As explained above, regional economic conditions have a significant impact on our results of operations. The table below presents the GDP growth rates for each of our most important markets in addition to forecasts by
the Economic Commission for Latin America and the Caribbean for growth in 2005.

|          |  |                        |  |       |  |      |  |        
|--------- |  | ---------------------- |  | ----- |  | ---- |  | -------
|          |  | Year ended December 31
|          |  |                        |  |       |  |     
|          |  | 2002                   |  | 2003  |  | 2004 |  | 2005(1)
|          |  |                        |  |       |  |      |  |        
|Chile     |  | 2.2%                   |  | 3.3%  |  | 6.1% |  | 6.2%   
|Argentina |  | -10.9%                 |  | 8.7%  |  | 9.0% |  | 6.5%   
|Brazil    |  | 1.9%                   |  | -0.2% |  | 5.2% |  | 4.0%   
|Mexico    |  | 0.7%                   |  | 1.2%  |  | 4.4% |  | 3.8%   
|          |  |                        |  |       |  |      |  |        

|(1) | Projected GDP Growth by the Economic Commission for Latin America and the Caribbean, April, 2005.
|--- | -------------------------------------------------------------------------------------------------
|   

Despite the improvement of market conditions shown during 2004, we can not assure that these conditions will continue in 2005.

Several factors could negatively impact our performance during 2005. Prices for our products periodically increase and decrease in what we refer to as price cycles, which are highly unpredictable. The price
cycles with respect to OSB, in particular, are subject to high volatility both in terms of the variation in high and low prices as well as the short time periods over which prices typically rise and fall. Recently, OSB prices have fallen in the
United States. Because a significant part of our growth has come from export sales of OSB, a decline in OSB prices could adversely affect our results of operations. Also, mainly due to significant economic growth in China, worldwide demand for
shipping has increased dramatically causing a scarcity of shipping capacity relative to

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demand. We have at times experienced difficulty in arranging shipping from our Latin American operations to export markets. Because exports have recently contributed significantly to our growth, future difficulties in arranging adequate shipping for
our products could adversely affect our results of operations.

The most important factors affecting the Companys operating and financial performance in 2004 were the following:

- Higher OSB prices cycles in the United States during the first quarter of 2004, declining moderately in the third quarter and raising through the fourth quarter.
- Economic recovery in Argentina, strong growth in Brazils economy, and significant growth in each of Mexico and Chile, thereby improving demand for our products.
- High and steadily rising oil prices during 2004, leading to price increases for the adhesives we use to manufacture board products.
- High freight costs resulting from high oil prices and scarcity of container and shipping availability.

The most important factors affecting the Companys operating and financial performance in 2003 were the following:

- Pricing pressure in particle board and MDF during the first half of the year.
- Economic recovery in Argentina and stabilization of regional currencies.
- Higher OSB price cycles in the US in the second half of 2003.

The most important factors affecting the Companys operating and financial performance in 2002 were the following:

- Low cost imports from Argentina into Chile, which put price pressure on Masisas Chilean sales, particularly of particle board.
- Economic crisis in Argentina, which was reflected in our results of operations as a result of the consolidation of Masisas financial results beginning July 1, 2002.

Summary.As a result of an improvement in regional economic conditions in 2004, the Company enjoyed a more positive business environment with higher prices and physical volume sales offsetting increased costs. In
2004, net sales increased 41.0% to US$397.3 million compared to net sales of US$281.8 million in 2003. Gross margins and operating margins increased from 23.5% and 9.0%, respectively, to 30.1% and 17.9%, respectively.

On April 12 and April 13, 2005, respectively, the shareholders of Masisa and Terranova approved the merger by incorporation of Masisa into and with Terranova. The completion of the merger was subject to certain
conditions, established at the respective Extraordinary Shareholders Meetings of Masisa and Terranova to approve the merger, with respect to the exercise of withdrawal rights. Those conditions were satisfied and the merger became effective on
May 31, 2005. As a consequence, Masisa no longer exists. Terranova continues as the surviving entity and is the legal successor of Masisa for all purposes. However, shares and ADSs of Masisa have not yet been exchanged for shares and ADSs of
Terranova and that exchange will not occur until Terranova has completed certain additional filings and obtained certain approvals related to the issuance of its shares and ADSs in exchange for shares and ADSs of Masisa. It typically takes between
60 and 90 days after the date of the last of the shareholder meetings at which the merger is first approved to complete this process. Although we cannot predict the exact amount of time that will be required to make or obtain the various filings and
approvals, we expect to complete this process and exchange shares and ADSs of Masisa for shares and ADSs of Terranova in early July 2005. Until the

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share exchange occurs, each such share and ADS of Masisa outstanding represents only the right to receive upon exchange 2.56 shares or 1.536 ADSs of Terranova, respectively.

In connection with the approval of the merger, Masisas shareholders approved an Extraordinary Dividend of US$54.0 million which was subject to certain conditions, established at the respective Extraordinary
Shareholders Meetings of Masisa and Terranova to approve the merger, with respect to the exercise of withdrawal rights and such conditions have successfully been met. In order to pay the dividend, Masisa incurred approximately US$26 million in
new short-term bank debt in addition to US$28 million in loans from Terranova, Masisas then controlling shareholder. For more information on the merger, see Item 4. Information on the Company  Merger with Terranova.  For more
information on the Extraordinary Dividend, see Item 8. Financial Information Dividend Policy.

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The discussion below analyses and compares on a consolidated level the results of operation. The following table summarizes the consolidated results of operations for the years indicated.

|                                                  |  |                         |  |         |  |        
|------------------------------------------------- |  | ----------------------- |  | ------- |  | -------
|                                                  |  | Year ended December 31,
|                                                  |  |                         |  |        
|                                                  |  | 2002                    |  | 2003    |  | 2004   
|                                                  |  |                         |  |         |  |        
|Net Sales (millions of US$)                       |  | 225.4                   |  | 281.8   |  | 397.3  
|Gross Margin (millions of US$)                    |  | 59.4                    |  | 66.3    |  | 119.4  
|Operating Income (millions of US$)                |  | 29.8                    |  | 25.3    |  | 71.1   
|Net Income (millions of US$)                      |  | 14.6                    |  | 9.6     |  | 41.6   
|Depreciation (millions of US$)                    |  | 24.0                    |  | 25.8    |  | 27.7   
|                                                 
|                                                 
|Physical Board Volume (thousands of cubic meters) |  | 1,302.0                 |  | 1,435.4 |  | 1,709.2
|Average Board Price per Cubic Meter (US$)         |  | 162                     |  | 178     |  | 215    
|                                                 
|Net Sales Growth %                                |  |                        |  | 25.0%   |  | 41.0%  
|Gross Margin % *                                  |  | 26.3%                   |  | 23.5%   |  | 30.1%  
|Operating Income Margin % *                       |  | 13.2%                   |  | 9.0%    |  | 17.9%  
|Net Income Margin % *                             |  | 6.5%                    |  | 3.4%    |  | 10.4%  
|                                                 

|* | Amounts are expressed as percentages of net sales.
|- | --------------------------------------------------
| 

Net sales increased 41.0% to US$397.3 million in 2004 compared to US$281.8 million in 2003. The increase was due mainly to higher average prices and significantly higher physical volume sales across a majority of our
product and geographic segments. The average price of our board products per cubic meter in 2004 increased 21.2 % to US$215 compared to US$178 per cubic meter in 2003. Consolidated sales of our board increased 14.1% to 1,638.3 thousand cubic meters
in 2004, compared to 1,435.4 thousand cubic meters in 2003 due to an increase in MDF volume sales in local markets and the increase in volume sales of OSB in the United States.

Gross margin increased from US$66.3 million, or 23.5% of net sales, in 2003 compared to US$119.4 million, or 30.1% of net sales, in 2004. This was mainly due to higher sales and increased gross margin as a percentage of
sales due to higher average prices while average costs of sales increased slightly.

Selling and administrative expenses totaled US$48.4 million, or 12.2% of net sales, in 2004, representing an 18.0% increase from US$41.0 million, or 14.5% of net sales, in 2003. This increase was due primarily to higher
selling expenses associated with significantly increased sales.

Operating income increased by 180.7% to US$71.1 million, or 17.9% of net sales, in 2004 compared to US$25.3 million, or 9.0% of net sales, in 2003. The increase in operating income is attributable mainly to
significantly higher sales and gross margin.

Non-operating results decreased by 71.7% from a loss of US$12.8 million in 2003 to a loss of US$21.9 million in 2004. Non-operating income declined 20.3% from US$4.9 million in 2003 to US$3.9 million in 2004 principally
due to a decrease of financial income which was offset by a slight increase in other non-operating expenses. Non-operating expenses increased by 37.2% from US$17.9 million in 2003 to US$24.6 million in 2004 principally due to an increase in interest
expense, an asset write-off for US$3.0 million as a result of obsolete assets principally in Masisa Mexicos particle board lines and Masisa Argentinas impregnation line which was provisioned at its book value, and a write off related to
a loan receivable balance from an affiliated entity for US$2.8 million.

The Company reported net income of US$41.6 million, or 10.4% of net sales, in 2004 compared to net income of US$9.6 million, or 3.4% of net sales, in 2003. The 333.3% increase in net income in 2004 compared to 2003
reflects significantly improved sales and operating income offset by an increase in other non-operating expenses.

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Net sales increased 25.0% to US$281.8 million in 2003 compared to US$225.4 million in 2002. The increase in net sales is attributable to generally improved market conditions in three of the Companys four principal
markets. Argentina, Brazil and Mexico showed strong sales volume growth and moderate price improvement. Improvement in these markets was offset partially by a decline in net sales in Chile due to greater competition and lingering import substitution
coming from Argentina. Physical board volume sales increased by 10.2% from 1,302.0 thousand cubic meters in 2002 to 1,435.4 thousand meters in 2002. Average board prices increased 9.6 % to US$178 in 2003 compared to US$162 in 2002.

Gross margin increased 11.6% from US$59.4 million in 2002 to US$66.3 million in 2003 due to higher overall sales. However, margins declined from 26.3% of net sales in 2002 to 23.5% of net sales in 2003 mainly due to an
increase in sales of lower margin products as well as higher costs of sales that were not wholly offset by higher product prices. Some of the higher costs of sales can be attributed to problems introducing new MDF technology in Chile in the first
quarter of 2003. During January and February of 2003, the Company faced difficulties introducing a new resin gluing technology on its MDF line in Cabrero which both increased costs and resulted in lost export sales. The Company estimated the these
problems increased average production costs by approximately 11% in the first two months of 2003.

Selling and administrative expenses increased 38.5% to US$41.0 million in 2003 from US$29.6 million in 2002. This increase was due primarily to the fact that: (i) the Companys operating expense were to a certain
extent variable and therefore increased when sales increased and (ii) the local currencies where the Company operated appreciated, on average, relative to the U.S. dollar, thereby increasing operating expenses when translated into U.S. dollars.
Additionally, in 2003 there were two one-time consulting projects totaling US$1.0 million. The first project, amounting to approximately US$0.6 million, was undertaken with the help of a globally recognized consulting firm to improve the
Companys long-term business strategy. The second project, amounting to approximately US$0.4 million, was undertaken, with the help of an investment bank, to analyze the Companys optimum corporate ownership structure.

Operating income decreased by 15.1% to US$25.3 million in 2003 compared to US$29.8 million in 2002 due to the decrease in gross margin and higher selling and administrative expenses as described above.

Non-operating results decreased from a loss of US$9.6 million in 2002 to a loss of US$12.7 million in 2003, a variation of 31.9%, despite a US$6.6 million decrease in price-level restatement losses. Non-operating income
declined 36.7% from US$7.7 million in 2002 to US$4.9 million in 2003 principally due to a non-recurring reversal of the allowance for doubtful accounts of US$2.8 million in 2002. Non-operating expenses increased by 48.5% from US$12.1 million in 2002
to US$17.9 million in 2003 principally due to an increase in interest expense as a result of the expensing of previously capitalized interest expense associated with the OSB plant in Brazil. Interest expense associated with the OSB plant in Brazil
was capitalized in 2001 and 2002 because it was in a construction and start-up phase.

The Company reported net income of US$9.6 million, or 3.4% of net sales, in 2003 compared to net income of US$14.6 million, or 6.5% of net sales, in 2002. The 34.1% decrease in net income in 2003 compared to 2002
reflects, among other things, lower gross margin and operating income and lower non-operating results as discussed above.

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The following discusses geographic segments based on the location in which the sale was originated, as reported in Note 23(2)(f) of the Consolidated Financial Statements.

Chile

|                                                      |  |                         |  |       |  |      
|----------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                      |  | Year ended December 31,
|                                                      |  |                         |  |       |  |      
|                                                      |  | 2002                    |  | 2003  |  | 2004 
|                                                      |  |                         |  |       |  |      
|Net Sales (millions of US$)                           |  | 116.3                   |  | 117.5 |  | 144.7
|Gross Margin (millions of US$)                        |  | 39.0                    |  | 27.9  |  | 36.1 
|Selling and Administrative Expenses (millions of US$) |  | -16.0                   |  | -17.9 |  | -21.1
|Operating Income (millions of US$)                    |  | 23.0                    |  | 10.0  |  | 15.0 
|Depreciation (millions of US$)                        |  | 10.7                    |  | 11.5  |  | 11.2 
|                                                     
|Net Sales Growth %                                    |  |                        |  | 1.0%  |  | 23.2%
|Gross Margin % *                                      |  | 33.5%                   |  | 23.8% |  | 24.9%
|Operating Income Margin % *                           |  | 19.8%                   |  | 8.5%  |  | 10.4%
|                                                      |  |                         |  |       |  |      

|* | Amounts are expressed as percentages of net sales.
|- | --------------------------------------------------
| 

Year ended December 31, 2004 compared to 2003. In Chile, net sales increased 23.2% to US$144.7 million in 2004 compared to US$117.5 million in 2003. This was due mainly to higher physical volume sales and average
prices in both particle board and MDF in the local market. We have benefited from strong economic growth in Chile leading to a surge in the construction sector. In addition, Argentinas strong economic recovery has reduced import price
pressure. Gross margin increased from US$27.9 million, or 23.8% of net sales, in 2003 to US$36.1 million, or 24.9% of net sales, in 2004. This was due mainly to increased sales offset by average costs increases as a result of higher raw material
costs such as resin and wood. Operating income increased to US$15.0 million, or 10.4% of net sales, in 2004 compared to US$10.0 million, or 8.5% of net sales, in 2003. This was mainly due to higher gross margin partially offset by higher selling and
administrative expenses due to increased sales, legal expenses related to the merger with Terranova and a moderate appreciation of the Chilean peso relative to the U.S. dollar.

Year ended December 31, 2003 compared to 2002.In Chile, net sales increased 1.0% to US$117.5 million in 2003 compared to US$116.3 million in 2002. Forestry and wood chip sales increased moderately. However, the
increase was offset by a decline in board sales due mainly to lower average prices and lower physical volume sales resulting from continued import pressure from Argentina, especially from particle board imports during the first half of 2003, and a
larger capacity in the board market. Production problems in the MDF board plants, as a result of introducing new technology in the first quarter of the year, prevented exports from compensating for part of this drop. Gross margin declined from
US$39.0 million, or 33.5% of net sales, in 2002 to US$27.9 million, or 23.8% of net sales, in 2003. This decrease is due mainly to lower physical volume sales and lower prices as discussed above while average raw material costs, which are priced in
dollars and determined by world markets, were either flat or increased. Operating income decreased to US$10.0 million, or 8.5% of net sales, in 2003 compared to US$23.0 million, or 19.8% of net sales, in 2002. The decrease in operating income is
attributable to the decrease in gross margin as discussed above and higher selling and administrative expenses due mainly to certain non-recurring expenses including consulting projects undertaken in 2003 to improve the Companys long-term
business strategy and operations. These consulting projects amounted to approximately US$1.0 million. The first project, amounting to approximately US$0.6 million, was undertaken with the help a globally recognized consulting firm to improve the
Companys long-term business strategy. The second project, amounting to approximately US$0.4 million, was undertaken, with the help of an investment bank, to analyze the Companys optimum corporate ownership structure. Additionally,
selling and administrative expenses were higher in 2003 compared to 2002 because of local currency appreciation, additional costs of storing unsold product, additional insurance and higher provision for doubtful accounts.

46

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Argentina

|                                                      |  |                         |  |       |  |      
|----------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                      |  | Year ended December 31,
|                                                      |  |                         |  |       |  |      
|                                                      |  | 2002                    |  | 2003  |  | 2004 
|                                                      |  |                         |  |       |  |      
|Net Sales (millions of US$)                           |  | 49.2                    |  | 68.9  |  | 90.8 
|Gross Margin (millions of US$)                        |  | 7.8                     |  | 12.0  |  | 23.2 
|Selling and Administrative Expenses (millions of US$) |  | -7.1                    |  | -7.6  |  | -8.6 
|Operating Income (millions of US$)                    |  | 0.7                     |  | 4.5   |  | 14.6 
|Depreciation (millions of US$)                        |  | 8.0                     |  | 8.1   |  | 8.4  
|                                                     
|Net Sales Growth %                                    |  |                        |  | 40.0% |  | 31.9%
|Gross Margin % *                                      |  | 15.9%                   |  | 17.4% |  | 25.6%
|Operating Income Margin % *                           |  | 1.5%                    |  | 6.5%  |  | 16.1%
|                                                      |  |                         |  |       |  |      

|* | Amounts are expressed as percentages of net sales.
|- | --------------------------------------------------
| 

Year ended December 31, 2004 compared to 2003.In Argentina, net sales increased 31.9% to US$90.8 million in 2004 compared to US$68.9 million in 2003. The increase was due mainly to the continued economic
recovery in Argentina leading to higher physical volume sales and prices in the local market for both particle board and MDF. Local particle board prices increased by approximately 18% and local MDF prices rose more than 7% in 2004. Additionally,
Masisa Argentina began selling significant quantities of our new MDF moldings to the U.S. market towards the end of 2003 and which continued to increase steadily throughout 2004. Gross margin increased from US$12.0 million, or 17.4% of net sales, in
2003 to US$23.2 million, or 25.6% of net sales, in 2004. This increase is due mainly to increased sales and higher margins resulting from a strong recovery in prices in particle board and MDF and an increase in sales of higher margin MDF moldings.
Operating income increased to US$14.6 million, or 16.1% of net sales, in 2004 compared to US$4.5 million, or 6.5% of net sales, in 2003. The increase in operating income is attributable to higher gross margin partially offset by higher selling
expenses due to increased sales.

Year ended December 31, 2003 compared to 2002. In Argentina, net sales increased 40.0% to US$68.9 million in 2003 compared to US$49.2 million in 2002. The increase is due mainly to a recovery in the Argentinean
market, especially in the second half of 2003, after the economic crisis in 2002. Industries such as construction, which suffered greatly during the crisis, improved in 2003. Both average prices and physical volume sales increased during 2003
compared to 2002. Gross margin increased from US$7.8 million, or 15.9% of net sales, in 2002 to US$12.0 million, or 17.4% of net sales, in 2003. This increase is due mainly to higher net sales resulting from the recovery of the local market, that
replaced lower margin exports sales. However, margins remained below pre-2002 levels because of higher raw material costs and continued excess capacity in the industry. Operating income increased to US$4.5 million, or 6.5% of net sales, in 2003
compared to US$0.7 million, or 1.5% of net sales, in 2002. The increase in operating income is attributable to the increase in gross margin as described above while selling and administrative expenses increased only slightly due to a moderate
appreciation of the Argentinean peso.

Brazil

|                                                      |  |                         |  |       |  |      
|----------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                      |  | Year ended December 31,
|                                                      |  |                         |  |       |  |      
|                                                      |  | 2002                    |  | 2003  |  | 2004 
|                                                      |  |                         |  |       |  |      
|Net Sales (millions of US$)                           |  | 46.2                    |  | 73.8  |  | 118.7
|Gross Margin (millions of US$)                        |  | 9.5                     |  | 19.3  |  | 43.8 
|Selling and Administrative Expenses (millions of US$) |  | -3.8                    |  | -6.5  |  | -9.1 
|Operating Income (millions of US$)                    |  | 5.7                     |  | 12.9  |  | 34.7 
|Depreciation (millions of US$)                        |  | 4.5                     |  | 5.3   |  | 7.2  
|                                                      |  |                         |  |       |  |      
|Net Sales Growth %                                    |  |                        |  | 59.7% |  | 61.0%
|Gross Margin % *                                      |  | 20.7%                   |  | 26.2% |  | 36.9%
|Operating Income Margin % *                           |  | 12.4%                   |  | 17.4% |  | 29.2%
|                                                      |  |                         |  |       |  |      

|* | Amounts are expressed as percentages of net sales.
|- | --------------------------------------------------
| 

Year ended December 31, 2004 compared to 2003. In Brazil, net sales increased 61.0% to US$118.7 million in 2004 compared to US$73.8 million in 2003. The increase is due mainly to strong demand and pricing for OSB
exports to the United States and significantly higher physical volume sales of MDF in the local market. OSB prices in the United States increased by approximately 65%. Gross margin increased from US$19.3 million, or

47

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26.2% of net sales, in 2003 to US$43.8 million, or 36.9% of net sales, in 2004. This increase is due mainly to higher sales and an expansion of the gross margin as a percentage of sales due to higher OSB prices in the United States. Operating income
increased to US$34.7 million, or 29.2% of net sales, in 2004 compared to US$12.9 million, or 17.4% of net sales, in 2003. The increase in operating income is attributable to the substantially higher gross margin that was only partially offset by
increased selling expenses and a moderate appreciation of the Brazilian real relative the U.S. dollar.

Year ended December 31, 2003 compared to 2002. In Brazil, net sales increased 59.7% to US$73.8 million in 2003 compared to US$46.2 million in 2002. This increase occurred despite no growth in GDP in the Brazilian
market in 2003 and a decline in both consumption and internal demand following pre- and post-election uncertainty. The increase is due mainly to a significant recovery in the price of MDF boards in the domestic market and a sales increase of OSB
boards both in Brazil as well as abroad, taking advantage of substantial OSB price increases in the US market towards the end of 2003. Both average prices and physical volume sales increased during 2003 compared to 2002. Gross margin increased from
US$9.5 million, or 20.7% of net sales, in 2002 to US$19.3 million, or 26.2% of net sales, in 2003. This increase is due mainly to higher physical volume sales, especially OSB exports, and higher sales prices relative to raw material costs. Operating
income increased to US$12.9 million, or 17.4% of net sales, in 2003 compared to US$5.7 million, or 12.4% of net sales, in 2002. The increase in operating income is attributable to the increase in gross margin as described above, however, the
increase was partially offset by higher selling and administrative expenses. In 2002, indirect expenses associated with the construction and start-up of the OSB plant were capitalized. Starting in 2003, with the OSB plant fully operating, these
indirect expenses are no longer capitalized thus increasing selling and administrative expenses compared to 2002. Also, depreciation expense increased in 2003 due to additional capital investments made in the OSB plant in 2002.

Mexico

|                                                      |  |                        |  |        |  |      
|----------------------------------------------------- |  | ---------------------- |  | ------ |  | -----
|                                                      |  | Year ended December 31
|                                                      |  |                        |  |        |  |      
|                                                      |  | 2002(1)                |  | 2003   |  | 2004 
|                                                      |  |                        |  |        |  |      
|Net Sales (millions of US$)                           |  | 17.0                   |  | 34.9   |  | 55.6 
|Gross Margin (millions of US$)                        |  | 2.9                    |  | 5.0    |  | 12.2 
|Selling and Administrative Expenses (millions of US$) |  | -2.7                   |  | -6.8   |  | -7.0 
|Operating Income (millions of US$)                    |  | 0.2                    |  | (1.8)  |  | 5.2  
|Depreciation (millions of US$)                        |  | 0.7                    |  | 0.9    |  | 1.0  
|Net Sales Growth %                                    |  |                       |  | 105.6% |  | 59.4%
|Gross Margin % *                                      |  | 17.2%                  |  | 14.4%  |  | 21.9%
|Operating Income Margin % *                           |  | 1.2%                   |  | (5.2)% |  | 9.3% 
|                                                      |  |                        |  |        |  |      

|(1) | The Company acquired its Mexico Operation in January 2002.
|--- | ----------------------------------------------------------
|*   | Amounts are expressed as percentages of net sales.        

Year ended December 31, 2004 compared to 2003.In Mexico, net sales increased 59.4% to US$55.6 million in 2004 compared to US$34.9 million in 2003. The increase is due mainly to significantly higher physical
volume sales and moderately higher prices for particle board and MDF. In addition to producing and selling particle board, Masisa Mexico also distributes and sells MDF and OSB imported from Masisas other subsidiaries. Gross margin increased
from US$5.0 million, or 14.4% of net sales, in 2003 to US$12.2 million, or 21.9% of net sales, in 2004. This increase is due mainly to higher sales and higher particle board prices which increased gross margins as percentage of sales. Operating
income increased from a loss of US$1.8 million, or 5.2% of net sales, in 2003 to US$5.2 million, or 9.3% of net sales, in 2004. The increase in operating income is attributable to higher gross margin and flat selling and administrative expenses.

Year ended December 31, 2003 compared to 2002. In Mexico, net sales increased 105.6% to US$34.9 million in 2003 compared to US$17.0 million in 2002. The increase is due mainly to Masisa Mexicos production
replacing Mexican sales that previously were filled by imports from other Masisa countries and an increase in exports. The Company acquired its Mexico operations on January 8, 2002. See Mexican Production Facilities under Item 4 for more
detailed information on the acquisition. The facilities acquired went through a startup and adjustment period during the first part of 2002 and therefore were not in full operation for the entire year. Gross margin increased from US$2.9 million, or
17.2% of net sales, in 2002 to US$5.0 million, or 14.4% of net sales, in 2003. This increase is due mainly to higher net sales as discussed above. Operating income decreased from US$0.2

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million, or 1.2% of net sales, in 2002 to a loss of US$1.8 million, or 5.2% of net sales, in 2003. The decrease in operating income is attributable to significantly higher selling and administrative expenses due mainly to non-recurring costs
associated with developing Masisa Mexicos administrative infrastructure and incorporating Masisa Mexico into the Companys global operations. Some of Masisa Mexicos selling and administrative expenses are variable and would be
expected to increase if sales were to increase.

Product Segments

Particle Board

|                                                  |  |                         |  |       |  |      
|------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                  |  | Year ended December 31,
|                                                  |  |                         |  |       |  |      
|                                                  |  | 2002                    |  | 2003  |  | 2004 
|                                                  |  |                         |  |       |  |      
|Net Sales (millions of US$)                       |  | 87.5                    |  | 92.2  |  | 111.0
|Physical Volume Sales (thousands of cubic meters) |  | 538.3                   |  | 552.0 |  | 580.1
|Average Price per Cubic Meter (US$)               |  | 163                     |  | 167   |  | 191  
|                                                 
|% of Consolidated Net Sales                       |  | 38.8%                   |  | 32.7% |  | 27.9%
|Net Sales Growth %                                |  |                        |  | 5.3%  |  | 20.4%
|Volume Growth %                                   |  |                        |  | 2.6%  |  | 5.1% 
|Price Change %                                    |  |                        |  | 2.7%  |  | 14.6%

Year ended December 31, 2004 compared to 2003. Particle board sales generated US$111.0 million, or 27.9% of our total net sales, in 2004 compared to US$92.2 million, or 32.7% of net sales, in 2003. Particle board
physical volume sales increased by 5.1% from 552.0 thousand cubic meters in 2003 to 580.1 thousand cubic meters in 2004. This increase in physical volume sales is mainly attributable to strong demand in all our principal markets, especially Mexico.
Average prices in U.S. dollars for consolidated particle board sales increased 14.6% to US$191 per cubic meter in 2004, compared to US$167 in 2003. The increase in particle board prices is mainly due to strong demand in all our principal markets.

Year ended December 31, 2003 compared to 2002. Particle board sales generated US$92.2 million, or 32.7% of the Companys total net sales, for 2003 compared to US$87.5 million, or 38.8% of net sales, for
2002. Particle board physical volume sales increased by 2.6% from 538.3 thousand cubic meters in 2002 to 552.0 thousand cubic meters in 2003. This increase in physical volume is mainly attributable to a recovery in the Argentinean market and strong
growth in Peru. However, the strength in these two markets was partially offset by weakness in Chile where both volume and average prices declined. Averages price in U.S. dollars for consolidated particle board sales increased 2.7% to US$167 per
cubic meter in 2003, compared to US$163 in 2002. The increase in particle board prices is mainly due to higher prices in Argentina and Brazil and a moderate appreciation of currencies in those local markets.

MDF

|                                                  |  |                         |  |       |  |      
|------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                  |  | Year ended December 31,
|                                                  |  |                         |  |       |  |      
|                                                  |  | 2002                    |  | 2003  |  | 2004 
|                                                  |  |                         |  |       |  |      
|Net Sales (millions of US$)                       |  | 119.8                   |  | 135.3 |  | 180.5
|Physical Volume Sales (thousands of cubic meters) |  | 674.4                   |  | 705.4 |  | 816.6
|Average Price per Cubic Meter (US$)               |  | 178                     |  | 192   |  | 221  
|                                                  |  |                         |  |       |  |      
|% of Consolidated Net Sales                       |  | 53.1%                   |  | 48.0% |  | 45.4%
|Net Sales Growth %                                |  |                        |  | 13.0% |  | 33.4%
|Volume Growth %                                   |  |                        |  | 4.6%  |  | 15.8%
|Price Change %                                    |  |                        |  | 8.0%  |  | 15.2%

Year ended December 31, 2004 compared to 2003. MDF sales generated US$180.5 million, or 45.4% of our total net sales, in 2004 compared to US$135.3 million, or 48.0% of net sales, in 2003. MDF physical volume
sales increased by 15.8% from 705.4 thousand cubic meters in 2003 to 816.6 thousand cubic meters in 2004. This increase in physical volume sales is mainly attributable to strong demand in all our principal markets, especially in Brazil as a result
of an increase in the overall market for MDF and in Argentina as result of its continued economic recovery. Average prices in U.S. dollars for consolidated MDF sales increased 15.2% to US$221 per cubic meter in

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2004, compared to US$192 in 2003. The increase in MDF prices is mainly due to strong demand in all our principal markets offsetting, in the case of Brazil, an increase in competition.

Year ended December 31, 2003 compared to 2002. MDF sales reached US$135.3 million, representing 48.0% of total net sales for 2003. In 2002, MDF sales totaled US$119.8 million or 53.1% of total net sales. MDF
physical volume sales increased 4.6% from 674.4 thousand cubic meters in 2002 to 705.4 thousand cubic meters in 2003. MDF sales do not include moldings made from MDF which are included in Other Products. The increase in volume was mainly due to a
recovery in the Argentinean local market and continued growth in Brazil which offset weakness in Chile. Prices recovered strongly in both Argentina and Brazil, as a result of strong demand and currency appreciation in the local markets. Average
prices in U.S. dollars for consolidated MDF sales increased 8.0% to US$192 per cubic meter in 2003, compared to US$178 in 2002.

OSB

|                                                  |  |                         |  |       |  |      
|------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                  |  | Year ended December 31,
|                                                  |  |                         |  |       |  |      
|                                                  |  | 2002                    |  | 2003  |  | 2004 
|                                                  |  |                         |  |       |  |      
|Net Sales (millions of US$)                       |  | 9.0                     |  | 27.7  |  | 54.5 
|Physical Volume Sales (thousands of cubic meters) |  | 89.4                    |  | 178.1 |  | 247.1
|Average Price per Cubic Meter (US$)               |  | 101                     |  | 155   |  | 220  
|                                                  |  |                         |  |       |  |      
|% of Consolidated Net Sales                       |  | 4.0%                    |  | 9.8%  |  | 13.7%
|Volume Growth %                                   |  |                        |  | 99.3% |  | 38.7%
|Price Change %                                    |  |                        |  | 53.9% |  | 42.2%

Year ended December 31, 2004 compared to 2003.OSB sales generated US$54.5 million, or 13.7% of our total net sales, in 2004 compared to US$27.7 million, or 9.8% of net sales, in 2003. OSB physical volume sales
increased by 38.7% from 178.1 thousand cubic meters in 2003 to 247.1 thousand cubic meters in 2004. This increase in physical volume is mainly attributable to strong demand for OSB in the United States for construction industry. Average prices in
U.S. dollars for consolidated OSB sales increased 42.2% to US$220 per cubic meter in 2004, compared to US$155 in 2003. The increase in OSB prices is mainly due to strong demand in the United States in the housing construction sector.

Year ended December 31, 2003 compared to 2002.OSB sales in 2003 reached US$27.7 million or 9.8% of the Companys net sales compared to only US$9.0 million or 4.0% of net sales in 2002. This represents an
increase of 206.7% in net sales and an increase of 99.3% in physical volume sales. In 2003, the Company sold 178.1 thousand cubic meters of OSB compared to 89.4 thousand cubic meters in 2002. This increase was mainly due to increased production and
sales from the Brazilian OSB plant which became fully operational in the fourth quarter of 2002. Also, the Company was able to take advantage of an increase in OSB prices in the U.S. market towards the end of the year to increase export sales.

Other products include principally timber, wood chips, molding and doors.

|                            |  |                         |  |        |  |      
|--------------------------- |  | ----------------------- |  | ------ |  | -----
|                            |  | Year ended December 31,
|                            |  |                         |  |        |  |      
|                            |  | 2002                    |  | 2003   |  | 2004 
|                            |  |                         |  |        |  |      
|Net Sales (millions of US$) |  | 9.1                     |  | 26.7   |  | 51.3 
|                           
|% of Consolidated Net Sales |  | 4.0%                    |  | 9.5%   |  | 12.9%
|Net Sales Growth %          |  |                        |  | 193.0% |  | 92.2%

Year ended December 31, 2004 compared to 2003.Other products sales generated US$51.3 million, or 12.9% of our total net sales, in 2004 compared to US$26.7 million, or 9.5% of net sales, in 2003. The increase in
other product sales was due mainly to:

- the increase in MDF molding sales, primarily due to the beginning of operations of 2 new lines in Chile and Argentina, respectively,.

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- the increase in sales of wood chips, wood plies and door parts, and
- flat fiberboard door sales.

Year Ended December 31, 2003 compared to 2002.Other products net sales increased 193.0% to US$26.7 million or 9.5% of the Companys net sales in 2003 from US$9.1 million or 4.0% of the Companys net
sales in 2002. The increase was primarily due to the addition of a pre-painted MDF moldings product line produced in Argentina starting in 2003 and a large increase in timber and wood sales. The MDF moldings were sold almost exclusively in exports
markets and reached net sales of US$4.7 million in 2003 compared to no sales in 2002. The increase in timber and wood chips sales was due mainly to higher physical volume sales, especially in Argentina, and increased trading revenue which were
partially offset by lower prices. Part of timber and wood chips net sales were derived from low margin trading activities that can fluctuate significantly depending on market conditions and Masisas ability to exploit market opportunities. In
2003, trading revenue more than doubled to approximately US$4.5 million compared to US$2.0 million in 2002. Door sales in 2003 were flat compared to 2002.

The Company operates and manages its forestry business in Chile and Argentina through its subsidiary Forestal. In the Geographic Segments discussion above, Forestals results of operations are included in Chile and
Argentina in accordance with the origin of sale. Forestals net sales and operating income, respectively, represent less than 5% of the Companys results of operations, principally due to the age of our forests, most of which are still in
formation phase. However, the Company believes that a separate discussion and analysis of its forestry business is useful.

|                                                      |  |                         |  |       |  |      
|----------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                      |  | Year ended December 31,
|                                                      |  |                         |  |       |  |      
|                                                      |  | 2002                    |  | 2003  |  | 2004 
|                                                      |  |                         |  |       |  |      
|Net Sales (millions of US$)                           |  | 11.9                    |  | 15.7  |  | 19.5 
|Gross Margin (millions of US$)                        |  | 1.2                     |  | 2.8   |  | 3.2  
|Selling and Administrative Expenses (millions of US$) |  | -0.5                    |  | -0.6  |  | -0.6 
|Operating Income (millions of US$)                    |  | 0.7                     |  | 2.2   |  | 2.6  
|Depreciation (millions of US$)                        |  | 0.1                     |  | 0.1   |  | 0.1  
|                                                     
|Net Sales Growth %                                    |  |                        |  | 31.3% |  | 24.3%
|Gross Margin % *                                      |  | 10.1%                   |  | 17.9% |  | 16.4%
|Operating Income Margin % *                           |  | 6.1%                    |  | 14.2% |  | 13.4%
|                                                      |  |                         |  |       |  |      

|* | Amounts are expressed as percentages of net sales.
|- | --------------------------------------------------
| 



Year Ended December 31, 2004 compared to 2003.Forestals net sales increased 24.3% to US$19.5 million in 2004 compared to US$15.7 million in 2003. The increase was due mainly to higher physical volume
sales, and increased wood plies trading in Chile. In 2003, Forestal began selling pine veneer to local and export markets, and this is now an important source of income, but with lower gross margins. It is important to note that the selling of pine
veneer gross margin increased from US$2.8 million, or 17.9% of net sales, in 2003 to US$3.2 million, or 16.4% of net sales, in 2004. This increase was due mainly to the higher net sales discussed above, partially offset by higher costs. Operating
income increased to US$2.6 million, or 13.4% of net sales, in 2004 compared to US$2.2 million, or 14.2%% of net sales, in 2003. The increase in operating income is attributable to higher net sales and gross margins. Despite the increase in sales,
selling and administrative expenses remained flat due to a change in delivery method.

Year Ended December 31, 2003 compared to 2002.Forestals net sales increased 31.3% to US$15.7 million in 2003 compared to US$11.9 million in 2002. The increase was due mainly to higher physical volume
sales, especially in Argentina, and increased trading revenue which were partially offset by lower prices. Part of Forestals net sales are derived from low margin trading activities that can fluctuate significantly depending on market
conditions and Masisas ability to exploit market opportunities. In 2003, trading revenue more than doubled to approximately US$4.5 million compared to US$2.0 million in 2002; however, average prices declined moderately primarily as a result of
local market oversupply in Chile. Gross margin increased from US$1.2 million, or 10.1% of net sales, in 2002 to US$2.8 million, or 17.9% of net sales, in 2003. This increase was due mainly to the higher net sales discussed above. Operating income
increased to US$2.2 million, or 14.2% of net sales, in 2003 compared to

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US$0.7 million, or 6.1% of net sales, in 2002. The increase in operating income is attributable to higher net sales and gross margins. Selling and administrative expenses increased moderately in dollar terms as a result of the appreciation of local
currencies.

In this section, when we refer to our external sources of liquidity prior to May 31, 2005, we are referring to sources external to Masisa. When such references are to periods on or after May 31, 2005, we are referring
to sources external to Terranova, as the legal successor to Masisa.

The Companys principal sources of liquidity are existing cash balances, cash generated from operations and its ability to borrow under credit facilities. In general, the Company did not seek to raise new net
long-term capital as it believed its current cash reserves and operating sources were sufficient to cover its planned capital expenditures and working capital requirements. Therefore, the Companys financing activities related principally to
replacing its existing long-term credit sources as they periodically matured or when cost of debt could be reduced.

The most significant financing event during 2004 were two new long-term bank loans of US$12.5 million from BCI, and US$12.5 million from Rabobank Nederland. Cash generated in operating activities during the year was
used to pay or prepay short and long term financial debt, that was reduced by US$55.0 million during 2004. The company ended the year with cash and a cash equivalent balance of US$22.6 million.

The most significant financing event during 2003 involved the issuance of a public bond with two series totaling US$91.2 million in December 2003 for the purpose of repaying previous bank borrowings with December 2003
and 2004 maturities.

In connection with the approval of the merger with Terranova, on April 2005 Masisas shareholders approved an Extraordinary Dividend of US$54.0 million which was subject to certain conditions, established at the
respective Extraordinary Shareholders Meetings of Masisa and Terranova to approve the merger, with respect to the exercise of withdrawal rights, and such conditions were met. In order to pay the dividend, Masisa incurred approximately US$26
million in new short term bank debt in addition to US$28 million in loans from Terranova, Masisas then controlling shareholder. For more information on the merger, see Item 4. Information on the Company  Merger with
Terranova. For more information on the Extraordinary Dividend, see Item 8. Financial Information  Dividend Policy.

Our net cash provided by operating activities was US$60.6 million for the year 2004, compared to US$17.8 million in 2003. The increases in sales volume, in conjunction with overall higher prices explain higher net sales
in US dollars. The increase in collections is explained by the growth in net sales and improved collection rates. Cash payments to suppliers also increased as a consequence of higher volumes produced and sold. Collections and payments to suppliers
and employees were US$471.9 million and US$387.9 million respectively. During 2004 the Company increased cash disbursements for interest payments and VAT payments, and reduced income taxes payments compared to 2003. The increase in cash
disbursements for interest payments was principally due to the higher interest rate of the bond issued on December 2003 compared to the interest rate of the debt prepaid with the proceeds of the bond. VAT payments increased from US$11.3 million in
2003 to US$13.5 million in 2004 a consequence of higher sales in US dollars. Income tax payments have been reduced from US$8.1 million in 2003 to US$5.1 million in 2004, mainly due to the lower net income obtained by the company during 2003. Net
working capital needs rose as a consequence of higher sales. There were no material credit policy changes during this period.

Masisas net cash provided by operating activities for 2003 was US$17.8 million, compared to US$4.5 million in 2002. A mild recovery in prices and higher overall volumes led to higher net sales in US dollars.
Collections as well as cash payments to suppliers increased as a consequence of higher volumes produced and sold. Collections and payments to suppliers and employees were US$328.9 million and US$297.5 million respectively. During 2003, Masisa
reduced cash disbursements for interest payments and increased cash disbursements for income tax payments and VAT payments. Despite having a higher interest expense during 2003, during the year

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Masisa disbursed US$9.8 million in interest payments, lower than the US$14.4 disbursed in 2002, as a result of expensing previously capitalized interest expense associated with the OSB plant in Brazil. The increase in income taxes paid, from US$1.7
million in 2002 to US$8.1 million in 2003, is mainly due to the different depreciation schedule used in financial statements for reporting and tax purposes, which had previously deferred income tax payments. VAT payments increased as a consequence
of higher sales in US dollars. Net working capital needs rose as a consequence of higher sales. There were no material credit policy changes during this period.

The table below summarizes the Companys significant capital spending by geographic segment.

|             |  |                            |  |      |  |     
|------------ |  | -------------------------- |  | ---- |  | ----
|             |  | Year ended December 31,   
|             |  |                            |  |      |  |     
|             |  | 2002                       |  | 2003 |  | 2004
|             |  |                            |  |      |  |     
|             |  | (millions of U.S. dollars)
|Chile(1)     |  | 7.6                        |  | 10.9 |  | 8.1 
|Argentina(2) |  | 5.4                        |  | 3.4  |  | 6.7 
|Brazil       |  | 19.6                       |  | 9.2  |  | 7.0 
|Mexico(3)    |  | 16.9                       |  | 2.5  |  | 2.1 
|             |  |                            |  |      |  |     
|            
|Total        |  | 49.5                       |  | 26.0 |  | 23.9
|             |  |                            |  |      |  |     

|(1) | Chile includes Forestal investing activities.              
|--- | -----------------------------------------------------------
|(2) | Argentina includes Forestal Argentina investing activities.
|(3) | Mexican operations acquired in January 2002.               
|   

Most of the capital expenditures incurred during 2002, 2003 and 2004 were funded with internal cash generation, and short-term and long-term bank loans.

- In Chile: US$2.9 million for the planting and maintenance of timberland; US$1.5 million for a MDF moldings line; US$0.7 million in set-up and office furniture expenses for our new administrative offices; US$0.7 million for machinery
replacement parts; and US$0.6 million for buildings related to the MDF moldings line;
- In Brazil: US$4.3 million for the acquisition, planting and maintenance of timberland; US$0.8 million for machines and equipment for the OSB line; and US$0.4 million for a second MDF defibering machine;
- In Argentina: US$2.3 million for the planting and maintenance of timberland; US$2.1 million for molding line equipment and buildings; and US$0.5 million for machinery replacement parts; and
- In Mexico: US$1.2 million for a new board forming line; US$0.4 million for a laminating line and US$0.1 million for a sanding machine.

The remaining capital expenditures in 2004 of US$5.8 million were related to various smaller projects.

Significant capital expenditures in 2003 were as follows:

- In Chile: US$3.8 million for the acquisition, planting and maintenance of timberland; and US$2.8 million for the addition of a new melamine line;
- In Brazil: approximately US$4.4 million for the planting of timberland;
- In Argentina: US$1.9 million for the acquisition, planting and maintenance of timberland; and
- In Mexico:US$2.4 million for machinery and equipment.

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The remaining capital expenditures in 2003 of US$10.7 million were related to various smaller projects.

- In Chile:US$3.4 million for the acquisition, planting and maintenance of timberland in Chile;
- In Brazil:US$13.3 million in equipment and investments related to the start-up phase of the new OSB plant; and US$3.7 million for the acquisition and planting of timberland in Brazil;
- In Argentina:US$1.9 million for construction of the new pre-painted MDF molding line with an annual installed capacity of 36,000 cubic meters in the Concordia, Argentina plant; and
- In Mexico:US$16.9 million to acquire the particle board plant in Durango with an annual installed capacity of 120,000 cubic meters per year and a small laminating line with an annual installed capacity of more than 21,000 cubic meters per
year.

The remaining capital expenditures in 2002 of US$11.3 million were related to various smaller projects.

During 2005, the Company plans to make capital investments of approximately US$4.7 million in Chile, US$3.9 million in Argentina, US$6.7 million in Brazil and US$0.4 million in Mexico. All of these investments will be
financed from operating cash flow. In Chile, the investments are expected to include the beginning phase in the construction of a new MDF plant, environmental impact reduction equipment, a board density measurement device, a sawdust recovery system
and gas escapes equipment. In Argentina, the investment plan includes a dry gluing line, MDF and particle board scrubbers and plant road improvements. In Brazil, the Companys primary investment will be for two dry gluing lines, an impregnation
line and a humidifying system. In Mexico, the principal planned investments include modifying the impregnation system, improving the water distribution systems and automating the glue heating system.

The Companys most significant financing activities were its long-term borrowings and short-term financing facilities. The following paragraphs describe the long and short-term borrowings Masisa paid or repaid
during the indicated periods.

Principal financing activities in the year 2004 related mainly to reducing short-term borrowings and, replacing maturing long-term borrowings. Our short-term borrowings and long-term borrowings maturing within one year
declined by US$55.5 million during 2004, from US$90.1 million on December 31, 2003 to US$34.6 million on December 31, 2004. Significant repayments of short-term borrowings in 2004 included repaying an aggregate amount of US$34.8 million relating to
several bank financings. Significant repayments of long-term borrowings during  2004 included the repayment of US$28.5 million to Rabobank Ireland and the payment of US$14.2 million of partial maturities of long term debt and US$9.0 million of a
partial maturity of a private placement. Our significant new long-term borrowings during 2004 were bank loans, including a borrowing of US$12.5 million from BCI and a borrowing of US$12.5 million from Rabobank Nederland.

The Companys financing activities in 2003 related mainly to replacing existing long-term borrowings maturing in late 2003 and 2004. The largest new borrowing was the successful public issuance of two series of
fixed rate bonds totaling US$91.2 million in December 2003. In addition, the Company obtained a new loan from The Bank of Nova Scotia for US$25.0 million. The remainder of new borrowings related to various short-term debt obligations. Significant
repayments of long-term borrowings during 2003 included the US$49.7 million Citibank N.A. bank borrowing and US$25.0 million for promissory notes.

The Companys principal financing activities in 2002 were the subscription of two long-term bank loans, one with Comerica Bank for US$15 million used to finance the acquisition of the Mexican particle board plant,
and one with Banco Chile New York for US$15 million used to prepay short term debt.

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There were no common stock capital increases in 2004 or 2003. On November 13, 2000, an Extraordinary Shareholders Meeting was held in Valdivia, and the shareholders of Masisa S.A. agreed to a capital increase of
182,441,061 shares of common stock, at a price of Ch$280 per share. The Chilean Corporations Law requires that a Chilean company offer its existing shareholders the right to purchase a sufficient number of shares to maintain their existing ownership
percentage upon the issuance of new shares through a preemptive rights offering. Maspanel, Masisas largest shareholder at that time, transferred its preemptive rights to subscribe the shares issued in the capital increase to Terranova. The
Company, pursuant to certain Central Bank of Chile rulings, could not extend the preemptive rights offering to the holders of ADSs. On January 12, 2001, when the preemptive rights offering period ended, 81,088,294 shares were subscribed and paid in
full for a total of Ch$22,705 million (equivalent to approximately US$39.6 million). On September 14, 2001 the Sumitomo Corporation subscribed 6,926,084 new shares for a total of Ch$2,147 million (approximately US$3.2 million). The proceeds from
this capital increase were used to repay a portion of the Companys short term bank loans. In November 2003, the offering period expired for 94,426,683 shares issued but not subscribed. As of May 30, 2005, the last day before the legal
effective date of the Companys merger with and into Terranova, there were no outstanding shares issued but not subscribed.

As of December 31, 2004, the Companys total debt, calculated as the sum of short-term bank borrowings, current portion of long-term bank borrowings, other long-term borrowings due within one year, long-term bank
borrowings and other long-term borrowings was US$236.8 million, compared to total debt of US$291.8 million as of December 31, 2003. Of the total debt in 2004, US$34.6 million was short-term borrowings compared to US$90.1 million in 2003.

In addition, total financial liabilities, calculated as total debt to banks, less financial assets (cash, time deposits and fixed rate securities), amounted to US$214.2 million as of December 31, 2004 compared to
US$242.9 million as of December 31, 2003.

At December 31, 2004, 2003 and 2002, the Companys ratio of current assets to current liabilities was 2.83:1.00, 1.74:1.00 and 1.35:1.00, respectively.

Total current assets were US$ 230.2 million, US$215.7 million and US$135.7 million on December 31, 2004, 2003 and 2002, respectively.

The 7% increase in current assets between December 31, 2003 and December 31, 2004 was mainly due to an increase in working capital, specifically accounts receivable and inventories, due to higher sales, despite a
decrease in deposits classified under other current assets

The 60% increase in current assets between December 31, 2002 and December 31, 2003 was mainly due to

- an increase in cash and deposit reserves held from a bond the Company issued in December 2003 specifically to repay bank borrowings, some of which were paid in the first quarter of 2004, and
- an increase in working capital, specifically accounts receivable and inventories, due to higher sales.

The 3.7% increase in current assets between December 31, 2001 and December 31, 2002 was mainly due to increased cash and deposits as well as increased inventories mainly due to the start up of the OSB plant in Brazil and the particle board plant in
Mexico during the same year.

Total current liabilities were US$81.2 million, US$124.1 million and US$100.9 million on December 31, 2004, 2003 and 2002, respectively.

The decrease of 35% of current liabilities between December 31, 2003 and December 31, 2004 was mainly due to a decrease in short-term bank borrowings.

The increase of 23.0% of current liabilities between December 31, 2002 and December 31, 2003 was mainly due to an increase in short-term bank borrowings and the classification in the short-term of long-term bank
borrowings, principally the approximately US$30 million Rabobank Ireland PLC loan. The increase of 50.3% in

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current liabilities between December 31, 2001 and December 31, 2002 was mainly due to the classification in the short-term of US$25 million of debt maturing in May 2003.

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The Company does not have any off-balance sheet arrangement including any transactions, agreements or other contractual arrangements involving an unconsolidated entity under which it has:

- made guarantees;
- a retained or a contingent interest in transferred assets;
- an obligation under derivative instruments classified as equity; or
- any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company, or that engages in leasing, hedging or research and development
arrangements with the Company.

See Notes 1 and 23 to the audited consolidated financial statements for a more detailed discussion of contingencies, including guarantees.

Contractual Obligations

The following table summarizes the companies significant long-term contractual obligations as of December 31, 2004.

|                                                |  |                                                   |  |             |  |           |  |           |  |            
|----------------------------------------------- |  | ------------------------------------------------- |  | ----------- |  | --------- |  | --------- |  | -----------
|                                                |  | Payments Due by Period (millions of U.S. dollars)
|                                                |  |                                                   |  |             |  |          
|                                                |  |                                                   |  | Less Than 1 |  |           |  |           |  | More Than 5
|                                                |  | Total                                             |  | Year        |  | 1-3 Years |  | 3-5 Years |  | Years      
|                                                |  |                                                   |  |             |  |           |  |           |  |            
|Long-term debt obligations                      |  | 233.5                                             |  | 31.4        |  | 141       |  | 39.3      |  | 21.8       
|Capital lease obligations                       |  | 0.1                                               |  | 0.1         |  |          |  |          |  |           
|Operating lease obligations                     |  | 6.3                                               |  | 1.2         |  | 1.6       |  | 1.5       |  | 2          
|Purchase obligations                            |  |                                                  |  |            |  |          |  |          |  |           
|Other long-term liabilities on the registrants |  |                                                   |  |             |  |           |  |           |  |            
|balance sheet under GAAP                        |  |                                                  |  |            |  |          |  |          |  |           
|                                               
|Total Contractual Obligations                   |  | 239.9                                             |  | 32.7        |  | 142.6     |  | 40.8      |  | 23.8       
|                                                |  |                                                   |  |             |  |           |  |           |  |            

The Company has a long-term resin supply contract with Georgia Pacific Resins Ltd. to ensure the normal supply of resins for existing and future operations, including calculations for future growth of the Company. The
estimated amount of the contract for 2005 is US$33 million. The contract is not a financial obligation since it does not oblige the Company to purchase a minimum amount from Georgia Pacific Resins Ltd.

The functional currency of the Company is the U.S. dollar. Portions of the Companys operating costs are denominated in Chilean pesos, Argentinean pesos, Brazilian reales and Mexican pesos. Since the revenues of
the Company are primarily denominated in U.S. dollars, when inflation/deflation in these countries is not offset by a change in the exchange rate to the U.S. dollar, the financial position, results of operations and cash flows of the Company could
be adversely affected. The value of the net assets of the Company not denominated in U.S. dollars can also be affected by devaluation of these currencies.

A summary of the Companys significant accounting policies is included in Note 2 of the Consolidated Financial Statements, which are included in this annual report. The preparation of financial statements requires
the Companys management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying footnotes. The Companys estimates and assumptions are based on historical experiences
and changes in the business environment. However, actual results may differ from estimates under different conditions, sometimes materially. Critical accounting policies and estimates are defined as those that are

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both most important to the portrayal of the Companys financial condition and results and require managements most subjective judgments. The Companys most critical accounting policies and estimates are described below.

The key judgments the Company must make under the property, plant, and equipment policy include the estimation of the useful lives of its various asset types, the election to utilize primarily the straight-line method
for recording depreciation, managements judgment regarding appropriate capitalization or expensing of costs related to fixed assets, and its determination that no impairment exists.

Property, plant, and equipment is stated on Companys balance sheet at cost less accumulated depreciation. Depreciation of buildings, equipment, and other depreciable assets is determined using primarily the
straight-line method. The estimation of useful lives for fixed assets impacts the level of annual depreciation expense recorded. In estimating the useful lives and expected residual value of fixed assets, the Company has primarily relied on actual
experience with similar plant and equipment and recommendations from engineers and manufacturers. Utilization of the straight-line method for recording depreciation or any of the other acceptable methods for depreciating assets will result in the
same amount of depreciation over the life of an asset; however, the amount of annual depreciation expense and the resulting carrying amount of net property, plant, and equipment can vary significantly depending on the method elected.

Expenditures that substantially improve and/or increase the useful life of facilities or equipment are capitalized. Maintenance and repair costs are expensed as incurred. The Companys evaluation of whether an
expenditure related to property, plant, and equipment substantially improves and/or increases the useful life of an asset and is appropriately capitalized as an addition to the assets cost basis or is expensed as normal maintenance and repair
expense can significantly affect results of operations for a given period, as well as its financial position.

Property, plant, and equipment assets are evaluated for possible impairment on a specific asset basis or in groups of similar assets, as applicable. This process requires the Companys estimate of future cash flows
generated by each asset or group of assets. In addition, the Company must make assumptions regarding product pricing, raw material costs, volumes of product sold, and growth rates to analyze the future cash flows for asset impairment assessments. If
our estimates of projected undiscounted future cash flows were too high by 10%, there would be no impact on the reported value of property, plant and equipment test for impairment on our Consolidated Balance Sheet.

Management believes that the estimates of future cash flows are reasonable; however, changes in estimates of such cash flows, changes in the likelihood of alternative outcomes, and changes in estimates of fair value
could affect the evaluations.

The Company determines the value of its forests by a technical appraisal process. The Company appraises the value of its forests annually, based on the expected present value of future cash flows to be generated by its
forests. This discounted cash flow analysis takes into account the forecasted harvests for the upcoming years based on tree growth and fluctuations in the cost and price of wood products.

The Company initially carries a new plantation at the historical cost including tree development and forest maintenance. When the technical appraisal indicates that the value of a plantation has changed because it
begins to have commercial value, the Company accounts for this by increasing or decreasing forestry plantations (which is a part of property, plant and equipment) and making a corresponding increase or decrease to the forestry reserves component of
shareholders equity.

At the end of each year, the Company moves to inventory the appraised value of trees it expects to harvest in the next twelve months. The Company carries these trees in inventory at appraised value until harvesting. No
reduction in shareholders equity is made when standing trees are moved to inventory in anticipation of harvesting.

The reserve is reversed from shareholders equity and from the Companys assets when the forestry plantation is sold.

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When the Company appraises the value of its forests it makes judgments about estimated growth rates, current market conditions and statistical techniques. The value of the Companys forests is significant and,
accordingly, the results of these judgments can have material affects on the reported amounts of assets and shareholders equity on the Companys balance sheet. If the estimated appraised value of our timber resources were too high by 10%, our net equity and the reported value of our forests assets would be overstated by ThUS$6,561.
our net equity and the reported value of our forests assets would be overstated by ThUS$6,651, but there would be no impact on our reported net income as the changes to fair values of forests has no impact on earnings as discussed above.

Depletion, or costs attributed to timber harvested, is recorded as trees are harvested. Depletion rates are adjusted annually. Depletion rates are determined by each identifiable farm block and computed by dividing the
original cost of the timber less previously recorded depletion by the total timber volume that is estimated to be harvested over the harvest cycle. The length of the harvest cycle varies by geographic region and species of timber. The depletion rate
calculations do not include an estimate for future silviculture costs associated with existing stands, future reforestation costs associated with a stands final harvest, or future volume in connection with the replanting of a stand subsequent
to its final harvest.

Significant estimates and judgments are required to determine the volume of timber available for harvest over the harvest cycle. Some of the factors affecting the estimates are changes in weather patterns, the effect of
fertilizer and pesticide applications, changes in environmental regulations and restrictions that may limit the companys ability to harvest certain timberlands, changes in harvest plans, the scientific advancement in seedling and growing
technology, and changes in harvest cycles.

We adjust our depletion rates annually on January 1st of each year. On January 1, 2004 we adjusted our depletion rates by 1.0% . As such, had our estimated volume of timber harvested at December 31, 2004 been estimated
too high by 1.0%, our reported cost of sales for the year ended December 31, 2004, would have been understated by ThUS$44.

Inventories of finished goods, forests and plantations in the process of exploitation, materials and supplies are stated at the lower of direct production cost or market (net realizable value), primarily using the
average cost method. Finished goods include certain indirect costs as appropriate. Determination of the net realizable value of each component of inventory is based on the current invoice price. Forests and plantations in the process of exploitation
are stated at the commercially appraised value at which these forests were transferred from fixed assets. These estimates can affect the carrying value for inventories, and any required inventory write-down can affect results of operations in both
current and future periods. Our inventory reserves at December 31, 2004 amounted to ThUS$789 which represents 1% of our total inventory of finished goods, materials and supplies. Additionally, we had no inventory write-downs during the year ended
December 31, 2004. Had our inventory reserves and write-downs been underestimated by 10%, our cost of sales would not be materially affected.

Effective January 1, 2000, the effects of deferred income taxes arising from temporary differences between the basis of assets and liabilities for tax and financial statement purposes are recorded in accordance with
Technical Bulletin No. 60 of the Chilean Institute of Accountants. The effects of deferred income taxes at January 1, 2000, which were not previously recorded, are recognized in income beginning in 2000 as the temporary differences reverse. Under
Technical Bulletin No. 60, deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will be realized. In making this determination, the Company considers both positive
and negative evidence and make certain assumptions, including projections of taxable income. Changes in these assumptions may have a material impact on results. If our projections of taxable income were too high by 10% there would be no impact on
the balance of our reported valuation allowance at December 31, 2004.

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Masisa S.A. was managed by its Board of Directors, which, in accordance with the bylaws of Company, consisted of seven directors who were elected at the ordinary annual shareholders meeting. Directors were not
required to be shareholders. The entire Board was elected every three years, and cumulative voting was permitted for the election of directors. The Board could appoint replacements to fill any vacancies that occurred during periods between
elections. The bylaws provided that a resignation triggered an election for all Board members at the next annual meeting. The Board of Directors, as set forth below, was elected at the Masisa Ordinary Shareholders Meeting held on April 21, 2004 and
the term of each of the current directors expired automatically on the effective date of the merger of the Company into and with Terranova on May 31, 2005. The election on April 21, 2004 was held two years early due to the resignation of Mr. Jaime
Fernandez. There were regularly scheduled meetings of the Board once a month, and extraordinary meetings were called when needed by the Chairman.

The names and positions of the members of the Board through May 31, 2005, their age and information on their principal business activities outside Masisa are as follows:

Julio Moura, 53 years old, was the Companys Chairman of the Board of Directors from 2002 through May 31, 2005. Mr. Moura is also Chairman of the Board of Directors and CEO of GrupoNueva and Chairman of the
Board of Directors of Terranova. He has served as Member of the Executive Management Committee and Executive Vice-president for the Schindler Group and Sika Finanz in Switzerland among others. From 1980 until 1983 he was Senior Associate of the
Consulting Company Booz Allen & Hamilton. Mr. Moura obtained a degree in mechanical engineering from the Swiss Federal Institute of Technology (ETH) in Zurich, Switzerland and holds a MS from M.I.T., Sloan Management School of Management, USA.

Gonzalo Zegers R.T., 44 years old, joined the Company in 1996 and served on the Board of Directors as Executive Vice-President from March 2003 through May 31, 2005. Prior to that he was the Companys Chief
Executive Officer from 1997 until March 2003. He also served as the Companys Chief Financial Officer from 1996 to 1997. Mr. Zegers is currently the Chief Executive Officer of Terranova. Mr. Zegers previously served as Chief Executive Officer
of C&D Agrofruta Ltda. and is currently on the Board of Directors of several companies related to Terranova. Mr. Zegers holds a business degree from Santiago University.

Patrick A. Nielson, 54 years old, served as a Director of Masisa from July 2002 through May 31, 2005. He is Vice-president, General Counsel and Secretary of GrupoNueva. He also serves on the Board of Directors of
Terranova. Prior to that, he was Vice President, General Counsel--Food Operations and Vice President International Legal and Regulatory Affairs of Dole Food Company, Inc. He has also been a member of the Board of Directors of Pascual Hermanos, S.A.
of Spain and The Western Growers Association. Mr. Nielson holds a Bachelor of Arts from Lewis & Clark College and a Juris Doctor from Hastings College of the Law, University of California.

Isidoro Palma P., 59 years old, served on the Board of Directors from 1988 to 1991 and again from 1993 through May 31, 2005. He served as Chairman of Masisaa Directors Committee from 2001 through May 31,
2005. Mr. Palma served from 1980 to 1991 as Vice-President of Citicorp/Citibank Chile and was a member of the Board of Directors of several Chilean companies. He is currently a member of the Board of Directors of Cintac S.A., Iutasa S.A.,
Inversiones Juan Yarur S.A. and is a member of Comisión Clasificadora de Riesgos. Mr. Palma is also the principal partner and Executive Director of Inversiones y Asesorías Prime Ltda. Mr. Palma holds a business degree from the Catholic
University of Chile, an MBA from Stanford University and is a Ph.D. candidate in Economics at the University of Minnesota.

Jorge Carey, 63 years old, served as a Director on the Companys Board from July 2002 through May 31, 2005. Mr. Carey has also served on the Board of Directors of Terranova since 2004. He has been a senior
partner of Carey y Cia., a Chilean legal firm since 1976. Mr. Carey is a board member of several publicly traded corporations, including Cemento Melón S.A. (of which he is the Chairman), Quebrada Blanca S.A., Enaex S.A. and CCU. He is also a
board member of several other Chilean institutions, including Corporación del Patrimonio Cultural de Chile and Consejo Nacional de Television and of several non-Chilean organizations, including Aur Resources Inc in Toronto, Canada, The Center
for International and American Law in Dallas, Texas, U.S.A. and the Moneda Chile Fund in Bermuda. Mr. Carey worked early in his career for three years as a staff attorney in

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Washington D.C. for the International Monetary Fund and the International Finance Corporation. He has been a professor of law at the Catholic University of Chile Law School and chairman of both the Chilean British Chamber of Commerce and the Chile
Canada Chamber of Commerce in Santiago, Chile. He received his law degree from the Catholic University of Chile Law School and a Masters degree in Comparative Jurisprudence from the School of Law of New York University where he was a Fulbright
scholar.

Ronald Degen, 61 years old, served as a Director of the Companys Board from December 2003 through May 31, 2005. Mr. Degen is also Vice President for Merger and Acquisitions of the GrupoNueva, Vice President
of the Board of Terranova and Chairman of the Board of Amanco Brasil. He was the President and CEO of Amanco Brasil, President and CEO of Companhia Paulista de Força e Luz (CPFL), Director of the Board of Bandeirantes de Energia, Director of
the Board of Mercado Atacadista de Energia (MAE), President and CEO of Schindler Brasil, Vice President of Grupo Abril, Executive Director and COO of Editora Abril, Executive Director of Industria Villares and Director of Booz Allen & Hamilton
International. He has a Professional Electrical Engineering Degree from Escola de Engenharia Mauá Brazil, is Graduate in Automation from the Swiss Federal Institute of Technology (ETH), Switzerland, and has an MBA from the University of
Michigan, USA.

Ignacio Guerrero G., 52 years old, joined the Company in 2000 and served on the Board of Directors from that time through May 31, 2005. He is also Managing Director of CMB Chile S.A., and serves on the Board of
Directors of Rebrisa S.A., Zalaquett S.A., Nibsa S.A., Polo Ralph Lauren Chile, Axxion S.A. and A.F.I. CMB Prime. Prior to 2000 he was CFO of Codelco Chile, and Vicepresident of Citibank New York and of Citibank Chile. He has been a professor of
Economics and Business at the Catholic University of Chile and at the Adolfo Ibañez University Business Schools. Mr. Guerrero holds an economics degree from the Catholic University of Chile and an MBA from Harvard University.

Mr. Moura, Mr. Zegers, Mr. Degen, Mr. Nielson and Mr. Carey are directors or executive officers of affiliates of the Company within the GrupoNueva group. During the period between the resignation of the former Board
Member, Mr. Jaime Fernandez on December 18, 2003 and the Shareholders Meeting held in April 21, 2004, the Board of Directors was formed by the current Directors.

Under the Chilean Stock Companies Act, all public companies must have a comité de directores, or directors committee which must be responsible for:

- examining and commenting on the financial statements and external auditors report that is delivered to the Company prior to the final presentation of such financial information at the annual shareholders meeting;
- nominating the external auditors and rating agencies that will be presented for approval at the annual shareholders meeting;
- evaluating and reporting to the Board of Directors on transactions with related parties pursuant to Article 89 of the Chilean Stock Companies Act as well as transactions in which a director, manager or executive officer of the Company has an
interest as required by Article 44 of the Chilean Stock Companies Act; and
- advising on the compensation of the Companys senior management.

During 2004 and prior to the merger of Masisa and Terranova on May 31, 2005, Masisas directors committee also served as its audit committee.

Masisas directors committee was composed of three director members and was created in April 2001. In August 2002, due to the acquisition by Terranova of its majority and controlling interest in Masisa, Mr.
Juan Obach was replaced on the committee by Mr. Jaime Fernández. The other two members of the committee were Mr. Isidoro Palma and Mr. Ignacio Guerrero. In an extraordinary meeting of the board of directors held on May 28, 2003, Mr. Palma,
Mr. Guerrero and Mr. Zegers were designated as the members of the directors committee. Each of Mr.

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Palma, Mr. Guerrero and Mr. Zegers were redesignated as members of the directors committee in an ordinary meeting of the board of directors on May 18, 2004. Upon completion of the merger by incorporation of Masisa into and with Terranova this
committee does no longer exist.

Masisas executive officers were appointed by the Board and held office at the discretion of the Board. The names, ages, responsibilities and prior business experience of Masisas senior officers were are
follows:

Eduardo Vial R.T., 51 years old, is the Companys Chief Executive Officer, a position he held from March 2003 through May 31, 2005. Prior to that, he was Companys Chief Operating Officer from 1986
through March 2003. Before joining the Company, he was in charge of INFORSAs sawmill operations. Mr. Vial holds a degree in Forestry Engineering from the University of Chile.

Alejandro Droste B., 39 years old, joined Masisa in October 2004 and served as Chief Financial Officer from that time through May 31, 2005. Mr. Droste is also a Director of Inversiones Internacionales Terranova
S.A. and Chief Financial Officer of Terranova S.A. since February 2003. Previously, Mr. Droste was Deputy CFO of Masisa from September 1998 to December 2000, and Chief Financial Officer of Masisa do Brasil from December 2000 to February 2003. Mr.
Droste holds a degree in Commercial Engineering from the University of Santiago in Chile and a Masters degree in finance from the London School of Economics, in the United Kingdom.

Maria Emilia Correa, 47 years old, joined GrupoNueva in 2000, and served as Vice-President, Social and Environmental Responsibility, from that time through May 31, 2005. In addition, Ms. Correa has served as
Chief Social and Environmental Officer for Masisa and Terranova since July 2004. She divides her time approximately equally among GrupoNueva, Terranova and Masisa. Ms. Correa served as Executive Director of Colombian BCSD from 1995 to 2000. Ms.
Correa holds a law degree from the Universidad de los Andes of Bogota in Colombia and a Masters degree in sociology from the New School for Social Research, USA.

Patricio Reyes U., 37 years old, joined Masisa in September 2004, and served as General Counsel since from that time through May 31, 2005.. Mr. Reyes has also been the General Counsel of Terranova since 2002.
Prior to the merger, he divided his time approximately equally between Terranova and Masisa. He also serves as a Director of IITSA and Oxinova S.A. Prior to joining Terranova, Mr. Reyes worked as associate attorney for Estudio Arturo Alessandri, a
Chilean law firm. Mr. Reyes holds a law degree and a Masters degree in corporate law from the Catholic University of Chile. He is a practicing lawyer in Chile as designated by the Supreme Court of Chile and is a member of the Chilean College of
Lawyers.

Fernando A. Errázuriz O., 42 years old, joined Masisa and Terranova in July 2004, and served as Chief Supply Chain Officer to Masisa of the companies from that time through May 31, 2005. Mr.
Errázuriz has also served as Chief Supply Chain Officer of Terranova since July 2004. Prior to joining Masisa, Mr. Errázuriz served as Supply Chain Director at Kimberly Clark, a paper company, from 1997-2004. Mr. Errázuriz holds
a civil engineering degree from Catholic University of Chile and a Masters in Business Administration from Adolfo Ibáñez University in 1997.

Jorge Correa D., 56 years old, joined Masisa in 1997 and has served as Chief Executive Officer of Forestal Tornagaleones and Forestal Argentina, former forestry subsidiaries of Masisa, since then. He divides his
time approximately equally between Forestal Tornagaleones and Forestal Argentina. Mr. Correa also works four hours per week as a part-time Professor of Forestry Engineering at the University of Chile and Universidad Mayor. Mr. Correa holds degree in
Forestry Engineering from the University of Chile.

Italo Rossi B., 51 years old, was Masisas Chief Corporate Marketing Officer, a position he held from May 2004 through May 31, 2005. Mr. Rossi joined Masisa in 1989 as Chief Sales and Marketing Officer. He
served as Chief Executive Officer of Masisa do Brasil from 1999-2004. Before joining Masisa, he was Forestry Director at Fundación Chile. Mr. Rossi holds a degree in Forestry Engineering from the University of Chile.

Manfred Timmermann B., 54 years old, was the Companys Chief Engineering Officer, a position he held from 1993 through May 31, 2005. Mr. Timmermann joined the Company in 1978 as Head of Technology of the
Valdivia Plant and was named Head of Technology of the Chiguayante plant in 1993. In 1987, he was named

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Deputy Production Officer of the Mapal plant and was named Masisa Concepcións Deputy Engineering Officer in 1990. Mr. Timmermann holds a degree in Civil Mechanical Engineering from the University of Chile.

Miguel Oneto R., 48 years old, was the Companys Chief Human Resources Officer, a position he held from 1997 through May 31, 2005. Mr. Oneto is also Chief Human Resources Officer of Terranova from 2003.
Prior to the merger, he divided his time approximately equally between Terranova and Masisa. Prior to joining Masisa, he was Head of McKays Holding Training Department, Head of the Training Department of Banco BHIF and Human Resources and
Administration Manager of AFP Habitat S.A., Laboratorio Ballerina and First National Bank of Boston. Mr. Oneto received a degree in Business Administration from the University of Santiago and a postgraduate degree in Human Relations and Labor
Psychology from the Catholic University of Chile.

Martin Köster, 44 years old, was the Chief Export Officer, a position he held from July 2001 through May 31, 2005. Prior to that he was Export Manager, a position he held from August 1992, when he joined the
Company, until July 2001. Mr. Köster holds a degree in Forestry Engineering from the University of Chile.

For the year ended December 31, 2004, the aggregate amount of compensation paid by Masisa S.A. to its directors and executive officers was approximately US$1,458,734. Members of the Companys Board received per
diem fees as well as a participation in Masisas net profits. In 2004, the directors as a group received 2% of net profits. The Company and its subsidiaries did not maintain any pension or retirement programs for its directors or executive
officers.

The table below sets forth compensation paid to directors during 2004.

DIRECTOR COMPENSATION

|                       |  |                                           |  |                |  |                                               
|---------------------- |  | ----------------------------------------- |  | -------------- |  | ----------------------------------------------
|                       |  | Per Diem for attendance at board meetings |  | Profit sharing |  | Per Diem for attendance at directors committee
|                       |  |                                           | 
|                       |  |                                           | 
|Directors(1)           |  |                                           | 
|                       |  | US$                                       |  | US$            |  | US$                                           
|Isidoro Palma          |  | 9,901                                     |  | 22,618         |  | 2,513                                         
|Ignacio Guerrero       |  | 9,901                                     |  | 22,618         |  | 2,513                                         
|Julio Moura            |  | 9,901                                     |  | 45,236         |  |                                              
|Jaime Fernández        |  |                                          |  | 23,795         |  |                                              
|Jorge Carey            |  | 9,901                                     |  | 22,618         |  |                                              
|Patrick Arthur Nielson |  | 9,901                                     |  | 22,618         |  |                                              
|Gonzalo Zegers         |  | 9,901                                     |  | 27,978         |  | 2,513                                         
|Ronald Degen           |  | 9,901                                     |  | 806            |  |                                              
|Patricio Reyes         |  |                                          |  | 3,966          |  |                                              
|Total                  |  | 69,307                                    |  | 192,253        |  | 7,539                                         
|                       |  |                                           |  |                |  |                                               

The executives of Masisa S.A. received an aggregate amount of compensation of approximately US$1,374,734 and severance payments of US$84,000 during the year 2004.

The Company did not provide benefits upon termination of employment under any service contract or plan for directors.

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As of December 31, 2004, the Company had 1,586 employees, including employees of all of its Chilean, Argentinean, Brazilian, Peruvian, Ecuadorian and Mexican subsidiaries. The significant increase in the number of
employees in 2004 was due mainly to changes in Chiles labor code that required us to contract workers that were previously sub-contracted. The following table sets forth the number of employees by main category of activity and geographic
location as of the end of each year in the three-year period ended December 31, 2004:

EMPLOYEES BY JOB-CATEGORY(1)AND LOCATION

|               |  |            |  |               |  |         |  |              |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |      
|-------------- |  | ---------- |  | ------------- |  | ------- |  | ------------ |  | ---- |  | ---- |  | ---- |  | ---- |  | ----- |  | ----- |  | ----- |  | -----
|               |  | Executives |  | Professionals |  | Workers |  | Consolidated
|               |  |            |  |               |  |         |  |              |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |      
|               |  | 2002       |  | 2003          |  | 2004    |  | 2002         |  | 2003 |  | 2004 |  | 2002 |  | 2003 |  | 2004  |  | 2002  |  | 2003  |  | 2004 
|               |  |            |  |               |  |         |  |              |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |      
|Masisa         |  |            |  |               |  |         |  |              |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |      
|Chile          |  | 21         |  | 21            |  | 32      |  | 133          |  | 189  |  | 223  |  | 515  |  | 459  |  | 625   |  | 670   |  | 669   |  | 880  
|Argentina      |  | 15         |  | 9             |  | 11      |  | 54           |  | 45   |  | 46   |  | 141  |  | 142  |  | 290   |  | 210   |  | 196   |  | 347  
|Brazil         |  | 7          |  | 7             |  | 7       |  | 39           |  | 51   |  | 61   |  | 102  |  | 106  |  | 128   |  | 148   |  | 164   |  | 196  
|Mexico         |  | 4          |  | 6             |  | 5       |  | 24           |  | 34   |  | 54   |  | 130  |  | 112  |  | 98    |  | 158   |  | 152   |  | 157  
|Peru / Ecuador |  | 1          |  | 1             |  | 1       |  | 1            |  | 5    |  | 5    |  | -    |  | -    |  | -     |  | 2     |  | 6     |  | 6    
|               |  |            |  |               |  |         |  |              |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |      
|Total          |  | 48         |  | 44            |  | 56      |  | 251          |  | 324  |  | 389  |  | 888  |  | 819  |  | 1,141 |  | 1,188 |  | 1,187 |  | 1,586
|               |  |            |  |               |  |         |  |              |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |      

|(1) | Executives include the CEO, Chief Managers, Deputy Chief Managers and Plant Head Managers. Professionals include Middle Managers, Supervisors and professionals in positions without supervision. Workers include all employees other than executives and
professionals.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

Chile. As of December 31, 2004, the Company had 880 permanent employees in Chile, representing growth of 32% compared to 2003. This growth was due primarily to the beginning of operations of a new MDF moldings
production line, changes in the labor code, and new corporate management services such as Supply Chain, Planning and Marketing. Masisa Peru had six employees as of December 31, 2004. Approximately 53% of Masisas Chilean employees are
represented by six labor unions. The Company still employs subcontractors for many tasks.

Chilean law protects the rights of the Companys workers, whether unionized or specially organized as a group (i.e., Negotiating Group), for the purpose of the collective bargaining process and to
strike in the event that an agreement on labor contracts is not reached. Labor relations for unionized and non-unionized employees in each of the Companys facilities are governed by one or more separate collective bargaining agreements between
Masisa or its relevant subsidiary and one or more of the unions or Negotiating Groups of which the employees at the facility are members.

None of the Companys agreements with its unions have expired as the Companys policy has been to establish a long-term alliance with its employees. The Company believes that it has good relationships with the
labor unions. The Company has no reason to believe that future collective bargaining processes will not follow past practice and does not anticipate any work stoppages at any of its facilities. Compensation for unionized personnel and employees is
established in accordance with the relevant collective bargaining agreements. Pursuant to these agreements, employees receive a salary according to a scale that is based upon job function, performance and seniority. Unionized employees also receive
certain benefits provided for by law and certain benefits that vary depending upon the terms of their collective bargaining agreement.

All employees who are dismissed for reasons other than misconduct are entitled by law to severance pay. Non-unionized permanent employees are entitled to a basic payment of one months salary (with a maximum of
UF90, equivalent to US$2,680 as of December 31, 2004) for each year or fraction thereof worked, provided that the fraction is at least six months. This benefit is subject to a limitation of a total payment of no more than 11 months salary for
employees hired after August 14, 1981 (severance payments to employees hired before August 14, 1981 are not subject to this limitation). Although Masisa Chile could apply this limitation to the severance pay it pays to its employees, the Company
voluntarily pays severance payments calculated based upon the total time such employees have been employed by the Company, without regard to the statutory limitation. This method of determining severance payments, however, has not been made a part
of the Companys employment contracts.

The Company does not maintain any pension or retirement programs for its employees. Workers in Chile are subject to a national pension law that establishes a system of independent pension plans which are administered

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by Administradoras de Fondos de Pensiones (Pension Fund Administrators). The Company has no liability for the performance of the pension plans or any pension payments to be made to the employees in Chile.

Argentina. As of December 31, 2004, Masisa Argentina had 347 employees, which represented a increase of 77% as compared to 2003, principally due to the beginning of operations of new MDF molding production
lines.

In Argentina, collective bargaining agreements are negotiated on an industry-wide basis. Employees at Concordia are members of two industry-wide unions. Therefore, all the collective bargaining agreements between Masisa
Argentina and the unions are the result of industry-wide bargaining. The collective bargaining agreements are renewed on an annual basis. Masisa Argentina believes its relationship with its employees is good.

All employees who are dismissed without cause are entitled by law to severance pay, which is based, among other things, on length of service. These severance payments are subject to a minimum of at least two months
salary.

Masisa Argentina does not maintain any pension or retirement programs for its employees. As in Chile, pension plans in Argentina are administrated by an independent Administradoras de Fondos de Jubilaciones y Pensiones
(Pension Fund Managers). The Company has no liability for the performance of the pension plans or any pension payments to be made to the employees in Argentina.

Brazil. As of December 31, 2004, Masisa Brazil had 196 employees, representing an increase of 20% compared to 2003 due principally to an increase in administrative staff accompanying strong growth in that market.

In Brazil, as in Argentina, collective bargaining agreements are negotiated on an industry-wide basis. Employees at Masisa Brazil are members of one industry-wide union. Therefore, all of the collective bargaining
agreements between Masisa Brazil and the union are the result of industry-wide collective bargaining. The collective bargaining agreements are renewed on an annual basis. Masisa Brazil believes its relationship with its employees is good.

Masisa Brazil does not maintain any pension or retirement programs for its employees. Based on total payroll, Masisa Brazil makes monthly contributions to severance indemnity plans, government pension and social
security, and such payments are expensed as incurred. The Company has no liability for the performance of the pension plans or any pension payments to be made to the employees in Brazil.

Mexico. As of December 31, 2004, the Company had 157 permanent employees in Mexico, representing a 3% increase compared to 2003 due principally to continued improvements in efficiency.

In Mexico, as in Argentina and Brazil, collective bargaining agreements are negotiated on an industry-wide basis. Employees at Maderas y Sintéticos de México S.A. de C.V. and Maderas y Sintéticos
Servicios S.A. de C.V. are members of one industry-wide union. Therefore, all of the collective bargaining agreements between such companies and the union are the result of industry-wide collective bargaining. However, only 34% of such companies
employees in Mexico are union members. The collective bargaining agreements are renewed each year. The current collective bargaining agreement was entered into in January 2005.

All employees who are dismissed for reasons other than misconduct are entitled by law to severance pay, which corresponds to a three months salary plus twelve days salary per year or fraction thereof worked.

Maderas y Sintéticos de Mexico does not maintain any pension or retirement programs for its employees. As in Brazil, Maderas y Sintéticos de Mexico makes monthly contributions to severance indemnity plans,
government pension and social security, and such payments are expensed as incurred. The Company had no liability for the performance of the pension plans or any pension payments to be made to the employees in Mexico.

None of the Companys directors or executive officers owns one percent or more of the shares of the Company as of December 31, 2004. The Company had no stock option plan for its directors, executive officers or
employees.

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PART III

Item 7. Major Shareholders and Related Party TransactionsMajor Shareholders

Masisa S.A.s only outstanding voting securities are shares of its common stock without nominal (par) value (Common Stock). On April 12 and April 13, 2005, respectively, the shareholders of Masisa and
Terranova approved the merger by incorporation of Masisa into and with Terranova. The completion of the merger was subject to certain conditions, established at the respective Extraordinary Shareholders Meetings of Masisa and Terranova to
approve the merger, with respect to the exercise of withdrawal rights. Those conditions were satisfied and the merger became effective on May 31, 2005. As a consequence, Masisa no longer exists. Terranova continues as the surviving entity and is the
legal successor of Masisa for all purposes. However, shares and ADSs of Masisa have not yet been exchanged for shares and ADSs of Terranova and that exchange will not occur until Terranova has completed certain additional filings and obtained
certain approvals related to the issuance of its shares and ADSs in exchange for shares and ADSs of Masisa. It typically takes between 60 and 90 days after the date of the last of the shareholder meetings at which the merger is first approved to
complete this process. Although we cannot predict the exact amount of time that will be required to make or obtain the various filings and approvals, we expect to complete this process and exchange shares and ADSs of Masisa for shares and ADSs of
Terranova in early July 2005. Until the share exchange occurs, each such share and ADS of Masisa outstanding represents only the right to receive upon exchange 2.56 shares or 1.536 ADSs of Terranova, respectively.

As of May 30, 2005, there were 928,514,743 shares of Common Stock issued and outstanding.

The table below shows, as of May 30, 2005, the number and percentage of shares owned by each person known by the Company to own more than five percent of Masisa S.A.s outstanding Common Stock. The Company is
required under Chilean regulations to disclose its twelve largest shareholders, and this information is also included in the table.

MAJOR SHAREHOLDERS

|                                         |  |                  |  |       
|---------------------------------------- |  | ---------------- |  | ------
|                                         |  |                  |  |       
|Shareholder                              |  | Number of shares |  | %     
|                                         |  |                  |  |       
|Terranova S.A.                           |  | 486861555        |  | 52.43%
|The Bank Of New York                     |  | 49184040         |  | 5.30% 
|AFP Habitat S.A. para Fdo. Pension C     |  | 29985494         |  | 3.23% 
|AFP Cuprum S.A. para Fdo. Pension C      |  | 21673708         |  | 2.33% 
|AFP Provida S.A. para Fdo. Pension C     |  | 20851507         |  | 2.25% 
|AFP Habitat S.A. Fondo Tipo B            |  | 16186883         |  | 1.74% 
|AFP Santa Maria S.A. para Fdo. Pension C |  | 14928313         |  | 1.61% 
|AFP Cuprum S.A. Fondo Tipo B             |  | 13804586         |  | 1.49% 
|Citicorp Chile Fdo De Inv.Mobiliaria     |  | 13187954         |  | 1.42% 
|Bolsa De Comercio De Santiago, Bolsa De  |  | 12974958         |  | 1.40% 
|AFP Provida S.A. Fondo Tipo B            |  | 12973203         |  | 1.40% 
|AFP Bansander S.A. Fdo. Pension C        |  | 11808616         |  | 1.27% 
|AFP Cuprum S.A. Fondo Tipo A             |  | 10472010         |  | 1.13% 
|AFP Cuprum S.A. Fondo de Pension D       |  | 8837806          |  | 0.95% 
|                                         |  |                  |  |       

|(1) | Pursuant to the requirements of Chilean law, all Common Stock represented by American Depositary Shares is owned of record by The Bank of New York, as Depositary. See Item 10. Additional InformationExchange Controls.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

As of May 31, 1999, Pathfinder and Inversiones Coigüe Ltda. (Coigüe) increased their respective ownership to 19.96% and 23.18%, respectively. In December 30, 1999, Coigüe Dos purchased all of
the Common Stock held by Coigüe, which was 25.36% of the Common Stock. In August 2000, Coigüe Dos and Pathfinder transferred their holdings of Common Stock to Maspanel S.A. (Maspanel), a subsidiary of Pathfinder. On December
13, 2001, Maspanel purchased 13,105,000 shares in the Chilean Stock Market. In January 2002, Maspanel purchased 251,543 shares and 500,000 shares, respectively, in the Chilean Stock Market. As a consequence, Maspanels ownership increased to
43.16% of the Common Stock.

In January 2001, Terranova subscribed 81,084,916 shares of Common Stock resulting from the capital increase approved during the Extraordinary Shareholders Meeting held on November 13, 2000, thus acquiring an

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8.8% stake in Masisa. In September 2001, the Japanese company Sumitomo Corporation subscribed 6,926,084 shares of Common Stock resulting from the same capital increase, acquiring a 0.75% interest in Masisa.

On July 22, 2002, Terranova acquired Maspanels 43.16% stake in Masisa thus becoming the controlling shareholder of the Company with 51.90% of the Companys total shares paid and outstanding. As of June 30,
2004, as a result of open market purchases made on the Santiago Stock Exchange on May 27, 2003, Terranova owned 486,861,555 shares (52.43%) of Common Stock.

At an Extraordinary Shareholders Meeting held on October 31, 2003, the merger of Forestal Terranova S.A. and Terranova S.A. was approved, with Forestal Terranova S.A. being incorporated into Terranova S.A.
Therefore Forestal Terranova S.A. was dissolved and Terranova S.A. acquired all its assets and liabilities. Included in the assets of Forestal Terranova S.A., there were 486,861,555 Masisa S.A. shares, which as a result of the merger, were
automatically transferred to Terranova S.A. At the time of that merger, on October 31, 2003, Forestal Terranova S.A. owned 99.9% of the Terranova S.A. shareholders equity.

On May 31, 2005, Masisa was merged into and with Terranova as described above.

None of the major shareholders of Masisa had voting rights different than those corresponding to minority shareholders. Additionally, as of December 31, 2004, 20,294,207 shares of common stock were held by thirteen
record holders resident in the United States, and 69,416,610 shares of common stock represented by 2,313,887 ADSs, were held of record by one holder for the benefit of our ADS holders. As of May 30, 2005, 11,619,557 shares of common stock were held
by nine record holders resident in the United States, and 49,184,040 shares of common stock represented by 1,639,468 ADSs, were held of record by one holder for the benefit of our ADS holders.

Article 89 of the Chilean Corporations Law requires that a companys transactions with related parties shall fulfill equity conditions similar to those usually prevailing in the market. Directors and executive
officers of companies that violate Article 89 are liable for losses resulting from such violation. In addition, Article 44 of the Chilean Corporations Law provides that a company may enter into transactions in which a director, manager or executive
officer has a personal interest, only if such operations are previously known and approved by the Board of Directors and the terms of such transaction are similar to those prevailing in the market. In circumstances where it is not possible to
determine if the terms of such transaction are similar to those prevailing in the market, Chilean law requires the Board to approve or reject such transaction with the abstention of any director with an interest on such a transaction. Resolutions
approving such transactions must be reported to the companys shareholders at the next shareholders meeting. Violation of Article 44 may result in administrative or criminal sanctions for the company, and shareholders or interested third
parties who suffer losses as a result of such violation have the right to receive compensation in certain situations.

During 2004 and 2005 up to May 31, the Company engaged in certain transactions with related companies and persons. The majority of these transactions involved the sale of products and/or services between subsidiaries at
market prices. For details of such transactions, see Note 19 to the Consolidated Financial Statements.

With effect as of January 1, 2003, the Company entered into a management contract with Terranova for the management by the Company of Terranovas indirect subsidiary, Fibranova C.A. Fibranova C.A. owns industrial
installations in Puerto Ordaz, Venezuela, which consist of two board production lines (particle board and MDF), a melamine board recovering line and a molding MDF line. Fibranovas production is marketed to end-users mainly in Venezuela and
Colombia.

Pursuant to the contract the Company had administrative control of Fibranovas operations, including, with some restrictions, management of all areas of that company, including senior management, finance and
administration, marketing, commercial and human resources. The contract had a term of three years. Under the contract, the Company was paid for its services an amount equal to 8% of Fibranovas annual operating result. Additionally, during the
term of the contract and for a period of up to three years thereafter the Company had a preferential and irrevocable option to acquire shares and assets of Fibranova, exercisable in the event Terranova intended to sell any such shares or assets to
third parties. As a result of the merger of Masisa with Terranova, the merged company has assumed the rights and obligations of the Company under the contract.

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Item 8.Financial Information

Consolidated Financial Statements

See Item 18. Financial Statements and pages F-1 through F-47.

Export Sales

For a discussion of the Companys export sales, see Item 5. Operating and Financial Review and ProspectsResults of Operations.

Legal and Arbitration Proceedings

The Company was party to certain legal proceedings arising in the normal course of its business, none of which management considered, individually or in the aggregate, to be material.

The Companys dividend policy was determined from time to time by its Board of Directors and announced at the annual ordinary shareholders meeting, which was generally held in March or April. Shareholder
approval of the dividend policy was not required. However, each year the Board was required to submit for approval at the annual ordinary shareholders meeting a declaration of the final dividend corresponding to the preceding year. Dividends
are not price level adjusted between the end of the preceding year and the date of the declaration of the final dividend. As required by the Chilean Corporations Law, unless otherwise decided by unanimous vote of the issued and subscribed shares of
Common Stock, the Company was required to distribute a cash dividend in an amount equal to at least 30% of the Companys consolidated net income for that year (on a Chilean GAAP basis), unless and except to the extent the Company had a deficit
in retained earnings.

At the Companys Annual General Shareholders Meeting held on April 12, 2005, the Board of Directors proposed, and the shareholders approved, a dividend policy calling for dividends not lower than 30% and not higher
than 50% of the Companys net income in 2004 and for future years. In addition, the Companys shareholders approved an Ordinary Dividend equal to 30% of the Companys 2004 net income and an Extraordinary dividend of US$54 million.

In addition to the Ordinary Dividend and in connection with the approval of the merger with Terranova, Masisas shareholders approved an Extraordinary Dividend of US$54.0 million which was subject to certain
conditions, established at the respective Extraordinary Shareholders Meetings of Masisa and Terranova to approve the merger, with respect to the exercise of withdrawal rights and such conditions have successfully been met.

Dividends were paid to shareholders of record on the fifth business day preceding the date set for payment of the dividend. The holders of the ADRs on the applicable record dates for the ADSs were entitled to
participate fully in all dividends declared after their acquisitions of the ADSs, subject to payment of the applicable taxes. For additional information, see Item 10. Additional InformationTaxation.

There have been no significant changes since the date of the Companys most recent financial statements.

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The table below shows, for the periods indicated, the high and low closing prices, in Chilean pesos, for a share of Common Stock on the Santiago Stock Exchange and the high and low closing sales prices per ADS, in U.S.
dollars, as reported by the NYSE.

|               |  |                         |  |                         |  |       |  |      
|-------------- |  | ----------------------- |  | ----------------------- |  | ----- |  | -----
|               |  | Santiago Stock Exchange |  | New York Stock Exchange
|               |  |                         |  |                        
|Years ended    |  | Ch$ per Common Share(1) |  | US$ per ADS(2)         
|               |  |                         |  |                        
|December 31,   |  | High                    |  | Low                     |  | High  |  | Low  
|               |  |                         |  |                         |  |       |  |      
|              
|2000           |  | 295.00                  |  | 203.00                  |  | 17.25 |  | 10.94
|2001           |  | 330.00                  |  | 221.00                  |  | 15.70 |  | 9.40 
|2002           |  | 282.00                  |  | 130.00                  |  | 13.08 |  | 5.30 
|2003           |  | 242.00                  |  | 155.00                  |  | 12.47 |  | 5.90 
|2004           |  | 385.00                  |  | 215.00                  |  | 20.25 |  | 10.76
|2003           |  |                         |  |                         |  |       |  |      
|First Quarter  |  | 184.00                  |  | 155.00                  |  | 7.80  |  | 5.90 
|Second Quarter |  | 205.00                  |  | 174.00                  |  | 8.70  |  | 7.23 
|Third Quarter  |  | 199.00                  |  | 165.00                  |  | 8.70  |  | 7.23 
|Fourth Quarter |  | 242.00                  |  | 185.00                  |  | 12.47 |  | 8.30 
|2004           |  |                         |  |                         |  |       |  |      
|First Quarter  |  | 258.01                  |  | 215.00                  |  | 14.49 |  | 10.76
|Second Quarter |  | 275.25                  |  | 235.25                  |  | 13.10 |  | 11.20
|Third Quarter  |  | 339.90                  |  | 274.96                  |  | 16.55 |  | 13.00
|Fourth Quarter |  | 385.00                  |  | 317.00                  |  | 20.25 |  | 15.45
|2005           |  |                         |  |                         |  |       |  |      
|First Quarter  |  | 389.00                  |  | 345.00                  |  | 20.00 |  | 18.30
|Monthly Prices |  |                         |  |                         |  |       |  |      
|January, 2005  |  | 367.00                  |  | 345.00                  |  | 19.80 |  | 18.30
|February, 2005 |  | 377.00                  |  | 362.10                  |  | 19.73 |  | 18.45
|March, 2005    |  | 389.00                  |  | 365.00                  |  | 20.00 |  | 18.49
|April, 2005    |  | 387.90                  |  | 363.90                  |  | 20.20 |  | 18.70
|May, 2005      |  | 373.60                  |  | 319.00                  |  | 19.80 |  | 16.14
|               |  |                         |  |                         |  |       |  |      

|(1) | Chilean pesos are reflected at historical values and therefore are not adjusted to reflect changes in purchasing power.
|--- | -----------------------------------------------------------------------------------------------------------------------
|(2) | 1 ADS = 30 shares of Common Stock.                                                                                     
|   

The Companys Common Stock is traded on the Santiago Stock Exchange, the Bolsa Electrónica de Chile, Bolsa de Valores (the Electronic Stock Exchange of Chile) and the Bolsa de Corredores, Bolsa
de Valores (the Valparaiso Stock Exchange). The Company conducted a preemptive rights offering in Chile and an international offering of ADSs, evidenced by American Depositary Receipts (ADRs), in June 1993 (the 1993
Offerings). Since the consummation of the 1993 Offerings, the ADSs (each ADS represents 30 shares of Common Stock) have been traded in the United States on the New York Stock Exchange under the symbol MYS. The ADRs are outstanding under a
Deposit Agreement dated June 17, 1993 among the Company, The Bank of New York, as depositary, and the holders, from time to time, of such ADRs.

On April 12 and April 13, 2005, respectively, the shareholders of Masisa and Terranova approved the merger by incorporation of Masisa into and with Terranova. The completion of the merger was subject to certain
conditions, established at the respective Extraordinary Shareholders Meetings of Masisa and Terranova to approve the merger, with respect to the exercise of withdrawal rights. Those conditions were satisfied and the merger became effective on
May 31, 2005. As a consequence, Masisa no longer exists. Terranova continues as the surviving entity and is the legal successor of Masisa for all purposes. However, shares and ADSs of Masisa have not yet been exchanged for shares and ADSs of
Terranova and that exchange will not occur until Terranova has completed certain additional filings and obtained certain approvals related to the issuance of its shares and ADSs in exchange for shares and ADSs of Masisa. It typically takes between
60 and 90 days after the date of the last of the shareholder meetings at which the merger is first approved to complete this process. Although we cannot predict the exact amount of time that will be required to make or obtain the various filings and
approvals, we expect to complete this

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process and exchange shares and ADSs of Masisa for shares and ADSs of Terranova in July 2005. Until the share exchange occurs, each such share and ADS of Masisa outstanding represents only the right to receive upon exchange 2.56 shares or 1.536 ADSs
of Terranova, respectively. Upon the exchange of shares and ADSs of Masisa for shares and ADSs of Terranova, Masisas shares will cease to trade on all exchanges on which they trade as of the date of this document.

The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. The Santiago Stock Exchange, which is Chiles principal exchange, had a
market capitalization of approximately US$116.1 billion as of December 3l, 2004 and an average monthly trading volume of approximately US$$992.3 million for 2004. The Santiago Stock Exchange was established in 1893 and is a private company whose
equity consists of 48 shares held by 46 shareholders. As of December 31, 2004, 239 share series were listed on the Santiago Stock Exchange. The Santiago Stock Exchange accounts for approximately 81.87% of all amounts of equity securities traded in
Chile.

Equity, closed-end funds, fixed-income securities, short-term and money market securities, gold and U.S. dollars are traded on the Santiago Stock Exchange. In 1991, the Santiago Stock Exchange initiated a futures market
with two instruments: U.S. dollars futures and Selective Share Price Index (IPSA) futures. In 1994, the Santiago Stock Exchange initiated an option market. Regarding securities, they are traded primarily through an electronic system of
trade, called Telepregón, which operates from 9:30 a.m. to 4:30 p.m. The Electronic Stock Exchange of Chile operates continuously from 9:30 a.m. to 4:30 p.m. on each business day.

The three main share price indices for the Santiago Stock Exchange are the General Share Price Index (the IGPA), the IPSA and the Inter-10. The IGPA is calculated using the prices of 158 issues and is broken
into five main sectors (although there are 15 sectors in total): banks and finance, farming and forest products, mining, industrials and miscellaneous. The IPSA is a major company index, currently including the Exchanges 40 most active stocks.
Shares included in the IPSA are weighted according to the value of shares traded and account for more than 80% of the entire market capitalization. The Inter-10 corresponds to the quarterly l0 most active Chilean ADRs. Masisas stock is
included in both the IGPA and the IPSA. In addition, there are two main share price indices for the Electronic Stock Exchange, the Global Index and the ADRIAN. The Global Index is composed of the 42 shares most representative of the Chilean economy
and are integrated by four industrial sectors: electricity, services, industry and natural resources. The ADRIAN incorporates all the Chilean ADRs.

Approximately 17.21% of equity trading is conducted on the Chilean Electronic Stock Exchange, an electronic trading market which was created by banks and non-member brokerage houses. The remaining 0.92% of equity is
traded on the Valparaíso Stock Exchange.

Set forth below is certain information concerning Masisa S.A.s capital stock and a brief summary of certain significant provisions of its estatutos (the Bylaws) and Chilean law. This description
does not purport to be complete and is qualified in its entirety by reference to the Bylaws, which are included in Exhibit 1.1 to this Annual Report.

Masisa S.A. was a publicly-held stock corporation (sociedad anónima abierta) organized under the laws of Chile. Masisa was incorporated by a public deed dated January 31, 1964, an abstract of which was
published in the Diario Oficial de la República de Chile No. 25.897 (Official Gazette of Chile No. 25.897) on July 23, 1964. This publication is recorded on page 143 No. 52 of the Registro de Comercio del Conservador de Bienes Raices y
Comercio de Valdivia (Real Estate and Commercial Registry of Valdivia) for the year 1964. The corporate purpose of Masisa, as stated in its Bylaws, was broadly defined to include the production and sale of wood products, as more fully set forth in
the Third Article of its Bylaws. Masisa S.A. has an indefinite corporate duration.

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Shareholder rights in Chilean companies are governed generally by a companys bylaws (which effectively serve the purpose of both the articles, or certificate, of incorporation, and the bylaws of a United States
company). Additionally, the Corporations Law and the Chilean Corporations Law Regulations, Supreme Decree 587 (the Regulations on Corporations) govern the operation of Chilean companies and provide for certain shareholder rights.

Shareholder rights can be amended through an agreement adopted in an Extraordinary Shareholders Meeting, which shall subsequently agree upon the corresponding amendment to the bylaws. However, there are certain
provisions of Chilean law that cannot be waived by the shareholders.

The Chilean securities markets are principally regulated by the SVS under the Securities Market Law and the Chilean Corporations Law. These two laws provide for disclosure requirements, restrictions on insider trading
and price manipulation, and protection of minority investors. The Chilean Corporations Law clarifies rules and requirements for establishing publicly-held stock corporations while eliminating government supervision of privately-held companies. The
Securities Market Law establishes requirements for public offerings, stock exchanges and brokers, and outlines disclosure requirements for companies that issue publicly offered securities.

Under Articles 12 and 54 and Title XV of the Securities Market Law, certain information regarding transactions in shares of publicly-held corporations must be reported to the SVS and the Chilean exchanges on which such
shares are listed. Holders of shares of publicly-held corporations are required to report to the SVS and the Chilean exchanges:

- any acquisition or sale of shares that results in the holders acquiring or disposing of 10% or more of the corporations capital; and
- any acquisition or sale of shares or options to buy or sell shares, in any amount, if made by a holder of 10% or more of the corporations capital or if made by a director, liquidator, main officer, general manager or manager of such
corporation.

Persons or entities intending to acquire control of a publicly-held corporation are also required to inform the public in advance through a notice published in a Chilean newspaper, which must disclose the price and
conditions of any negotiations. Prior to such publication, a written communication to such effect must be sent to the SVS and the Chilean exchanges.

Chilean law does not contain any provision that discriminates against shareholders or prospective shareholders who own a substantial number of shares. However, a special public offering procedure applies should the
controller of a company decide to increase its stock in the company, according to which the offer must be made to all shareholders on a pro rata basis in proportion to their respective stock.

Under Chilean law, a corporation issues its stock as soon as the shareholders authorize an increase in such corporations capital, provided that the minutes of the corresponding shareholders meeting are
put into a public deed, and an abstract of said deed is published in the Official Gazette and registered in the Commercial Registry corresponding to the companys domicile. In addition, in the case of publicly-held stock corporations, the SVS
must authorize the issuance of the new shares and must register them in the Securities Registry. When a shareholder subscribes for shares, the shares are transferred to such shareholders name, and the shareholder is treated as a shareholder
for all purposes, except receipt of dividends, unless otherwise stipulated in the bylaws of the corporation. The shareholder becomes eligible to receive dividends once such shareholder has paid for the shares. If a shareholder does not pay for
shares for which such shareholder has subscribed on or prior to the date agreed upon for payment, the corporation is entitled to auction the shares on the stock exchange, and has a cause of action against the shareholder for the difference between
the subscription price and the price received at auction. However, until such shares are sold at auction, the shareholder continues to exercise all the rights of a shareholder (except the right to receive dividends). Authorized shares which have not
been paid for within the period ending three years from the

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date when the capital increase agreement was made at the shareholders meeting, are deemed cancelled under Chilean law and are no longer available for sale by the Chilean corporation. At that time, the capital of the corporation is
automatically reduced to the amount effectively paid within such period.

The Bylaws authorize a single series of common stock, without par value.

The Bylaws required the board to consist of seven directors. The entire board was elected every three years. There was no requirement that a director be a stockholder of Masisa.

The Bylaws of Masisa do not contain any provision regarding a mandatory retirement age for the Companys directors, nor does Chilean law contain any provision in this respect.

According to Chilean Corporations Law, a company can only execute transactions wherein one or more directors have material interest, provided that such contracts are previously known and approved by the Board and
correspond to an arms-length transaction. Board agreements thereto must be informed in the next shareholders meeting. For this purpose, the law assumes that a director has an interest in any transaction in which he or she intervenes personally
or through his or her spouse or relatives up to second degree (brothers or sisters, parents, grandparents, sons or daughters and grandsons or granddaughters); or through the companies or partnerships in which the director owns more than 10% of their
capital; or through the companies or partnerships wherein any of the aforementioned persons is a director, or directly or indirectly owns more than 10% of its capital; or if the director acts as attorney-in-fact of the companys counterpart; or
if the director or his or her related parties act as counsel in connection with the transaction.

If the transaction wherein the director has a material interest involves a relevant amount (more than 1% of the companys equity) and the Board considers that it is not possible to determine if it is an
arms-length transaction, the Board may approve or reject the execution of the transaction, with the abstention of the interested director, or appoint an independent team of evaluators. The evaluators report shall be made available to the
shareholders. If shareholders representing at least 5% of the companys voting stock consider that the transaction is not in the companys best interest, or if the evaluators report differ considerably, they may request that the
Board call for an Extraordinary Shareholders Meeting in order to approve or reject the execution of such transaction, in the former case by at least 2/3 of the companys voting stock. The related party that intends to carry out the operation
with the company must provide to the Board all relevant information pertaining to such operation.

Any borrowing from the company by a director is treated under Chilean law as a related party transaction and is subject to the rules set forth above.

Pursuant to the Chilean Corporations Law, if the bylaws of a company establish compensation for directors, such compensation must be agreed to in a Shareholders Meeting. The companys bylaws establish that the
directors will be compensated in an amount determined by the Annual Shareholders Meeting, notwithstanding the right of the Board to agree to compensate a director for the performance of any other duty different from his or her duty as a director.

The Chilean Corporations Law and the Regulations on Corporations grant certain preemptive rights to shareholders of all Chilean companies. The Chilean Corporations Law and Regulations on Corporations generally require
Chilean companies to offer to shareholders the right to purchase a sufficient number of shares or convertible securities to maintain their existing ownership percentage in the company whenever it issues new shares or convertible securities.

In accordance with Chilean law, Masisa was required to distribute mandatory cash dividends of 30% of its net income calculated in accordance with Chilean GAAP unless otherwise decided by a unanimous vote of the holders
of the Shares. See Item 3. Key InformationDividends and Item 8. Financial InformationDividends.

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At the option of Masisa, the portion of any dividend which exceeds the mandatory limits established pursuant to Chilean law could be paid in cash, in shares of Masisa or in shares of corporations owned by it.
Shareholders who do not expressly elect to receive a dividend other than in cash are legally presumed to have decided to receive the dividend in cash.

Those dividends not collected by the shareholders entitled thereto within 5 years as of payment date, was required to be donated by Masisa to the Chilean Firemen Corps.

In the event of a liquidation of Masisa, the holders of fully paid shares of Common Stock would participate in the assets available after payment of all creditors in proportion to the number of shares held by them.

The general annual meeting of the shareholders (a General Annual Shareholders Meeting) of the Company was held during the first fourth months of each year. Special meetings (an Extraordinary
Shareholders Meeting) were be called by the board of directors when deemed appropriate or when requested by shareholders representing at least 10% of the issued voting shares or by the SVS. Notice to convene the General Annual
Shareholders Meeting or a special meeting was given by means of a notice in a newspaper published in Masisas corporate domicile (currently Valdivia) or in the Official Gazette in a prescribed manner. Notice was required to be also be
mailed to each shareholder and given to the SVS 15 days in advance of the meeting.

The quorum for a shareholders meeting was established by the presence, in person or by proxy, of shareholders representing at least the absolute majority of the issued voting shares of Masisa; if a quorum was not
present at the first meeting, the meeting could be reconvened and upon the meeting being reconvened, shareholders present at the reconvened meeting were deemed to constitute a quorum regardless of the percentage of the shares represented. However,
if a shareholders meeting was called for the purpose of:

- considering a change of organization, merger or division of Masisa;
- an amendment to the term of duration or early dissolution;
- a change in corporate domicile, (iv) a decrease of corporate capital;
- approval of capital contributions or assessments of assets other than cash;
- modification of the authority reserved to shareholders meetings or limitations on the Board of Directors;
- reduction in the number of the Board of Directors;
- the sale, transfer or disposition of 50% or more of Masisas assets, either including or excluding its corresponding liability, or the formulation or modification of any business plan which contemplates the sale, transfer or disposition of
assets in such amount;
- the form of distributing corporate benefits;
- a guaranty by Masisa of liabilities of any third-party other than a subsidiary, in an amount exceeding 50% of Masisas total assets;
- the purchase by Masisa of its issued stock in accordance with articles 27A and 27B of Chilean Corporations Law;
- the amendment of any formal defects in the companys bylaws which may nullify its incorporation, or
- other matters as may be set forth in the companys bylaws.

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The vote required at such a meeting was a two-thirds majority of the issued Common Stock.

Chilean law does not require a publicly-held Chilean company to provide the level and type of information that United States securities laws require a reporting company to provide to its shareholders in connection with
a solicitation of proxies. Under Chilean law, a notice of a shareholders meeting listing the matters to be addressed must be mailed to shareholders not fewer than 15 days prior to the date of a meeting. In cases of a General Annual
Shareholders Meeting, an annual report of the companys activities which includes audited financial statements for the company must also be mailed to shareholders.

The Chilean Corporations Law provides that whenever shareholders representing 10% or more of the issued voting shares so request, a Chilean companys annual report must include within the materials dispatched by
the board of directors to shareholders, the boards comments and proposals in relation to the companys affairs. Similarly, the Chilean Corporations Law provides that whenever the board of directors of a publicly-held company convenes a
general meeting of shareholders and solicits proxies for the meeting, information supporting its decisions or other similar materials, it is obligated to include the pertinent comments and proposals that may have been made by shareholders owning 10%
or more of the companys voting shares who request that such comments and proposals be so included.

Only shareholders registered as such with Masisa Chile at least five days prior to the date of a shareholders meeting were entitled to attend and vote their shares. A shareholder could appoint another individual (who
need not have been a shareholder) as his proxy to attend and vote on his behalf. Every shareholder entitled to attend and vote at a shareholders meeting had one vote for every share subscribed.

The Chilean Corporations Law provides that upon the adoption at an Extraordinary Shareholders Meeting of any of the resolutions enumerated below, dissenting shareholders acquire the right to withdraw from a Chilean
company and to compel that company to repurchase their shares, subject to the fulfillment of certain terms and conditions.

Dissenting shareholders are defined as those which vote against a resolution which results in the withdrawal right, or if absent at such a meeting, those who state in writing to the company their opposition
to the respective resolution. Dissenting shareholders must perfect their withdrawal rights by tendering their stock to the company within 30 days of the resolution (except in the case of pension fund shareholders as discussed below).

The price paid to a dissenting shareholder of a publicly-held company for such shares is the weighted average of the closing sales prices for the shares as reported on the stock exchanges for the 60-day period preceding
the event giving rise to the withdrawal right.

The resolutions that result in a shareholders right to withdraw are the following:

- The transformation of the company;
- The merger of the company;
- The disposition of 50% or more of the corporate assets under the terms described in (viii) of Shareholders Meetings and Voting Rights;
- The granting of guarantees exceeding 50% of the companys assets to guarantee obligations of third parties, except subsidiaries;
- The creation of preferential rights for a class of shares or an amendment to those already existing; in which case the right to withdraw only accrues to the dissenting shareholder of the class or classes of shares adversely affected;

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- A resolution passed with a vote at an Extraordinary Shareholder Meeting, from which a shareholder dissented, which amends the bylaws of a company that are null and void due to formal defects (i) in the companys incorporation or (ii) in any
modification of the companys bylaws that would grant a shareholder a right to withdraw;
- Such other causes as may be established by Chilean law and the companys bylaws (the Bylaws currently do not establish any instances); and
- If a shareholder who acquired 2/3 of the voting stock of the company does not make an offer to buy the shares of the remaining shareholders within 30 days as of such acquisition, then said remaining shareholders may withdraw from the company.
- The approval of our ceasing to be subject to the regulations applicable to publicly held corporations in the event we no longer meet the requirements under Chilean law to qualify as such a corporation.

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Masisa believes that none of its agreements are material to its business because they are immaterial with respect to amount or significance.

The Central Bank of Chile, among other things, is responsible for monetary policies and for exchange controls in Chile. As of April 19, 2001, Chapter XXVI of Title I of the Compendio de Normas de Cambios Internacionales
of the Central Bank of Chile (Chapter XXVI) was eliminated and new investments in ADRs by non-residents of Chile, are now governed by Chapter XIV of the Compendio de Normas de Cambios Internacionales of the Central Bank of Chile
(Chapter XIV). According to the new regulations, such investments must be carried out through Chiles Mercado Cambiario Formal (the Formal Exchange Market) and reported to the Central Bank of Chile. Foreign investments
may still be registered with the Foreign Investment Committee under Decree-Law 600 of 1974, as amended (Decree-Law 600), and obtain the benefits of the contract executed under Decree-Law 600.

Notwithstanding these new foreign exchange regulations of the Central Bank and the elimination of Chapter XXVI, the ADSs representing shares of common stock of Masisa are the subject of and regulated by a contract dated
June 16, 1993 (the Foreign Investment Contract) among the Depositary, Masisa and the Central Bank, pursuant to Article 47 of the Central Bank Act and the regulations of Chapter XXVI, which was incorporated in the Foreign Investment
Contract and addresses the issuance of ADSs by Chilean corporations. Under the Foreign Investment Contract, investors are granted access to the Formal Exchange Market for the purpose of converting amounts from pesos to dollars and repatriating from
Chile amounts received with respect to deposited shares of common stock or shares of common stock withdrawn from deposit or the surrender of ADRs (including amounts received as cash dividends and proceeds from the sale in Chile of the underlying
shares of common stock and rights arising therefrom). After completion of the merger of Masisa with and into Terranova, with Terranova continuing after the merger as the surviving company, holders of Masisa ADSs will have the right to receive
Terranova ADSs and the provisions of the Chapter XXVI and the Foreign Investment Contract will no longer be applicable to the former holders of Masisa ADSs. Thereafter, all holders of Terranova ADSs will be subject to the new regulations of the
Chapter XIV.

Under Chapter XIV, foreign currency payments or remittances to parties abroad (outside of Chile) or made with funds held abroad, that correspond to the capital, interest, inflation adjustments, profits and other
benefits in connection to the Terranova ADSs shall be reported to the Central Bank of Chile and shall take place through the Formal Exchange Market.

Material United States
Tax Consequences

The following
 discussion is a description of the United States tax  consequences  to a U.S.  Holder
(as defined below) of the ownership of Masisa shares or ADSs. This discussion:

- does not
purport to be an analysis of all the potential tax consequences that may be important to
a Holder (as defined               below) based on the Holder's particular tax
situation;does not purport to be an analysis of all the potential tax
              consequences that may be important to a Holder (as defined below) based on
the Holder's particular tax situation;

- is
based on the current provisions of the United States Internal Revenue Code of 1986, as
amended, which we refer to as the               "Internal Revenue Code", the existing
applicable United States federal income tax regulations promulgated or proposed
              under the Internal Revenue Code, which we refer to as the "Treasury
Regulations", judicial authority and current               administrative rulings and
practice, all of which are subject to change, possibly with retroactive effect;

- is
applicable only to "Holders" who hold the Masisa common stock or ADSs as capital assets
for U.S. federal income tax               purposes;

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- does not
describe all of the U.S. tax consequences that may be relevant to Holders in light of
              their particular circumstances or to Holders subject to special rules, such
as:

| |  | banks, thrifts, regulated investment companies or other financial institutions;                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | insurance companies;                                                                                                                                                                                                             
|
| |  | banks,thrifts, regulated investment companies or other financial institutions;                                                                                                                                                   
|
| |  | tax-exempt entities;                                                                                                                                                                                                             
|
| |  | pension funds;                                                                                                                                                                                                                   
|
| |  | brokers, dealers  and certain traders in securities or foreign currency, or traders that elect to mark-to-market their securities;                                                                                               
|
| |  | persons holding the shares or ADSs as part of a position in a constructive sale transaction, a
risk reduction transaction or other integrated transaction for U.S.
federal income tax purposes;                                  
|
| |  | individuals
subject to special rules as a result of the termination of their U.S. citizenship or
                  residency;                                                                                                    
|
| |  | Holders
subject to the alternative minimum tax;                                                                                                                                                                                  
|
| |  | corporations
that accumulate earnings in order to avoid U.S. federal income tax;                                                                                                                                                 
|
| |  | U.S. Holders
that have a functional currency that is not the U.S. dollar;                                                                                                                                                        
|
| |  | partnerships
and other pass-through entities for U.S. federal income tax purposes that hold the
                  shares or ADSs and investors holding interests in such partnerships or
pass-through                   entities;
|
| |  | does not
discuss any possible applicability of any state, local or non-U.S. taxes; and                                                                                                                                           
|
| |  | does not discuss any reporting requirements of or other consequences under the Treasury
                  Regulations relating to certain tax shelter transactions.                                                              

We have not sought and
will not seek any rulings from the Internal  Revenue Service with respect to any matter
discussed  herein.  No assurance can be given that the Internal Revenue Service would not
assert,or that a court  would  not  sustain,  a  position  contrary  to any of the  tax
 characterizations  and tax consequences set forth below.

Holders are urged to
consult with their own tax advisors concerning the U.S. federal, state, local and
non-U.S. income and other tax consequences of the ownership of Masisa shares or ADSs.

As used herein,  the
term "U.S.  Holder" means a Holder that, for U.S. federal income tax purposes, is:

- a citizen or
individual resident of the United States;

- a corporation,
or other entity taxable as a corporation for U.S. federal income tax purposes,
             created or organized in or under the laws of the United States, any state
thereof or the              District of Columbia;

- an estate, the
income of which is subject to U.S. federal income taxation regardless of its
             source; or

- a trust if a
court within the United States is able to exercise primary supervision over the
      trust's administration, and one or more "United States persons" (as defined in
section              7701(a)(30) of the Internal Revenue Code) have the authority to
control all of the              substantial decisions of that trust.

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Notwithstanding  the
preceding  sentence,  certain  electing trusts in existence on August 20, 1996 that were
treated as United States persons prior to such date may also be treated as U.S. Holders.

If a partnership,
including any entity or arrangement treated as a partnership for U.S. federal income
tax purposes, is a Holder of Masisacommon stock or ADSs, then the tax treatment of
a partner in such partnership generally will depend upon the status of the
partner and the activities of the partnership. Persons that are partners of a
partnership holding shares or ADSs should consult their own tax advisors.

Holders are urged to
consult their own tax advisors with respect to the application of the U.S. income tax
laws to their particular situations, as well as any tax consequences arising under
the laws pertaining to any other U.S. tax, the laws of any state, local or non-U.S.
taxing jurisdiction and any applicable treaty.

U.S. Tax Consequences
of Ownership of Masisa Shares or ADSs by U.S. Holders

The U.S.  Treasury
 Department  has expressed  concern that  depositaries  for American  Depositary
Receipts,  or other intermediaries  between the holders of shares of an issuer and the
issuer, may be taking actions  that are  inconsistent  with the  claiming  of U.S.
 foreign  tax  credits by U.S.  holders of such receipts or shares.  Accordingly,  the
analysis  regarding the availability of a U.S. foreign tax credit for Chilean taxes and
sourcing  rules  described  below could be affected by future actions that may be taken
by the U.S. Treasury Department.

Taxation of Dividends.The gross amount of cash distributions or property distributions (other than
certain distributions, if any, of Masisa shares or ADSs distributed pro rata to
all of Masisa's shareholders, including Holders of ADSs) with respect to Masisa
shares or ADSs, to the extent paid out of current or accumulated earnings and
profits of Masisa (as determined under U.S. federal income tax principles),
including the net amount of the Chilean withholding tax withheld on the distribution
(after taking into account the credit for Chilean corporate income tax (the "First
Category Tax")), will be included as a dividend in the gross income of a U.S.
Holder of Masisa shares or ADSs as ordinary income when the dividends are received by
the depositary or the Holder, as the case may be. Such distributions will not be
eligible for the dividends received deduction generally allowed to corporations
under the Internal Revenue Code. To the extent, if any, that the amount of any
distribution by Masisa exceeds its current or accumulated earnings and profits as
determined under U.S. federal income tax principles, such distribution will be
treated first as a tax-free return of the U.S. Holder's adjusted tax basis in its
shares or ADSs and, thereafter, as capital gain. Masisa does not maintain calculations
of its earnings and profits for U.S. federal income tax purposes.

Eligible  dividends
 received by a  non-corporate  U.S.  Holder in tax years beginning on or before December
31, 2008 in respect of shares or ADSs will generally be taxed at a special  reduced rate,
 provided that certain  requirements  are met,  including a requirement  that the U.S.
Holder hold the shares or ADSs, as  applicable,  for more than 60 days during the 120-day
 period  beginning 60 days before the  ex-dividend date.

Dividends  paid in
Chilean pesos will be included in the income of a U.S.  Holder in a U.S.  dollar amount,
 regardless of whether the payment is in fact converted into U.S.  dollars,  calculated
by reference to the exchange  rate in effect on the day they are received by the
 depositary  or the Holder,  as the case may be.  U.S.  Holders  are urged to consult
 their own tax  advisors  regarding  the  treatment  of foreign currency  gain or loss,
if any, on any Chilean pesos  received  that are  converted  into U.S.  dollars on a date
 subsequent to receipt.  The amount of any  distribution  of property  other than cash
will be the fair market value of such property on the date of  distribution.  The Chilean
 withholding tax (after taking into account the credit for the First  Category Tax) will
be treated as a foreign  income tax that a U.S.  Holder may elect to deduct in computing
its income tax or, subject to certain  complex  limitations  and conditions generally
 applicable  to foreign tax credits under the Internal  Revenue  Code, to credit  against
its U.S. federal income tax liability.  Dividends  generally will constitute  foreign
source "passive  income" or, in the case of certain  U.S.  Holders,  "financial  services
 income,"  which may be relevant  for  purposes of determining  a U.S.  Holder's  foreign
tax credit  limitation.  U.S.  Holders are urged to consult their own advisors
 concerning  the  availability  of, and  limitations  on, any such  foreign tax credits
in light of their particular circumstances.

Taxation of Capital
Gains.Upon the sale, exchange or other disposition of Masisa shares or ADSs, a U.S.
Holder will recognize gain or loss for U.S. federal income tax purposes in an amount
equal to the difference between the U.S. dollar value of the amount of cash or fair
market value of property received for the shares or ADSs and such U.S. Holder's adjusted
tax basis (determined in U.S. dollars) in such shares or ADSs at the time of disposition.
Any such gains or losses generally will be long-term capital gains or losses if the U.S.
Holder has held the shares or

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ADSs as capital assets
for more than one year at the time of disposition.  Long-term  capital gains recognized
 by an  individual  U.S.  Holder  generally  will be  subject  to a  reduced  rate  of
 tax.  The deductibility of capital losses is subject to limitations.

Chilean
taxes imposed on a sale or other  disposition  of Masisa shares or ADSs,  net of any
refund available  to the U.S.  Holder,  generally  will be treated  as foreign  income
 taxes  eligible  for credit against a U.S.  Holder's U.S.  federal  income tax
 liability.  Gain realized by a U.S.  Holder on a sale or other  disposition of Masisa
shares or ADSs generally will be treated as U.S. source income.  Because a U.S. Holder
 generally  may not use a foreign  tax credit to reduce its U.S.  federal  income  tax
 liability  in respect of its U.S.  source income,  in the case of a disposition of
shares (which,  unlike a disposition of ADSs,  would be  taxable in Chile),  such U.S.
 Holder  generally  will not be able to utilize  foreign  tax credits in respect of
Chilean tax  imposed on such a  disposition  unless such Holder has other  income from
foreign  sources,  in the appropriate  category,  for purposes of the foreign tax credit
 limitation  rules. U.S.  Holders are urged to consult their tax advisors  regarding the
 application  of the foreign tax credit limitation rules to their investment in and
disposition of the Masisa shares.

Deposits
and  withdrawals  of common stock by U.S.  Holders in exchange for ADRs will not result
in the realization of gains or losses for U.S. federal income tax purposes.

U.S. Backup
Withholding Tax and Information Reporting Requirements

U.S.
 backup  withholding  tax and information  reporting  requirements  generally apply to
certain payments to certain non-corporate  Holders of stock.  Information reporting
generally will apply to payments of  dividends  on, and to proceeds  from the sale or
other  disposition  of,  shares of common stock or ADSs made within the United States to
a Holder of shares or ADSs (other than an "exempt  recipient,"  including a corporation,
 a payee that is not a U.S.  person that  provides  an  appropriate  certification  and
certain other persons).

A
payor will be  generally  required  to  withhold  backup  withholding  tax from any
 payments  of dividends on, or the proceeds  from the sale or redemption  of, shares or
ADSs within the United States to a Holder  (other  than an  "exempt  recipient"),  if
 such  Holder  fails  to  furnish  its  correct  taxpayer identification  number  and
 certain  other  information  or  otherwise  fails to  comply  with  the  backup
withholding tax  requirements.  The current backup  withholding tax rate is 28 percent.
 Amounts withheld as backup  withholding  are allowable as a credit against the Holder's
U.S.  federal income tax upon furnishing certain required information to the Internal
Revenue Service.

Material Chilean Tax
Consequences

The
 following  discussion  is a description  of the Chilean tax  consequences  of the
ownership of Masisa  shares or ADSs to a holder who is not  domiciled  in or resident of
Chile or a legal  entity that is not organized under Chilean law and does not have a
permanent establishment in Chile (a "Foreign Holder").

For
 purposes of Chilean tax law, an  individual  is a resident of Chile if he has resided in
Chile either

- more than six
months in one calendar year; or

- a total of
more than six months, in two consecutive tax years.

Under
 Chilean law,  certain  provisions  contained  in statutes  such as tax rates  applicable
 to foreign  investors,  the computation of taxable income for Chilean  purposes and the
manner in which Chilean taxes are  imposed  and  collected  may only be amended by
another  statute.  In  addition,  the Chilean tax authorities  issue  rulings and
 regulations  of either  general or specific  application  and interpret the provisions
of Chilean tax law.  Chilean taxes may not be assessed  retroactively  against  taxpayers
who act in good faith  relying on such  rulings,  regulations  and  interpretations.
 Chilean tax  authorities  may, however, change such rules,  regulations and
interpretations  prospectively.  There is no general income tax treaty between Chile and
the United States.

This
discussion:

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- is based upon
the tax laws of Chile as in effect on the date of this registration statement,
              including applicable regulations and rulings, and including ruling No. 324
of January 29,               1990 of the Chilean tax administration; and

- is not
intended as Chilean tax advice to any particular Foreign Holder, which can be rendered
only               in light of its particular circumstances, and does not purport to be a
complete analysis of               the potential Chilean tax consequences that may be
important to a Foreign Holder based on               that Foreign Holder's particular tax
situation or circumstances.

We
have not sought and will not seek any rulings from the Chilean tax  administration  with
respect to any matter  discussed  herein.  No assurance can be given that the Chilean tax
 administration  would not assert,  or that a court would not sustain a position contrary
to any of the tax  characterizations  and tax consequences set forth below.

Foreign
Holders are urged to consult with their own tax advisors concerning the Chilean
tax consequences of the ownership of Masisa shares or ADSs.

Chilean Tax
Consequences of Ownership of Masisa Shares or ADSs by Foreign Holders

The
following  discussion contains a description of the material Chilean Tax Consequences
 relevant to the purchase,  ownership and disposition of Masisa shares or ADSs by a
Foreign Holder.  This  description is based, in part, on the  representations  of the
depositary and the assumption that each obligation in the Deposit Agreement and any
related agreement will be performed in accordance with its terms.

Taxation
of Dividends.Cash dividends paid by Masisa with respect to its common stock or
ADSs held by Foreign Holders will be subject to Chile's withholding tax at a rate
of 35% (the "Withholding Tax"), unless the dividend is paid out of income exempt from
the Withholding Tax. The Withholding Tax must be withheld and paid over to the Chilean
Treasury by Masisa. A credit against the Withholding Tax is available in the
amount of the First Category Tax actually borne by Masisa on the income paid as
a dividend. The basis of the Withholding Tax will be equal to the amount of the
cash dividend plus the amount of any available First Category Tax credit.

The
example below  illustrates  the  effective  Chilean  Withholding  Tax burden on a cash
dividend received by a Foreign  Holder,  assuming a Withholding Tax rate of 35%, an
effective First Category Tax rate of 17% and a distribution of all of the net proceeds
available after payment of the First Category Tax.

|Taxable income                                                                                              | 100 
|----------------------------------------------------------------------------------------------------------- | ----
|First Category Tax (17% of US$100)                                                                          | (17)
|Net proceeds available                                                                                      | 83  
|Dividend payment                                                                                            | 83  
|Withholding Tax (35% of the sum of the dividend (US$83) and the available First Category Tax credit (US$17) | (35)
|First Category Tax credit                                                                                   | 17  
|Net dividend received                                                                                       | 65  
|                                                                                                           
|Payable Withholding Tax                                                                                     | (18)

The
tax character of the dividend  (taxable or exempt from  Withholding  Tax) and the amount
of any First Category Tax credit will be determined in accordance with the dividend
 imputation  rules contained in Chile's  income tax law.  Such rules  generally  provide
that  dividends  are imputed first to the company's oldest profits subject to Withholding
 Tax, then to any profits exempt from  Withholding Tax, and finally to any book-profits
in excess of taxable and exempt profits.

Dividend
 distributions  made in property (other than shares of common stock) will be taxed as if
a cash  dividend in the amount of the fair  market  value of the  distributed  property
 had been paid.  Stock dividends  are not  subject to Chilean  taxation  upon
 distribution.  The  exercise  of  preemptive  rights relating to common stock will not
be subject to Chilean  taxation.  Gains from the sale of preemptive rights relating to
common  stock will be subject to both the First  Category Tax and the  Withholding  Tax
(subject to the credit outlined above).

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Taxation of Capital  Gains.  Gains  realized on the sale,  exchange or other  disposition  by a Foreign Holder of the ADSs (or
ADRs evidencing ADSs) will not be subject to any Chilean taxes,  provided that such sale,  exchange or other disposition occurs outside
of Chile. The deposit and withdrawal of common stock in exchange for ADRs is not subject to any Chilean taxes.

The tax basis of the  shares of common  stock  received  in  exchange  for ADSs  will be the  acquisition  cost of the  shares
adjusted for the CPI variation  between the month preceding the exchange and the month preceding the sale. The valuation  procedure set
forth in the deposit  agreement,  which values  shares of common stock that are being  exchanged at the highest  reported sale price at
which they trade on the Santiago  Stock  Exchange on the date the exchange is recorded on the books of the Company,  will determine the
acquisition  cost for this purpose.  Consequently,  the conversion of ADSs into common stock and the same-day sale of such common stock
for the value established under the deposit agreement will not generate a taxable capital gain in Chile.

Gain  recognized on a sale or exchange of common stock (as  distinguished  from a sale or exchange of ADSs  representing  such
common stock) held by Foreign Holders will be subject to Chilean income taxes at an effective rate of 35% if either

- the Foreign Holder has held the common stock for less than one year, counted from the date of acquisition of such common
              stock or since exchanging the ADSs for such common stock,

- the Foreign Holder acquired and disposed of the common stock in the ordinary course of its business or as a regular trader of
              shares, or

- the sale is made to a related entity.

Otherwise,  gain on the sale or other  disposition  of common stock will be subject  generally to the First  Category Tax as a
sole income tax, currently imposed at a rate of 17%.

In certain cases and provided  certain  requirements  are met,  capital gains realized on the sale of actively traded stock of
Chilean  public  companies may be exempt from Chilean  income  taxes.  The stock of Masisa is currently  considered an actively  traded
stock in the Santiago Stock  Exchange,  and Foreign  Holders of the stock may qualify for an income tax exemption.  Foreign Holders are
urged to consult with their own tax advisors to determine whether an exemption applies to them.

Other Chilean Taxes

There are no Chilean inheritance,  gift or succession taxes applicable to the ownership,  transfer or disposition of ADSs by a
Foreign  Holder,  but such taxes may apply to transfers from  inheritance,  gifts or  successions  if the transferor  acquired the ADSs
with Chilean-source  resources.  There are no Chilean stamp, issue, registration or similar taxes or duties payable by a Foreign Holder
of common stock or ADSs.

Chilean Withholding Tax Certificates

Upon  request,  the  Company  will  provide  to  Foreign  Holders  appropriate  documentation  evidencing  the  payment of the
Withholding Tax (net of applicable First Category Tax).

Documents on Display

Masisa S.A. is subject to the information requirements of the Securities Exchange Act of 1934 applicable to foreign private issuers,
and accordingly Masisa S.A. files or furnishes reports, information statements and other information with the U.S. Securities and
Exchange Commission. These reports and other information filed by Masisa S.A. can be inspected at, and subject to the payment of any
required fees, copies may be obtained from, the public Reference Section of the U.S. Securities and Exchange Commission, 100 F
Street, N.E., Room 1580, Washington, D.C. 20549, and at the U.S. Securities and Exchange Commissions Regional Offices located at 233
Broadway, New York, New York 10279 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,

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Illinois 60661. These reports and other information may also be inspected and copied at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

Masisa S.A.s SEC filings and submissions are also available from commercial retrieval services and, with respect to filings and submissions made after November 2002, may be obtained over the Internet at the
website maintained by the SEC at www.sec.gov. As a foreign private issuer, Masisa S.A. was not required to make filings with the SEC by electronic means prior to November 2002.

As a foreign private issuer, Masisa S.A. is exempt from the proxy requirements of Section 14 of the Exchange Act and from the short-swing profit recovery rules of Section 16 of the Exchange Act, although the rules of
the New York Stock Exchange may required Masisa S.A. to solicit proxies from its shareholders under some circumstances.

Item 11. Quantitative and Qualitative Disclosure About Market Risk

The Company is subject to market risk that losses could occur in the values of financial instruments from fluctuations in interest rates, foreign currency exchange rates and commodity prices.The Company is
exposed to these risks in the normal course of its business due to its use of certain financial instruments and transactions in various foreign currencies. Based on current market conditions, the Companys Chief Executive Officer and Chief
Financial Officer establish policies for new loans, derivative contracts, time deposits, marketable securities and securities with resale agreements and policies.

New long-term loans for financing new investments, or refinancing existing long-term loans, must be approved by the Companys Board of Directors. In each country where the Company has operations, management is able
to incur new short-term loans to finance working capital needs in the normal course of business. Intercompany loans between Masisa and its subsidiaries, or within its subsidiaries, are settled with fixed interest rates, on a case by case basis.

The Companys Chief Executive Officer and Chief Financial Officer from time to time establish policies to manage the Companys financial risk. Hedging interest rate exposure and foreign currency risk through the use of derivative
contracts is specifically considered for purposes of managing such risks. Derivative instruments, such as swaps or cross currency contracts, which are based directly or indirectly upon interest rates and currencies, are used by the Company to manage
and reduce the risk inherent in currency and interest rate fluctuations. The Company does not utilize derivative instruments for speculative purposes. Interest rate swap instruments utilized by the Company are transaction-specific so that a specific
debt instrument or contract determines the amount, maturity and other terms of the hedge while currency instruments are either transaction specific or based on anticipated cash flows from operations.

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The Companys primary interest rate risk exposures arise from its long-term fixed rate bank borrowings and bond liabilities and other long-term liabilities. Assuming other factors are held constant, interest rate
changes generally affect the fair value of fixed rate debt, but do not impact the carrying value, earnings or cash flows. Of the Companys long-term interest bearing debt, as of December 31, 2004, 59 % was fixed rate debt and 41% was variable
compared to 73% and 27 % for the year ended 2003. The Company has entered into an interest rate swap on a portion of its variable debt for a notional amount of US$12 million. The company pays a fixed rate of 5.2% under the terms of the agreement,
which expires in October 2006. At December 31, 2004, the fair value of this swap was a liability of US$ 339,000. The Company has also entered into two separate cross currency swaps for notional amounts of $20 million and $40 million. Under the terms
of these contracts, the Company pays a fixed US$ amount at a rate of 6.3% . The expiration period of these contracts match those terms of the Companys UF denominated fixed rate debt. The Company has also entered into a cross currency swap in
which it pays Mexican pesos at a rate of 11.8% and receives US dollars at a rate of 6.2% . The notional amount of this contract is US$ 20 million. The contract period also corresponds to the period of the Companys long term UF denominated
debt. The following table provides information as of December 31, 2004 about the Companys interest-earning liabilities and derivative contracts, including its long-term debt and its private placement with U.S. insurance companies and other
institutional investors, which are sensitive to changes in interest rates, based upon their respective contractual maturity dates:

|                                            |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|------------------------------------------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ---------- |  | ------ |  | --------------
|(Amounts in thousands of US$)               |  | 2005   |  | 2006   |  | 2007   |  | 2008   |  | 2009   |  | Thereafter |  | Total  |  | Estimated fair
|                                            |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  | Market Value  
|                                            |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|INTEREST EARNING ASSETS                     |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                            |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                           
|US$ denominated fixed rate                  |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|(short-term and long-term)                  |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|Time deposits                               |  | 17,033 |  |       |  |       |  |       |  |       |  |           |  | 17,033 |  | 17,033        
|Weighted average interest rate              |  | 2.00%  |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                           
|Chilean peso denominated                    |  | 1,175  |  |       |  |       |  |       |  |       |  |           |  | 1,175  |  | 1,175         
|Marketable securities                       |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|Weighted average interest rate              |  | 3.0%   |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                            |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                           
|                                           
|INTEREST BEARING LIABILITIES                |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                           
|Fixed Rate :                                |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|Chilean peso - UF denominated bank debt (1) |  | 1,414  |  | 2,648  |  |       |  |       |  |       |  |           |  | 4,062  |  | 5,555         
|Weighted average interest rate              |  | 6.70%  |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                           
|Bonds and other long-term Borrowings:       |  | 216    |  | 15,533 |  | 15,533 |  | 15,533 |  | 51,724 |  |           |  | 98,539 |  | 103,556       
|Chilean peso  UF denominated               |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|Weighted average interest rate              |  | 5.27%  |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                           
|Private Placement, Bonds and other long-    |  | 9,371  |  | 9,000  |  | 9,000  |  | 9,000  |  |       |  |           |  | 36,371 |  | 37,810        
|term Borrowings  US$                       |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|Weighted average interest rate              |  | 8.06%  |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                           
|Variable Rate :                             |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|US$ denominated bank debt                   |  | 23,515 |  | 28,791 |  | 25,392 |  | 11,250 |  | 5,000  |  | 3,750      |  | 97,698 |  | 97,698        
|Weighted average interest rate              |  | 3.3%   |  |        |  |        |  |        |  |        |  |            |  |        |  |               
|                                            |  |        |  |        |  |        |  |        |  |        |  |            |  |        |  |               

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|                                         |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|---------------------------------------- |  | ----- |  | ----- |  | ----- |  | ----- |  | ----- |  | --- |  | ------ |  | -----
|DERIVATIVE CONTRACTS                     |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|                                         |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Interest Rate Swaps US$ (2)              |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|                                         |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Pay fixed, receive variable              |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Amounts to be paid                       |  | 552   |  | 237   |  |       |  |       |  |       |  |     |  | 789    |  | 339  
|Weighted average interest fixed rate     |  | 5.2%  |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Expected amounts to be received          |  | 288   |  | 154   |  |       |  |       |  |       |  |     |  | 442    |  |      
|Weighted average variable rate expected  |  | 3.4%  |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|                                         |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Cross Currency Swaps (3)                 |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Pay USD, receive UF                      |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Amounts to be paid                       |  | 3,784 |  | 3,595 |  | 2,838 |  | 2,081 |  | 1,324 |  | 568 |  | 14,190 |  |      
|Weighted average interest fixed rate USD |  | 6.3%  |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Expected amounts to be received          |  | 3,256 |  | 3,195 |  | 2,606 |  | 1,974 |  | 1,298 |  | 574 |  | 12,904 |  | 5,231
|Weighted average variable fixed rate UF  |  | 4.9%  |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|                                         |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Pay MXN receive USD (3)                  |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Amounts to be paid                       |  | 2,439 |  | 2,317 |  | 1,829 |  | 1,341 |  | 854   |  | 366 |  | 9,145  |  | 460  
|Weighted average interest fixed rate MXN |  | 11.8% |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|Expected amounts to be received          |  | 1,240 |  | 1,178 |  | 930   |  | 682   |  | 434   |  | 186 |  | 4,650  |  |      
|Weighted average interest fixed rate USD |  | 6.2%  |  |       |  |       |  |       |  |       |  |     |  |        |  |      
|                                         |  |       |  |       |  |       |  |       |  |       |  |     |  |        |  |      

|(1) | The UF  dollar exchange rate deffers from the chilean peso dollar exchange rate in that the UF automatically adjusts in accordance with chilean inflation.                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The fair value of swaps is determined based on bank confirmations. The related expected payments and receipts were determined based on these fair values utilizing a wieghted average variable rate expected to match this fair value.
|(3) | Amounts were calculated utilizing the fair value of the swap contract as determined by the bank and the exchange rate of the related currency against the US dollar as published by the Central Bank of Chile at December 31, 2004.   

We were subject to foreign currency exchange rate risks associated with assets and liabilities and transactions in currencies other than our functional currency. We periodically entered into foreign exchange contracts
including cross currency swaps when deemed necessary to hedge or offset the risk of loss due to currency fluctuations of assets and liabilities and transactions denominated in foreign currencies. When hedging foreign currency exposures,
our practice is to hedge such exposures with foreign exchange contracts denominated in the same currency and with similar critical terms as the underlying exposure, and therefore, the instruments are effective at generating offsetting changes in the
earnings and fair value. At December 31, 2004, the Company had ThUS$102,601 Chilean peso denominated debt as compared to ThUS$102,571 Chilean peso denominated debt at the end of 2003. This represents 43% and 35% of our total debt at December 31,
2004 and 2003, respectively. Additionally, a portion of the Companys subsidiaries operating revenues and assets and liabilities are in currencies that differ from the Companys functional currency. However, since both their operating
revenues and expenses are in the same currency, this creates a partial natural hedge with each other.

As explained above in the interest rate risk section, at December 31, 2004, we had three separate cross currency swaps used to manage our exposure to foreign currency risk. The terms of these contracts match the terms
of the UF denominated debt and the Company pays a fixed US dollar amount at a rate of 6.2% . The notional amount of the contracts is $60 million. The company also entered into a cross currency swap to hedge its Mexican subsidiary operations. Under
the terms of this contract, the Company pays Mexican pesos at a fixed rate of 11.8% and receives US dollars at a rate of 6.3% . The notional amount of this contract is US$ 20 million and the period matches the period of its UF debt obligation. The
following table summarizes the Companys long-term debt, financial instruments, and assets and liabilities denominated in the stated currencies the Company held as of December 31, 2004, based upon their respective contractual maturity dates:

|(Amounts in thousands of US$) |  | 2004 |  | 2005 |  | 2006 |  | 2007 |  | 2008 |  | Thereafter |  | Total |  | Estimated fair
|----------------------------- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---------- |  | ----- |  | --------------
|                              |  |      |  |      |  |      |  |      |  |      |  |            |  |       |  | Market Value  
|                              |  |      |  |      |  |      |  |      |  |      |  |            |  |       |  |               
|ASSETS:                       |  |      |  |      |  |      |  |      |  |      |  |            |  |       |  |               
|                              |  |      |  |      |  |      |  |      |  |      |  |            |  |       |  |               

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|Chilean Peso                             |  | 30,700 |  |        |  |        |  |        |  |        |  |     |  | 30,700 |  |        
|---------------------------------------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | --- |  | ------ |  | -------
|Mexican Peso                             |  | 18,900 |  |        |  |        |  |        |  |        |  |     |  | 18,900 |  |        
|Other currencies non US Dollar           |  | 38,299 |  |        |  |        |  |        |  |        |  |     |  | 38,299 |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|LIABILITIES:                             |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Chilean Peso (excluding debt)            |  | 18,112 |  |        |  |        |  |        |  |        |  |     |  | 18,112 |  |        
|Mexican Peso                             |  | 6,029  |  |        |  |        |  |        |  |        |  |     |  | 6,029  |  |        
|Other currencies non US Dollar           |  | 13,554 |  |        |  |        |  |        |  |        |  |     |  | 13,554 |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Chilean peso - UF denominated debt (1)   |  | 1,414  |  | 2,648  |  |       |  |       |  |       |  |    |  | 4,062  |  | 5,555  
|Weighted average interest rate           |  | 6.70%  |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Bonds and other long-term Borrowings     |  | 216    |  | 15,533 |  | 15,533 |  | 15,533 |  | 51,724 |  |    |  | 98,539 |  | 103,556
|Chilean peso  UF denominated (1)        |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Weighted average interest rate           |  | 5.27%  |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|DERIVATIVE CONTRACTS                     |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Pay USD, receive UF (2)                  |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Amounts to be paid                       |  | 3,784  |  | 3,595  |  | 2,838  |  | 2,081  |  | 1,324  |  | 568 |  | 14,190 |  |        
|Weighted average interest fixed rate USD |  | 6.3%   |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Expected amounts to be received          |  | 3,256  |  | 3,195  |  | 2,606  |  | 1,974  |  | 1,298  |  | 574 |  | 12,904 |  | 5,231  
|Weighted average variable fixed rate UF  |  | 4.9%   |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|                                         |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Pay MXN receive USD (2)                  |  |        |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Amounts to be paid                       |  | 2,439  |  | 2,317  |  | 1,829  |  | 1,341  |  | 854    |  | 366 |  | 9,145  |  | - 460  
|Weighted average interest fixed rate MXN |  | 11.8%  |  |        |  |        |  |        |  |        |  |     |  |        |  |        
|Expected amounts to be received          |  | 1,240  |  | 1,178  |  | 930    |  | 682    |  | 434    |  | 186 |  | 4,650  |  |        
|Weighted average interest fixed rate USD |  | 6.2%   |  |        |  |        |  |        |  |        |  |     |  |        |  |        



|   
|---
|(1)
|(2)
|   

Item 12.Description of Securities Other than Equity Securities

Item 13. Default, Dividend Arrearages and Delinquencies

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

The Company maintained a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it filed or submitted under the Securities Exchange Act of
1934 was recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. As of the end of the period covered by this Annual Report, an evaluation of the effectiveness of the
Companys disclosure controls and procedures was carried out under the supervision and with the participation of the Companys management, including the Chief Executive Officer and the Chief Financial Officer. Based on that evaluation, the
Chief Executive Officer and the Chief Financial Officer of Terranova, as the

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legal successor to Masisa for all purposes, have concluded that the Companys disclosure controls and procedures were effective as of the end of the period covered by this Annual Report.

Subsequent to the date of the evaluation referred to above, there have been no changes in the Companys internal control over financial reporting that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.

The Board of Directors of the Company determined that it had at least one audit committee financial expert, as defined in Item 16A of Form 20-F, serving on the Audit Committee. Isidoro Palma was the director
whom the Board of Directors had determined to be an audit committee financial expert. Mr. Palma was an independent director during his term of service on the Audit Committee. Holders of ADSs should understand that this designation is a disclosure
requirement of the SEC related to Mr. Palmas experience and understanding with respect to certain accounting and auditing matters. The designation did not and does not impose on Mr. Palma any duties, obligations or liability that are greater
than are generally imposed on him as a member of the Audit Committee and Board of Directors, and his designation as an audit committee financial expert pursuant to this SEC requirement did not and does not affect the duties, obligations or liability
of any other member of the Audit Committee or Board of Directors.

The Company adopted a code of ethics that applied to all of its employees and directors, including its principal executive officer, principal financial officer and principal accounting officer. The code of ethics was
the same as Terranovas code of ethics which is available at Terranovas website at http://www.masisa.com.

Audit Fees. Fees paid to PricewaterhouseCoopers for the audit of the annual consolidated financial statements included in the Companys Annual Report on Form 20-F in the years ended 2003 and 2004 were
US$357,190 and US$313,799, respectively.

Audit-Related Fees. Fees paid to PricewaterhouseCoopers for audit-related services, including consultations regarding the Sarbanes-Oxley Act and other items, were US$37,370 and US$75,871, respectively, for
the years ended 2003 and 2004.

Tax Fees. Fees paid to PricewaterhouseCoopers associated with tax compliance and tax consultation were US$69,660 and US$45,937, respectively, for the years ended 2003 and 2004.

All Other Fees. Fees paid to PricewaterhouseCoopers for other services increased from US$8,210 in 2003 to US$14,050 in 2004, principally due to consulting services and services related to sustainability
studies.

Audit Committee Pre-Approval Policies. The Audit Committee adopted a formal policy on auditor independence requiring the approval by the Audit Committee of all professional services rendered by the
Companys independent auditor prior to the commencement of the specified services. The Audit Committee considered annually and, if appropriate, approved the provision of audit services by Companys independent auditor and considered and,
if appropriate, pre-approved the provision of certain defined audit and non-audit services. The Audit Committee also considered on a case-by-case basis and, if appropriate, approved specific engagements that were not otherwise pre-approved.

Any proposed engagement that did not fit within the definition of a pre-approved service could be presented to the Audit Committee for consideration at its next regular meeting or, if earlier consideration was required,
to the Audit Committee for action by written consent. The Audit Committee also delegated to the Chair of the Audit Committee the authority to pre-approve audit-related and non-audit services not prohibited by law to be performed by the
Companys independent auditors and associated fees up to a maximum for any one non-audit service of $100,000, provided that the Chair reported any decisions to pre-approve such audit-related or non-audit services and fees to the full Audit
Committee at its next regular meeting.

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All of the services described in Audit-Related Fees, Tax Fees and All Other Fees, were approved by the Audit Committee in accordance with the Companys formal policy on auditor
independence.

Item 16D. Exemptions from the Listing Standards for Audit Committees.

A comparison of NYSE corporate governance standards, including the standards for audit committees of listed companies, and Terranovas corporate governance practices is available on Terranovas website at
www.masisa.com. This comparison is the same as that which applied to Masisa prior to its merger with Terranova.

Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers.

Except in connection with the merger of Masisa into and with Terranova, during 2004 the Company did not, nor did any affiliated purchaser as that term is defined in Exchange Act Rule 10b-18(a)(3), purchase
any of the Companys equity securities that are registered under Section 12 of the Exchange Act.

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PART IV

Item 17. Financial Statements

The Companys financial statements have been prepared in accordance with Item 18.

Item 18. Financial Statements

See pages F-1 through F-47, incorporated herein by reference.
The following is an index to the financial statements:

|                                                                       |  |     
|---------------------------------------------------------------------- |  | ----
|Consolidated Financial Statements for Masisa S.A. and Subsidiaries     |  | Page
|Report of independent registered accounting firm                       |  | F-1 
|Consolidated balance sheets as of December 31, 2003 and 2004           |  | F-2 
|Consolidated statements of income for each of the three years ended    | 
|December 31, 2002, 2003 and 2004                                       |  | F-3 
|Consolidated statement of cash flows for each of the three years ended | 
|December 31, 2002, 2003 and 2004                                       |  | F-4 
|Notes to Consolidated Financial Statements                             |  | F-6 

Item 19. Exhibits

Documents filed as exhibits to this Annual Report:

|            |                                                                                                                                                                                                                                                                                                                       
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                       
|1.1         | Bylaws (estatutos sociales) of Masisa S.A., together with an English translation (previously filed with the Securities and Exchange Commission as Exhibit 1.1 on Form 20-F dated June 29, 2001 and incorporated by reference herein).                                                                                 
|            |                                                                                                                                                                                                                                                                                                                       
|2.1         | Form of Deposit Agreement among the Company, Bank of New York and holders from time to time of American Depositary Receipts issued thereunder, including the form of the Depositary Receipt (incorporated by reference to the statement on Form F-6, Registration No. 33-63154, filed by Masisa S.A. on May 21, 1993).
|            |                                                                                                                                                                                                                                                                                                                       
|8.1         | List of significant subsidiaries of the Company.                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                       
|12.1        | Certification by Chief Executive Officer of Masisa S.A. pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                       
|12.2        | Certification by Chief Financial Officer of Masisa S.A. pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                       
|13          | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished under Section 18 of the Securities Exchange Act of 1934).                                                                                                                                                                          

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Report of Independent Registered Accounting FirmonFinancial Statement Schedules

Our audits of the consolidated financial statements referred to in our report dated June 6, 2005 appearing in the 2004 Form 20-F also include an audit of the financial statement schedules listed in Schedule II of this Form 20-F. In our opinion,
this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

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MASISA S.A.

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

Accounts receivable  Reserves

|                                                     |  |                           |  |                 |  |                 |  |          |  |               
|---------------------------------------------------- |  | ------------------------- |  | --------------- |  | --------------- |  | -------- |  | --------------
|                                                     |  | Balance at                |  |                 |  |                 |  | Exchange |  |               
|                                                     |  | Beginning of              |  | Charge to Costs |  | Amounts Written |  | Rate     |  | Balance at End
|Year Ended                                           |  | Period                    |  | and Expenses    |  | Off             |  | Impact   |  | of Period     
|                                                     |  | (thousands of US dollars)
|                                                    
|December 31, 2004                                    |  | 4,017                     |  | 778             |  | -193            |  | -134     |  | 4,468         
|December 31, 2003                                    |  | 2,603                     |  | 377             |  | -189            |  | 1,226    |  | 4,017         
|December 31, 2002                                    |  | 4,402                     |  | 333             |  | -28             |  | -2,104   |  | 2,603         
|                                                    
|                                                    
|                                                    
|                                                    
|Accounts receivable  Reserves  Affiliated entities |  |                           |  |                 |  |                
|                                                    
|                                                    
|                                                     |  | Balance at                |  |                 |  |                 |  | Exchange |  |               
|                                                     |  | Beginning of              |  | Charge to Costs |  | Amounts Written |  | Rate     |  | Balance at End
|Year Ended                                           |  | Period                    |  | and Expenses    |  | Off             |  | Impact   |  | of Period     
|                                                     |  | (thousands of US dollars)
|                                                    
|December 31, 2004                                    |  | 0                         |  | 2,762           |  | -2,762          |  | 0        |  | 0             
|December 31, 2003                                    |  | 0                         |  | 0               |  | 0               |  | 0        |  | 0             
|December 31, 2002                                    |  | 0                         |  | 0               |  | 0               |  | 0        |  | 0             
|                                                    
|                                                    
|                                                    
|                                                    
|Inventories  Reserves                               |  |                           |  |                 |  |                 |  |         
|                                                    
|                                                    
|                                                     |  | Balance at                |  |                 |  |                 |  | Exchange |  |               
|                                                     |  | Beginning of              |  | Charge to Costs |  | Amounts Written |  | Rate     |  | Balance at End
|Year Ended                                           |  | Period                    |  | and Expenses    |  | Off             |  | Impact   |  | of Period     
|                                                     |  | (thousands of US dollars)
|                                                    
|December 31, 2004                                    |  | 996                       |  | 115             |  |                |  | 6        |  | 1,117         
|December 31, 2003                                    |  | 676                       |  | 350             |  |                |  | -30      |  | 996           
|December 31, 2002                                    |  | 429                       |  | 443             |  |                |  | -196     |  | 676           

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MASISA S.A. AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2004





|                                                                       |  |     
|---------------------------------------------------------------------- |  | ----
|Consolidated Financial Statements for Masisa S.A. and Subsidiaries     |  | Page
|Report of independent registered accounting firm                       |  | F-1 
|Consolidated balance sheets as of December 31, 2003 and 2004           |  | F-2 
|Consolidated statements of income for each of the three years ended    | 
|December 31, 2002, 2003 and 2004                                       |  | F-3 
|Consolidated statement of cash flows for each of the three years ended | 
|December 31, 2002, 2003 and 2004                                       |  | F-4 
|Notes to Consolidated Financial Statements                             |  | F-6 





|      |   |                                                                  
|----- | - | -----------------------------------------------------------------
|Ch$   | - | Chilean pesos                                                    
|ThCh$ | - | Thousands of Chilean pesos                                       
|US$   | - | United States dollars                                            
|ThUS$ | - | Thousands of United States dollars                               
|Pa$   | - | Argentine Pesos                                                  
|UF    | - | A UF (Unidad de Fomento) is an inflation-indexed peso-denominated
|      |   | monetary unit. The UF rate is set daily in advance based on the  
|      |   | previous month's inflation rate.                                 

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REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Masisa S.A.

|1 | We have audited the accompanying consolidated balance sheets of MASISA S.A. and its subsidiaries (the Company) as of December 31, 2004 and 2003 and the related consolidated statements of income and of cash flows for each of the three
years in the period ended December 31, 2004, all expressed in thousands of United States dollars. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial
statements based on our audits.                                                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|2 | We conducted our audits in accordance with generally accepted auditing standards in both Chile and the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
| 
|3 | In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MASISA S.A. and its subsidiaries at December 31, 2004 and 2003 and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in Chile.                                                                                                                                                                                                                                                                                        
| 
|4 | Accounting principles generally accepted in Chile vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in
Note 23 to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                
| 

/s/ PricewaterhouseCoopers
_______________________
Santiago, Chile
June 6, 2005

F - 1

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MASISA S.A. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of United States Dollars)

|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|---------------------------------------------------------------------------- | ------ | --------------- | ------ | ------- | ----------------- | -------------------------------------------------------------------------------------------------------------------------- | ------- | ------- | ------- | -------
|                                                                             |        | At December 31, |        |         |                   | At December 31,                                                                                                           
|ASSETS                                                                       |        | 2003            |        | 2004    |                   | LIABILITIES AND SHAREHOLDERS EQUITY                                                                                       |         | 2003    |         | 2004   
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|                                                                            
|CURRENT ASSETS                                                               |        |                 |        |         |                   | CURRENT LIABILITIES                                                                                                        |         |         |         |        
|Cash                                                                         |        | 8,661           |        | 4,358   |                   | Short-term bank borrowings (Note 10)                                                                                       |         | 37,883  |         | 3,110  
|Time deposits and securities purchased
              under resale agreements |        |                 |        |         |                   | Current portion of long-term bank                                  borrowings  (Note 11)                                   |         |         |         |        
|                                                                             | 11,120 |                 | 18,208 |         |                   | 42,254                                                                                                                     |         | 21,819 
|Accounts receivable (Note 3)                                                 |        | 72,220          |        | 93,859  |                   | Other long-term borrowings due within
             one year (Note 12)                                                      |         |         |         |        
|Notes and accounts receivable from
             related companies (Note 19)  |        |                 |        |         |                   |                                                                                                                            | 10,010  |         | 9,698  
|                                                                             | 2,298  |                 | 7,383  |         | Dividends payable |                                                                                                                            | 206     |         | 174    
|Inventories (Note 4)                                                         |        | 77,716          |        | 90,967  |                   | Accounts payable                                                                                                           |         | 25,415  |         | 31,691 
|Recoverable taxes (Note 15 b)                                                |        | 11,180          |        | 10,202  |                   | Notes and accounts payable                                                                                                 |         |         |         |        
|Other current assets (Note 5)                                                |        | 32,540          |        | 5,177   |                   | to related companies (Note 19)                                                                                             |         | 1,827   |         | 3,509  
|                                                                             |        |                 |        |         |                   | Accrued liabilities (Note 16)                                                                                              |         | 4,611   |         | 8,098  
|                                                                             |        |                 |        |         |                   | Other current liabilities                                                                                                  |         | 1,905   |         | 3,128  
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|                                                                            
|Total current assets                                                         |        | 215,735         |        | 230,154 |                   | Total current liabilities                                                                                                  |         | 124,111 |         | 81,227 
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|                                                                            
|PROPERTY, PLANT AND EQUIPMENT                                                |        |                 |        |         |                   | LONG-TERM LIABILITIES                                                                                                      |         |         |         |        
|(net) (Note 6)                                                               |        | 637,891         |        | 647,774 |                   | Long-term bank borrowings (Note 11)                                                                                        |         | 74,285  |         | 76,831 
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|                                                                             |        |                 |        |         |                   | Deferred income taxes (Note 15 c)                                                                                          |         | 11,256  |         | 14,723 
|OTHER ASSETS                                                                 |        |                 |        |         |                   | Other long-term borrowings (Note 12)                                                                                       |         | 127,366 |         | 125,323
|Investments in                                                               |        |                 |        |         |                   | Other long-term liabilities (Note 13)                                                                                      |         | 11,198  |         | 19,826 
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|unconsolidated affiliates (Note 7)                                           |        | 10              |        | 60      |                   | Total long-term liabilities                                                                                                |         | 224,105 |         | 236,703
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|Goodwill and negative goodwill, net (Note 8)                                 |        | (435)           |        | (420)   |                   |                                                                                                                            |         |         |         |        
|Long-term receivables                                                        |        | 1,218           |        | 4,677   |                   | MINORITY INTEREST                                                                                                          |         | 66,331  |         | 76,076 
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|Notes and accounts receivable from                                           |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|related companies (Note 19)                                                  |        | 3,297           |        | 597     |                   | COMMITMENTS AND
CONTINGENCIES (Note 18)                                                                                    |         | -       |         | -      
|Other assets (Note 9)                                                        |        | 9,055           |        | 11,628  |                   |                                                                                                                            |         |         |         |        
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|Total other assets                                                           |        | 13,145          |        | 16,542  |                   | SHAREHOLDERS' EQUITY (Note 17)                                                                                             |         |         |         |        
|                                                                             |        |                 |        |         |                   | Common stock (928,514,743 shares in
             2004 and 2003, authorized and outstanding
             with no par value) |         |         |         |        
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |        
|                                                                             |        |                 |        |         |                   |                                                                                                                            | 237,022 |         | 237,022
|                                                                             |        |                 |        |         |                   | Reserves                                                                                                                   |         | 59,706  |         | 70,222 
|                                                                             |        |                 |        |         |                   | Retained earnings                                                                                                          |         | 155,496 |         | 193,220
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|                                                                             |        |                 |        |         |                   | Total shareholders equity                                                                                                 |         | 452,224 |         | 500,464
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        
|                                                                            
|Total assets                                                                 |        | 866,771         |        | 894,470 |                   | Total liabilities and shareholders equity                                                                                 |         | 866,771 |         | 894,470
|                                                                             |        |                 |        |         |                   |                                                                                                                            |         |         |         |        

The accompanying Notes 1 to 23 form an integral part of these consolidated financial statements.

F - 2

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MASISA S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Expressed in thousands of United States Dollars)

|                                    |  | For the years     
|----------------------------------- |  | ------------------
|                                    |  | ended December 31,
|                                    |  | 2002              
|                                    |  |                   
|OPERATING RESULTS                   |  |                   
|Net sales                           |  | 225,412           
|Cost of sales                       |  | (166,022)         
|                                    |  |                   
|                                    |  |                   
|Gross margin                        |  | 59,390            
|Selling and administrative expenses |  | (29,566)          
|                                    |  |                   
|                                    |  |                   
|                                   
|Operating income                    |  | 29,824            
|                                    |  |                   
|                                   
|NON-OPERATING RESULTS               |  |                   
|Non-operating income (Note 20)      |  | 7,677             
|Non-operating expenses (Note 21)    |  | (12,058)          
|Price-level restatements            |  | (6,349)           
|Foreign exchange gains (losses)     |  | 1,127             
|                                    |  |                   
|                                   
|Non-operating results               |  | (9,603)           
|                                    |  |                   
|                                    |  |                   
|                                   
|Income before income taxes          |  |                   
|and minority interest               |  | 20,221            
|                                   
|Minority interest                   |  | 1,391             
|Income taxes (Note 15 a)            |  | (7,033)           
|                                    |  |                   
|                                    |  |                   
|NET INCOME                          |  | 14,579            
|                                    |  |                   

The accompanying Notes 1 to 23 form an integral part of these consolidated financial statements.

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MASISA S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of United States Dollars)

|                                                         |  | For the years     
|-------------------------------------------------------- |  | ------------------
|                                                         |  | ended December 31,
|                                                         |  | 2002              
|                                                         |  |                   
|                                                        
|CASH FLOWS FROM OPERATING ACTIVITIES                     |  |                   
|Net income for the year                                  |  | 14,579            
|Adjustments to reconcile net income to net cash          |  |                   
|provided by operating activities:                        |  |                   
|Depreciation                                             |  | 24,026            
|Gain on sales of assets                                  |  | (1279)            
|Amortization of goodwill                                 |  | 265               
|Write-offs and provisions                                |  | 562               
|Provision for deferred income taxes                      |  | 1,619             
|Equity in losses (earnings) of unconsolidated affiliates |  | (16)              
|Gain on sale of subsidiaries and investment              |  | -                 
|Price-level restatements                                 |  | 6,349             
|Foreign exchange gain (loss)                             |  | (1,127)           
|Minority interest                                        |  | (1,391)           
|Other                                                    |  | 3,585             
|                                                        
|Changes in assets and liabilities:                       |  |                   
|Increase in trade accounts receivable                    |  | (6,074)           
|Increase in inventories                                  |  | (23,270)          
|(Increase) decrease in other assets                      |  | (10,177)          
|                                                        
|Increase (decrease) in accounts payable                  |  | (1,809)           
|Increase in other liabilities                            |  | 3,456             
|(Decrease) in recoverable and other taxes                |  | (4,764)           
|                                                         |  |                   
|                                                         |  |                   
|Net cash provided by operating activities                |  | 4,534             
|                                                         |  |                   
|                                                        
|CASH FLOWS FROM INVESTING ACTIVITIES                     |  |                   
|Purchase of property, plant and equipment                |  | (49,524)          
|                                                         |  |                   
|Proceeds from sale of property, plant and equipment      |  | 46                
|Other                                                    |  | (88)              
|                                                         |  |                   
|                                                        
|Net cash used in investing activities                    |  | (49,396)          
|                                                         |  |                   

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MASISA S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of United States Dollars)

|                                                     |  |                    |  |                 |  |         
|---------------------------------------------------- |  | ------------------ |  | --------------- |  | --------
|                                                     |  | For the years     
|                                                     |  | ended December 31,
|                                                     |  | 2002               |  | 2003            |  | 2004    
|                                                     |  |                    |  |                 |  |         
|CASH FLOWS FROM FINANCING ACTIVITIES                 |  |                    |  |                 |  |         
|Dividends paid                                       |  | (8,599)            |  | (4,382) (3,825)
|Borrowings from banks and others                     |  | 73,489             |  | 168,078         |  | 68,112  
|Loans from related companies                         |  | -                  |  | 1,447           |  | -       
|Payment of borrowings                                |  | (39,175)           |  | (114,026)      
|(90,197)                                             |  |                    |  |                 |  |         
|Payment of bonds                                     |  | -                  |  | (25,000)        |  | (9,000) 
|Other financing activities                           |  | 431                |  | (1,965)         |  | (109)   
|                                                     |  |                    |  |                 |  |         
|                                                     |  |                    |  |                 |  |         
|                                                    
|Net cash provided by (used in) financing activities  |  | 26,146             |  | 24,152          |  | (35,019)
|                                                     |  |                    |  |                 |  |         
|                                                    
|Inflation effect on cash and cash equivalents        |  | 3,137              |  | 1,484           |  | (18)    
|                                                     |  |                    |  |                 |  |         
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |  | (15,579)           |  | 17,547          |  | 2,785   
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR       |  | 17,813             |  | 2,234           |  | 19,781  
|                                                     |  |                    |  |                 |  |         
|CASH AND CASH EQUIVALENTS AT END OF YEAR             |  | 2,234              |  | 19,781          |  | 22,566  
|                                                     |  |                    |  |                 |  |         
|                                                    
|Supplemental disclosure of cash flow information:    |  |                    |  |                 |  |         
|                                                    
|                                                     |  | 2002               |  | 2003            |  | 2004    
|                                                     |  |                    |  |                 |  |         
|Cash paid during the year for:                       |  |                    |  |                 |  |         
|Interest                                             |  | 9,817              |  | 14,338          |  | 14,923  
|Income taxes                                         |  | 8,135              |  | 1,665           |  | 5,136   

The accompanying Notes 1 to 23 form an integral part of these consolidated financial statements.

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MASISA S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY

MASISA S.A. (Masisa and together with its controlled subsidiaries, the Company) is a sociedad anónima abierta (a public corporation) whose Common stock is listed on the Santiago Stock Exchange, the
Valparaiso Stock Exchange and the Chilean Electronic Stock Exchange and whose American Depository Receipts are traded on the New York Stock Exchange. Accordingly, the Company is subject to the regulations of both the Superintendency of Securities
and Insurance in Chile (SVS) and the U.S. Securities and Exchange Commission (SEC) in the United States of America.  The Company manufactures raw, melamine-laminated and wood-veneered particle board, medium-density fiberboard (MDF), oriented -
strand board (OSB) and wood doors for residential and commercial applications. The Companys principal markets include Chile, Argentina, Brazil and Mexico.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Chile and the accounting regulations of the SVS. Where differences exist between the standards of the SVS and the Chilean
Institute of Accountants, the standards of the SVS will prevail.

The Company has issued its statutory consolidated financial statements in Spanish and in conformity with accounting principles generally accepted in Chile, which include certain notes and additional information required by the SVS for statutory
purposes.  Management believes that these additional notes and information are not essential for the complete understanding of the consolidated financial statements and, accordingly, these notes and additional information have been excluded from the
accompanying financial statements.

b) Use of estimates in the preparation of financial statements

The preparation of the Companys consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management makes its best
estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Although these estimates are based on managements best knowledge of current events and
actions that may impact the Company in the future, actual results may be different from the estimates. The Companys critical accounting policies are those that affect its financial statements materially and involve difficult, subjective or
complex judgments by management. Those policies and assumptions are valuation of long-lived assets, valuation of accounts receivable, valuation of inventory, assumptions used in the valuation and accounting for timber resources, accounting for
income taxes and accounting for potential litigation claims and contingencies.

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c) Currency

Change in Reporting Currency

On April 10, 2003, the Chilean IRS authorized Masisa to maintain its accounting records in US dollars as of January 1, 2003. On October 10, 2003, the SVS authorized the Company to present its annual and quarterly statutory financial statements in US
dollars. Given this approval, in November 2003, the Company restated its statutory financial statements for the quarters ended March 31, 2003 and June 30, 2003 to be reported in US dollars and all future filings with the SVS will be reported in US
dollars. The Companys functional currency has not changed and remains the US dollar.

Foreign Currency Translation of Stable Currencies

Commencing January 1, 2003, for Masisa and those subsidiaries authorized to maintain their accounting records in US dollars as well as those foreign subsidiaries considered as an extension of the parent Companys operation, assets and
liabilities denominated in other currencies are remeasured to US dollars at the exchange rates prevailing on December 31st of each year except for inventory, property plant and equipment and certain other assets and liabilities.
Inventory, property, plant and equipment and certain other assets and liabilities are remeasured at either; (1) the historical exchange rates if the corresponding asset or liability originated subsequent to January 1, 2003; or (2) the January 1,
2003 exchange rate, representing the effective date of the approval to maintain the Companys accounting records in US dollars. Commencing January 1, 2003, revenues and expenses are generally translated at the exchange rates on the dates of the
transactions. Gains or losses from foreign currency remeasurement as described above for periods subsequent to January 1, 2003 are included in Consolidated net income.

Commencing January 1, 2003, for those subsidiaries that maintain their accounting records in currencies others than the US dollar and are not extensions of the parent Companys operations (Forestal Tornagaleones S.A. and its
subsidiary FTG Overseas Ltd.), all assets, liabilities, revenues and expenses are translated into US dollar using the exchange rates prevailing on December 31st of each year. The translation adjustment derived from the effect of the
variation of the exchange rate between the beginning and the closing of the year over beginning of the year Shareholders equity is reported as a Cumulative translation gain/(loss) as a separate component of Shareholders equity.

Foreign Currency Translation of Not Stable Currencies

In accordance with Technical Bulletin N 64 of the Chilean Institute of Accountants for all periods presented, the financial statements of subsidiaries located in countries that are subject to significant risks, restrictions or fluctuations due to
inflationary or exchange effects (so called not stable countries) must be remeasured in US dollars.  Accordingly, the financial statements of Forestal Argentina, Masisa Argentina S.A., Maderas y Sintéticos de Mexico S.A. de C.V.,
Maderas y Sintéticos Servicios S.A. de C.V. and Masisa do Brasil Ltda. are remeasured in US dollars as follows:

|1 | Monetary assets and liabilities were translated at year-end rates of exchange between the US dollar and the local currency.                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|2 | All non-monetary assets and liabilities and shareholders equity were translated at historical rates of exchange between the US dollar and the local currency.
| 

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|3 | Income and expense accounts were translated at average rates of exchange between the US dollar and the local currency for the period, except for those arising from non-monetary accounts, which are included at historic rates of exchange.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|4 | Any exchange differences which arise were included in the results of operations for the period.                                                                                                                                             
| 

The difference between the investments equity value arising from the financial statements remeasured as explained above and the net equity value at the beginning of the year, plus the proportional share of the investments net income for
the year, was recorded in the account, Cumulative translation gain/(loss) as a separate component of Shareholders equity.

In addition, exchange differences (netted from Chilean inflation) arising from debt obligations that qualify as foreign currency hedges of the foreign investments mentioned above were also recorded in the account Cumulative Translation
Adjustment.

d) Consolidation

The consolidated financial statements include the accounts of Masisa and the following subsidiaries which it controls:

|                                            |  |                                 |  |                           |  |          |  |         
|------------------------------------------- |  | ------------------------------- |  | ------------------------- |  | -------- |  | --------
|                                            |  |                                 |  | Ownership at December 31,
|Company                                     |  | Business                        |  | 2002                      |  | 2003     |  | 2004    
|                                            |  |                                 |  |                           |  |          |  |         
|                                            |  |                                 |  | %                         |  | %        |  | %       
|Masisa Argentina S.A.                       |  | Production of wood products     |  |                           |  |          |  |         
|                                            |  | and forestry by-products        |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Masisa Overseas Ltd.                        |  | Investments                     |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Masisa Inversiones Ltda.                    |  | Investments                     |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Inversiones Coronel Ltda.                   |  | Investments                     |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Masisa do Brasil Ltda.                      |  | Production of wood products     |  |                           |  |          |  |         
|                                            |  | and forestry by-products        |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Masisa Cabrero S.A. (1)                     |  | Production of wood products     |  |                           |  |          |  |         
|                                            |  | and forestry by-products        |  | 100.0000                  |  | -        |  | -       
|Forestal Tornagaleones S.A. and             |  |                                 |  |                           |  |          |  |         
|subsidiaries (2)                            |  | Forestry                        |  | 60.4492                   |  | 60.4492  |  | 60.4538 
|Maderas y Sintéticos del Perú S.A.C.        |  | Sales of wood products          |  | 99.9011                   |  | 99.9011  |  | 99.9011 
|Masisa Concepción Ltda. (3)                 |  | Investments                     |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Maderas y Sintéticos Servicios S.A. de C.V. |  | Services                        |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Maderas y Sintéticos de México S.A. de C.V. |  | Production of wood products and |  |                           |  |         
|                                            |  | forestry by-products            |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Masisa Partes y Piezas Ltda.                |  | Production of wood products and |  |                           |  |         
|                                            |  | forestry by-products            |  | 100.0000                  |  | 100.0000 |  | 100.0000
|Masisa Ecuador S.A.                         |  | Sales of wood products          |  | 100.0000                  |  | 100.0000 |  | 100.0000

|(1) | On January 3, 2003 Masisa Cabrero S.A. merged with Inversiones Coronel Limitada, another consolidated subsidiary.                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | On August 12, 2004, Masisa S.A. acquired 1,315 shares in it ́s consolidated subsidiary Forestal Tornagaleones S.A., for a purchase price of $ 4,210. The acquisition increased Masisa ́s ownership to 60.45%.
|   
|(3) | On February 5, 2003 the subsidiary C y D Agrofruta Limitada changed its name to Masisa Concepción Ltda.                                                                                                    
|   

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All significant balances and transactions between the consolidated subsidiaries have been eliminated. The participation of minority shareholders in subsidiaries is reflected in the Consolidated Balance Sheets under Minority interest.

e) Price-level restatements

As discussed in Note 2 c), until January 1, 2003, the Companys consolidated financial statements, were expressed in Chilean pesos and restated on an annual basis to reflect the effects of variations in the purchasing power of the local
currency during each year.  As of January 1, 2003, Masisa and certain authorized subsidiaries maintain accounting records in US dollars and therefore price-level restatements commencing on January 1, 2003 are no longer applicable for these
subsidiaries.  Certain Masisas subsidiaries have not received approval to maintain their accounting records in US dollars.  Forestal Tornagaleones S.A. and FTG Overseas Ltd. continue to maintain Chilean peso accounting records and apply the
principle of price-level restatements in accordance with Chilean GAAP. For this purpose, non-monetary assets, liabilities and equity accounts have been restated by charges or credits to income, unless not required by Technical Bulletin No. 64 (see
Note 2 c). Furthermore, the income and expense accounts have been restated in terms of year-end constant pesos.

In accordance with Chilean tax regulations and accounting practices, the restatements are calculated based on the official Consumer Price Index of the National Institute of Statistics, applied one month in arrears, which was, 1.0% and 2.5% for the
years ended December 31, 2003 and 2004 respectively. This index is considered by the business community, the accounting profession and the Chilean government to be the index which most closely complies with the technical requirement to reflect the
variation in the general level of prices in the country and, consequently, is widely used for financial reporting purposes in Chile.

The above-mentioned price-level restatements do not purport to present appraised or replacement values and are only intended to restate all non-monetary financial statement components in terms of local currency of a single purchasing power and to
include in the net result for each year the gain or loss in purchasing power arising from the holding of monetary assets and liabilities exposed to the effects of inflation.

f) Time deposits and securities purchased under resale agreements

Time deposits are recorded at cost plus accrued interest at each year-end.  Securities purchased under resale agreements are presented at cost plus accrued interest at the year-end.  The value of these investments does not exceed their respective
market values at December 31, 2003 and 2004.

g) Allowance for doubtful accounts

The Company has recorded an allowance for doubtful accounts for possible non-collection of accounts receivable, which is shown as a deduction from accounts receivable. The allowance is established as 1% of receivables from local customers plus
additional amounts for specific customers, where collection is doubtful based on an analysis of the aging of the outstanding balances as well as other relevant information.

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h) Inventories

Inventories are valued at the lower of production or acquisition cost, including indirect manufacturing costs, or market value. Inventory costs are determined using the average cost method. The valuation of inventories are periodically assessed and,
if necessary, a write-down of the value for estimated excess and obsolete inventory is recorded based on estimates about future demand and actual usage.

As of December 31 of each year, forests and plantation inventories in the process of exploitation are stated at the commercially appraised value at which these forests were transferred from fixed assets in conjunction with the revaluation of timber
resources described in Note 2 i) below.

i) Property, plant and equipment

Property, plant and equipment, except timber resources, are stated at cost, which includes capitalized interest. Depreciation is calculated using the straight-line method based on the estimated useful life of each asset, which were as follows:

|                                          |  |      
|----------------------------------------- |  | -----
|                                          |  | Years
|                                          |  |      
|Plants, buildings and other installations |  | 25-40
|Machinery and equipment                   |  | 10-20
|Other fixed assets                        |  | 1-10 

Depreciation for 2002, 2003 and 2004 amounted to ThUS$ 24,026, ThUS$ 25,814 and ThUS$ 27,705 respectively.

Timber and timberlands are stated at cost less cost of timber harvested. The costs incurred in developing and growing timber such as site preparation, property taxes, seedlings, planting, fertilization, insect and wildlife control, herbicide
application and thinning, are capitalized. These capitalized costs are accumulated by specifically identifiable farm blocks. Accounting practices for these costs do not change when timber becomes merchantable and harvesting commences. Costs incurred
related to logging roads are capitalized and amortized over their expected useful lives or as the related timber is harvested. These capitalized costs are included in the historical cost of the timber. At each period-end, the timber resources are
adjusted to reflect values based on technical appraisals performed by specialized forestry engineers.

Depletion, or costs attributed to timber harvested is determined by each identifiable farm block that is in the harvesting stage based on the relationship of unamortized timber costs to the estimated volume of recoverable timber multiplied by the
amount of timber cut. The estimated volume of recoverable timber is determined using statistical information and other data related to growth rates and yields gathered from physical observations, models, and other information gathering techniques.
Changes in yields are generally due to adjustments in growth rates and similar matters and are accounted for prospectively as changes in estimates. The cost of timber harvested is included in the carrying values of raw material and product
inventories and in the cost of products sold as these inventories are sold to third parties. The depletion rate calculations do not include an estimate for future costs associated with existing stands, future reforestation costs associated with a
stands final harvest, or future volume in connection with the replanting of a stand subsequent to its final harvest.

As a result of the above accounting treatment, the Company records timber resources at appraisal value prior to cutting with the offsetting adjustment recorded as Forestry Reserves in Shareholders equity. When the timber is cut and sold, the
component of Cost of Sales associated with the appraisal value is offset against Forestry Reserves in Shareholders equity.

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Financing costs of projects requiring major investments in long-term construction and those costs incurred from financing specific projects are capitalized and amortized over the estimated useful lives of the related assets. Direct and indirect
interest costs incurred in connection with the development of forests are also capitalized.

Other fixed assets include spare parts inventories with turnover of less than one-year. These are valued similar to inventory as described in Note 2 h). Those items with significant value and with an ongoing benefit are depreciated in the same
period of time as the asset with which they are associated, while those items with frequent use are charged to cost of production when used.

Assets purchased under financing leases are recorded at their fair value on the date of the lease agreement, which is determined by discounting the amounts payable in installments and the bargain purchase option, if any, at the interest rate
implicit, or explicit, in the contract. These assets are not legally considered property of the Company until the purchase option is exercised.

Disbursements for the development of internal use software are charged to the results of operations as incurred. External direct costs of materials and services rendered in developing an enterprise resource planning system (an SAP R/3 system) and
interest costs incurred during development are capitalized. Payroll related costs were not material and have been expensed. Training costs and data conversion costs are expensed as incurred.

Assets to be disposed of at year-end have been recorded under Other assets at fair value based on an independent appraisal.

j) Investments in unconsolidated affiliates

Investments in unconsolidated affiliates are accounted for using the equity method when they represent between 20% and 50% of the voting stock of the investee. Accordingly, the Companys proportional share in the net income (or loss) of each
investee is recognized on an accrual basis, after eliminating any unrealized profits or losses from transactions with the investees in Non-operating income in the Consolidated Statements of Income.

k) Goodwill and negative goodwill

Under Chilean GAAP, for acquisitions before January 1, 2004, goodwill arises from the excess of the purchase price of companies acquired over their net book value; negative goodwill arises when net book value of the acquired company exceeds the
purchase price of companies acquired. Goodwill and negative goodwill also arise from the purchase of investments accounted for by the equity method. Effective January 1, 2004, Technical Bulletin 72 (TB 72) requires the determination of goodwill and
negative goodwill to be determined based on the fair value of the acquired company.

Goodwill and negative goodwill are amortized over ten to twenty years considering the expected period of return of the investment.  The Company evaluates the recoverability of goodwill on a periodic basis.

l) Bonds

Bonds are recorded at face value plus accrued interest. The discount on, and expenses incurred, in the issuance of the bonds are included in Other current assets and Other assets in the Consolidated Balance Sheets and are amortized using the
interest method of amortization over the term of the instruments.

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m) Income taxes and deferred income taxes

Effective January 1, 2000, the effects of deferred income taxes arising from temporary differences between the basis of assets and liabilities for tax and financial statement purposes are recorded in accordance with Technical Bulletins Nos. 60, 68
and 69 of the Chilean Institute of Accountants and Circular No. 1,466 of the SVS. The effects of deferred income taxes at January 1, 2000 that were not previously recorded, were recognized, in accordance with the transitional period provided by
Technical Bulletin No. 60, against a contra asset or liability account (complementary accounts) and were recorded to offset the effects of the deferred tax assets and liabilities not recorded prior to January 1, 2000. Complementary
accounts are amortized to income over the estimated average reversal periods corresponding to underlying temporary differences to which the deferred tax asset or liability relates. Deferred income taxes at January 1, 2000 are recognized in income
beginning in 2001 as the temporary differences are reversed.

Deferred income tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax assets will not be realized.  The valuation allowance
should be sufficient to reduce the deferred income tax asset to an amount that is more likely than not to be realized.

n) Revenue recognition

Revenues are recorded at the time of shipment of products to the customer. The following criteria must be met in order to recognize revenue: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered;
(3) the price to the buyer is fixed or determinable; and (4) collection is reasonably assured. Revenues which the Company has billed and collected in advance are deferred until the related products are shipped and the criteria above have been met.

o) Employee vacations

The cost of employee vacations is recognized as an expense on an accrual basis as the vacations are earned by employees and are included in Accrued liabilities in the Consolidated Balance Sheets.

p) Cash and cash equivalents

The Company considers all short-term highly-liquid investment securities purchased with original maturities of three months or less to be cash equivalents for purposes of the Consolidated Statement of Cash Flows.

Cash flow from operating activities includes all cash flows related to primary operating activities of the Company and include interest paid, interest income and, in general, all cash flows that are not defined as investment or financing activities.
The concept of operations used in this statement is broader than that used in the Consolidated Statement of Income.

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The balances of cash and cash equivalents were as follows:

|                                             |  |                 |  |        |  |       
|-------------------------------------------- |  | --------------- |  | ------ |  | ------
|                                             |  | At December 31,
|                                             |  | 2002            |  | 2003   |  | 2004  
|                                             |  |                 |  |        |  |       
|                                             |  | ThUS$           |  | ThUS$  |  | ThUS$ 
|Cash                                         |  | 1,916           |  | 8,661  |  | 4,358 
|Time deposits                                |  | 318             |  | -      |  | 17,033
|Securities purchased under resale agreements |  | -               |  | 11,120 |  | 1,175 
|                                             |  |                 |  |        |  |       
|Total                                        |  | 2,234           |  | 19,781 |  | 22,566
|                                             |  |                 |  |        |  |       

q) Impairment of long-lived assets

The Company periodically evaluates the carrying value of its long-lived assets for impairment. The carrying value of a long-lived asset is considered impaired by the Company when the expected undiscounted cash flows from such asset are separately
identifiable and less than its carrying value. In that event, a loss would be recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset.  Fair market value is determined primarily using the
anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals.

r) Derivative contracts

The Company enters into hedging contracts including interest rate swap agreements and forward exchange contracts.  The contracts are accounted for in accordance with Technical Bulletin No. 57, Accounting for Derivative Contracts.
(TB 57) of the Chilean Institute of Accountants.  Under TB 57 all derivative financial instruments are recognized on the Consolidated Balance Sheets at their fair value. Derivative instruments are accounted for as follows:

Hedges of forecasted transactions:

The derivative instrument is stated at its fair value on the Consolidated Balance Sheets and any change in the fair value is recognized on the balance sheet as an unrealized gain or loss in Other current liabilities or in Other assets. When the
contract is settled, the unrealized gain or loss on the instrument is recognized in earnings in Non-operating income in the Consolidated Statements of Income.

Firm commitments hedging contracts (Hedges of existing items):

The hedged item and derivative instrument are measured at fair value on the balance sheet. Unrealized gains and losses are recorded in earnings in Non-operating income in the Consolidated Statements of Income if the net effect is a loss and deferred
and recognized when the contract is settled if it is a gain. The unrecognized gains associated with the derivative instrument are included in Other current liabilities in the Consolidated Balance Sheets.

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One of the qualifying criteria for hedge accounting is that the hedging relationship between the hedging instrument and the hedged item must be highly effective in achieving the offset of changes in those fair values or cash flows that are
attributable to the hedged risk, both at the inception of the hedge and on an ongoing basis. If, at any point, the prospective consideration indicates that the hedging instrument is not expected to be highly effective in the future, hedge accounting
is discontinued from that point forward.

The impact of the Companys hedging activities included in Non-operating expenses for the years ended 2003 and 2004 totaled ThUS$ 678 and ThUS$ 1,115, respectively.  The unrealized gains included in Other current liabilities as of December 31,
2004 and 2003 totaled ThUS$ 1,329 and ThUS$ -, respectively. The unrealized losses included in Other assets as of December 31, 2004 and 2003 totaled ThUS$ 272 and ThUS$ 989, respectively.

s) Research and development expenses

Research and development expenses are charged to income in the year in which they occur.  The Company has not incurred significant research and development expenses during the years ended December 31, 2003 and 2004.

t) Reclassifications

Certain 2003 amounts in the accompanying financial statements have been reclassified to conform to the 2004 presentation. The reclassifications had no material effect on the previously reported presentation of assets and liabilities, previously
reported net income, cash flows or shareholders equity.

NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable include the following:

|                                       |  |                           |  |             |  |                  
|-------------------------------------- |  | ------------------------- |  | ----------- |  | -----------------
|                                       |  | Accounts receivable aging |  |            
|                                       |  |                           | 
|                                       |  | 1-90 days                 |  | 91-360 days |  | December 31, 2004
|                                       |  |                           |  |             |  |                  
|                                      
|                                       |  | ThUS$                     |  | ThUS$       |  | ThUS$            
|                                      
|Trade accounts receivable              |  | 67,081                    |  | 11,618      |  | 78,699           
|Notes receivable                       |  | 7,346                     |  | 1,467       |  | 8,813            
|Other accounts receivable              |  | 7,277                     |  | 3,538       |  | 10,815           
|Less: Allowances for doubtful accounts |  |                           |  |             |  | (4,468)          
|                                       |  |                           |  |             |  |                  
|                                      
|Total                                  |  |                           |  |             |  | 93,859           
|                                       |  |                           |  |             |  |                  

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|                                       |  |                           |  |             |  |                  
|-------------------------------------- |  | ------------------------- |  | ----------- |  | -----------------
|                                       |  | Accounts receivable aging |  |            
|                                       |  |                           | 
|                                       |  | 1-90 days                 |  | 91-360 days |  | December 31, 2003
|                                       |  |                           |  |             |  |                  
|                                      
|                                       |  | ThUS$                     |  | ThUS$       |  | ThUS$            
|                                      
|Trades accounts receivable             |  | 59,897                    |  | 1,467       |  | 61,364           
|Notes receivable                       |  | 8,324                     |  | 575         |  | 8,899            
|Other accounts receivable              |  | 5,825                     |  | 149         |  | 5,974            
|Less: Allowances for doubtful accounts |  |                           |  |             |  | (4,017)          
|                                       |  |                           |  |             |  |                  

|      |  |  |  |  |  |       
|----- |  |  |  |  |  | ------
|     
|Total |  |  |  |  |  | 72,220
|      |  |  |  |  |  |       
|      |  |  |  |  |  |       

NOTE 4 - INVENTORIES

Inventories include the following:

|                                                      |  |                 |  |        
|----------------------------------------------------- |  | --------------- |  | -------
|                                                      |  | At December 31,
|                                                      |  | 2003            |  | 2004   
|                                                      |  |                 |  |        
|                                                     
|                                                      |  | ThUS$           |  | ThUS$  
|Finished goods                                        |  | 46,477          |  | 53,641 
|Raw materials                                         |  | 12,948          |  | 21,079 
|Other materials                                       |  | 3,966           |  | 3,172  
|Spare parts                                           |  | 7,704           |  | 7,396  
|Forests and plantations in the process of explotation |  | 7,617           |  | 6,796  
|Reserve for obsolescence                              |  | (996)           |  | (1,117)
|                                                      |  |                 |  |        
|Total                                                 |  | 77,716          |  | 90,967 
|                                                      |  |                 |  |        

NOTE 5 - OTHER CURRENT ASSETS

Other current assets include the following:

|                                  |  |                 |  |      
|--------------------------------- |  | --------------- |  | -----
|                                  |  | At December 31,
|                                  |  | 2003            |  | 2004 
|                                  |  |                 |  |      
|                                  |  | ThUS$           |  | ThUS$
|Deposits                          |  | 29,104          |  | -    
|Deferred income taxes (Note 15 c) |  | 562             |  | 110  
|Prepaid expenses                  |  | 2,874           |  | 5,067
|                                  |  |                 |  |      
|Total                             |  | 32,540          |  | 5,177
|                                  |  |                 |  |      

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NOTE 6 - PROPERTY, PLANT AND EQUIPMENT (NET)

a)  Property, plant and equipment include the following:

|                                          |  |                 |  |          
|----------------------------------------- |  | --------------- |  | ---------
|                                          |  | At December 31,
|                                          |  | 2003            |  | 2004     
|                                          |  |                 |  |          
|                                         
|                                          |  | ThUS$           |  | ThUS$    
|                                         
|Land                                      |  | 67,031          |  | 68,213   
|Plants, buildings and other installations |  | 105,384         |  | 107,980  
|Machinery and equipment                   |  | 488,554         |  | 493,210  
|Timber resources                          |  | 125,779         |  | 148,177  
|Construction in progress                  |  | 8,825           |  | 7,516    
|Other fixed assets:                       |  |                 |  |          
|Furniture, fixtures and other             |  | 11,062          |  | 9,672    
|Spare parts                               |  | 11,247          |  | 11,233   
|Assets under leasing contracts            |  | 1,763           |  | 1,712    
|Software                                  |  | 5,444           |  | 6,364    
|Other                                     |  | 1,551           |  | 6,964    
|                                          |  | 826,640         |  | 861,041  
|Accumulated depreciation                  |  | (188,749)       |  | (213,267)
|                                          |  |                 |  |          
|Property, plant and equipment (net)       |  | 637,891         |  | 647,774  
|                                          |  |                 |  |          

|b) | As stated in Note 2 i), Tornagaleones and its subsidiary Forestal Argentina S.A. capitalized interest related to plantation financing in property, plant and equipment. Tornagaleones capitalized interest under this concept totaling ThUS$ 310 and
expensed interest ThUS$ 155 for the years ended December 31, 2004 and 2003, respectively. Masisa do Brasil Ltda. capitalized interest related to plantation financing included in property, plant and equipment totaling ThUS$ 2,169 and ThUS$ 2,536 for
the years ended December 31, 2004 and 2003, respectively.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Tornagaleones has outstanding debt in US dollars. As a result of this, Tornagaleones incurred an exchange gain of ThUS$ 103 in 2004 and an exchange gain of ThUS$ 864 in 2003 associated with this debt. As permitted under Chilean GAAP, this exchange
gain and loss was netted against capitalized interest.                                                                                                                                                                                                                                                         
|  
|c) | As described in Note 2 i), Masisa do Brasil Ltda., Tornagaleones and its subsidiary Forestal Argentina S.A. have revalued their forests and plantations at year end based on technical appraisals. The accumulated adjustment in value amounted to ThUS$
44,023 in 2004 (ThUS$ 37,050 in 2003) and is included in Timber resources. The Company has recognized it proportionate share in Forest reserves in Shareholders Equity and the balance is included in Minority interest on the Consolidated Balance
Sheets.                                                  
|  
|d) | In 2004, the Company recorded a change for the write down in value of certain fixed assets including its particle board line located in Mexico and certain obsolete production equipment in Argentina and Chile in the amount of ThUS$ 2,998 which is
included in the Consolidated Statement of Income under Non-operating operating expenses (see Note 21).                                                                                                                                                                                                           
|  

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NOTE 7 - INVESTMENTS IN UNCONSOLIDATED AFFILIATES

The Companys investments in unconsolidated affiliates totaled ThUS$ 10 and ThUS$ 60 at December 31, 2003 and 2004, respectively. The Companys proportional share in the net income (or loss) of unconsolidated affiliates totaled a loss of
ThUS$ 16, ThUS$ 685 and a loss of ThUS$ 26 for 2002, 2003 and 2004, respectively.

As of December 31, 2004 and 2003, the Company has recorded a provision for investments in unconsolidated affiliates with negative equity at year-end totaling ThUS$ 666 at December 31, 2003 and ThUS$ 693 at December 31, 2004, which is included in
Other long-term liabilities (see Note 13).

NOTE 8 - GOODWILL AND NEGATIVE GOODWILL, NET

Goodwill and negative goodwill, net of accumulated amortization, were as follows:

|                                |  |                 |  |        
|------------------------------- |  | --------------- |  | -------
|                                |  | At December 31,
|                                |  | 2003            |  | 2004   
|                                |  |                 |  |        
|                                |  | ThUS$           |  | ThUS$  
|                               
|Masisa Cabrero S.A. (1)         |  | 1,419           |  | 1,334  
|Forestal Tornagaleones S.A. (2) |  | (1,854)         |  | (1,754)
|                                |  |                 |  |        
|Total                           |  | (435)           |  | (420)  
|                                |  |                 |  |        

|(1) | During 2000, the Company purchased a 92.61% interest in its subsidiary Masisa Cabrero S.A. from Forestal Terranova S.A. and Fibras del Noreste S.A. for ThUS$ 43,469, which resulted in goodwill of ThUS$ 1,753. The goodwill is being amortized over
twenty years.                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | On June 27, 2002, the Company made a capital investment of ThUS$ 7,372 in its subsidiary Forestal Tornagaleones S.A., which increased its ownership by 6.45%. This investment resulted in negative goodwill of ThUS$ 2,012. This negative goodwill is
being amortized to income over twenty years.
|   

Goodwill amortization, net totaled ThUS$ 142 and ThUS$ (15) in 2003 and 2004 respectively.

NOTE 9 - OTHER ASSETS

Other assets include the following:

|                                  |  |                 |  |       
|--------------------------------- |  | --------------- |  | ------
|                                  |  | At December 31,
|                                  |  | 2003            |  | 2004  
|                                  |  |                 |  |       
|                                  |  | ThUS$           |  | ThUS$ 
|Assets for disposal               |  | 413             |  | 136   
|Recoverable taxes (See Note 15 b) |  | 957             |  | 87    
|Bond issuance costs               |  | 5,861           |  | 5,085 
|Receivable for swap agreements    |  | -               |  | 5,230 
|Fair value swap agreements        |  | 989             |  | 272   
|Other                             |  | 835             |  | 818   
|                                  |  |                 |  |       
|Total                             |  | 9,055           |  | 11,628
|                                  |  |                 |  |       

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NOTE 10 - SHORT-TERM BANK BORROWINGS

Short-term bank borrowings maturing in one year or less include the following:

|                     |  |                           |                   |      |                 |        |      |      
|-------------------- |  | ------------------------- | ----------------- | ---- | --------------- | ------ | ---- | -----
|                     |  | Foreign 
Currency in 2004 |                   |      |                 |        |      |      
|                     |  |                           | Interest rate at  |      | At December 31,
|                     |  |                           |                   |      |                 |        |     
|                     |  |                           | December 31, 2004 |      | 2003            |        | 2004
|                     |  |                           |                   |      |                 |        |      |      
|                    
|                     |  |                           |                   | %    |                 | ThUS$  |      | ThUS$
|                    
|Banco de Chile       |  | US$                       |                   | -    |                 | 9,133  |      | -    
|Banco de Chile       |  | Chilean Pesos             |                   | -    |                 | 2,512  |      | -    
|ABN AMRO Bank        |  | Chilean Pesos             |                   | -    |                 | 1,155  |      | -    
|ABN AMRO Bank        |  | Other                     |                   | -    |                 | 1,056  |      | -    
|HSBC Bank Chile      |  | US$                       |                   | -    |                 | 3,609  |      | -    
|Bancoestado          |  | US$                       |                   | -    |                 | 3,043  |      | -    
|CorpBanca            |  | US$                       |                   | -    |                 | 5,080  |      | -    
|Banco Del Desarrollo |  | US$                       |                   | 3.59 |                 | 5,511  |      | 1,506
|Rabobank Curacao N.V |  | US$                       |                   | -    |                 | 5,075  |      | -    
|ITAU BBA             |  | Other                     |                   | 2.68 |                 | 1,709  |      | 1,604
|                     |  |                           |                   |      |                 |        |      |      
|                    
|Total                |  |                           |                   |      |                 | 37,883 |      | 3,110
|                     |  |                           |                   |      |                 |        |      |      

During 2004, the average annual interest rate was 3.1% . During 2003, the average annual interest rate was 2.3% .  Accrued interest totaling ThUS$ 10 and ThUS$ 340 at December 31, 2004 and 2003, respectively, is included in the outstanding balances.

At December 31, 2004, the Company had ThUS$ 191,011 of short-and long term lines of credit, of which ThUS$ 85,245 were unused and available for borrowing on an unsecured basis.

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NOTE 11 - LONG-TERM BANK BORROWINGS

Long-term bank borrowings include the following:

|                                    |  |                          |               |             |                 |               |                 |          |      |         
|----------------------------------- |  | ------------------------ | ------------- | ----------- | --------------- | ------------- | --------------- | -------- | ---- | --------
|                                    |  | Foreign Currency in 2004 |               |             |                 | Interest rate |                 |          |      |         
|                                    |  |                          |               |             | at December 31, |               | At December 31,
|                                    |  |                          | Interest rate |             | 2004            |               | 2003            |          | 2004
|                                    |  |                          |               |             |                 |               |                 |          |      |         
|                                    |  |                          |               |             |                 | %             |                 | ThUS$    |      | ThUS$   
|BankBoston (1)                      |  | US$                      |               | Fixed rate  |                 | 12.00         |                 | 86       |      | -       
|BankBoston (1)                      |  | Pa                       |               | Fixed rate  |                 | 12.00         |                 | 8        |      | 16      
|BankBoston N.A. (2)                 |  | US$                      |               | Fixed rate  |                 | 11.27         |                 | 305      |      | -       
|Rabobank Ireland PLC (3)            |  | US$                      |               | Fixed rate  |                 | 8.00          |                 | 29,121   |      | -       
|Dresdner Bank Lateinamerika (4)     |  | US$                      |               | Libor+1.90  |                 | 3.38          |                 | 6,101    |      | 5,106   
|Banco de Credito e Inversiones (5)  |  | UF                       |               | Fixed rate  |                 | 6.70          |                 | 7,451    |      | 4,062   
|Raboinvestments Chile S.A (6)       |  | US$                      |               | Libor+1.875 |                 | 3.35          |                 | 14,090   |      | 13,106  
|Security Bank (7)                   |  | US$                      |               | Libor+1.50  |                 | 3.78          |                 | 2,829    |      | 1,888   
|Citibank N.A (8)                    |  | US$                      |               | Fixed rate  |                 | 5.20          |                 | 1,124    |      | 339     
|Comerica Bank (9)                   |  | US$                      |               | Libor+1.35  |                 | 3.57          |                 | 15,074   |      | 10,788  
|Banco de Chile NY (10)              |  | US$                      |               | Libor+1.25  |                 | 3.45          |                 | 15,084   |      | 12,949  
|The Bank of Nova Scotia (11)        |  | US$                      |               | Libor+1.15  |                 | 2.52          |                 | 25,266   |      | 25,295  
|Rabobank Nederland (12)             |  | US$                      |               | Libor+1.00  |                 | 3.59          |                 | -        |      | 12,549  
|Banco de Crédito e Inversiones (13) |  | US$                      |               | Libor+1.44  |                 | 4.05          |                 | -        |      | 12,552  
|                                    |  |                          |               |             |                 |               |                 |          |      |         
|Total                               |  |                          |               |             |                 |               |                 | 116,539  |      | 98,650  
|Less: Current portion (14)          |  |                          |               |             |                 |               |                 | (42,254) |      | (21,819)
|                                    |  |                          |               |             |                 |               |                 |          |      |         
|Long-term portion                   |  |                          |               |             |                 |               |                 | 74,285   |      | 76,831  
|                                    |  |                          |               |             |                 |               |                 |          |      |         

|(1)  | This loan is repayable in monthly installments of principal and interest.                                                                                                          
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | The balance of this loan was repaid during 2004.                                                                                                                                   
|(3)  | This loan was prepaid during March 2004.                                                                                                                                           
|(4)  | This loan is repayable in six semi-annual installments, starting on January 2005. Interest is paid semi- annually.                                                                 
|(5)  | The outstanding balance of this loan as of December 31, 2004 is repayable in three semi-annual installments, starting on February 2005, with interest payments semi-annually.      
|(6)  | The outstanding balance of this loan as of December 31, 2004 is repayable in six semi-annual installments starting on April 2005, with interest payments semi-annually.            
|(7)  | The outstanding balance of this loan as of December 31, 2004 is repayable in four semi-annual installments, commencing March 2005, with interest payments to be made semi-annually.
|(8)  | This loan is repayable in semi-annual installments of principal and interest.                                                                                                      
|(9)  | This loan is repayable in five semi-annual installments, commencing April 2005, with interest payments to be made semi-annually.                                                   
|(10) | This loan is repayable in six semi-annual installments, commencing April 2005, with interest payments to be made semi-annually.                                                    
|(11) | The Company entered into this loan in January, 2003. This loan is repayable in six semi-annual installments, commencing July 2005, with interest payments to be made semi-annually.
|(12) | The Company entered into this loan in May, 2004. This loan is repayable in ten semi-annual installments, commencing November 2005, with interest payments to be made semi-annually.
|(13) | The Company entered into this loan in May, 2004. This loan is repayable in ten semi-annual installments, commencing May 2005, with interest payments to be made semi-annually.     
|     | Includes ThUS$ 1,871 and ThUS$976 corresponding to accrued interest at December 31, 2003 and 2004, respectively.                                                                   
|    

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Scheduled payments of the long-term portion of long-term bank borrowings at December 31, 2004 are as follows:

|                           |  |       
|-------------------------- |  | ------
|Amounts payable during the |  |       
|years ending December 31,  |  | ThUS$ 
|                           |  |       
|                          
|2006                       |  | 31,439
|2007                       |  | 25,392
|2008                       |  | 11,250
|2009                       |  | 5,000 
|2010                       |  | 3,750 
|                           |  |       
|                          
|Total                      |  | 76,831
|                           |  |       

NOTE 12 - OTHER LONG-TERM BORROWINGS

Other long-term borrowings include the following:

|                                               |  |                 |  |        
|---------------------------------------------- |  | --------------- |  | -------
|                                               |  | At December 31,
|                                               |  | 2003            |  | 2004   
|                                               |  |                 |  |        
|                                               |  | ThUS$           |  | ThUS$  
|Bonds payable                                  |  | 91,453          |  | 98,539 
|Promissory notes (8.06% per annum due in 2008) |  | 45,484          |  | 36,371 
|Leases payable                                 |  | 439             |  | 111    
|                                               |  |                 |  |        
|Total                                          |  | 137,376         |  | 135,021
|Less: Current portion                          |  | (10,010)        |  | (9,698)
|                                               |  |                 |  |        
|Long-term portion                              |  | 127,366         |  | 125,323
|                                               |  |                 |  |        

Bonds

In December 2003, the Company issued fixed rate bonds in the Chilean market. Series A bonds of ThUS$ 77,829 mature in seven years and pay interest at 5.0% .  Series B bonds of ThUS$ 21,865 mature in twenty one years and pay interest at 6.25% .
Interest is payable on both Series A and B bonds on June 15th and December 15th of each year with the first payment due on June 15, 2005.

As stipulated in the contract, the proceeds of the bond issuance were used to prepay short and long term bank borrowings.

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Scheduled maturities of other long-term borrowings at December 31, 2004 are as follows:

|                          |  |        
|------------------------- |  | -------
|Maturities during the     |  |        
|years ending December 31, |  | ThUS$  
|                          |  |        
|                         
|2006                      |  | 25,280 
|2007                      |  | 25,855 
|2008                      |  | 25,860 
|2009                      |  | 16,857 
|2010                      |  | 16,799 
|2011 and beyond           |  | 14,672 
|                          |  |        
|                         
|Total                     |  | 125,323
|                          |  |        

NOTE 13 - OTHER LONG-TERM LIABILITIES

Other long-term liabilities include the following:

|                                                             |  |                 |  |       
|------------------------------------------------------------ |  | --------------- |  | ------
|                                                             |  | At December 31,
|                                                             |  | 2003            |  | 2004  
|                                                             |  |                 |  |       
|                                                             |  | ThUS$           |  | ThUS$ 
|Taxes payable                                                |  | 7,459           |  | 14,191
|Forest subsidy                                               |  | 3,073           |  | 3,153 
|Deficit in investments accounted for under the equity method |  | 666             |  | 693   
|Other                                                        |  | -               |  | 1,789 
|                                                             |  |                 |  |       
|Total                                                        |  | 11,198          |  | 19,826
|                                                             |  |                 |  |       

NOTE 14 - COVENANTS

Certain of the Companys borrowing agreements include restrictive covenants. The more restrictive covenants include the following:

Local Bonds

The bonds issued in 2003 contain covenants establishing certain obligations for the Company and its subsidiaries, including the following: maintenance of insurance on the principal assets of the Company in accordance with the industrys
standards; issuance of quarterly and annual financial statements to the representative of the bondholders, both individual and consolidated, abiding by the standards applicable to public corporations; the obligation to provide copies of risk rating
reports; the obligation to update the accounting books of the Company and its subsidiaries; the obligation to perform transactions with subsidiaries under market conditions; the prohibition of providing financing to any entity of the business group,
other than the issuer or any of its subsidiaries or invitees; and the requirement to maintain a quarterly leverage ratio (defined as the ratio between current liabilities and equity based on the consolidated financial statements) not higher than 0.9
times. As of December 31, 2004, the Company was in compliance with all covenants.

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The Bank of Nova Scotia

In connection with the loan of US$ 25 million granted by The Bank of Nova Scotia, in which Scotiabank Sud Americano acted as an agent, the Company and/or its subsidiaries are obligated to the following covenants: maintain a leverage ratio (defined
as the ratio of consolidated net liabilities to consolidated tangible net worth) not higher than 1; maintain a coverage over financial expenses not lower than 3; maintaining a consolidated equity not lower then US$345 million at December 31, 2004;
the Company can not sell, transfer, dispose of, promise to sell or dispose of its current stake in the ownership of its subsidiaries, with the exceptions set forth in the contract; the Company can not pledge assets that are essential for the normal
operation of the business, except in the conditions provided for in the contract; the Company can not grant loans to its shareholders for operations outside the regular course of business.  As of December 31, 2004, the outstanding balance of the
loan was US$25,3 million and the Company is in compliance with all covenants.

Comerica Bank

The Company has the following covenants associated with its loan of US$ 15 million granted by Comerica Bank. Covenants include: maintenance of insurance on the principal assets in accordance with industry standards; updating accounting records of
the Parent company and its subsidiaries; compliance with current laws and regulations; compliance with the payment of every obligation derived from debt contracts; maintenance of the Companys line of business; prohibition of issuing certain
guarantees on its assets, except for those existing upon signature of the agreement and other such as chattel mortgage on new assets purchased in the Companys ordinary line of business; performance of transactions with the subsidiaries under
market conditions; prohibition of merging of the Company with any other company, or liquidating or dissolving it, and selling or renting its assets, property or businesses, except in the terms agreed upon in the contract; limitation to the debt
contracted and loans granted in conformity with the conditions stated in the agreement; maintenance of a consolidated equity not lower than US$ 345 million at December 31, 2004; maintenance of an interest coverage ratio (defined as operating cash
flow over net financial expenses) of at least 3; and maintenance of a leverage ratio (defined as the ratio of consolidated net liabilities to consolidated tangible net worth) not higher than 1. As of December 31, 2004, the outstanding balance of the
loan was US$ 10.8 million and the Company is in compliance with all covenants.

Banco de Chile

The Company has the following covenants associated with its credit line for US$ 15 million granted by Banco de Chile.  Covenants include: maintenance of a leverage ratio (defined as the ratio of consolidated net liabilities to consolidated tangible
net worth) not higher than 1; maintenance of a coverage ratio against financial expenses of at least 3; maintenance of a consolidated equity of at least US$ 345 million at December 31, 2004; and the prohibition of selling, transferring, pledging to
sell or disposing of, in any way or manner, its present equity investment in the property of its subsidiaries except in the terms agreed upon in the contract. As of December 31, 2004, the outstanding balance of the loan was US$ 12.9 million and the
Company is in compliance with all covenants.

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Dresdner Bank L.A. - Forestal Argentina S.A.

In accordance with loans contracted by this subsidiary, the company is obligated to comply with certain covenants that are derived from the financial statements of this subsidiary issued in accordance with accounting principles generally accepted in
Argentina.

These covenants include the maintenance of:

-
A ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to financial expenses equal to or higher than 1.2 times;

- Net equity of at least US$ 37 million.

Non-compliance with any of the above obligations can require the immediate payment of the quantities owed, as if they had matured and were currently collectable

On March 18, 2004, Masisa became the guarantor of this loan. As guarantor, the above covenants are derived from the Companys financial statement and not Forestal Argentina S.A.

As of December 31, 2004, Masisa is in compliance with the covenants.

Promissory Notes from Private Placement

In connection with notes issued in a private placement in the United States during 1996, Masisa and its subsidiaries, Masisa Overseas Ltd. and Masisa Argentina S.A., are contractually committed to maintain certain covenants, which are summarized as
follows:

|- | Compliance with all laws                                             
|- | ---------------------------------------------------------------------
|- | Maintenance of insurance on properties and businesses                
|- | Maintenance of properties in good repair, working order and condition
|- | Payment of taxes and claims                                          
|- | Maintenance of financial covenants as follows:                       
| 
|  | a)                                                                   
|  | b)                                                                   
|  | c)                                                                   
| 
|- | Ownership obligations                                                
| 
|  | a)                                                                   
|  | b)                                                                   
| 

As of December 31, 2004, the Company was in compliance with all covenants.

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Rabobank Nederland

Masisa Argentina has the following covenants associated with its loan for US$ 12.5 million granted by Cooperative Cenrale Raiffeisen-Boerenleenbank B.A. (Rabobank Nederland).  Covenants include: maintenance of a leverage ratio (defined as the ratio
of consolidated net liabilities to consolidated tangible net worth) not higher than 0.9; maintenance of a coverage ratio against financial expenses of at least 3; maintenance of a consolidated equity of at least US$ 345 million at December 31, 2004;
and the prohibition of selling, transferring, pledging to sell or disposing of, in any way or manner, its present equity investment in the property of its subsidiaries except in the terms agreed upon in the contract. As of December 31, 2004, the
Company is in compliance with all covenants.

Banco de Crédito e Inversiones

Masisa Argentina has the following covenants associated with its loan for US$ 12.5 million granted by Banco de Crédito e Inversiones. Covenants include: maintenance of a leverage ratio (defined as the ratio of consolidated net liabilities to
consolidated tangible net worth) not higher than 0.9; maintenance of a coverage ratio against financial expenses of at least 3, maintenance of a consolidated equity of at least US$ 345 million at December 31, 2004; and the prohibition of selling,
transferring, pledging to sell or disposing of, in any way or manner, its present equity investment in the property of its subsidiaries except in the terms agreed upon in the contract. As of December 31, 2004, the Company is in compliance with all
covenants.

NOTE 15 - INCOME TAXES

a) The income tax provisions in the Consolidated Statements of Income were as follows:

|                                                  |  | Year ended December 31,
|------------------------------------------------- |  | -----------------------
|                                                  |  | 2002                   
|                                                  |  |                        
|                                                  |  | ThUS$                  
|Current year provision for income tax             |  | 5,781                  
|Deferred income taxes                             |  | 1,619                  
|Adjustments of income taxes of prior years        |  | (367)                  
|                                                  |  |                        
|Total provision                                   |  | 7,033                  
|                                                  |  |                        
|b) Recoverable and taxes payable were as follows: |  |                        
|                                                  |  | At December 31,        
|                                                  |  | 2002                   
|                                                  |  |                        
|                                                  |  | ThUS$                  
|Provisional monthly income tax prepayments        |  | 1,349                  
|Income tax provision                              |  | (5,781)                
|Value-added taxes recoverable                     |  | 15,034                 
|Value-added taxes payable                         |  | (3,295)                
|Others                                            |  | 548                    
|                                                  |  |                        
|Total                                             |  | 7,855                  
|                                                  |  |                        

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Recoverable and taxes payable as outlined above are classified in the Consolidated Balance Sheets as follows:

|                                                                        |  |                 |  |         
|----------------------------------------------------------------------- |  | --------------- |  | --------
|                                                                        |  | At December 31,
|                                                                        |  | 2003            |  | 2004    
|                                                                        |  |                 |  |         
|                                                                        |  | ThUS$           |  | ThUS$   
|Recoverable tax                                                         |  | 11,180          |  | 10,202  
|Tax recoverable long-term included in long-term Other Assets (Note 9)   |  | 957             |  | 87      
|Tax payable long-term included in Other long-term liabilities (Note 13) |  | (7,459)         |  | (14,191)
|                                                                        |  |                 |  |         
|Total                                                                   |  | 4,678           |  | (3,902) 
|                                                                        |  |                 |  |         

c) Deferred income taxes

At December 31, 2003 and 2004, the accumulated balances from deferred taxes originating from temporary differences were as follows:

|                                              |  |                      |  |                      |  |            |  |          
|--------------------------------------------- |  | -------------------- |  | -------------------- |  | ---------- |  | ---------
|                                              |  | At December 31, 2003 |  | At December 31, 2004
|Assets                                        |  | Short-term           |  | Long-term            |  | Short-term |  | Long-term
|                                              |  |                      |  |                      |  |            |  |          
|                                              |  | ThUS$                |  | ThUS$                |  | ThUS$      |  | ThUS$    
|Allowance for doubtful accounts               |  | 624                  |  | -                    |  | 692        |  | 647      
|Provision for vacations                       |  | 237                  |  | -                    |  | 336        |  | -        
|Leasing obligations                           |  | -                    |  | 72                   |  | -          |  | 19       
|Tax loss carry-forwards                       |  | 904                  |  | 31,524               |  | 374        |  | 21,431   
|Other provisions                              |  | 464                  |  | 1,687                |  | 349        |  | 2,764    
|                                              |  |                      |  |                      |  |            |  |          
|Total                                         |  | 2,229                |  | 33,283               |  | 1,751      |  | 24,861   
|Less: Complementary liability account         |  | (30)                 |  | (1,419)              |  | (29)       |  | (1,456)  
|Valuation allowance                           |  | -                    |  | (18,036)             |  | -          |  | (6,553)  
|                                              |  |                      |  |                      |  |            |  |          
|                                             
|Net assets                                    |  | 2,199                |  | 13,828               |  | 1,722      |  | 16,852   
|                                              |  |                      |  |                      |  |            |  |          
|                                             
|Liabilities                                   |  |                      |  |                      |  |            |  |          
|Overhead costs in inventories                 |  | (1,012)              |  | (3,552)              |  | (736)      |  | (2,901)  
|Forest reserve                                |  | (70)                 |  | (11,124)             |  | -          |  | (13,211) 
|Depreciation of property, plant and equipment |  | (650)                |  | (20,401)             |  | (943)      |  | (24,921) 
|                                              |  |                      |  |                      |  |            |  |          
|Total                                         |  | (1,732)              |  | (35,077)             |  | (1,679)    |  | (41,033) 
|Less: Complementary asset account             |  | 95                   |  | 9,993                |  | 67         |  | 9,458    
|                                              |  |                      |  |                      |  |            |  |          
|Net liability                                 |  | (1,637)              |  | (25,084)             |  | (1,612)    |  | (31,575) 
|                                              |  |                      |  |                      |  |            |  |          
|Total net deferred income tax                 |  |                      |  |                      |  |            |  |          
|asset (liability)                             |  | 562                  |  | (11,256)             |  | 110        |  | (14,723) 
|                                              |  |                      |  |                      |  |            |  |          

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NOTE 16 - ACCRUED LIABILITIES

Accrued liabilities include the following:

|                      |  |                 |  |      
|--------------------- |  | --------------- |  | -----
|                      |  | At December 31,
|                      |  | 2003            |  | 2004 
|                      |  |                 |  |      
|                      |  | ThUS$           |  | ThUS$
|Accrued vacations     |  | 1,657           |  | 2,218
|Accrued commissions   |  | 1,334           |  | 1,702
|Provision for bonuses |  | 325             |  | 1,136
|Other provisions      |  | 1,295           |  | 3,042
|                      |  |                 |  |      
|Total                 |  | 4,611           |  | 8,098
|                      |  |                 |  |      

NOTE 17 - SHAREHOLDERS EQUITY

a) Changes in capital and reserve accounts in 2003 and 2004 were as follows:

|                                                |   |             |   |         |       | Reserves |   | Retained earnings
|----------------------------------------------- | - | ----------- | - | ------- | ----- | -------- | - | -----------------
|                                                |   |             |   |         |       |          |   |                  
|2002                                            |   |             |   |         |       |          |   |                  
|                                               
|                                                |   | Number      |   |         |       |          |   | Cumulative       
|                                                |   | of shares   |   | Common  |       | Forestry |   | translation      
|                                                |   | issued      |   | stock   |       | reserve  |   | adjustment       
|                                                |   |             |   |         |       |          |   |                  
|                                                |   |             |   | ThUS$   |       | ThUS$    |   | ThUS$            
|                                                |   |             |   |         |       |          |   |                  
|Balances at December 31, 2001                   |   | 928,514,743 |   | 230,118 |       | 10,638   |   | 20,448           
|                                                |   |             |   |         |       |          |   |                  
|Allocation of 2001 net income                   |   | -           |   | -       |       | -        |   | -                
|Payment of dividend of US$ 0.00924   per share  |   |             |   |         |       |          |   |                  
|                                                | - |             | - |         | -     |          | - |                  
|Increase in forestry reserve due   to appraisal |   |             |   |         |       |          |   |                  
|                                                | - |             | - |         | 4,847 |          | - |                  
|Cumulative translation adjustment               |   | -           |   | -       |       | -        |   | 11,126           
|Price-level restatement of equity               |   | -           |   | 6,904   |       | 318      |   | 614              
|Net income for the year                         |   | -           |   | -       |       | -        |   | -                
|                                                |   |             |   |         |       |          |   |                  
|                                                |   |             |   |         |       |          |   |                  
|                                                |   |             |   |         |       |          |   |                  
|Balances at December 31, 2002                   |   | 928,514,743 |   | 237,022 |       | 15,803   |   | 32,188           
|                                                |   |             |   |         |       |          |   |                  

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|                                                |   |             |   |         |       | Reserves |   | Retained earnings
|----------------------------------------------- | - | ----------- | - | ------- | ----- | -------- | - | -----------------
|                                                |   |             |   |         |       |          |   |                  
|                                                |   |             |   |         |       |          |   |                  
|                                                |   | Number      |   |         |       |          |   | Cumulative       
|                                                |   | of shares   |   | Common  |       | Forestry |   | translation      
|                                                |   | issued      |   | stock   |       | reserve  |   | adjustment       
|                                                |   |             |   |         |       |          |   |                  
|                                                |   |             |   | ThUS$   |       | ThUS$    |   | ThUS$            
|Balances at December 31, 2002                   |   | 928,514,743 |   | 237,022 |       | 15,803   |   | 32,188           
|Allocation of 2002 net income                   |   |             |   | -       |       | -        |   | -                
|Payment of dividend of                          |   |             |   |         |       |          |   |                  
|US$ 0.00476 per share                           |   |             |   | -       |       | -        |   | -                
|Increase in forestry reserve due to appraisal   |   |             |   |         |       |          |   |                  
|                                                |   |             | - |         | 3,124 |          | - |                  
|Cumulative translation adjustment               |   |             |   | -       |       | -        |   | 8,591            
|Net income for the year                         |   | -           |   | -       |       | -        |   | -                
|                                                |   |             |   |         |       |          |   |                  
|                                               
|Balances at December 31, 2003                   |   | 928,514,743 |   | 237,022 |       | 18,927   |   | 40,779           
|                                                |   |             |   |         |       |          |   |                  
|                                               
|Balances at December 31, 2003                   |   | 928,514,743 |   | 237,022 |       | 18,927   |   | 40,779           
|Allocation of 2003 net income                   |   | -           |   | -       |       | -        |   | -                
|Payment of dividend of                          |   |             |   |         |       |          |   |                  
|US$ 0.0041411 per share                         |   | -           |   | -       |       | -        |   | -                
|Increase in forestry reserve due to   appraisal |   |             |   |         |       |          |   |                  
|                                                | - |             | - |         | 6,224 |          | - |                  
|Cumulative translation adjustment               |   | -           |   | -       |       | -        |   | 4,292            
|Net income for the year                         |   | -           |   | -       |       | -        |   | -                
|                                                |   |             |   |         |       |          |   |                  
|Balances at December 31, 2004                   |   | 928,514,743 |   | 237,022 |       | 25,151   |   | 45,071           
|                                                |   |             |   |         |       |          |   |                  

b) Principal shareholders

At December 31, 2004, Masisa was controlled by Terranova S.A., which owns 52.434% of the shares issued and outstanding.

c) Dividends

At the Annual General Meeting held on April 21, 2004 the shareholders approved a final dividend on 2004 net income of US$ 0.0041411 per share, for an aggregate amount of ThUS$ 3,845.  The shareholders also agreed to a minimum dividend policy ranging
from 30% to 50% of net income.

At the Annual General Meeting held on April 30, 2003, the shareholders approved a final dividend on 2003 net income of US$ 0.00476 per share, for an aggregate amount of ThUS$ 4,420. The shareholders also agreed to a minimum dividend policy ranging
from 30% to 50% of net income.

d) Forestry reserve

The forestry reserve represents amounts recorded by the Companys subsidiaries Tornagaleones and Masisa do Brasil Ltda. See Note 2 i) for the accounting policy regarding this reserve.

e) Cumulative translation adjustment

In accordance with Technical Bulletin No. 64 this account corresponds to the year-end US dollar exchange difference (net of Chilean inflation) from investments in related companies and related liabilities that continue to maintain accounting records
in currencies other than the US dollar as of January 1, 2003 and for periods prior to January 1, 2003 for subsidiaries that maintained accounting records in currencies other than the Chilean peso.

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|                             |  |           |  |                      |  |              |  |       
|---------------------------- |  | --------- |  | -------------------- |  | ------------ |  | ------
|2004                         |  |           |  | Exchange gain (loss) |  | Balance at  
|                             |  | Beginning |  | attributable to      |  | December 31,
|Company                      |  | balance   |  | Investment           |  | Liabilities  |  | 2004  
|                             |  |           |  |                      |  |              |  |       
|                             |  | ThUS$     |  | ThUS$                |  | ThUS$        |  | ThUS$ 
|Masisa Argentina S.A.        |  | 26,068    |  | -                    |  | -            |  | 26,068
|Maderas y Sintéticos de      |  |           |  |                      |  |              |  |       
|Mexico S.A. de C.V.          |  | 190       |  | -                    |  | -            |  | 190   
|Masisa Partes y Piezas Ltda. |  | (23)      |  | -                    |  | -            |  | (23)  
|Forestal Tornagaleones S.A.  |  | 11,708    |  | 3,696                |  | 596          |  | 16,000
|Masisa do Brasil Ltda.       |  | 2,741     |  | -                    |  | -            |  | 2,741 
|Masisa Cabrero S.A.          |  | 95        |  | -                    |  | -            |  | 95    
|                             |  |           |  |                      |  |              |  |       
|Total                        |  | 40,779    |  | 3,696                |  | 596          |  | 45,071
|                             |  |           |  |                      |  |              |  |       

|                             |  |           |  |                      |  |              |  |       
|---------------------------- |  | --------- |  | -------------------- |  | ------------ |  | ------
|2003                         |  |           |  | Exchange gain (loss) |  | Balance at  
|                             |  | Beginning |  | attributable to      |  | December 31,
|Company                      |  | balance   |  | Investment           |  | Liabilities  |  | 2003  
|                             |  |           |  |                      |  |              |  |       
|                             |  | ThUS$     |  | ThUS$                |  | ThUS$        |  | ThUS$ 
|Masisa Argentina S.A.        |  | 26,068    |  | -                    |  | -            |  | 26,068
|Maderas y Sintéticos de      |  |           |  |                      |  |              |  |       
|Mexico S.A. de C.V.          |  | 190       |  | -                    |  | -            |  | 190   
|Masisa Partes y Piezas Ltda. |  | -         |  | (23)                 |  | -            |  | (23)  
|Forestal Tornagaleones S.A.  |  | 3,094     |  | 7,670                |  | 944          |  | 11,708
|Masisa do Brasil Ltda.       |  | 2,741     |  | -                    |  | -            |  | 2,741 
|Masisa Cabrero S.A.          |  | 95        |  | -                    |  | -            |  | 95    
|                             |  |           |  |                      |  |              |  |       
|Total                        |  | 32,188    |  | 7,647                |  | 944          |  | 40,779
|                             |  |           |  |                      |  |              |  |       

|                        |  |           |  |                      |  |              |  |       
|----------------------- |  | --------- |  | -------------------- |  | ------------ |  | ------
|2002                    |  |           |  | Exchange gain (loss) |  | Balance at  
|                        |  | Beginning |  | attributable to      |  | December 31,
|Company                 |  | balance   |  | Investment           |  | Liabilities  |  | 2003  
|                        |  |           |  |                      |  |              |  |       
|                        |  | ThUS$     |  | ThUS$                |  | ThUS$        |  | ThUS$ 
|Masisa Argentina S.A.   |  | 18,616    |  | 9,362                |  | (1,910)      |  | 26,068
|Forestal Argentina S.A. |  | 2,351     |  | 1,022                |  | (279)        |  | 3,094 
|Maderas y sintéticos de |  |           |  |                      |  |              |  |       
|Mexico S.A. de C.V.S.A. |  | -         |  | 567                  |  | (377)        |  | 190   
|Masisa do Brasil Ltda.  |  | -         |  | 10,839               |  | (8,098)      |  | 2,741 
|Masisa Cabrero S.A.     |  | 95        |  | -                    |  | -            |  | 95    
|                        |  |           |  |                      |  |              |  |       
|Total                   |  | 21,062    |  | 21,790               |  | (10,664)     |  | 32,188
|                        |  |           |  |                      |  |              |  |       

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f) Tax credits on declared dividends

Retained earnings at December 31, 2004 have the following tax credits available to shareholders when distributed:

|                     |  |        |  |             
|-------------------- |  | ------ |  | ------------
|                     |  |        |  | Tax credit  
|                     |  |        |  | available on
|Earnings of the year |  | Amount |  | distribution
|                     |  |        |  |             
|                    
|                     |  | ThUS$  |  | %           
|                    
|2004                 |  | 13,870 |  | 17.0        
|2003                 |  | 10,262 |  | 16.5        
|2002                 |  | 30,049 |  | 16.0        
|2002                 |  | 531    |  | 15.0        
|2001                 |  | 3,127  |  | 15.0        
|2000                 |  | 4,207  |  | 15.0        

Under Chilean tax laws, distributions must be made on a first-in first-out basis.

NOTE 18 - COMMITMENTS AND CONTINGENCIES

a) Guarantees

On October 15, 1998, Forestal Tornagaleones entered into a loan agreement with Raboinvestments Chile S.A. for US$ 15,8 million. Under terms of the agreement the company collateralized the loan with plantations and land for the term of the loan that
expires in 3 years.  The book value of the plantations is ThUS$ 20,964 and the book value of the land is ThUS$ 5,642 as of December 31, 2004.

At December 31, 2004, the Company has received guarantees, including pledges, mortgages, endorsements of loan insurance policies, special mandates and surety bonds to guarantee repayment to clients and fulfillment of obligations related to the
Companys business activities amounting to ThUS$ 4,778 (ThUS$ 7,583 in 2003).

Forestal Tornagaleones has received guarantees to secure repayment to clients and fulfillment of obligations related to the Companys business activities amounting to ThUS$ 113 in 2004 (ThUS$ 705 in 2003).

b) Lawsuits

The Company is involved in legal proceedings, claims and litigation arising in the ordinary course of business.  In the opinion of management, these matters will not materially affect the Companys consolidated financial position, operating
results or cash flows when resolved in a future period.

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As of December 31, 2004, there is an outstanding complaint amounting to ThUS$ 663 for damages to property caused in opinion of the complaining party by Forestal Tornagaleones  On September 22, 2003, an appealable judgment was issued against the
Company, which limited the scope of the claimed damages to ThCh$ 60,000, but did not fix the amount payable. Such judgment was appealed by the Company. On January 9, 2004, the Court of Appeals of Valdivia accepted the appeal, by annulling the
judgment and refusing to accept the complaint filed against the Company in all its parts, including legal costs. The complainant filed a motion to appeal on January 31, 2005, which remains pending at the date of issuance of these consolidated
financial statements.  Given the judgment pronounced by the Court of Appeals of Valdivia, the Company believes that the likelihood of success for the complainant is minimal.

On May 30, 2002, the Chilean Internal Revenue Service issued a tax assessment amounting to ThCh$ 406,545 (ThUS$ 729 at December 31, 2004) for alleged differences in the determination of income taxes by Inversiones Coronel Limitada.  The Company has
made no provision for this assessment as management believes it will prevail in this case.

NOTE 19 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES

Notes and accounts receivable from related companies at each year included the following:

|                                       |  |                        |  |                 |  |      
|-------------------------------------- |  | ---------------------- |  | --------------- |  | -----
|                                       |  |                        |  | At December 31,
|Name                                   |  | Relationship           |  | 2003            |  | 2004 
|                                       |  |                        |  |                 |  |      
|                                       |  |                        |  | ThUS$           |  | ThUS$
|Short-term                             |  |                        |  |                 |  |      
|                                       | 
|Terranova Colombia                     |  | Shareholders in common |  | 33              |  | 34   
|Masnova S.A. de C.V                    |  | Equity investment      |  | 1,872           |  | 1,360
|Terranova Forest Products, INC         |  | Directors in common    |  | 19              |  | 4,527
|Forestal Río Calle Calle S.A.          |  | Equity investment      |  | -               |  | 3    
|Terranova S.A.                         |  | Principal shareholder  |  | -               |  | 109  
|Fibranova C.A.                         |  | Shareholders in common |  | -               |  | 627  
|Plycem Construsistemas Costa Rica S.A. |  | Directors in common    |  | 268             |  | 373  
|Plycem Construsistemas El Salvador     |  | Directors in common    |  | 96              |  | 49   
|Plycem Construsistemas Honduras        |  | Directors in common    |  | -               |  | 51   
|Plycem Construsistemas Nicaragua       |  | Directors in common    |  | -               |  | 90   
|Plycem Construsistemas Guatemala S.A.  |  | Directors in common    |  | 10              |  | 160  
|                                       |  |                        |  |                 |  |      
|Total                                  |  |                        |  | 2,298           |  | 7,383
|                                       |  |                        |  |                 |  |      

|                              |  |                   |  |                 |  |      
|----------------------------- |  | ----------------- |  | --------------- |  | -----
|                              |  |                   |  | At December 31,
|Name                          |  | Relationship      |  | 2003            |  | 2004 
|                              |  |                   |  |                 |  |      
|                              |  |                   |  | ThUS$           |  | ThUS$
|Long-term                     |  |                   |  |                 |  |      
|                              | 
|Forestal Río Calle Calle S.A. |  | Equity investment |  | 3,297           |  | 597  
|                              |  |                   |  |                 |  |      

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Outstanding notes and accounts payable balances to related companies at the end of each year included the following:

|                                       |  |                        |  |                 |  |      
|-------------------------------------- |  | ---------------------- |  | --------------- |  | -----
|                                       |  |                        |  | At December 31,
|Name                                   |  | Relationship           |  | 2003            |  | 2004 
|                                       |  |                        |  |                 |  |      
|                                       |  |                        |  | ThUS$           |  | ThUS$
|Forestal Río Calle Calle S.A.          |  | Equity investment      |  | 228             |  | -    
|Terranova S.A.                         |  | Principal shareholder  |  | 666             |  | -    
|Fibranova C.A.                         |  | Shareholders in common |  | 3               |  | -    
|Terranova Brasil Ltda.                 |  | Shareholders in common |  | 48              |  | 26   
|Forestal Terranova Mexico S.A. de C.V. |  | Shareholders in common |  | 877             |  | 3,483
|Plycem Construsistemas Honduras        |  | Directors in common    |  | 3               |  | -    
|Plycem Construsistemas Nicaragua       |  | Directors in common    |  | 2               |  | -    
|                                       |  |                        |  |                 |  |      
|Total                                  |  |                        |  | 1,827           |  | 3,509
|                                       |  |                        |  |                 |  |      

Significant transactions with related parties included the following:

|                                          |  |                        |  |                         |  |       |  |       |  |            
|----------------------------------------- |  | ---------------------- |  | ----------------------- |  | ----- |  | ----- |  | -----------
|                                          |  |                        |  | Year ended December 31, |  |      
|                                          |  |                        |  |                         |  |       |  |       |  |            
|Name                                      |  | Relationship           |  | 2002                    |  | 2003  |  | 2004  |  | Transaction
|                                          |  |                        |  |                         |  |       |  |       |  |            
|                                          |  |                        |  | ThUS$                   |  | ThUS$ |  | ThUS$ |  |            
|Forestal Río Calle Calle S.A.             |  | Equity investment      |  | 271                     |  | 99    |  | 34    |  | Interest   
|Terranova S.A.                            |  | Principal shareholder  |  | 2,959                   |  | 1,692 |  | 2,461 |  | Purchases  
|                                          |  |                        |  | 25                      |  | 327   |  | 290   |  | Services   
|                                          |  |                        |  | 1,226                   |  | -     |  | -     |  | Sales      
|Forestal Terranova Mexico S.A. de C.V.    |  | Shareholders in common |  | 3,109                   |  | 75    |  |       |  | Sales      
|Masnova de México S.A.                    |  | Equity investment      |  | 3,520                   |  | -     |  | -     |  | Sales      
|Terranova Costa Rica S.A.                 |  | Shareholders in common |  | 336                     |  | 150   |  | -     |  | Sales      
|Terranova Colombia S.A.                   |  | Shareholders in common |  | 710                     |  | 686   |  | 510   |  | Sales      
|Fibranova C.A.                            |  | Shareholders in common |  | -                       |  | 279   |  | 490   |  | Services   
|                                          |  |                        |  | -                       |  | 1,273 |  | 2,720 |  | Sales      
|Terranova Forest Products, INC            |  | Directors in common    |  | -                       |  | 161   |  | 8,365 |  | Sales      
|Forestal Terranova de Guatemala S.A.      |  | Shareholders in common |  | -                       |  | 36    |  | -     |  | Sales      
|Plycement Construsistema Costa Rica S.A.  |  | Directors in common    |  | -                       |  | 253   |  | 718   |  | Sales      
|Plycement Construsistema El Salvador S.A. |  | Directors in common    |  | -                       |  | 90    |  | 263   |  | Sales      
|Plycement Construsistema Guatemala S.A.   |  | Directors in common    |  | -                       |  | 211   |  | 312   |  | Sales      
|Plycement Construsistema Honduras         |  | Directors in common    |  | -                       |  | 114   |  | 175   |  | Sales      
|Plycement Construsistema Nicaragua        |  | Directors in common    |  | -                       |  | 62    |  | 118   |  | Sales      

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NOTE 20 - NON-OPERATING INCOME

Non-operating income during each year includes the following:

|                                                        |  |                         |  |       |  |      
|------------------------------------------------------- |  | ----------------------- |  | ----- |  | -----
|                                                        |  | Year ended December 31,
|                                                        |  |                         |  |       |  |      
|                                                        |  | 2002                    |  | 2003  |  | 2004 
|                                                        |  |                         |  |       |  |      
|                                                        |  | ThUS$                   |  | ThUS$ |  | ThUS$
|Gain on sales of property, plant and equipment          |  | 1,279                   |  | 913   |  | 1,240
|Gain on sales of investments                            |  | -                       |  | 44    |  | -    
|Equity in earnings of unconsolidated affiliate (Note 7) |  | 16                      |  | -     |  | -    
|Interest and other financial income                     |  | 2,534                   |  | 3,328 |  | 1,721
|Reversal of allowance for doubtful accounts             |  | 2,847                   |  | -     |  | -    
|Forgiveness of notes payable                            |  | 709                     |  | -     |  | -    
|Other                                                   |  | 292                     |  | 549   |  | 914  
|                                                        |  |                         |  |       |  |      
|Total                                                   |  | 7,677                   |  | 4,834 |  | 3,875
|                                                        |  |                         |  |       |  |      

NOTE 21 - NON-OPERATING EXPENSES

Non-operating expenses during each year include the following:

|                                                        |  |                         |  |        |  |       
|------------------------------------------------------- |  | ----------------------- |  | ------ |  | ------
|                                                        |  | Year ended December 31,
|                                                        |  |                         |  |        |  |       
|                                                        |  | 2002                    |  | 2003   |  | 2004  
|                                                        |  |                         |  |        |  |       
|                                                        |  | ThUS$                   |  | ThUS$  |  | ThUS$ 
|Interest expense                                        |  | 10,733                  |  | 14,875 |  | 16,892
|Write-down of other assets to fair value (Note 6)       |  | -                       |  | -      |  | 2,998 
|Amortization of goodwill and negative goodwill (Note 8) |  | 265                     |  | 142    |  | (15)  
|Equity in losses of unconsolidated affiliates (Note 7)  |  | -                       |  | 685    |  | 26    
|Donations                                               |  | 64                      |  | 64     |  | 54    
|Write off affiliate receivable                          |  | -                       |  | -      |  | 2,762 
|Losses on sales of property, plant and equipment        |  | -                       |  | 115    |  | 192   
|Depreciation of equipment temporarily out of service    |  | 432                     |  | 1,649  |  | 453   
|Other                                                   |  | 564                     |  | 346    |  | 1,193 
|                                                        |  |                         |  |        |  |       
|Total                                                   |  | 12,058                  |  | 17,876 |  | 24,555
|                                                        |  |                         |  |        |  |       

NOTE 22 - SUBSEQUENTS EVENTS

On March 24, 2005, the Company issued a prospectus outlining the merger of the Company with its majority shareholder, Terronova S.A (Terranova). The merger was approved on April 12 and 13, 2005 by the shareholders of Masisa and Terranova,
respectively. The merger is intended to be completed on, or before, July 12, 2005.  In the proposed merger, the Company will merge into Terranova and Terranova will be the surviving entity. The Company ́s common shareholders will receive 2.56
shares of Terranova common stock for each Masisa share they own. The Company ́s American depostiary share (ADS) holders will receive 1.536 Terranova ADS for each Masisa ADS they own.

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In connection with the approval of the merger, Masisas shareholders approved an Extraordinary Dividend of US$ 54.0 million which was subject to certain conditions, established at the respective Extraordinary Shareholders Meetings of
Masisa and Terranova to approve the merger, with respect to the exercise of withdrawal rights and such conditions have successfully been met. In order to pay the dividend, Masisa incurred approximately US$ 26 million in new bank debt in addition to
US$ 28 million in loans to Terranova. The dividens were paid on May 27, 2005.

There have been no subsequent accountings or financial events during the period from December 31, 2004 through the date on which these financial statements were prepared, June 6, 2005, which could significantly affect their interpretation.

NOTE 23 - DIFFERENCES BETWEEN CHILEAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Accounting principles generally accepted in Chile (Chilean GAAP) vary in certain important respects from the accounting principles generally accepted in the United States of America.  Such differences involve certain methods for
measuring the amounts shown in the financial statements, as well as additional disclosures required by generally accepted accounting principles in the United States of America (US GAAP).

1 Differences in measurement methods

The principal methods applied in the preparation of the accompanying financial statements which have resulted in amounts which differ from those that would have otherwise been determined under US GAAP are as follows:

a) Reporting currency and inflation accounting

For the year ended December 31, 2004, the reporting currency for the Company is the US dollar. Prior to January 1, 2003, the Company reported its financial statements in Chilean Pesos. Effective January

1, 2003 and following the approval of the appropriate Chilean regulatory authorities, the Company changed its reporting currency to the US dollar in order to be consistent with its majority shareholders financial reporting currency and
to facilitate its majority shareholders consolidation process for financial reporting purposes.  The Companys functional currency has not changed and remains the US dollar.

For the years prior to the 2003, the Company presented financial statements in Chilean pesos restated to reflect the full effects of the change in the purchasing power of the Chilean peso on the financial position and results of operations of
reporting entities. The method, described in Note 2 d), is based on a model which enables the calculation of net inflation gains or losses caused by monetary assets and liabilities exposed to changes in the purchasing power of the local currency by
restating all non-monetary accounts in the financial statements. The model prescribes that the historical cost of such accounts be restated for general price-level changes between the date of origin of each item and the year-end, and allows direct
utilization of replacement values for the restatement of inventories as an alternative to the price-level restatement of those assets, but only if the resulting variation is not material.

In accordance with Item 18 of Form 20-F for periods prior to December 31, 2003, the Company was not required to include an adjustment to eliminate price-level restatements in the reconciliation of net income and equity from Chilean GAAP to US GAAP
as the Company prepared its financial statements in accordance with Chilean GAAP and the inflation-adjusted Chilean peso was the reporting currency.

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As a result of changing its reporting currency to US dollars beginning January 1, 2003, the Company recast its prior year financial statements to US dollars in accordance with Chilean GAAP and therefore no longer qualified for the exemption
described above associated with the US GAAP reconciliation. For the presentation of financial statements in accordance with Chilean GAAP, the Consolidated Balance Sheets, Statements of Income and Cash Flows at and for the year ended December 31,
2002 was recasted into US dollars using the historical year-end exchange rates as described in Note 2 b) above.

Pursuant to Item 18 of Form 20-F and SEC regulations, a change in reporting currency from a price-level adjusted currency such as the Chilean peso to the US dollar requires the financial statements for all periods presented to be recast as if the US
dollar had been used for all periods. Accordingly, for the reconciliation of net income from Chilean GAAP to US GAAP for the year ended December 31, 2002, the Company has (1) eliminated all price-level adjustments; (2) remeasured all monetary assets
and liabilities at current exchange rates; (3) remeasured non-monetary assets, liabilities and shareholders equity accounts based on historical exchange rates; and (4) remeasured revenues and expenses at the weighted-average of the exchange
rates in the period.

Translation of the Companys investment in Tornagaleones:

The Companys subsidiary, Tornagaleones, maintains its accounting records in Chilean pesos. Commencing January 1, 2003 with the approval to report the Companys financial statements in US dollars, in accordance with Chilean GAAP, the
Company records a translation adjustment included in shareholders equity derived from the net difference between the value of its investment in its subsidiary resulting from the movement in the exchange rate between the Chilean peso and the US
dollar, the Companys functional currency (see Note 17 f).

Under US GAAP, subsidiaries which maintain their records in a currency other than its functional currency, must remeasure their financial statements into the functional currency before translating to the reporting currency. All monetary assets and
liabilities are remeasured based on current exchange rates and all non-monetary assets and liabilities and shareholders equity are remeasured based on historical exchange rates.  Revenues and expenses are remeasured at the weighted-average of
the exchange rates in the period. All remeasurement effects are recorded as a component of net income.

In accordance with Chilean GAAP, for subsidiaries that maintain accounting records in Chilean pesos, monetary assets or liabilities denominated in US dollars are translated to Chilean pesos at year-end exchange rates and the corresponding adjustment
is included in net income for the subsidiary. Pursuant to US GAAP, this adjustment is not required for monetary assets and liabilities denominated in US dollars as the Companys functional currency is the US dollar. The cumulative effect of
these adjustments has been presented as an adjustment to Chilean GAAP net equity. The adjustments are included in paragraph (k) below.

b) Income taxes

Under Chilean GAAP, effective January 1, 2000, the Company began applying Technical Bulletin No. 60 of the Chilean Institute of Accountants concerning deferred income taxes. Technical Bulletin No. 60 requires the recognition of deferred income taxes
for all temporary differences, whether recurring or not, using an asset and liability approach. For US GAAP purposes, in prior years the Company applied Statement of Financial Accounting Standard (SFAS) No. 109, Accounting for
Income Taxes, whereby income taxes are also recognized using substantially the same asset and liability approach. Deferred income tax assets and liabilities established for temporary differences between the financial reporting basis and tax
basis of the Companys assets and liabilities are based on enacted rates at the dates that the temporary differences are expected to reverse. The effect of changes in tax rates is included in income for the period that includes the enactment
date.

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After the year ended December 31, 1999, Chilean GAAP and US GAAP differ due to the recognition for US GAAP purposes of the reversal of deferred income taxes included in the US GAAP reconciliations in years prior to 2000.

Prior to the implementation of Technical Bulletin No. 60, no deferred income taxes were recorded under Chilean GAAP if the related timing differences were expected to be offset in the year that they were projected to reverse by new timing
differences of a similar nature.

Furthermore, deferred income tax assets under both Chilean and US GAAP should be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax assets
will not be realized. The valuation allowance should be sufficient to reduce the deferred income tax asset to an amount that is more likely than not to be realized.

The effect of providing for deferred income taxes for the differences between the amounts shown for assets and liabilities in the balance sheet and the tax basis of those assets and liabilities is included in paragraph 1 k) below and certain
disclosures required under SFAS No. 109 are set forth in paragraph 2 b) below.

c) Minimum dividend

As required by the Chilean Companies Act, unless otherwise decided by the unanimous vote of the holders of issued and subscribed shares, the Company must distribute a cash dividend in an amount equal to at least 30% of the Company's net income for
each year as determined in accordance with Chilean GAAP, unless and except to the extent the Company has unabsorbed prior year losses. Since the payment of the 30% dividend out of each years income is a legal requirement in Chile a provision
has been made in the accompanying US GAAP reconciliation in paragraph 1 k) below to recognize the corresponding decrease in Shareholders equity at December 31st of the year to which the minimum dividend is attributed.

d) Consolidation

As mentioned in Note 2 i), for Chilean GAAP purposes, investments in related companies are accounted for pursuant to the equity method when the companys investment represents between 10% and 50% of the voting stock of the investee.  For US
GAAP purposes prior to February 1, 2003, investments in related companies required the use of the equity method of accounting for investments that give the investor the ability to exercise significant influence over operating and financial policies
of the investee. For those companies which were determined to be controlled through the Companys investment (generally, ownership of over 50% of the outstanding voting shares), US GAAP required consolidation. Subsequent to February 1, 2003, US
GAAP requires the determination of whether an entity should be consolidated in accordance with FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires consolidation by the primary
beneficiary of a Variable Interest Entity (VIE). The primary beneficiary is generally defined as having the majority of the risk and rewards arising from the VIE.

Masnova de Mexico S.A. de C.V. is 50% owned by Masisa de Mexico S.A. de C.V. and 50% owned by a related party and the Company has the ability to control the entities operations.  For Chilean GAAP purposes, however, Masnova de Mexico S.A. de
C.V. is not consolidated. The effects of not consolidating Masnova under Chilean GAAP are not material and accordingly are not included in the reconciliation of net income and net equity from Chilean GAAP to US GAAP. Masnova de Mexico S.A. de
C.V.s balance sheet at December 31, 2004, includes total assets of ThUS$ 591, total liabilities of ThUS$ 1,924, and negative stockholders equity of ThUS$ 1,333.  Masnova de México S.A. de C.V.s has no material commitments or
contingencies.

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Relative to the Companys investments in unconsolidated affiliates, there are no differences in the application of the equity method or consolidation between Chilean GAAP and US GAAP.

e) Revaluation of timber resources

As mentioned in Note 2 h), certain timber assets are reported in the financial statements at amounts determined in accordance with a technical appraisal. Revaluation of property, plant and equipment is an accounting principle that is not generally
accepted in the United States. The effects of the reversal of this revaluation for both investments in unconsolidated affiliates and consolidated subsidiaries are shown in the reconciliation of shareholders equity in paragraph 1 k) below. As
previously indicated in Note 2 h), the revaluation of timber resources is not given effect in the Consolidated Statement of Income under Chilean GAAP and therefore no US GAAP adjustment is necessary.

f) Capitalization of interest and other costs

Under Chilean GAAP, the capitalization of interest costs is optional. As described in Note 2 h), the Company capitalizes financing costs on long-term investment projects in a manner consistent with US GAAP.

Under Chilean GAAP, foreign exchange gains and losses associated with foreign-currency denominated debt, which qualifies for interest capitalization, can be netted against the corresponding capitalized interest. Under US GAAP, only the interest on
the qualifying debt related to investment projects is capitalized and foreign currency gains and losses on foreign-currency denominated debt is recorded in income as a non-operating gain or loss.

Tornagaleones, which is 60.4% owned by the Company and consolidated, capitalized interest costs incurred in connection with the development of its forests. Under US GAAP, interest costs incurred to finance the development of forests are not normally
capitalized.

The adjustments for the reversal of capitalizing interest costs incurred in connection with the development of forests and the netting of foreign-currency gains and losses against interest capitalized pursuant to Chilean GAAP is shown in the
reconciliations of net income and shareholders equity in paragraph 1 k) below.

g) Business combinations and goodwill

Under US GAAP, the purchase method is used for all business combinations. The acquired companys assets and liabilities are adjusted to give effect to the purchase price paid by the acquiring company. If, after the assets, including
intangibles, and liabilities of the acquired company have been adjusted to their fair value, at the acquisition date, the purchase price exceeds the amount of such fair value, the excess is recorded as goodwill. SFAS No. 141, Business
Combinations, establishes specific criteria for the recognition of intangible assets separately from goodwill and it requires unallocated negative goodwill to be allocated pro rata to the acquired assets or written off immediately as an
extraordinary gain.  Goodwill and certain specifically identified intangibles are assigned an indefinite useful life. Accordingly, no goodwill amortization expense is recorded for US GAAP purposes.  Goodwill and indefinite life intangibles are
subject to annual impairment tests based on the fair value method.

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Under Chilean GAAP, until January 1, 2004, the excess of cost over the net book value of a purchased company is recorded as goodwill (the book value purchase method), which is then amortized to income over a maximum period of twenty years.
Amortization of goodwill may be accelerated if the acquired company generates sufficient income to absorb the additional amortization in any given year.  The excess of net book value over the cost of an investment is considered to be negative
goodwill under Chilean GAAP and is also amortized to income over a maximum period of twenty years.  The amortization of negative goodwill may be accelerated if the acquired company sustains losses. Beginning January 1, 2004, goodwill and negative
goodwill are calculated based on the net fair value of the assets acquired.

Goodwill arising from the purchase of Masisa Cabrero S.A. in 2000 was adjusted to conform Chilean purchase accounting with US GAAP and is shown in the reconciliation of net income and shareholders ́ equity in paragraph 1 k) below.

Negative goodwill resulting from the purchase of additional shares of Forestal Tornagaleones is being amortized over 20 years under Chilean GAAP. Under US GAAP, this negative goodwill would have been allocated pro-rata to the acquired non-current
assets as of the acquisition date resulting in lower depreciation expense.  The difference between amortizing the negative goodwill to income over 20 years under Chilean GAAP and the impact under the full allocation pursuant to US GAAP has not been
included in the reconciliation of net income and shareholders equity as the net impact is not material.

h) Minority interest

The proportional effects of the US GAAP adjustments described above related to the Companys subsidiary, Tornagaleones, have been included in the reconciliation of net income and shareholders equity in paragraph k) below.

i) Comprehensive income

SFAS No. 130, Reporting Comprehensive Income, establishes guidelines for the presentation of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income represents the change in
shareholders equity of the Company during the period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and
distributions to owners.  There are no differences between net income in accordance with US GAAP and comprehensive income in accordance with US GAAP.  Additionally, there are no items impacting accumulated comprehensive income.

j) Derivative financial instruments

The Company enters into foreign currency forward exchange contracts to cover the risk of exposure to exchange rate differences on existing items on the balance sheet denominated in currency other than the US dollars.  Under these forward contracts,
for any rate above or below the fixed rate, the Company receives or pays the difference between the spot rate and the fixed rate for the given amount at the settlement date.  It also enters into interest rate swaps in order to hedge its exposure to
interest rate differences. Counter-parties to these financial instruments expose the Company to credit-related losses in the event of nonperformance; however, counter-parties to these contracts are major financial institutions and the risk of loss
due to nonperformance is believed to be minimal.

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Under Chilean GAAP, derivatives are accounted for in accordance with Technical Bulletin 57, Accounting for Derivative Contracts (TB 57). Under TB 57, all derivative financial instruments should be recognized on the balance
sheet at their fair value. In addition, TB 57 requires that derivative financial instruments be classified as Non-hedging (investment) instruments and Hedging instruments, the latter further divided into those covering existing transactions and
those covering anticipated transactions.

Contracts to cover existing transactions hedge against the risk of a change in the fair value of a hedged item. The differences resulting from the changes in the fair value of both the hedged item and the derivative instrument should be accounted
for as follows:

|a. | If the net effect is a loss, it should be recognized in earnings in the period of change.                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b. | If the net effect is a gain, it should be recognized when the contract is closed and accordingly deferred on the balance sheet.                                                                                                                     
|  
|c. | If the net effect is a gain and net losses were recorded on the transaction in prior years, a gain should be recognized in earnings in the current period up to the amount of net losses recorded previously.                                       
|  
|d. | If the effect is a net loss and net gains were recorded (as a deferred revenue) on the transaction in prior years, the gain should be utilized to offset the net loss before recording the remaining loss in the results of operations for the year.
|  

Contracts to cover anticipated transactions are those that have the objective of protecting cash flow risks of a transaction expected to occur in the future (cash flow hedge). The hedging instrument should be recorded at its fair value and the
changes in fair value should be stated on the balance sheet as unrealized gains or losses. When the contract is closed, the unrealized gains or losses on the derivative instrument should be recognized in earnings without affecting the cost or sales
price of the asset acquired or sold in the transaction. However, probable losses arising from purchase commitments should not be deferred.

Non-hedging (investment) instruments should also be presented at their fair value, with changes in fair value reflected in the earnings of the period in which the change in fair value occurs.

At December 31, 2004, the Company has one outstanding interest rate swap protect the Company against interest rate risk. The derivative contract is a hedge against future interest payments on debt amounting to US$ 12,000,000 related to a loan
described in Note 11. The contract matures in 2006.

At December 31, 2004, the Company has three cross currency contracts, two to protect itself against fluctuations in the Chilean peso and one to protect itself against fluctuations in the Mexican peso. The contracts had notional amounts of $ 60
million and $ 20 million, respectively. These derivatives all mature during the year 2010.

Under US GAAP, the Company applies SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS 137 and SFAS 138 on the same matter (collectively referred to herein as SFAS 133).  SFAS 133
requires that all derivative instruments be recognized on the balance sheet at fair value and that changes in the fair value be recognized in income when they occur, the only exception being derivatives that qualify as hedges. To qualify the
derivative instrument as a hedge, the Company must meet strict hedge effectiveness and contemporaneous documentation requirements at the initiation of the hedge and assess the hedge effectiveness on an ongoing basis over the life of the hedge.

At December 31, 2004, 2003 and 2002, these contracts did not meet the documentation requirements to be designated as hedges under US GAAP. The difference between the treatment under Chilean GAAP and US GAAP are presented as an adjustment in
paragraph k) below.

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k) Effects of conforming to US GAAP

The adjustments to reported net income pursuant to Chilean GAAP required to conform with accounting principles generally accepted in the United States of America include the following:

|                                                                        |  |                         |  |         |  |        
|----------------------------------------------------------------------- |  | ----------------------- |  | ------- |  | -------
|                                                                        |  | Year ended December 31,
|                                                                        |  |                        
|                                                                        |  | 2002                    |  | 2003    |  | 2004   
|                                                                        |  |                         |  |         |  |        
|                                                                        |  | ThUS$                   |  | ThUS$   |  | ThUS$  
|Net income as shown in the Chilean GAAP financial statements            |  | 14,579                  |  | 9,613   |  | 41,569 
|- Net effect for change in reporting currency (par. 1a)                 |  | 4,749                   |  | (547)   |  | 353    
|- Inflation adjustments (par. 1 a)                                      |  | (1,098)                 |  | (567)   |  | (639)  
|- Deferred income taxes  reversal of complementary accounts (par. 1 b) |  | 1,718                   |  | 2,785   |  | (439)  
|- Capitalization of interest (par. 1 f)                                 |  | (3,462)                 |  | (3,300) |  | (1,744)
|- Capitalization of exchange difference (par. 1 f)                      |  | (130)                   |  | 1,473   |  | 103    
|- Goodwill amortization (par. 1 g)                                      |  | 308                     |  | 242     |  | (15)   
|- Derivative contracts (par. 1 j)                                       |  | -                       |  | -       |  | 1,057  
|- Net deferred income tax effects on US GAAP adjustments (par. 1 b)     |  | 530                     |  | 997     |  | 555    
|- Net effects of US GAAP adjustments on minority interest (par. 1 h)    |  | 133                     |  | 399     |  | 504    
|                                                                        |  |                         |  |         |  |        
|Net income in accordance with US GAAP                                   |  | 17,327                  |  | 11,095  |  | 41,304 
|                                                                        |  |                         |  |         |  |        

The adjustments required to conform shareholders equity to US GAAP include the following:

|                                                                       |  |                 |  |         
|---------------------------------------------------------------------- |  | --------------- |  | --------
|                                                                       |  | At December 31,
|                                                                       |  | 2003            |  | 2004    
|                                                                       |  |                 |  |         
|                                                                       |  | ThUS$           |  | ThUS$   
|Shareholders equity as shown in the Chilean GAAP financial statements |  | 452,224         |  | 500,464 
|Net effect for change in reporting currency (par. 1 a)                 |  | 78,121          |  | 78,474  
|Inflation adjustments (par. 1 a)                                       |  | (54,690)        |  | (55,329)
|Deferred income taxes (par. 1 b)                                       |  | (9,932)         |  | (10,371)
|Minimum dividend (par. 1 c)                                            |  | (2,884)         |  | (12,471)
|Reversal of revaluation of timber resources (par. 1 e)                 |  | (27,872)        |  | (36,056)
|Capitalization of interest (par. 1 f)                                  |  | (8,401)         |  | (10,145)
|Capitalization of exchange differences (par. 1 f)                      |  | 1,017           |  | 1,120   
|Goodwill amortization (par. 1 g)                                       |  | 370             |  | 355     
|Derivative contracts (par. 1 j)                                        |  | -               |  | 1,057   
|Net deferred income tax effects on USGAAP adjustments (par. 1b)        |  | (5,080)         |  | (4,525) 
|Net effect of US GAAP adjustments on minority interest (par. 1 h)      |  | 13,405          |  | 11,576  
|                                                                       |  |                 |  |         
|Shareholders equity in accordance with US GAAP                        |  | 436,278         |  | 464,149 
|                                                                       |  |                 |  |         

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The changes in shareholders equity determined under US GAAP were as follows:

|                                                                          |  |         
|------------------------------------------------------------------------- |  | --------
|                                                                          |  | ThUS$   
|                                                                          |  |         
|Balances at December 31, 2001                                             |  | 415,281 
|Reversal of accrual of minimum dividend required                          |  |         
|by low at prior year end                                                  |  | 9,411   
|Distribution of dividends                                                 |  | (9,532) 
|Accrual of minimum dividend required by law                               |  | (4,374) 
|Net income for the year                                                   |  | 17,327  
|                                                                          |  |         
|Balance at December 31, 2002                                              |  | 428,113 
|                                                                          |  |         
|                                                                         
|Reversal of accrual of minimum dividend required by law at prior year end |  | 4,374   
|Distribution of dividends                                                 |  | (4,420) 
|Accrual of minimum dividend required by law                               |  | (2,884) 
|Net income for the year                                                   |  | 11,095  
|                                                                          |  |         
|Balance at December 31, 2003                                              |  | 436,278 
|                                                                          |  |         
|                                                                         
|Reversal of accrual of minimum dividend required by law at prior year end |  | 2,884   
|Distribution of dividends                                                 |  | (3,846) 
|Accrual of minimum dividend required by law                               |  | (12,471)
|Net income for the year                                                   |  | 41,304  
|                                                                          |  |         
|Balance at December 31, 2004                                              |  | 464,149 
|                                                                          |  |         

l) Income statement classifications under US GAAP

As disclosed in Notes 20 and 21, under Chilean GAAP, the Company has classified certain items in non-operating results (i.e., certain gains and losses on sales of property, plant and equipment; write-downs of property, plant and equipment;
depreciation of equipment temporarily out of service, provisions for accounts receivable losses, etc.) that under US GAAP, are included in operating income. In addition, differences in classification of income and expenses and goodwill as well as
other differences between Chilean GAAP and US GAAP exist as summarized in Note 1 j). As a result of these reclassifications pursuant to US GAAP, operating income amounted to ThUS$ 30,959, ThUS$ 24,140, and ThUS$ 65,525 for the years ended December
31, 2002 and 2003, 2004 respectively.

F - 40

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2 Additional US GAAP disclosure requirements

a) Earnings per share

SFAS No. 128, Earning Per Share, requires the disclosure of basic and diluted earnings per share (EPS). Basic EPS is calculated using income available to common stockholders divided by the weighted-average of common shares outstanding
during the year. Diluted EPS is similar to basic EPS except that the weighted-average of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common
shares, such as options, had been issued. The treasury stock method is used to calculate dilutive shares which reduce the gross number of dilutive shares by the number of shares that can be acquired from the proceeds of the options assumed to be
exercised. Diluted EPS is equal to basic EPS for all periods presented as the Company did not have any potentially dilutive securities. The following disclosure of earnings per share information is not generally required for presentation in the
financial statements under Chilean GAAP but is required under US GAAP:

|                                                        |  |                         |  |         |  |        
|------------------------------------------------------- |  | ----------------------- |  | ------- |  | -------
|                                                        |  | Year ended December 31,
|                                                        |  |                        
|                                                        |  | 2002                    |  | 2003    |  | 2004   
|                                                        |  |                         |  |         |  |        
|                                                       
|                                                        |  | US$                     |  | US$     |  | US$    
|                                                       
|Basic and diluted earnings per share under Chilean GAAP |  | 0.0157                  |  | 0.0104  |  | 0.0448 
|                                                        |  |                         |  |         |  |        
|Basic and diluted earnings per share under US GAAP      |  | 0.0187                  |  | 0.0119  |  | 0.0445 
|                                                        |  |                         |  |         |  |        
|Weighted average number of shares of                    |  |                         |  |         |  |        
|common stock outstanding (in thousands)                 |  | 928,515                 |  | 928,515 |  | 928,515
|                                                        |  |                         |  |         |  |        

b) Income taxes

The provisions for income taxes charged to the results of operations pursuant to US GAAP were as follows:

|                                                         |  |         |  |         |  |      
|-------------------------------------------------------- |  | ------- |  | ------- |  | -----
|                                                         |  | 2002    |  | 2003    |  | 2004 
|                                                         |  |         |  |         |  |      
|                                                         |  | ThUS$   |  | ThUS$   |  | ThUS$
|Deferred tax expense (benefit) under Chilean GAAP:       |  |         |  |         |  |      
|Chile                                                    |  | 1,604   |  | 328     |  | (242)
|Foreign                                                  |  | (352)   |  | (1,449) |  | 2,074
|                                                        
|Additional deferred tax expense (benefit) under US GAAP: |  |         |  |         |  |      
|Chile adjustment                                         |  | (2,248) |  | (3,782) |  | (116)
|                                                         |  |         |  |         |  |      
|                                                        
|Total deferred tax provision under US GAAP               |  | (996)   |  | (4,903) |  | 1,716
|                                                         |  |         |  |         |  |      
|                                                        
|Current year provision for income tax:                   |  |         |  |         |  |      
|Chile                                                    |  | 5,781   |  | 2,108   |  | 2,584
|Foreign                                                  |  | -       |  | 708     |  | 2,226
|                                                         |  |         |  |         |  |      
|                                                        
|Total current income tax provision under US GAAP         |  | 5,781   |  | 2,816   |  | 4,810
|                                                         |  |         |  |         |  |      
|                                                        
|Total provision (benefit) under US GAAP                  |  | 4,785   |  | (2,087) |  | 6,526
|                                                         |  |         |  |         |  |      

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All components of the income tax provision arise from Chilean, Argentine, Mexican, Ecuadorian, Peruvian, and Brazilian sources.

Deferred tax assets (liabilities) are summarized as of follows at December 31:

|                                           |  |          |  |         
|------------------------------------------ |  | -------- |  | --------
|                                           |  | 2003     |  | 2004    
|                                           |  |          |  |         
|                                          
|                                           |  | ThUS$    |  | ThUS$   
|                                          
|Property, plant and equipment (1)          |  | (27,494) |  | (32,540)
|Inventories                                |  | (4,564)  |  | (3,817) 
|                                           |  |          |  |         
|                                          
|Gross deferred tax liabilities             |  | (32,058) |  | (36,357)
|                                           |  |          |  |         
|                                          
|Tax loss carryforwards (2)                 |  | 32,428   |  | 21,805  
|Valuation allowance (2)                    |  | (18,036) |  | (6,553) 
|Notes and accounts receivable              |  | 624      |  | 1,339   
|Accounts payable                           |  | 72       |  | 19      
|Accrued vacations                          |  | 237      |  | 336     
|Other provisions                           |  | 2,151    |  | 3,113   
|                                           |  |          |  |         
|                                          
|Gross deferred tax assets                  |  | 17,476   |  | 20,059  
|                                           |  |          |  |         
|                                          
|Net deferred tax liabilities under US GAAP |  | (14,582) |  | (16,298)
|                                           |  |          |  |         

|(1) | Includes tax benefits from Argentina that consist of the deferral of income tax on gains arising from the sales of fixed assets when those assets are subsequently replaced by new similar assets. For tax purposes, the gains are credited against the
tax basis of the new assets.                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | The tax loss carry forwards at December 31, 2004 originating in Masisa Argentina S.A. and Forestal Argentina S.A. expire in 2007. The tax loss carry forwards originating in Forestal Tornagaleones Ltda. and Brazil have no expiration date. The
valuation allowance of ThUS$ 6,553 and ThUS$ 18,036 related to losses in Argentina, Brazil and Chile that the Company does not believe are more likely than not to be recovered based on the economic situation.
|   

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The provision for income taxes differs from the amount of income tax determined by applying the applicable Chilean statutory income tax rate (16% in 2002, 16.5% in 2003 and 17% in 2004) to US GAAP pretax income as a result of the following
differences:

|                                                         |  |                         |  |         |  |         
|-------------------------------------------------------- |  | ----------------------- |  | ------- |  | --------
|                                                         |  | Year ended December 31,
|                                                         |  |                        
|                                                         |  | 2002                    |  | 2003    |  | 2004    
|                                                         |  |                         |  |         |  |         
|                                                         |  | ThUS$                   |  | ThUS$   |  | ThUS$   
|US GAAP pretax income                                    |  |                         |  |         |  |         
|Chile                                                    |  | 24,693                  |  | 3,540   |  | 11,213  
|Foreign                                                  |  | (2,581)                 |  | 5,468   |  | 36,617  
|                                                         |  |                         |  |         |  |         
|                                                        
|Total                                                    |  | 22,112                  |  | 9,008   |  | 47,830  
|                                                         |  |                         |  |         |  |         
|                                                        
|At statutory Chilean tax rates                           |  |                         |  |         |  |         
|Chile                                                    |  | 3,951                   |  | 584     |  | 1,906   
|Foreign                                                  |  | (413)                   |  | 902     |  | 6,225   
|                                                         |  |                         |  |         |  |         
|                                                        
|Total                                                    |  | 3,538                   |  | 1,486   |  | 8,131   
|                                                         |  |                         |  |         |  |         
|                                                        
|Increase (decrease) in rates resulting from:             |  |                         |  |         |  |         
|Price-level restatement not accepted for tax purposes    |  | (1,079)                 |  | (3,063) |  | (1,042) 
|Non-taxable income                                       |  | (3,261)                 |  | 881     |  | (315)   
|Non-deductible expenses                                  |  | 1,388                   |  | 6,672   |  | 5,179   
|Adjustments of income tax provision of prior year        |  | 63                      |  | 467     |  | 270     
|Other local income taxes                                 |  | (223)                   |  | (37)    |  | (14)    
|Difference between tax rate in Argentina, Peru, Ecuador, |  |                         |  |         |  |         
|Mexico and Brazil                                        |  | (3,254)                 |  | (1,594) |  | 6,001   
|Change in valuation allowance                            |  | 9,079                   |  | (7,111) |  | (11,483)
|Other                                                    |  | (1,466)                 |  | 212     |  | (201)   
|                                                         |  |                         |  |         |  |         
|At effective tax rates                                   |  | 4,785                   |  | (2,087) |  | 6,526   
|                                                         |  |                         |  |         |  |         

c) The following methods and assumptions were used to estimate the fair value of each class of financial instrument at December 31, 2003 and 2004 for which it is practicable to estimate that value:

- For cash, time deposits, securities purchased under resale agreements, short-term bank loans, current accounts receivable and current accounts payable, the carrying amounts approximate fair value due to the short-term maturity of these
instruments.
- For long-term receivables, the fair values were estimated using the interest rate the Company could obtain on long-term time deposits with a term similar to the estimated collection period of the receivable.
- For long-term time deposits, the fair values were estimated using interest rates available for time deposits with similar remaining terms.
- For long-term debt obligations, the fair values were estimated based on rates available to the Company for debt with similar terms and remaining maturities.

F - 43

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- For foreign currency forward contracts and interest rate swaps, fair values were estimated based on quotes obtained from brokers for derivatives with similar terms and remaining maturities.

|                                             |  |                      |  |                      |  |          |  |        
|-------------------------------------------- |  | -------------------- |  | -------------------- |  | -------- |  | -------
|                                             |  | At December 31, 2003 |  | At December 31, 2004
|                                             |  |                      |  |                      |  |          |  |        
|                                             |  | Carrying             |  | Fair                 |  | Carrying |  | Fair   
|                                             |  | amount               |  | value                |  | amount   |  | value  
|                                             |  |                      |  |                      |  |          |  |        
|                                            
|                                             |  | ThUS$                |  | ThUS$                |  | ThUS$    |  | ThUS$  
|Assets                                       |  |                      |  |                      |  |          |  |        
|                                            
|Cash                                         |  | 8,661                |  | 8,661                |  | 4,358    |  | 4,358  
|Time deposits (short-term)                   |  | 29,104               |  | 29,104               |  | 17,033   |  | 17,033 
|Securities purchased under resale agreements |  | 11,120               |  | 11,120               |  | 1,175    |  | 1,175  
|Accounts receivable (current)                |  | 72,220               |  | 72,220               |  | 93,859   |  | 93,859 
|Accounts receivable (long-term)              |  | 1,218                |  | 1,218                |  | 4,677    |  | 4,677  
|Derivate contracts                           |  | -                    |  | -                    |  | 4,498    |  | 4,498  
|                                            
|Liabilities                                  |  |                      |  |                      |  |          |  |        
|                                            
|Short-term bank borrowings                   |  | 37,883               |  | 37,883               |  | 3,110    |  | 3,110  
|Accounts payable (current)                   |  | 25,415               |  | 25,415               |  | 31,691   |  | 31,691 
|Long-term bank borrowings (including         |  |                      |  |                      |  |          |  |        
|current portion)                             |  | 116,539              |  | 116,749              |  | 98,650   |  | 99,425 
|Other long-term liabilities                  |  | 11,198               |  | 11,198               |  | 19,826   |  | 19,826 
|Other long-term borrowings                   |  | 127,366              |  | 130,567              |  | 125,323  |  | 129,934
|Derivate contracts                           |  | 989                  |  | 989                  |  | -        |  | -      

d) Concentration of credit risk

The assets of the Company that are potentially subject to significant concentrations of credit risk are deposits held with banks and financial institutions, investments in derivative instruments and trade accounts receivable.

The Company holds accounts with a variety of banks and does not hold significant deposits or derivative instruments with any single bank. The Company performs periodic evaluations of the relative credit standing of these financial institutions and
limits the amount of credit exposure with any institution. The Company has a wide customer base and trades with a large number of small customers. Consequently, the Company does not believe that it had any significant concentrations of credit risk
at December 31, 2004.

e) Segment information

In 1998, the Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.  SFAS No. 131 establishes standards for public enterprises to determine and report information about operating segments in
their annual and interim reports.  The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Companys reportable segments.

The Company has determined that the information used by the Company's key decision makers for making operating decisions and assessing performance is based on geographical segments.  The Companys reportable geographical segments are Chile,
Mexico, Argentina and Brazil. Management views these segments as key components of the entitys business and expects the segments to meet the quantitative thresholds in future years.

F - 44

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The Company measures its reportable segments and evaluates their performance based on operating income (loss), which includes inter-segment revenues and corporate expenses that are allocated to the operating segments. The Company is not dependent on
any single customer. The accounting policies underlying the reported segment data are the same as those described in the summary of significant accounting policies (see Note 2).

The following table below presents sales information about reportable segments based on the location in which the sale is originated for the years ending December 31.

|                     |  |         |  |           |  |         |  |         |  |           |  |        
|-------------------- |  | ------- |  | --------- |  | ------- |  | ------- |  | --------- |  | -------
|2004                 |  | Chile   |  | Argentina |  | Brazil  |  | Mexico  |  | Other (1) |  | Total  
|                     |  |         |  |           |  |         |  |         |  |           |  |        
|                     |  | ThUS$   |  | ThUS$     |  | ThUS$   |  | ThUS$   |  | ThUS$     |  | ThUS$  
|Sales                |  | 144,681 |  | 90,809    |  | 118,720 |  | 55,599  |  | (12,497)  |  | 397,312
|Operating income     |  | 15,017  |  | 14,619    |  | 34,680  |  | 5,170   |  | 1,660     |  | 71,089 
|Capital expenditures |  | 8,139   |  | 6,708     |  | 6,960   |  | 2,133   |  | 7         |  | 23,947 
|Depreciation         |  | 11,168  |  | 8,426     |  | 7,157   |  | 951     |  | 2         |  | 27,705 
|                     |  |         |  |           |  |         |  |         |  |           |  |        
|2003                 |  | Chile   |  | Argentina |  | Brazil  |  | Mexico  |  | Other (1) |  | Total  
|                     |  |         |  |           |  |         |  |         |  |           |  |        
|                     |  | ThUS$   |  | ThUS$     |  | ThUS$   |  | ThUS$   |  | ThUS$     |  | ThUS$  
|Sales                |  | 117,477 |  | 68,854    |  | 73,756  |  | 34,885  |  | (13,146)  |  | 281,826
|Operating income     |  | 10,007  |  | 4,453     |  | 12,867  |  | (1,812) |  | (189)     |  | 25,326 
|Capital expenditures |  | 10,856  |  | 3,498     |  | 9,153   |  | 2,453   |  | 17        |  | 25,977 
|Depreciation         |  | 11,482  |  | 8,119     |  | 5,317   |  | 893     |  | 3         |  | 25,814 
|                     |  |         |  |           |  |         |  |         |  |           |  |        
|2002                 |  | Chile   |  | Argentina |  | Brazil  |  | Mexico  |  | Other (1) |  | Total  
|                     |  |         |  |           |  |         |  |         |  |           |  |        
|                     |  | ThUS$   |  | ThUS$     |  | ThUS$   |  | ThUS$   |  | ThUS$     |  | ThUS$  
|Sales                |  | 116,296 |  | 49,166    |  | 46,172  |  | 16,965  |  | (3,187)   |  | 225,412
|Operating income     |  | 23,004  |  | 747       |  | 5,737   |  | 210     |  | 126       |  | 29,824 
|Capital expenditures |  | 7,566   |  | 5,463     |  | 19,597  |  | 16,893  |  | 4         |  | 49,523 
|Depreciation         |  | 10,765  |  | 8,017     |  | 4,508   |  | 736     |  | -         |  | 24,026 

|(1) | Other includes inter-company eliminations.
|--- | ------------------------------------------
|   

The following table presents sales information based on the location to which the product is shipped and long-lived asset information by geographic area:

|              |  |         |  | Property, plant and equipment
|------------- |  | ------- |  | -----------------------------
|              |  | Sales   |  | year ended December 31,      
|              |  |         |  |                              
|              |  | 2002    |  | 2003                         
|              |  |         |  |                              
|              |  | ThUS$   |  | ThUS$                        
|Domestic:     |  |         |  |                              
|Chile         |  | 81,433  |  | 76,693                       
|Argentina     |  | 15,847  |  | 28,641                       
|Brazil        |  | 49,760  |  | 74,115                       
|Mexico        |  | 27,454  |  | 37,684                       
|United States |  | 3,338   |  | 13,389                       
|Foreign       |  | 47,580  |  | 51,304                       
|              |  |         |  |                              
|Total         |  | 225,412 |  | 281,826                      
|              |  |         |  |                              

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Foreign revenue in the table above includes sales from Chile, Mexico, Argentina and Brazil to other countries. Such amounts are detailed by major geographic area as follows:

|                                                            |  | 2002   |  | 2003   |  | 2004  
|----------------------------------------------------------- |  | ------ |  | ------ |  | ------
|                                                            |  |        |  |        |  |       
|                                                            |  | ThUS$  |  | ThUS$  |  | ThUS$ 
|Central and South America                                   |  | 18,652 |  | 22,409 |  | 28,905
|Asia                                                        |  | 27,269 |  | 24,731 |  | 17,943
|Europe                                                      |  | 1,659  |  | 4,164  |  | 8,113 
|                                                            |  |        |  |        |  |       
|Total export sales from Chile, Mexico, Argentina and Brazil |  | 47,580 |  | 51,304 |  | 54,961
|                                                            |  |        |  |        |  |       
|Export sales from Chile, Mexico Argentina and Brazil as a   |  |        |  |        |  |       
|percentage of total sales                                   |  | 21.10% |  | 18.20% |  | 13.83%
|                                                            |  |        |  |        |  |       

Enterprise wide sales information based on the Companys products follows:

|                            |  |                               |  |         |  |        
|--------------------------- |  | ----------------------------- |  | ------- |  | -------
|                            |  | Sales year ended December 31,
|                            |  | 2002                          |  | 2003    |  | 2004   
|                            |  |                               |  |         |  |        
|                            |  | ThUS$                         |  | ThUS$   |  | ThUS$  
|Raw particle board          |  | 32,014                        |  | 30,804  |  | 37,530 
|Coated particle board       |  | 55,480                        |  | 61,357  |  | 73,453 
|Raw MDF                     |  | 102,670                       |  | 103,116 |  | 130,038
|Coated MDF                  |  | 17,128                        |  | 32,223  |  | 50,508 
|Oriented Strand Board (OSB) |  | 9,021                         |  | 27,665  |  | 54,459 
|Others                      |  | 9,099                         |  | 26,661  |  | 51,324 
|                            |  |                               |  |         |  |        
|Total                       |  | 225,412                       |  | 281,826 |  | 397,312
|                            |  |                               |  |         |  |        

f) Accounting developments

In November 2004, the FASB issued FASB Statement No. 151, Inventory Costs  an amendment of ARB No. 43 (FAS 151), which is the result of its efforts to converge U.S. accounting standards for inventories with
International Accounting Standards. FAS No. 151 requires idle facility expenses, freight, handling costs, and wasted material (spoilage) costs to be recognized as current-period charges. It also requires that allocation of fixed production overheads
to the costs of conversion be based on the normal capacity of the production facilities. FAS No. 151 will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. FAS 151 is not expected to have any impact on the
Companys financial position or results of operations.

In December 2004, the FASB issued FASB Statement No. 153, Exchange of Non-monetary Assets and amendment of APB No. 29 (FAS 153),which is the result of its efforts to improve comparability of  U.S. accounting standards for
non-monetary transactions with International Accounting Standards. FAS No. 153 eliminates the exception to fair value for exchanges of similar productive assets outlined in APB No. 29 and replaces it with a general exception for exchange
transactions that do not have commercial substance  that is, transactions that are not expected to result in significant changes in the cash flows of the reporting entity. FAS No. 153 will be effective for non-monetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. FAS 153 is not expected to have any impact on the Companys financial position or results of operations.

F - 46

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g) Accounting developments

In November 2004, the FASB issued FASB Statement No. 151, Inventory Costs  an amendment of ARB No. 43 (FAS 151), which is the result of its efforts to converge U.S. accounting standards for inventories with
International Accounting Standards. FAS No. 151 requires idle facility expenses, freight, handling costs, and wasted material (spoilage) costs to be recognized as current-period charges. It also requires that allocation of fixed production overheads
to the costs of conversion be based on the normal capacity of the production facilities. FAS No. 151 will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. FAS 151 is not expected to have any impact on the
Companys financial position or results of operations.

In December 2004, the FASB issued FASB Statement No. 153, Exchange of Non-monetary Assets and amendment of APB No. 29 (FAS 153),which is the result of its efforts to improve comparability of  U.S. accounting standards for
non-monetary transactions with International Accounting Standards. FAS No. 153 eliminates the exception to fair value for exchanges of similar productive assets outlined in APB No. 29 and replaces it with a general exception for exchange
transactions that do not have commercial substance  that is, transactions that are not expected to result in significant changes in the cash flows of the reporting entity. FAS No. 153 will be effective for non-monetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. FAS 153 is not expected to have any impact on the Companys financial position or results of operations.

In May 2005, the FASB issued FASB Statement No. 154 Accounting Changes and Error Corrections  a replacement of APB Opinion No. 20 and FASB Statement No. 3 (FAS 154), which changes the requirements for the accounting and
reporting of a change in an accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. This Statement requires retrospective application to prior periods financial statements of changes in
accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. FAS 154 is not expected to have any impact on the Companys financial position or results of operations.

F - 47

---



SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, Masisa S.A., as successor by merger to the Registrant, certifies that it meets all of the requirements for filing on Form 20-F and has
duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

| |     |                                                                              
| | --- | -----------------------------------------------------------------------------
| |     | MASISA S.A. . (formerly known as Terranova S.A.), as successor to Masisa S.A.
| |     |                                                                              
|
|
| | By: | /s/Alejandro Droste B.                                                       
| |     |                                                                              
| |     | Alejandro Droste B.                                                          
| |     | Chief Financial Officer                                                      

---

#####