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Ternium S.A. Form 6-K Summary

Business Context and Reporting Period

This filing reports the consolidated condensed interim financial statements for Ternium S.A., a Luxembourg-based steel manufacturer, for the six-month period ended June 30, 2007. The report was filed on August 2, 2007. Ternium operates globally through three primary business segments: flat steel products, long steel products, and other products (pig iron and pellets). The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and have been reviewed by Price Waterhouse & Co. S.R.L.

Key Financial Metrics (Six Months Ended June 30, 2007)

Note: Total borrowings for 2006 were $2,984,134 (Current $1,451,605 + Non-Current $1,532,529). For 2007, total borrowings were $567,354 (Current $367,831 + Non-Current $199,523).

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased by approximately 16% year-over-year, driven by higher volumes and prices across both flat and long steel segments.
• Profitability: Net income attributable to equity holders rose 15% to $459 million. Operating income remained relatively flat ($866 million vs. $869 million) due to increased selling, general, and administrative expenses ($363 million vs. $306 million).
• Debt Reduction: The company significantly reduced its debt load. Total borrowings dropped from approximately $2.98 billion at year-end 2006 to $567 million at June 30, 2007. This reduction was achieved through substantial repayments of borrowings ($681 million) during the period.
• Cash Position: While operating cash flow improved significantly to $897 million, the cash balance decreased from $2.83 billion (Dec 31, 2006) to $731 million (June 30, 2007) due to debt repayments, capital expenditures ($197 million), and dividend distributions ($120 million).

Guidance, Outlook, and Material Events

• Acquisition of Grupo Imsa: A significant subsequent event occurred on July 26, 2007, where Ternium completed the acquisition of 100% of Grupo Imsa S.A.B. de C.V. for approximately $1.7 billion. This transaction was financed primarily through new debt facilities ($125 million for Ternium and $3.167 billion for subsidiary Hylsa).
• Dividends: The company paid dividends of $0.05 per share ($100.2 million total) in June 2007. Restrictions on dividend payments related to the Hylsamex acquisition loan were lifted as the loan was fully repaid, though subsidiary Siderar remains subject to certain restrictions.
• Contingencies: Sidor (a subsidiary) faces a potential exposure of $143.4 million related to an appeal by PDVSA Gas regarding gas pricing arbitration. Management considers the likelihood of loss remote.
• Outlook: The filing does not provide specific forward-looking financial guidance for the remainder of 2007, but the acquisition of Grupo Imsa is expected to expand Ternium's presence in the Mexican market.

Key Facts for Investor Verification

• Debt Structure Post-Acquisition: Verify the impact of the new $3.3 billion+ debt facilities incurred for the Grupo Imsa acquisition on future leverage ratios and interest coverage, as these were not reflected in the June 30, 2007 balance sheet.
• Integration of Grupo Imsa: Monitor the integration progress and financial contribution of Grupo Imsa in subsequent quarterly reports.
• PDVSA Litigation: Track the status of the PDVSA Gas appeal regarding the $143.4 million potential exposure.
• Currency Exposure: Given the global operations (South/Central America, North America, Europe), monitor the impact of foreign exchange fluctuations on "Other financial expenses, net," which included a $14.6 million gain in the first half of 2007.