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Business Context and Reporting Period

This Form 6-K filing, dated May 5, 2006, serves as a notice of the Annual General Meeting of Shareholders for Ternium S.A., a leading steel manufacturer in the Americas with operations in Mexico, Argentina, and Venezuela. The filing includes the 2005 Annual Report and Accounts. The reporting period covers the fiscal year ended December 31, 2005. This was a transformative year for the company, marked by the consolidation of its three principal operations (Siderar, Sidor, and Hylsamex) and the successful completion of its Initial Public Offering (IPO) on the New York Stock Exchange on February 1, 2006.

Key Financial Metrics (Fiscal Year 2005)

Note: 2004 figures are not fully comparable as they primarily reflect Siderar operations, whereas 2005 includes the consolidation of Amazonia (Sidor) from February 2005 and Hylsamex from August 2005.

Material Changes vs. Prior Period

• Revenue and Volume Growth: Net sales increased by 178% to $4.4 billion, driven by the inclusion of Hylsamex and Amazonia results. Total shipments reached 6.6 million tons (up from 2.2 million tons in 2004), with flat products accounting for 5.3 million tons.
• Profitability: Operating income margin improved significantly to 31% of net sales. EBITDA margin reached 40%.
• Balance Sheet Expansion: Total assets more than tripled to $8.7 billion due to acquisitions. Total financial debt increased to $2.9 billion, primarily to fund the Hylsamex acquisition ($2.2 billion cash outflow for acquisition).
• Post-Balance Sheet Debt Reduction: Following the year-end, the company reduced debt by $1.1 billion through the IPO proceeds ($527.9 million net) and the conversion of $594 million in subordinated convertible loans into common shares.

Guidance, Outlook, and Management Commentary

• Market Outlook: Management expects steel demand in core Latin American markets to continue growing in 2006, though at a slightly lower rate than 2005. The U.S. market is expected to remain stable. Steel prices are projected to remain stable in 2006.
• Cost Pressures: Central and South American operations are expected to face higher iron ore costs in 2006 following price increases negotiated by Sidor in late 2005.
• Investment Plan: The company plans to invest approximately $620 million to increase crude steel production by 0.5 million tons by 2007 and 1.4 million tons by 2009. Additional investments of $110 million are planned for North American facilities to enhance hot rolled and coated lines.
• Corporate Governance: The filing details the election of the Board of Directors, including three independent members, and the appointment of PricewaterhouseCoopers as independent auditors for 2006.

Important Facts for Investor Verification

• Comparability of Financials: Verify that 2005 results are not directly comparable to 2004 due to the consolidation of Amazonia and Hylsamex mid-year. The 2004 data largely reflects only Siderar.
• Debt Structure Post-IPO: Confirm the reduction of $1.1 billion in debt achieved in early 2006 via IPO proceeds and convertible loan conversions, which significantly improved the balance sheet relative to the year-end 2005 position.
• Minority Interest: Note that a significant portion of net income ($368.4 million) is attributable to minority interest, primarily related to Siderar and Sidor/Amazonia.
• One-Time Items: Review the impact of one-time charges, including $54.3 million for the closure of Hylsamex facilities and $31.2 million for Hylsamex reorganization costs.
• Regulatory and Tax Risks: Monitor ongoing litigation regarding tax claims in Argentina (Siderar) and Venezuela (Sidor), as well as potential exposure from pension plan rulings in Venezuela.