TX

Ternium S.A. Form 6-K Summary

Business Context and Reporting Period

This filing presents the unaudited consolidated condensed interim financial statements for Ternium S.A. for the three-month period ended March 31, 2013. Ternium is a global steel manufacturer organized into two reportable segments: Steel (flat and long steel products) and Mining (iron ore and pellets). The company is incorporated in Luxembourg and its American Depositary Shares (ADS) trade on the NYSE under the symbol "TX".

Key Financial Metrics

Note: All amounts are in USD thousands unless otherwise specified.

Material Changes vs. Prior Period

• Revenue Decline: Net sales decreased by approximately 2.1% to $2.14 billion, driven primarily by lower volumes and pricing in the Steel segment.
• Profitability: Operating income declined by 4.4% to $271.8 million. Profit for the period dropped 11.6% to $151.4 million, largely due to lower operating income and increased financial expenses.
• Financial Expenses: "Other financial (expenses) income, net" swung from a gain of $14.1 million in Q1 2012 to a loss of $11.1 million in Q1 2013, primarily due to foreign exchange losses and changes in the fair value of financial instruments.
• Accounting Changes: Effective January 1, 2013, the company applied IFRS 11 to its interests in Peña Colorada and Exiros B.V., reclassifying them from "Investments in non-consolidated companies" to joint operations, recognizing assets, liabilities, and results on a line-by-line basis.
• Investment in Usiminas: The company recorded an equity loss of $15.9 million related to its 22.71% stake in Usiminas, reflecting Usiminas' net loss for the period.

Guidance, Outlook, and Risks

Dividends: The Board of Directors proposed a dividend of USD 0.065 per share (USD 0.65 per ADS), totaling approximately $130.3 million, subject to shareholder approval at the annual meeting on May 2, 2013.

Contingencies and Legal Risks:

• Argentina Tax Claim (Siderar): The Argentine tax authority (AFIP) has assessed approximately $17.0 million in taxes, fines, and interest for fiscal years 1995-1999. The company has appealed and recorded a provision of $1.8 million.
• Brazil Lawsuit (CSN): Companhia Siderúrgica Nacional (CSN) filed a lawsuit alleging Ternium and affiliates were required to launch a tag-along tender offer for Usiminas shares. Ternium believes the allegations are groundless and intends to defend vigorously.
• Mexico Tax Claim: Mexican authorities assessed a potential deficiency of approximately $348 million regarding a 2004 capital reduction. The company believes an obligation is not probable and has recorded no provision.

Commitments: Siderar has fixed commitments for raw material purchases totaling $409.4 million for 2013 and equipment acquisitions of $86.3 million.

Investor Verification Checklist

• Usiminas Performance: Verify the impact of Usiminas' reported net loss ($77 million) on Ternium's future earnings and the status of the CSN lawsuit regarding the Usiminas acquisition.
• Dividend Approval: Confirm the outcome of the shareholder vote on the proposed $0.065 per share dividend at the May 2, 2013 meeting.
• Foreign Exchange Exposure: Assess the volatility of the USD against local currencies (MXN, ARS, BRL) given the significant foreign exchange losses recorded in Q1 2013.
• Accounting Reclassification: Review the impact of the IFRS 11 adoption on the Mining segment's reported revenue and operating income compared to prior periods.
• Debt Maturity: Analyze the maturity profile of the $2.14 billion in total borrowings to evaluate liquidity risks.