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Business Context and Reporting Period

This Form 6-K, filed on March 20, 2012, by Ternium S.A., a Luxembourg-based holding company and leading steel producer in Latin America, serves as a notice of the Annual General Meeting of Shareholders scheduled for May 2, 2012. The filing includes the Company's 2011 Annual Report, which covers the fiscal year ended December 31, 2011. Ternium manufactures flat and long steel products with operations in Mexico, Argentina, Colombia, the southern United States, and Guatemala.

Key Financial Metrics (Year Ended December 31, 2011)

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 24% year-over-year, driven by a 10% increase in shipments (8.8 million tons) and a 14% increase in revenue per ton due to higher steel prices.
• Profitability Decline: Despite higher operating income (+20%), net income attributable to equity holders decreased 17% to USD 513.5 million. This was primarily due to a USD 431.1 million decrease in net financial results.
• Foreign Exchange Impact: A significant non-cash foreign exchange loss of approximately USD 360.1 million occurred due to the 13.1% depreciation of the Mexican Peso against the U.S. dollar, impacting Ternium Mexico's USD-denominated debt.
• Cash Flow: Free cash flow dropped significantly to USD 45.8 million from USD 456.7 million in 2010, largely due to increased capital expenditures and working capital requirements (inventory buildup).
• Segment Performance: The flat steel products segment saw operating income rise to USD 965.1 million, while the long steel products segment increased to USD 259.8 million, aided by the consolidation of Ferrasa in Colombia.

Guidance, Outlook, and Material Events

• Usiminas Acquisition: On January 16, 2012, Ternium closed a transaction to acquire a 22.7% stake in Usiminas (Brazil's largest flat steel producer) for approximately USD 2.2 billion. This alliance with Nippon Steel and Usiminas aims to strengthen Ternium's competitive position in Latin America.
• Dividend Proposal: The Board proposes a dividend of USD 0.075 per share (USD 0.75 per ADR), payable on May 10, 2012, totaling approximately USD 150.4 million. This dividend will be paid from retained earnings.
• Investment Plans: Capital expenditures are expected to increase in 2012, focusing on a new cold-rolling and galvanizing facility in Mexico (joint venture with Nippon Steel) and a slab production expansion in Argentina.
• Risks and Contingencies:
  • Tax Claims: A significant tax assessment of approximately USD 293 million was notified by Mexican authorities regarding a 2004 capital reduction; Ternium intends to appeal and believes an obligation is not probable.
  • Legal Settlement: Ternium settled an arbitration dispute with Tata Steel in June 2011 for an aggregate amount of USD 124 million (Ternium's share was USD 21.3 million).
  • Commodity Prices: The Company remains exposed to volatility in raw material costs (iron ore, coal, slabs) and energy prices.

Key Facts for Investor Verification

• Usiminas Transaction Details: Verify the final closing terms, financing structure (including the USD 700 million syndicated loan), and the specific governance rights within the Usiminas control group.
• Foreign Exchange Exposure: Assess the ongoing impact of the Mexican Peso's volatility on future earnings and the effectiveness of hedging strategies.
• Dividend Sustainability: Confirm the source of the proposed dividend (retained earnings) given the reported loss for the year under Luxembourg GAAP and the significant foreign exchange translation adjustments.
• Capital Expenditure Execution: Monitor the progress and cost overruns of the new Mexico facility and the Argentina slab expansion, which are critical for future growth.
• Tax Litigation Status: Track the outcome of the Mexican tax authority's assessment regarding the 2004 capital reduction, which represents a material potential liability.