By:
/s/ Roberto
Philipps
|
By:
/s/ Daniel
Novegil
|
Name:
Roberto Philipps
|
Name:
Daniel Novegil
|
Title:
Chief Financial Officer
|
Title:
Chief Executive Officer
|
Page
|
|
1
|
|
2
|
|
3
|
|
4
|
|
6
|
|
8
|
PRICE
WATERHOUSE & CO. S.R.L.
|
||
by
|
(Partner)
|
|
Marcelo
D. Pfaff
|
Year
ended December 31,
|
|||||||||||||
Notes
|
2007
|
2006
|
2005
|
||||||||||
Continuing
operations
|
|||||||||||||
Net
sales
|
30
|
8,184,381 | 6,565,582 | 4,449,771 | |||||||||
Cost
of sales
|
6
& 30
|
(5,796,040 | ) | (4,296,979 | ) | (2,486,974 | ) | ||||||
Gross
profit
|
2,388,341 | 2,268,603 | 1,962,797 | ||||||||||
Selling,
general and administrative expenses
|
7
|
(825,807 | ) | (624,784 | ) | (504,687 | ) | ||||||
Other
operating income (expenses), net
|
9
|
23,874 | (7,250 | ) | (65,949 | ) | |||||||
Operating
income
|
1,586,408 | 1,636,569 | 1,392,161 | ||||||||||
Interest
expense
|
30
&31
|
(142,137 | ) | (112,918 | ) | (81,608 | ) | ||||||
Interest
income
|
30
|
66,878 | 52,554 | 32,324 | |||||||||
Other
financial expenses, net
|
10
& 30
|
(351,096 | ) | (322,417 | ) | (261,452 | ) | ||||||
Excess
of fair value of net assets acquired over cost
|
3
|
- | - | 188,356 | |||||||||
Equity
in (losses) earnings of associated companies
|
14
|
(7,065 | ) | 4,534 | 21,524 | ||||||||
Income
before income tax expense
|
1,152,988 | 1,258,322 | 1,291,305 | ||||||||||
Income
tax expense
|
11
|
(162,640 | ) | (262,356 | ) | (218,492 | ) | ||||||
Income
from continuing operations
|
990,348 | 995,966 | 1,072,813 | ||||||||||
Discontinued
operations
|
|||||||||||||
Income
from discontinued operations
|
29
|
10,818 | - | - | |||||||||
Net
income for the year
|
1,001,166 | 995,966 | 1,072,813 | ||||||||||
Attributable
to:
|
|||||||||||||
Equity
holders of the Company
|
28
|
784,490 | 795,424 | 704,406 | |||||||||
Minority
interest
|
216,676 | 200,542 | 368,407 | ||||||||||
1,001,166 | 995,966 | 1,072,813 | |||||||||||
Weighted
average number of shares outstanding
|
28
|
2,004,743,442 | 1,936,833,060 | 1,209,476,609 | |||||||||
Basic
earnings per share for profit attributable to the equity holders of the
Company (expressed in USD per share)
|
0.39 | 0.41 | 0.58 | ||||||||||
Diluted
earnings per share for profit attributable to the equity holders of the
Company (expressed in USD per share)
|
0.39 | 0.41 | 0.54 |
Notes
|
December
31, 2007
|
December
31, 2006
|
|||||||||||||||
ASSETS
|
|||||||||||||||||
Non-current
assets
|
|||||||||||||||||
Property,
plant and equipment, net
|
12
|
6,858,779 | 5,420,683 | ||||||||||||||
Intangible
assets, net
|
13
|
1,452,230 | 551,587 | ||||||||||||||
Investments
in associated companies
|
14
|
44,042 | 16,285 | ||||||||||||||
Other
investments, net
|
15
& 30
|
14,815 | 13,387 | ||||||||||||||
Deferred
tax assets
|
23
|
31,793 | 36,439 | ||||||||||||||
Receivables,
net
|
16
& 30
|
217,638 | 8,619,297 | 78,903 | 6,117,284 | ||||||||||||
|
|||||||||||||||||
Current
assets
|
|
||||||||||||||||
Receivables
|
17
& 30
|
426,038 | 175,818 | ||||||||||||||
Derivative
financial instruments
|
25
|
577 | 7,852 | ||||||||||||||
Inventories,
net
|
18
|
1,913,051 | 1,241,325 | ||||||||||||||
Trade
receivables, net
|
19
& 30
|
847,827 | 577,866 | ||||||||||||||
Other
investments
|
20
|
65,337 | - | ||||||||||||||
Cash
and cash equivalents
|
20
|
1,126,041 | 4,378,871 | 643,352 | 2,646,213 | ||||||||||||
Non-current
assets classified as held for sale
|
29
|
769,142 | 7,042 | ||||||||||||||
|
5,148,013 | 2,653,255 | |||||||||||||||
Total
assets
|
13,767,310 | 8,770,539 | |||||||||||||||
EQUITY
|
|||||||||||||||||
Capital
and reserves attributable to the company’s equity holders
|
4,452,680 | 3,757,558 | |||||||||||||||
Minority
interest
|
1,914,210 | 1,729,583 | |||||||||||||||
Total
equity
|
6,366,890 | 5,487,141 | |||||||||||||||
LIABILITIES
|
|||||||||||||||||
Non-current
liabilities
|
|||||||||||||||||
Provisions
|
21
|
57,345 | 60,543 | ||||||||||||||
Deferred
income tax
|
23
|
1,337,039 | 985,155 | ||||||||||||||
Other
liabilities
|
24
|
336,500 | 274,566 | ||||||||||||||
Trade
payables
|
30
|
6,690 | 7,229 | ||||||||||||||
Borrowings
|
26
|
3,677,497 | 5,415,071 | 548,401 | 1,875,894 | ||||||||||||
|
|||||||||||||||||
Current
liabilities
|
|
||||||||||||||||
Current
tax liabilities
|
|
184,766 | 103,195 | ||||||||||||||
Other
liabilities
|
24
& 30
|
182,239 | 158,374 | ||||||||||||||
Trade
payables
|
30
|
983,884 | 621,754 | ||||||||||||||
Derivative
financial instruments
|
25
|
13,293 | 15,487 | ||||||||||||||
Borrowings
|
26
|
407,404 | 1,771,586 | 508,694 | 1,407,504 | ||||||||||||
|
|||||||||||||||||
Liabilities
directly associated with non-current assets classified as held for
sale
|
29
|
213,763 | - | ||||||||||||||
1,985,349 | 1,407,504 | ||||||||||||||||
Total
liabilities
|
7,400,420 | 3,283,398 | |||||||||||||||
Total
equity and liabilities
|
13,767,310 | 8,770,539 |
Attributable to the Company’s equity holders (1)
|
||||||||||||||||||||||||||||||||||||||||
Capital
stock (2)
|
Initial
public
offering
expenses
|
Revaluation
and other
reserves
|
Capital
stock issue
discount (3)
|
Currency
translation
adjustment
|
Retained
earnings
|
Total
|
Minority
interest
|
Total
Equity at
December
31, 2007
|
Total
Equity at
December
31, 2006
|
|||||||||||||||||||||||||||||||
Balance
at January 1
|
2,004,744 | (23,295 | ) | 2,047,199 | (2,324,866 | ) | (121,608 | ) | 2,175,384 | 3,757,558 | 1,729,583 | 5,487,141 | 3,575,919 | |||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Currency
translation adjustment
|
10,869 | 10,869 | (13,019 | ) | (2,150 | ) | (36,907 | ) | ||||||||||||||||||||||||||||||||
Net
income for the year
|
784,490 | 784,490 | 216,676 | 1,001,166 | 995,966 | |||||||||||||||||||||||||||||||||||
Total
recognized income for the year
|
10,869 | 784,490 | 795,359 | 203,657 | 999,016 | 959,059 | ||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Dividends
paid in cash and other distributions
|
(100,237 | ) | (100,237 | ) | (100,237 | ) | - | |||||||||||||||||||||||||||||||||
Dividends
paid in cash and other distributions by subsidiary
companies
|
(20,000 | ) | (20,000 | ) | (27,175 | ) | ||||||||||||||||||||||||||||||||||
Acquisition
of business (see Note 3)
|
(195 | ) | (195 | ) | (154,690 | ) | ||||||||||||||||||||||||||||||||||
Contributions
from shareholders (see
Note 1)
|
- | - | 3,085 | |||||||||||||||||||||||||||||||||||||
Contributions
from minority shareholders in consolidated subsidiaries
|
1,165 | 1,165 | - | |||||||||||||||||||||||||||||||||||||
Conversion
of Subordinated Convertible Loans (see Note 1)
|
- | - | 605,924 | |||||||||||||||||||||||||||||||||||||
Initial
Public Offering (see Note 1)
|
- | - | 525,019 | |||||||||||||||||||||||||||||||||||||
Balance
at December 31
|
2,004,744 | (23,295 | ) | 1,946,962 | (2,324,866 | ) | (110,739 | ) | 2,959,874 | 4,452,680 | 1,914,210 | 6,366,890 | 5,487,141 |
Attributable to the Company’s equity holders (1)
|
||||||||||||||||||||||||||||||||||||||||
Capital
stock (2)
|
Initial
public
offering
expenses
|
Revaluation
and other
reserves
|
Capital
stock issue
discount
(3)
|
Currency
translation
adjustment
|
Retained
earnings
|
Total
|
Minority
interest
|
Total
Equity
at
December
31,
2006
|
Total
Equity
at
December
31,
2005
|
|||||||||||||||||||||||||||||||
Balance
at January 1
|
1,396,552 | (5,456 | ) | 1,462,137 | (2,298,048 | ) | (92,691 | ) | 1,379,960 | 1,842,454 | 1,733,465 | 3,575,919 | 1,771,851 | |||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Currency
translation adjustment
|
(28,917 | ) | (28,917 | ) | (7,990 | ) | (36,907 | ) | (120,246 | ) | ||||||||||||||||||||||||||||||
Net
income for the year
|
795,424 | 795,424 | 200,542 | 995,966 | 1,072,813 | |||||||||||||||||||||||||||||||||||
Total
recognized income for the year
|
(28,917 | ) | 795,424 | 766,507 | 192,552 | 959,059 | 952,567 | |||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Dividends
paid in cash and other distributions
|
- | (238,652 | ) | |||||||||||||||||||||||||||||||||||||
Dividends
paid in cash and other distributions by subsidiary
companies
|
(27,175 | ) | (27,175 | ) | (130,571 | ) | ||||||||||||||||||||||||||||||||||
Acquisition
of business (see Note 3)
|
(32,429 | ) | (32,429 | ) | (122,261 | ) | (154,690 | ) | 1,171,422 | |||||||||||||||||||||||||||||||
Contributions
from shareholders (see
Note 1)
|
33,801 | 43,100 | (26,818 | ) | 50,083 | (46,998 | ) | 3,085 | 54,758 | |||||||||||||||||||||||||||||||
Conversion
of Subordinated Convertible Loans (see Note 1)
|
302,962 | 302,962 | 605,924 | 605,924 | - | |||||||||||||||||||||||||||||||||||
Initial
Public Offering (see Note 1)
|
271,429 | (17,839 | ) | 271,429 | 525,019 | 525,019 | (5,456 | ) | ||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Balance
at December 31
|
2,004,744 | (23,295 | ) | 2,047,199 | (2,324,866 | ) | (121,608 | ) | 2,175,384 | 3,757,558 | 1,729,583 | 5,487,141 | 3,575,919 |
|
(1)
|
Shareholders’
equity determined in accordance with accounting principles generally
accepted in Luxembourg is disclosed in Note 27
(iv).
|
|
(2)
|
At
December 31, 2007, the Capital Stock adds up to 2,004,743,442 shares at a
nominal value of USD1 each.
|
|
(3)
|
Represents
the difference between book value of non-monetary contributions received
from shareholders under Luxembourg GAAP and
IFRS.
|
Year
ended December 31,
|
|||||||||||||
Notes
|
2007
|
2006
|
2005
|
||||||||||
Cash
flows from operating activities
|
|||||||||||||
Net
income for the year
|
1,001,166 | 995,966 | 1,072,813 | ||||||||||
Adjustments
for:
|
|||||||||||||
Depreciation
and amortization
|
12&13
|
565,848 | 424,495 | 316,405 | |||||||||
Income
tax accruals less payments
|
31
|
(181,048 | ) | (18,075 | ) | (44,008 | ) | ||||||
Derecognition
of property, plant and equipment
|
9
(iii)
|
- | 13,323 | 54,348 | |||||||||
Excess
of fair value of net assets acquired over cost
|
3
|
- | - | (188,356 | ) | ||||||||
Changes
to pension plan
|
24
|
- | 46,947 | - | |||||||||
Equity
in loss (earnings) of associated companies
|
14
|
7,065 | (4,534 | ) | (21,524 | ) | |||||||
Interest
accruals less payments
|
31
|
89,465 | 4,197 | 24,523 | |||||||||
Changes
in provisions
|
21&22
|
(10,125 | ) | 33,802 | 19,046 | ||||||||
Changes
in working capital
|
31
|
24,883 | (276,153 | ) | 54,420 | ||||||||
Discontinued
operations
|
29
|
6,535 | - | - | |||||||||
Others
|
60,412 | 25,005 | (25,212 | ) | |||||||||
Net
cash provided by operating activities
|
1,564,201 | 1,244,973 | 1,262,455 | ||||||||||
Cash
flows from investing activities
|
|||||||||||||
Capital
expenditures
|
12&13
|
(436,268 | ) | (405,817 | ) | (244,939 | ) | ||||||
Changes
in trust funds
|
- | 5,185 | 83,570 | ||||||||||
Acquisition
of business:
|
|||||||||||||
Purchase
consideration
|
3
|
(1,728,869 | ) | (210,548 | ) | (2,196,678 | ) | ||||||
Cash
acquired (1)
|
3
|
190,087 | - | 520,753 | |||||||||
Income
tax credit paid on business acquisition
|
3
|
(297,700 | ) | - | - | ||||||||
Increase
in other investments
|
(65,337 | ) | - | - | |||||||||
Investments
in associated companies
|
- | (2,598 | ) | - | |||||||||
Proceeds
from the sale of property, plant and equipment
|
24,883 | 3,425 | 6,063 | ||||||||||
Discontinued
operations
|
29
|
(10,435 | ) | - | - | ||||||||
Net
cash used in investing activities
|
(2,323,639 | ) | (610,353 | ) | (1,831,231 | ) | |||||||
Cash
flows from financing activities
|
|||||||||||||
Dividends
paid in cash and other distributions to company’s
shareholders
|
(100,237 | ) | - | (238,652 | ) | ||||||||
Dividends
paid in cash and other distributions by subsidiary
companies
|
(20,000 | ) | (27,175 | ) | (130,571 | ) | |||||||
Net
proceeds from Initial Public Offering
|
- | 525,019 | - | ||||||||||
Contributions
from shareholders
|
- | 3,085 | 54,758 | ||||||||||
Contributions
from minority shareholders in consolidated subsidiaries
|
1,165 | - | - | ||||||||||
Proceeds
from borrowings
|
4,132,745 | 167,283 | 2,135,430 | ||||||||||
Repayments
of borrowings
|
(2,760,938 | ) | (1,424,495 | ) | (657,597 | ) | |||||||
Net
cash provided by (used in) financing activities
|
1,252,735 | (756,283 | ) | 1,163,368 | |||||||||
Increase
(Decrease) in cash and cash equivalents
|
493,297 | (121,663 | ) | 594,592 | |||||||||
Movement
in cash and cash equivalents
|
|||||||||||||
At
January 1,(2)
|
633,002 | 754,980 | 194,875 | ||||||||||
Effect
of exchange rate changes
|
(258 | ) | (315 | ) | (34,487 | ) | |||||||
Increase
(Decrease) in cash and cash equivalents
|
493,297 | (121,663 | ) | 594,592 | |||||||||
Cash
and cash equivalents at December 31,
|
20
|
1,126,041 | 633,002 | 754,980 | |||||||||
Non-cash transactions | |||||||||||||
Conversion of debt instruments into shares | - | 605,924 | 127,576 |
(1)
The amount of cash acquired of USD 520,753 was presented as a movement in
cash and cash equivalents at December 31,
2005.
|
(2)
In addition, the Company has restricted cash for USD 10,350 and USD 10,650
at December 31, 2006 and December 31, 2005,
respectively.
|
1
|
Business
of the Company, Initial Public Offering and corporate
reorganization
|
2
|
Basis
of presentation
|
3
|
Acquisition
of business
|
4
|
Accounting
policies
|
5
|
Segment
information
|
6
|
Cost
of sales
|
7
|
Selling,
general and administrative expenses
|
8
|
Labor
costs (included in cost of sales, selling, general and administrative
expenses)
|
9
|
Other
operating income (expense), net
|
10
|
Other
financial expenses, net
|
11
|
Income
tax expense
|
12
|
Property,
plant and equipment, net
|
13
|
Intangible
assets, net
|
14
|
Investments
in associated companies
|
15
|
Other
investments, net – non current
|
16
|
Receivables,
net - non current
|
17
|
Receivables
- current
|
18
|
Inventories,
net
|
19
|
Trade
receivables, net
|
20
|
Cash,
cash equivalents and other investments
|
21
|
Allowances
and Provisions - non current
|
22
|
Allowances
- current
|
23
|
Deferred
income tax
|
24
|
Other
liabilities
|
25
|
Derivative
financial instruments
|
26
|
Borrowings
|
27
|
Contingencies,
commitments and restrictions on the distribution of
profits
|
28
|
Earnings
per share
|
29
|
Discontinued
operations
|
30
|
Related
party transactions
|
31
|
Cash
flow disclosures
|
32
|
Recently
issued accounting pronouncements
|
33
|
Financial
risk management
|
34
|
Post
balance sheet events
|
Percentage
of ownership at December 31,
|
||||||||||||||
Company
|
Country
of
Organization
|
Main
activity
|
2007
|
2006
|
2005
|
|||||||||
Ternium
S.A.
|
Luxembourg
|
Holding
of investments in flat and long steel manufacturing and distributing
companies
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Hylsamex
S.A. de C.V. (1)
|
Mexico
|
Holding
company
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Siderar
S.A.I.C.
|
Argentina
|
Manufacturing
of flat steel products
|
60.93 | % | 60.93 | % | 56.07 | % | ||||||
Sidor
C.A. (2)
|
Venezuela
|
Manufacturing
and selling of steel products
|
56.38 | % | 56.38 | % | 53.20 | % | ||||||
Ternium
Internacional S.A.
(formerly
Techintrade Uruguay S.A.)
|
Uruguay
|
Holding company
and marketing of steel products
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
III
Industrial Investments Inc. S.A. de C.V. (3)
|
Mexico
|
Holding
company
|
- | 100.00 | % | 100.00 | % | |||||||
Inversiones
Siderúrgicas S.A.
|
Panama
|
Holding
company
|
- | 100.00 | % | 100.00 | % | |||||||
Ylopa
- Servicios de Consultadoria Lda. (4)
|
Madeira
- Free zone
|
Participation
in the debt restructuring process of Amazonia and Sidor
C.A.
|
95.66 | % | 95.66 | % | 95.12 | % | ||||||
Consorcio
Siderurgia Amazonia Ltd.(5)
|
Cayman
Islands
|
Holding
of investments in Venezuelan steel companies
|
94.39 | % | 94.39 | % | 89.07 | % | ||||||
Fasnet
International S.A.
|
Panama
|
Holding
company
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Alvory
S.A.
|
Uruguay
|
Holding
of investment in procurement services companies
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Comesi
San Luis S.A.I.C. (6)
|
Argentina
|
Production
of cold or hot rold prepainted, formed and skelped steel
sheets
|
61.32 | % | 61.32 | % | 56.07 | % | ||||||
Inversiones
Basilea S.A. (7)
|
Chile
|
Purchase
and sale of real estate and other
|
60.93 | % | 60.93 | % | 56.07 | % | ||||||
Prosid
Investments S.C.A.(7)
|
Uruguay
|
Holding
company
|
60.93 | % | 60.93 | % | 56.07 | % | ||||||
Impeco
S.A. (7)
|
Argentina
|
Manufacturing
of pipe products
|
60.93 | % | 60.93 | % | 60.93 | % | ||||||
Socominter
de Guatemala S.A. (8)
|
Guatemala
|
Marketing
of steel products
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Ternium
Internacional España S.A. (formerly Socominter de España S.A.U.)
(8)
|
Spain
|
Marketing
of steel products
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Ternium
Internacional Ecuador S.A. (formerly Socotrading S.A.) (8)
|
Ecuador
|
Marketing
of steel products
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Ternium
International USA Corporation (formerly Techintrade Corporation)
(8)
|
USA
|
Marketing
of steel products
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Ternium
Internationaal B.V. (formerly Techint Engineering Company
B.V.)(8)
|
Netherlands
|
Marketing
of steel products
|
100.00 | % | 100.00 | % | 100.00 | % |
Percentage
of ownership at December 31,
|
||||||||||||||
Company
|
Country
of Organization
|
Main
activity
|
2007
|
2006
|
2005
|
|||||||||
Ternium
Internacional Perú S.A.C. (formerly Techintrade del Perú S.A.C.)
(8)
|
Peru
|
Marketing
of steel products
|
100.00 | % | 100.00 | % | 100.00 | % | ||||||
Ternium
International Inc.(8)
|
Panama
|
Marketing
of steel products
|
100.00 | % | 100.00 | % | - | |||||||
Hylsa
S.A. de C.V. (9)
|
Mexico
|
Manufacturing
and selling of steel products
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Ferropak
Comercial S.A. de C.V. (9)
|
Mexico
|
Scrap
company
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Ferropak
Servicios S.A. de C.V. (9)
|
Mexico
|
Services
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Galvacer
America Inc (9)
|
USA
|
Distributing
company
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Galvamet
America Corp (9)
|
USA
|
Manufacturing
and selling of insulates panel products
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Transamerica
E. & I. Trading Corp (9)
|
USA
|
Scrap
company
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Galvatubing
Inc. (9)
|
USA
|
Manufacturing
and selling of pipe products
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Las
Encinas S.A. de C.V. (9)
|
Mexico
|
Exploration,
explotation and pelletizing of iron ore
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Técnica
Industrial S.A. de C.V. (9)
|
Mexico
|
Services
|
88.23 | % | 88.22 | % | 86.68 | % | ||||||
Acerex
S.A. de C.V.
|
Mexico
|
Tooling
services
|
- | - | 43.34 | % | ||||||||
Acerex
Servicios S.A. de C.V.
|
Mexico
|
Services
|
- | - | 43.34 | % | ||||||||
Consorcio
Minero Benito Juarez Peña Colorada S.A.de C.V. (10)
|
Mexico
|
Exploration,
explotation and pelletizing of iron ore
|
44.12 | % | 44.11 | % | 43.34 | % | ||||||
Peña
Colorada Servicios S.A. de C.V. (10)
|
Mexico
|
Services
|
44.12 | % | 44.11 | % | 43.34 | % | ||||||
Ternium
Treasury Services S.A.
|
Uruguay
|
Financial
Services
|
100.00 | % | - | - | ||||||||
Ternium
Treasury Services B.V
|
Holanda
|
Financial
Services
|
100.00 | % | - | - | ||||||||
Servicios
Integrales Nova de Monterrey S.A. de C.V. (11)
|
Mexico
|
Medical
and Social Services
|
65.73 | % | - | - | ||||||||
Ternium Mexico
S.A. de C.V. (formerly
Grupo Imsa S.A.B. de C.V.)
|
Mexico
|
Holding
company
|
100.00 | % | - | - | ||||||||
Imsa
Acero S.A. de C.V. (12)
|
Mexico
|
Holding
company
|
100.00 | % | - | - | ||||||||
Enermex
S.A. de C.V. (12)
|
Mexico
|
Holding
company
|
100.00 | % | - | - | ||||||||
Sefimsa
S.A. de C.V. (12)
|
Mexico
|
Financial
Services
|
100.00 | % | - | - | ||||||||
Ecore
Holding S. de R.L. de C.V. (12)
|
Mexico
|
Holding
company
|
100.00 | % | - | - | ||||||||
Neotec L.L.C.
(12)
|
USA
|
Holding
company
|
100.00 | % | - | - | ||||||||
Treasury
Services L.L.C. (12)
|
USA
|
Financial
Services
|
100.00 | % | - | - | ||||||||
APM,
S.A. de C.V.
|
Mexico
|
Manufacturing
and selling of steel products
|
100.00 | % | - | - | ||||||||
Acedor,
S.A. de C.V.
|
Mexico
|
Holding
company
|
100.00 | % | - | - | ||||||||
Empresas
Stabilit S.A. de C.V. (12)
|
Mexico
|
Holding
company
|
100.00 | % | - | - | ||||||||
Acerus
S.A. de C.V. (12)
|
Mexico
|
Manufacturing
and selling of steel products
|
100.00 | % | - | - |
2
|
Basis
of presentation (continued)
|
Percentage
of ownership at December 31,
|
||||||||||||||
Company
|
Country
of Organization
|
Main
activity
|
2007
|
2006
|
2005
|
|||||||||
Imsa
Monclova S.A. de C.V. (12)
|
Mexico
|
Services
|
100.00 | % | - | - | ||||||||
Imsamex
Ecuador S.A. (12)
|
Ecuador
|
Marketing
of steel products
|
100.00 | % | - | - | ||||||||
Industrias
Monterrey S.A. (12)
|
Guatemala
|
Manufacturing
and selling of steel products
|
100.00 | % | - | - | ||||||||
Imsaacero
Ecuador Holding S.A. (12)
|
Ecuador
|
Holding
company
|
100.00 | % | - | - | ||||||||
Corporativo
Grupo Imsa S.A. de C.V. (12)
|
Mexico
|
Services
|
100.00 | % | - | - | ||||||||
Industrias
Monterrey S.A. de C.V. (12)
|
Mexico
|
Manufacturing
and selling of steel products
|
100.00 | % | - | - | ||||||||
Ternium
USA Inc. (formerly Imsa holding Inc.) (12)
|
USA
|
Holding
company
|
100.00 | % | - | - | ||||||||
Industria
Galvanizadora S.A. (12)
|
Guatemala
|
Manufacturing
and selling of steel products
|
100.00 | % | - | - | ||||||||
Imsa
Americas Inc. (12)
|
USA
|
Marketing
of steel products
|
100.00 | % | - | - | ||||||||
Imsa
Caribbean Inc. (12)
|
Puerto
Rico
|
Manufacturing
and selling of steel products
|
100.00 | % | - | - | ||||||||
Imsa
Colombia S.A. (12)
|
Colombia
|
Marketing
of steel products
|
100.00 | % | - | - | ||||||||
Imsa
Andina S.A. (12)
|
Peru
|
Marketing
of steel products
|
100.00 | % | - | - | ||||||||
Multypanel
de América S.A. (12)
|
Costa
Rica
|
Manufacturing
and selling of insulates panel products
|
100.00 | % | - | - | ||||||||
Industria
Galvanizadora S.A. (12)
|
Nicaragua
|
Manufacturing
and selling of steel products
|
99,30 | % | - | - | ||||||||
Industria
Galvanizadora de Honduras S.A. de C.V. (12)
|
Honduras
|
Manufacturing
and selling of steel products
|
99.20 | % | - | - | ||||||||
Industria
Galvanizadora S.A. de C.V. (12)
|
El
Salvador
|
Manufacturing
and selling of steel products
|
99.93 | % | - | - | ||||||||
Industrias
Monterrey S.A. (12)
|
Costa
Rica
|
Manufacturing
and selling of steel products
|
100.00 | % | - | - |
(1)
|
Indirectly
through the participation of Ternium Mexico S.A. de C.V. (70.00%) and
Siderar S.A.I.C. (29.92%). Total voting rights held:
99.92%.
|
(2)
|
Indirectly
through the participation in Amazonia (59.73%). Total voting rights held:
59.73%.
|
(3)
|
Formerly
III Industrial Investment Inc. BVI. As of December 13, 2007 it was merged
into Ternium México S.A. de C.V.
|
(4)
|
Directly
(88,89%), indirectly through Prosid Investments S.C.A. (11.11%). Total
voting rights held: 100.00%.
|
(5)
|
Directly
(85,62%) and indirectly through the participation in Prosid Investments
S.C.A. (14.38%). Total voting rights held:
100.00%.
|
(6)
|
Indirectly
through Siderar S.A.I.C. (99.00%) and Ternium Internacional Uruguay S.A.
(1.00%). Total voting rights held:
100.00%.
|
(7)
|
Indirectly
through Siderar S.A.I.C. Total voting rights held
100.00%.
|
(8)
|
Indirectly
through Ternium Internacional S.A.
Uruguay.
|
(9)
|
Indirectly
through the participation in Hylsamex. Total voting rights held: 99.92%.
See Note 3 e).
|
(10)
|
Indirectly
through the participation in Hylsamex. Total voting rights held:
50.00%.
|
(11)
|
Incorporated
during 2007.
|
(12)
|
Subsidiary
of Ternium Mexico S.A. de C.V. (see Note 3
(a)).
|
2
|
Basis
of presentation (continued)
|
USD
Thousands
|
||||||||
Fair
value
|
Book
value
|
|||||||
Property,
plant and equipment
|
1,602,398 | 1,205,128 | ||||||
Intangible
assets
|
456,404 | 73,227 | ||||||
Inventories
|
501,304 | 501,304 | ||||||
Cash
and cash equivalents
|
190,087 | 190,087 | ||||||
Deferred
Tax Liabilities
|
(481,930 | ) | (253,991 | ) | ||||
Provisions
|
(10,011 | ) | (10,011 | ) | ||||
Borrowings
|
(1,437,676 | ) | (1,437,676 | ) | ||||
Other
assets and liabilities, net
|
(99,069 | ) | (99,069 | ) | ||||
Net
assets pertaining to discontinued operations (1)
|
485,651 | 374,949 | ||||||
Net
|
1,207,158 | 543,948 | ||||||
Goodwill
|
455,776 | |||||||
Goodwill
– Discontinued operations
|
65,740 | |||||||
Total
Purchase Consideration
|
1,728,674 | |||||||
Other
cash consideration – Income Tax paid on the transaction
|
297,700 |
|
·
|
Ternium
made several borrowings in an aggregate principal amount of USD 125
million under a loan facility (the “Ternium Facility”) with a syndicate of
banks led by Calyon New York Branch as administrative agent, the proceeds
of which were primarily used to finance the above described tender offer.
Ternium’s loans under the Ternium Facility will be repaid in nine
consecutive and equal semi-annual installments commencing on July 26,
2008. On January 28, 2008, the company prepaid all of its outstanding
obligations with Calyon New York Branch, amounting to approximately USD
129.1 million.
|
|
·
|
Ternium’s
subsidiary Hylsa S.A. de C.V. (“Hylsa”) made several borrowings in an
aggregate principal amount of 3,485 million under a loan facility (the
“Hylsa Facility”) with a syndicate of banks led by Calyon New York Branch
as administrative agent, the proceeds of which were primarily used to
finance the above described capital reduction by Grupo Imsa, to refinance
existing indebtedness of Grupo Imsa and Hylsa and to pay taxes, fees and
expenses related to the
transactions.
|
|
·
|
Hylsa’s
debt under the Hylsa Facility amounted to USD 2,070 million in principal
amount, and Grupo Imsa’s debt under that facility amounted to USD 1,415
million in principal amount; and
|
|
·
|
Grupo Imsa’s unused commitment
under the facility amounted to USD 140
million.
|
USD
Thousands
|
||||
Property,
plant and equipment
|
47,825 | |||
Inventories
|
8,180 | |||
Deferred
tax liabilities
|
(875 | ) | ||
Others
assets and liabilities, net
|
53 | |||
Net
|
55,183 |
3
|
Acquisition
of business (continued)
|
USD
Thousands
|
||||
Property,
plant and equipment
|
2,129,325 | |||
Inventories
|
345,053 | |||
Cash
and cash equivalents
|
215,411 | |||
Deferred
tax liabilities
|
(449,537 | ) | ||
Pension
benefits
|
(116,860 | ) | ||
Borrowings
|
(751,730 | ) | ||
Others
assets and liabilities, net
|
488,297 | |||
Minority
interest
|
(156,651 | ) | ||
Net
|
1,703,308 |
3
|
Acquisition
of business (continued)
|
USD
Thousands
|
||||
Property,
plant and equipment
|
2,444,289 | |||
Inventories
|
284,676 | |||
Cash
and cash equivalents
|
305,342 | |||
Deferred
Tax Liabilities
|
(284,242 | ) | ||
Pension
Benefits
|
(78,425 | ) | ||
Provisions
|
(37,163 | ) | ||
Borrowings
|
(656,658 | ) | ||
Others
assets and liabilities, net
|
(13,459 | ) | ||
Minority
Interest
|
(795,178 | ) | ||
Net
|
1,169,182 |
4
|
Accounting
policies
|