FORM 6-K

Washington, D.C. 20549

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

Ternium S.A.

(Translation of Registrant’s name into English)

Ternium S.A.
46a, Avenue John F. Kennedy
L-1855 Luxembourg
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover
Form 20-F or 40-F.

Form 20-F þ     Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.

Yes o     No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection
with Rule 12g3-2(b):
Not applicable

 

 

The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended.

This report contains Ternium S.A.’s consolidated financial statements as of June 30, 2009.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TERNIUM S.A.

By:

/s/ Roberto Philipps

By:

/s/ Daniel Novegil

Name:

Roberto Philipps

Name:

Daniel Novegil

Title:

Chief Financial Officer

Title:

Chief Executive Officer

Dated: August 4, 2009

TERNIUM S.A.

CONSOLIDATED CONDENSED INTERIM
FINANCIAL STATEMENTS AS OF JUNE 30, 2009
AND FOR THE SIX-MONTH PERIODS
ENDED JUNE 30, 2009 AND 2008

46a, Avenue John F. Kennedy, 2^nd floor
L – 1855
R.C.S. Luxembourg: B 98 668

TERNIUM S.A.
Consolidated condensed interim financial statements as of June 30, 2009
and for the six-month periods ended June 30, 2009 and 2008
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM INCOME STATEMENTS

						Three-month period								Six-month period
						ended June 30,								ended June 30,
		Notes					2009				2008				2009				2008
						(Unaudited)								(Unaudited)
Continuing operations
Net sales			3				1,140,293				2,364,206				2,314,948				4,306,853
Cost of sales			3 & 4				(1,048,698	)			(1,579,452	)			(2,093,270	)			(3,027,197	)
Gross profit			3				91,595				784,754				221,678				1,279,656
Selling, general and administrative expenses			3 & 5				(142,991	)			(179,638	)			(279,157	)			(325,132	)
Other operating (expenses) income, net			3				(695	)			1,087				(21,095	)			11,067
Operating (loss) income			3				(52,091	)			606,203				(78,574	)			965,591
Interest expense							(32,130	)			(30,112	)			(59,836	)			(74,390	)
Interest income							5,273				12,034				10,369				24,143
Interest income – Sidor financial asset			11	(ii)			57,126				—				57,126				—
Other financial income, net			6				223,752				115,263				58,747				118,248
Equity in earnings of associated companies							117				446				658				890
Income (loss) before income tax expense							202,047				703,834				(11,510	)			1,034,482
Income tax
Current and deferred income tax (expense) benefit							(45,384	)			(208,160	)			51,155				(314,305	)
Reversal of deferred statutory profit sharing			9				—				—				—				96,265
Income from continuing operations							156,663				495,674				39,645				816,442
Discontinued operations
Income from discontinued operations			11				428,023				—				428,023				159,937
Profit for the period							584,686				495,674				467,668				976,379
Attributable to:
Equity holders of the Company							562,818				415,634				469,636				837,759
Minority interest							21,868				80,040				(1,968	)			138,620
							584,686				495,674				467,668				976,379
Weighted average number of shares outstanding							2,004,743,442				2,004,743,442				2,004,743,442				2,004,743,442
Basic and diluted earnings per share for profit attributable to the equity holders of the Company (expressed in USD per share)							0.28				0.21				0.23				0.42

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2008.

TERNIUM S.A.
Consolidated condensed interim financial statements as of June 30, 2009
and for the six-month periods ended June 30, 2009 and 2008
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

		Six-month period ended June 30, 2009												Six-month period ended June 30, 2008
		Attributable to												Attributable to
		the Company’s				Minority								the Company’s				Minority
		equity holders				interest				Total				equity holders				interest				Total
Profit (loss) for the period			469,636				(1,968	)			467,668				837,759				138,620				976,379
Other comprehensive income:
Currency translation adjustment			(57,248	)			(52,440	)			(109,688	)			165,610				39,599				205,209
Cash flow hedges			21,988				2,798				24,786				(3,586	)			(457	)			(4,043	)
Income tax relating to cash flow hedges			(6,157	)			(783	)			(6,940	)			1,004				128				1,132
Other comprehensive (loss) income for the period, net of tax			(41,417	)			(50,425	)			(91,842	)			163,028				39,270				202,298
Total comprehensive income (loss) for the period (unaudited)			428,219				(52,393	)			375,826				1,000,787				177,890				1,178,677

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2008.

TERNIUM S.A.
Consolidated condensed interim financial statements as of June 30, 2009
and for the six-month periods ended June 30, 2009 and 2008
(All amounts in USD thousands)

CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION

		Notes				June 30, 2009								December 31, 2008
						(Unaudited)
ASSETS
Non-current assets
Property, plant and equipment, net			7				4,081,363								4,212,313
Intangible assets, net			8				1,104,960								1,136,367
Investments in associated companies							6,127								5,585
Sidor financial asset			11	(ii)			426,998								—
Other investments, net							17,250								16,948
Receivables, net							175,182				5,811,880				120,195				5,491,408
Current assets
Receivables							161,701								248,991
Derivative financial instruments							1,472								1,516
Inventories, net							1,151,267								1,826,547
Trade receivables, net							469,146								622,992
Sidor financial asset			11	(ii)			1,012,145								—
Available for sale assets — discontinued operations			11	(ii)			—								1,318,900
Other investments							—								90,008
Cash and cash equivalents							1,816,023				4,611,754				1,065,552				5,174,506
Non-current assets classified as held for sale											17,062								5,333
											4,628,816								5,179,839
Total assets											10,440,696								10,671,247
EQUITY
Capital and reserves attributable to the company’s equity holders											5,025,771								4,597,370
Minority interest											911,323								964,094
Total equity											5,937,094								5,561,464
LIABILITIES
Non-current liabilities
Provisions							24,664								24,400
Deferred income tax							816,794								810,160
Other liabilities							152,274								148,690
Derivative financial instruments							43,143								65,847
Borrowings							2,054,645				3,091,520				2,325,867				3,374,964
Current liabilities
Current tax liabilities							74,283								194,075
Other liabilities							95,582								103,376
Trade payables							414,183								438,711
Derivative financial instruments							60,089								57,197
Borrowings							767,945				1,412,082				941,460				1,734,819
Total liabilities											4,503,602								5,109,783
Total equity and liabilities											10,440,696								10,671,247

Contingencies, commitments and restrictions to the distribution of profits are disclosed in Note 10.

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2008.

TERNIUM S.A.
Consolidated condensed interim financial statements as of June 30, 2009
and for the six-month periods ended June 30, 2009 and 2008
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

		Attributable to the Company’s equity holders (1)
						Initial public				Revaluation				Capital stock				Currency
						offering				and other				issue discount				translation				Retained								Minority				Total
		Capital stock (2)				expenses				reserves				(3)				adjustment				earnings				Total				interest				Equity
Balance at January 1, 2009			2,004,743				(23,295	)			1,702,285				(2,324,866	)			(528,485	)			3,766,988				4,597,370				964,094				5,561,464
Profit (loss) for the period																							469,636				469,636				(1,968	)			467,668
Other comprehensive income (loss) for the period											15,831								(57,248	)							(41,417	)			(50,425	)			(91,842	)
Total comprehensive income (loss) for the period											15,831								(57,248	)			469,636				428,219				(52,393	)			375,826
Acquisition of business (4)											182																182				(378	)			(196	)
Balance at June 30, 2009 (unaudited)			2,004,743				(23,295	)			1,718,298				(2,324,866	)			(585,733	)			4,236,624				5,025,771				911,323				5,937,094

Dividends may be paid by Ternium to the extent distributable retained earnings calculated in accordance with Luxembourg law and regulations exist. Therefore, retained earnings included in these consolidated condensed interim financial statements may not be wholly distributable. See Note 10 (iii).

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2008.

TERNIUM S.A.
Consolidated condensed interim financial statements as of June 30, 2009
and for the six-month periods ended June 30, 2009 and 2008
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)

		Attributable to the Company’s equity holders (1)
						Initial public				Revaluation				Capital stock				Currency
						offering				and other				issue discount				translation				Retained								Minority				Total
		Capital stock (2)				expenses				reserves (3)				(3)				adjustment				earnings				Total				interest				Equity
Balance at January 1, 2008			2,004,743				(23,295	)			1,946,963				(2,324,866	)			(110,739	)			2,959,874				4,452,680				1,805,243				6,257,923
Profit for the period																							837,759				837,759				138,620				976,379
Other comprehensive income for the period											(2,582	)							165,610								163,028				39,270				202,298
Total comprehensive income for the period											(2,582	)							165,610				837,759				1,000,787				177,890				1,178,677
Dividends paid in cash and other distributions											(100,237	)															(100,237	)							(100,237	)
Dividends paid in cash and other distributions by subsidiary companies																															(19,595	)			(19,595	)
Minority interest in discontinued operations																															(889,342	)			(889,342	)
Balance at June 30, 2008 (unaudited)			2,004,743				(23,295	)			1,844,144				(2,324,866	)			54,871				3,797,633				5,353,230				1,074,196				6,427,426

Dividends may be paid by Ternium to the extent distributable retained earnings calculated in accordance with Luxembourg law and regulations exist. Therefore, retained earnings included in these consolidated condensed interim financial statements may not be wholly distributable. See Note 10 (iii).

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2008.

TERNIUM S.A.
Consolidated condensed interim financial statements as of June 30, 2009
and for the six-month periods ended June 30, 2009 and 2008
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CASH FLOWS

						Six-month period
						ended June, 30
		Notes				2009				2008
						(Unaudited)
Cash flows from operating activities
Income from continuing operations							39,645				816,442
Adjustments for:
Depreciation and amortization			7 & 8				189,894				206,898
Income tax accruals less payments							(145,995	)			72,346
Equity in earnings of associated companies							(658	)			(890	)
Interest accruals less payments							(366	)			(84,650	)
Impairment charge			10(ii)				27,022				—
Changes in provisions							2,463				2,032
Changes in working capital							779,521				(901,363	)
Interest income — Sidor financial asset			11(ii)				(57,126	)			—
Net foreign exchange gains and others							(28,503	)			(157,563	)
Net cash provided by (used in) operating activities							805,897				(46,748	)
Cash flows from investing activities
Capital expenditures			7 & 8				(110,670	)			(247,002	)
Proceeds from the sale of property, plant and equipment							639				1,001
Decrease in other investments							90,008				65,337
Acquisition of business							(196	)			—
Proceeds from Sidor financial asset			11(ii)				400,000				—
Proceeds from the sale of discontinued operations			11(i)				—				722,523
Discontinued operations			11(iv)				—				89,820
Net cash provided by investing activities							379,781				631,679
Cash flows from financing activities
Dividends paid in cash and other distributions							—				(100,237	)
Dividends paid in cash and other distributions by subsidiary companies							—				(19,595	)
Proceeds from borrowings							161,980				181,305
Repayments of borrowings							(596,387	)			(931,441	)
Net cash used in financing activities							(434,407	)			(869,968	)
Increase/(Decrease) in cash and cash equivalents							751,271				(285,037	)
Movement in cash and cash equivalents
At January 1,							1,065,552				1,125,830
Effect of exchange rate changes							(800	)			5,668
Increase/(Decrease) in cash and cash equivalents							751,271				(285,037	)
Cash & cash equivalents of discontinued operations At March 31, 2008							—				(157,894	)
Cash and cash equivalents at June 30,							1,816,023				688,567

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the fiscal year ended December 31, 2008.

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements

INDEX TO THE NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

1 General information and basis of presentation		9
2 Accounting policies		9
3 Segment information		10
4 Cost of sales		12
5 Selling, general and administrative expenses		12
6 Other financial income, net		13
7 Property, plant and equipment, net		13
8 Intangible assets, net		13
9 Deferred statutory profit sharing		14
10 Contingencies, commitments and restrictions on the distribution of profits		14
11 Discontinued operations		16
12 Related party transactions		18
13 Recently issued accounting pronouncements		19

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

1 General information and basis of presentation

Ternium S.A. (the “Company” or “Ternium”), a Luxembourg Corporation (Societé Anonyme), was incorporated on December 22, 2003 under the name of Zoompart Holding S.A. to hold investments in flat and long steel manufacturing and distributing companies. The extraordinary shareholders’ meeting held on August 18, 2005, changed the corporate name to Ternium S.A.

Following a corporate reorganization carried out during fiscal year 2005, in January 2006 the Company successfully completed its registration process with the United States Securities and Exchange Commission (“SEC”). As from February 1, 2006, the Company’s shares are listed in the New York Stock Exchange.

The name and percentage of ownership of subsidiaries that have been included in consolidation in these Consolidated Condensed Interim Financial Statements is disclosed in Note 2 to the audited Consolidated Financial Statements for the year ended December 31, 2008.

Certain comparative amounts have been reclassified to conform to changes in presentation in the current period.

The preparation of consolidated condensed interim financial statements requires management to make estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet dates, and also the reported amounts of revenues and expenses for the reported periods. Actual results may differ from these estimates.

Material intercompany transactions and balances have been eliminated in consolidation. However, the fact that the functional currency of the Company’s subsidiaries differ, results in the generation of foreign exchange gains (losses) that are included in the consolidated condensed interim income statement under “Other financial income, net”.

These Consolidated Condensed Interim Financial Statements were approved by the Board of Directors of Ternium on August 4, 2009.

2 Accounting policies

These Consolidated Condensed Interim Financial Statements have been prepared in accordance with IAS 34, “Interim Financial Reporting”. These Consolidated Condensed Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2008, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

Recently issued accounting pronouncements were applied by the Company as from their respective dates.

These Consolidated Condensed Interim Financial Statements have been prepared following the same accounting policies used in the preparation of the audited Consolidated Financial Statements for the year ended December 31, 2008, except for the application of the following accounting pronouncements, which became effective on January 1, 2009:

1)

Comprehensive income

Ternium has applied IAS 1 revised that, among other changes, has incorporated the following:

(a)

all changes in equity arising from transactions with owners in their capacity as owners (i.e. owner changes in equity) have been presented separately from non-owner changes in equity. Under IAS 1 revised, an entity is not permitted to present components of comprehensive income (i.e. non-owner changes in equity) in the statement of changes in equity;

(b)

income and expenses have been presented in two statements (a separate income statement and a statement of comprehensive income), separately from owner changes in equity;

(c)

components of other comprehensive income have been displayed in the statement of comprehensive income; and

(d)

total comprehensive income has been presented in the financial statements.

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

2 Accounting policies (continued)

2)

Borrowing costs

Beginning on January 1, 2009, and as required by IAS 23 revised, Ternium capitalizes the borrowing costs incurred to finance construction, acquisition or production of qualifying assets. In the case of specific borrowings, Ternium determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. For general borrowings, Ternium determines the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs that Ternium capitalizes during a period will not exceed the amount of borrowing costs incurred during that period.

At June 30, 2009, the capitalized borrowing costs are not material.

3 Segment information

Reportable operating segments

For management purposes, the Company is organized on a worldwide basis into the following segments: flat steel products, long steel products and others.

The flat steel products segment comprises the manufacturing and marketing of hot rolled coils and sheets, cold rolled coils and sheets, tin plate, welded pipes, hot dipped galvanized and electro-galvanized sheets, pre-painted sheets and other tailor-made products to serve its customers’ requirements.

The long steel products segment comprises the manufacturing and marketing of billets (steel in its basic, semi-finished state), wire rod and bars.

The other products segment includes products other than flat and long steel, mainly pig iron, pellets and pre-engineered metal buildings.

		Flat steel				Long steel
		products				products				Other				Total
		(Unaudited)
Six-month period ended June 30, 2009
Net sales			1,969,184				280,208				65,556				2,314,948
Cost of sales			(1,866,116	)			(186,354	)			(40,800	)			(2,093,270	)
Gross profit			103,068				93,854				24,756				221,678
Selling, general and administrative expenses			(246,665	)			(25,289	)			(7,203	)			(279,157	)
Other operating (expenses) income, net (*)			(21,656	)			563				(2	)			(21,095	)
Operating (loss) income			(165,253	)			69,128				17,551				(78,574	)
Depreciation — PP&E			130,068				16,244				5,954				152,266

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

3 Segment information (continued)

		Flat steel				Long steel
		products				products				Other				Total
		(Unaudited)
Six-month period ended June 30, 2008
Net sales			3,656,149				544,419				106,285				4,306,853
Cost of sales			(2,603,935	)			(356,403	)			(66,859	)			(3,027,197	)
Gross profit			1,052,214				188,016				39,426				1,279,656
Selling, general and administrative expenses			(276,307	)			(36,157	)			(12,668	)			(325,132	)
Other operating income, net			4,627				2,500				3,940				11,067
Operating income			780,534				154,359				30,698				965,591
Depreciation — PP&E			148,616				16,357				2,243				167,216

Geographical information

There are no revenues from external customers attributable to the Company’s country of incorporation (Luxembourg). Ternium sells its products to three main geographical areas: South and Central America, North America, and Europe and others. The North American area comprises principally United States, Canada and Mexico. The South and Central American area comprises principally Argentina, Brazil, Colombia, Chile, Paraguay and Ecuador.

		South and
		Central				North				Europe
		America				America				and others				Total
		(Unaudited)
Six-month period ended June 30, 2009
Net sales			756,975				1,405,184				152,789				2,314,948
Depreciation — PP&E			57,305				94,926				35				152,266
Six-month period ended June 30, 2008
Net sales			1,475,992				2,791,380				39,481				4,306,853
Depreciation — PP&E			67,639				99,560				17				167,216

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

4 Cost of sales

		Six-month period
		ended June 30,
		2009				2008
		(Unaudited)
Inventories at the beginning of the year			1,826,547				1,904,489
Adjustment corresponding to inventories from discontinued operations			—				(455,013	)
			1,826,547				1,449,476
Translation differences			(53,822	)			89,272
Plus: Charges for the period
Raw materials and consumables used and other movements			856,816				3,191,424
Services and fees			58,598				77,531
Labor cost			182,101				230,286
Depreciation of property, plant and equipment			149,841				164,167
Amortization of intangible assets			8,361				9,809
Maintenance expenses			99,602				142,771
Office expenses			2,543				4,244
Freight and transportation			17,584				20,531
Insurance			4,721				3,940
(Recovery) Provision for obsolescence			(37,381	)			567
Valuation allowance			127,553				—
Recovery from sales of scrap and by-products			(10,617	)			(47,923	)
Others			12,090				19,823
Less: Inventories at the end of the period			(1,151,267	)			(2,328,721	)
Cost of sales			2,093,270				3,027,197

5 Selling, general and administrative expenses

		Six-month period
		ended June 30,
		2009				2008
		(Unaudited)
Services and fees			24,418				32,048
Labor cost			82,916				96,514
Depreciation of property plant and equipment			2,425				3,049
Amortization of intangible assets			29,267				29,873
Maintenance expenses			3,154				4,373
Taxes			32,042				39,606
Office expenses			11,980				16,114
Freight and transportation			84,339				89,032
Decrease of allowances for doubtful accounts			(1,859	)			(395	)
Others			10,475				14,918
Selling, general and administrative expenses			279,157				325,132

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

6 Other financial income, net

		Six-month period
		ended June 30,
		2009				2008
		(Unaudited)
Net foreign exchange gains (i)			58,527				139,887
Change in fair value of derivative instruments			6,165				(1,073	)
Debt issue costs			(2,790	)			(8,560	)
Others			(3,155	)			(12,006	)
Other financial income, net			58,747				118,248

7 Property, plant and equipment, net

		Six-month period
		ended June 30,
		2009				2008
		(Unaudited)
At the beginning of the year			4,212,313				6,776,630
Adjustments corresponding to PP&E from discontinued operations			—				(1,975,269	)
			4,212,313				4,801,361
Currency translation differences			(63,163	)			245,299
Additions			98,706				223,277
Disposals			(1,331	)			(1,235	)
Depreciation charge			(152,266	)			(167,216	)
Transfers			(12,896	)			—
At the end of the period			4,081,363				5,101,486

8 Intangible assets, net

		Six-month period
		ended June 30,
		2009				2008
		(Unaudited)
At the beginning of the year			1,136,367				1,449,320
Adjustments corresponding to intangible assets from discontinued operations			—				(12,731	)
			1,136,367				1,436,589
Currency translation differences			21,279				76,877
Additions			11,964				23,725
Amortization charge			(37,628	)			(39,682	)
Impairment charge (see note 10 (ii))			(27,022	)			—
At the end of the period			1,104,960				1,497,509

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

9 Deferred statutory profit sharing

As mentioned in Note 4 (n) to the audited Consolidated Financial Statements at December 31, 2008, Mexican laws require local companies to pay its employees a profit sharing bonus calculated on a basis similar to that used for local income tax purposes. The Company accounted for temporary differences arising between the statutory calculation and the reported expense determined under IFRS in a manner similar to calculation of deferred income tax.

In 2008, one of Ternium’s Mexican subsidiaries (Hylsa S.A. de C.V., “Hylsa”) entered into a spin off that became effective on March 31, 2008. After this corporate reorganization, all of Hylsa’s employees are included in the payroll of a company that is expected to generate non-significant taxable income and non-significant temporary differences. The Company agreed to pay its employees a bonus salary that will be calculated on a basis similar to that used for income tax purposes. Accordingly, during the six-month period ended June 30, 2008, the Company reversed the outstanding balance of the liability as of December 31, 2007 (amounting to USD 96 million) within Income tax (expense) benefit line item in the Consolidated Condensed Interim Income Statement.

10 Contingencies, commitments and restrictions on the distribution of profits

This note should be read in conjunction with Note 27 to the Company’s audited Consolidated Financial Statements for the year ended December 31, 2008. Significant changes or events since the date of issue of such financial statements are as follows:

(i) Siderar

(a) Expansion project

Within the investment plan to increase its production capacity, Siderar invested as of June 30, 2009, USD 225.6 million and additionally has entered into several commitments to acquire new production equipment for a total consideration of USD 191.8 million.

Furthermore, related to operating activities and to the investment plan, Siderar entered into an agreement with Air Liquide Argentina S.A. for the supply of oxygen, nitrogen and argon for a contracted amount of USD 174.7 million which is due to terminate in 2025.

Given the severe international financial crisis, its impact on the steel global market and the uncertainty about the evolution of steel demand, Siderar rescheduled the execution of its investment plan and the mentioned commitment with Air Liquide Argentina S.A., and entered into a renegotiation process to reduce the outflow of cash, specially during 2009, when the worst effects of the global crisis would be reflected in the international economic markets. Consequently, at the end of the period, Siderar agreed with some suppliers to cancel or postpone some purchase orders.

(b) Raw material contracts

Siderar, following global steel industry trends, entered into several renegotiation processes regarding the prices of certain relevant raw material contracts for a total consideration of USD 224.6 million, considering that the existing contractual terms do not reflect the current market conditions. At the date of issue of these financial statements, negotiations are still under way.

(ii) Steel supply contracts

Grupo Imsa (now Ternium Mexico), together with Grupo Marcegaglia, Duferco International and Donkuk Steel were parties to a ten-year steel slab off-take framework agreement with Corus UK Limited dated as of December 16, 2004, which was supplemented by bilateral off-take agreements. Under the agreements, the off-takers were required, in the aggregate, to purchase approximately 78% of the steel slab production of Corus’ Teeside facility in the North East of England, of which Grupo Imsa’s share was 15.38%, or approximately 0.5 million tons per year.

Ternium acquired commitments to make predetermined cash payments during the term of the contract in addition to the purchase price paid for the steel slab, as follows: (i) an initial payment of USD 14.3 million, (ii) twenty semi-annual payments distributed proportionately in different percentages until 2014 for a total of USD 16.5 million, and (iii) additional payments for future capital investments in Corus’ Teeside plant amounting to approximately USD 15.1 million. The initial payment and the due payments included in (ii) and (iii) above have been made prior to the acquisition of Ternium México by Ternium. In December 2007, all of Grupo Imsa’s rights and obligations under this contract were assigned to Ternium Procurement S.A. (formerly known as Alvory S.A.).

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

10 Contingencies, commitments and restrictions on the distribution of profits (continued)

(ii) Steel supply contracts (continued)

On April 7, 2009, Ternium Procurement S.A., together with the other offtakers, declared the early termination of their respective off-take agreements with Corus pursuant to a provision allowing the offtakers to terminate the agreements upon the occurrence of certain events specified in the off-take framework agreement. Corus initially denied the occurrence of the alleged termination event and initiated an arbitration proceeding against the offtakers and Ternium Mexico seeking damages arising out of the alleged wrongful termination of the off-take agreements, which damages Corus has not quantified but has stated would exceed the USD150 million maximum aggregate cap on liability of the offtakers under the off-take framework agreement. In addition, Corus threatened to submit to arbitration further claims in tort against the offtakers, and also threatened to submit such claims against certain third-parties to such agreements, including the Company. The offtakers and Ternium Mexico, in turn, denied Corus’ claims and brought counterclaims against Corus which, in the aggregate, would also be greater than USD150 million. On May 12, 2009, Corus, by a letter from its lawyers, alleged that the offtakers’s termination notice amounted to a repudiatory breach of the agreements and stated that it accepted that the agreements had come to an end and that it would no longer pursue a claim for specific performance in the arbitration; the claim for damages, however, would be maintained. The arbitration proceeding has not yet concluded. At the date of issue of these financial statements it is impossible to foresee the final outcome of this arbitration proceeding.

At the acquisition of Ternium Mexico by Ternium, the Company valued the intangible asset related to this contract at USD 29.7 million. As of March 31, 2009, the Company decided to fully impair the remaining value of this intangible asset for a total amount of USD 27.0 million, as the value of such intangible asset is not representative of the current market condition.

(iii) Restrictions on the distribution of profits

Under Luxembourg law, at least 5% of net income per year calculated in accordance with Luxembourg law and regulations must be allocated to a reserve until such reserve equals 10% of the share capital. At June 30, 2009, this reserve reached the above-mentioned threshold.

Ternium may pay dividends to the extent that it has distributable retained earnings and distributable reserves calculated in accordance with Luxembourg law and regulations. Therefore, retained earnings included in these consolidated condensed interim financial statements may not be wholly distributable.

Shareholders’ equity under Luxembourg law and regulations comprises the following captions:

		At June 30,
		2009
		(Unaudited)
Share capital			2,004,743
Legal reserve			200,474
Distributable reserves			201,674
Non distributable reserves			1,414,123
Accumulated profit at January 1, 2009			1,457,281
Profit for the period			404,523
Total shareholders’ equity under Luxembourg GAAP			5,682,818

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

11 Discontinued operations

(i) Sale of non strategic U.S. assets

On February 1, 2008, Ternium, through its subsidiary Imsa Acero S.A. de C.V., completed the sale of its interests in Steelscape Inc., ASC Profiles Inc., Varco Pruden Buildings Inc. and Metl-Span LLC to BlueScope Steel North America Corporation, a subsidiary of BlueScope Steel Limited, for a total consideration of USD 723 million on a cash-free and debt-free basis, net of working capital and other adjustments. Direct transaction costs paid by the Company in connection with this sale totaled USD 4.1 million. The Company continues to own Steelscape’s Shreveport, LA plant. Ternium has also retained its pre-engineered metal buildings and insulated steel panels businesses in Mexico. As of June 30, 2008, the result of this transaction was a gain of USD 101.4 million, calculated as the net proceeds of the sale less the book value of discontinued net assets and the corresponding tax effect. Afterwards, the Company recognized an additional charge of USD 3.9 million related to this discontinued operation.

(ii) Nationalization of Sidor

On March 31, 2008, Ternium S.A. (the “Company”) controlled approximately 59.7% of Sidor, while Corporación Venezolana de Guayana, or CVG (a Venezuelan governmental entity), and Banco de Desarrollo Económico y Social de Venezuela, or BANDES (a bank owned by the Venezuelan government), held approximately 20.4% of Sidor and certain Sidor employees and former employees held the remaining 19.9% interest.

Further to several threats of nationalization and various adverse interferences with management in preceding years, on April 8, 2008, the Venezuelan government announced its intention to take control over Sidor. On April 29, 2008, the National Assembly of Venezuela passed a resolution declaring that the shares of Sidor, together with all of its assets, were of public and social interest, and authorizing the Venezuelan government to take any action it deemed appropriate in connection with any such assets, including expropriation.

On May 11, 2008, Decree Law 6058 of the President of Venezuela regulating the steel production activity in the Guayana, Venezuela region (the “Decree”), dated April 30, 2008, was published. The Decree ordered that Sidor and its subsidiaries and associated companies be transformed into state-owned enterprises (“empresas del Estado”), with the government owning not less than 60% of their share capital. The Decree required the Venezuelan government to create two committees: a transition committee to be incorporated into Sidor’s management and to ensure that control over the current operations of Sidor and its subsidiaries and associated companies was transferred to the government on or prior to July 12, 2008, and a separate technical committee, composed of representatives of the government and the private shareholders of Sidor and its subsidiaries and associated companies, to negotiate over a 60-day period (extendable by mutual agreement) a fair price for the shares to be transferred to Venezuela. The Decree also stated that, in the event the parties failed to reach agreement by the expiration of the 60-day period, the Venezuelan Ministry of Basic Industries and Mining (the “MIBAM”) would assume control and exclusive operation of, and the Executive Branch would order the expropriation of, the shares of the relevant companies in accordance with the Venezuelan Expropriation Law.

Upon expiration of the term contemplated under the Decree, on July 12, 2008, Venezuela, acting through CVG, assumed operational control and complete responsibility for Sidor’s operations, and Sidor’s board of directors ceased to function. However, negotiations between the Venezuelan government and the Company regarding the terms of the compensation continued over several months, and the Company retained formal title over the Sidor shares during that period.

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

11 Discontinued operations (continued)

(ii) Nationalization of Sidor (continued)

On May 7, 2009, the Company completed the transfer of its entire 59.7% interest in Sidor to CVG. The Company agreed to receive an aggregate amount of USD 1.97 billion as compensation for its Sidor shares. Of that amount, CVG paid USD 400 million in cash at closing. The balance was divided in two tranches: the first tranche of USD 945 million will be paid in six equal quarterly installments (the first installment being due on August 7, 2009), while the second tranche will be paid at maturity in November 2010, subject to quarterly mandatory prepayment events based on the increase of the WTI crude oil price over its May 6, 2009 level. Under the agreements with CVG and Venezuela, in the event of non-compliance by CVG with its payment obligations, the Company has reserved the rights and remedies that it had prior to the transfer of the Sidor shares in relation to any claim against Venezuela, subject to certain limitations, including that the Company may not claim an amount exceeding the outstanding balance due from CVG.

At June 30, 2009, the value of the Sidor financial asset (following the receipt of the 400 million cash payment) amounted to USD 1,439.1 million after application of a 14.36% annual discount rate to adequately reflect, and only for the purpose of recording, the present accounting value of the receivable with CVG.

In the three-month period ended June 30, 2009, the Company recorded a net gain, in accounting terms, of USD 428.0 million in connection with this transaction which is disclosed within “Income from discontinued operations” in the Consolidated Condensed Interim Income Statement. This result represents the difference between (i) the fair value, in accounting terms, net of taxes and other transaction costs, of the compensation for the Sidor financial asset (which comprised a USD 400 million cash payment and a receivable against CVG that, at May 7, 2009, had a fair value of USD 1,382.0 million after application of the discount rate stated above, net of taxes and other transaction costs of USD 37.1 million) and (ii) the carrying amount of the Sidor financial asset at March 31, 2009. In addition, the Company recorded a gain in the amount of USD 57.1 million included in “Interest income — Sidor financial asset” in the Consolidated Condensed Interim Income Statement. All the above is without prejudice to the rights of the Company, including the rights and remedies reserved in the agreement with CVG and Venezuela as described above, in the event of non-compliance by CVG with its payment obligations.

(iii) Analysis of the result of discontinued operations:

		Six-month period ended
		June 30,
		2009				2008
		(Unaudited)
Net sales			—				467,618
Cost of sales			—				(306,744	)
Gross profit			—				160,874
Selling, general and administrative expenses			—				(90,362	)
Other operating income, net			—				1,080
Operating income			—				71,592
Financial expenses, net			—				(15,329	)
Loss from Participation Account — Sidor			—				(96,525	)
Income from Participation Account			—				57,654
Equity in losses of associated companies			—				(150	)
Income before income tax			—				17,242
Income tax benefit			—				41,326
Subtotal			—				58,568
Gain from the sale of non strategic U.S. assets			—				101,369
Gain from the disposal of Sidor (net of income tax)			428,023				—
Income from discontinued operations			428,023				159,937

TERNIUM S.A.
Notes to the Consolidated Condensed Interim Financial Statements (Contd.)

11 Discontinued operations (continued)

(iv) Analysis of cash flows from discontinued operations:

		Six-month period ended
		June 30,
		2009				2008
		(Unaudited)
Cash flows from discontinued operating activities
Net income of from discontinued operations			428,023				159,937
Adjustments for:
Depreciation and amortization			—				50,820
Income tax accruals less payments			—				(41,613	)
Gain from the sale of non strategic U.S. assets			—				(101,369	)
Gain from the disposal of Sidor			(428,023	)			—
Changes in working capital and others			—				107,184
Cash flows from discontinued operating activities			—				174,959
Net cash used by discontinued investing activities			—				(54,923	)
Net cash used in discontinued financing activities			—				(30,216	)
Net cash from discontinued operations			—				89,820