FORM 6 - K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

As of 11/3/2010

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 September 30, 2010.

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/ Pablo Brizzio

By:

/s/ Daniel Novegil

Name:

Pablo Brizzio

Name:

Daniel Novegil

Title:

Chief Financial Officer

Title:

Chief Executive Officer

Dated: November 3, 2010

TERNIUM S.A.

CONSOLIDATED CONDENSED INTERIM
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010
AND FOR THE NINE-MONTH PERIODS
ENDED SEPTEMBER 30, 2010 AND 2009

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 September 30, 2010
and for the nine-month periods ended September 30, 2010 and 2009
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM INCOME STATEMENTS

				Three-month period								Nine-month period
				ended September 30,								ended September 30,
		Notes		2010				2009				2010				2009
				(Unaudited)								(Unaudited)
Continuing operations
Net sales		3			1,877,234				1,278,835				5,454,473				3,593,783
Cost of sales		3 & 4			(1,448,149	)			(1,005,363	)			(4,060,783	)			(3,098,633	)
Gross profit		3			429,085				273,472				1,393,690				495,150
Selling, general and administrative expenses		3 & 5			(170,105	)			(114,570	)			(482,623	)			(393,727	)
Other operating income (expenses), net		3			8,587				(24	)			9,186				(21,119	)
Operating income		3			267,567				158,878				920,253				80,304
Interest expense					(17,868	)			(25,589	)			(55,249	)			(85,425	)
Interest income					10,244				5,752				18,177				16,121
Interest income – Sidor financial asset		11			11,604				38,259				56,685				95,385
Other financial income (expenses), net		6			29,539				(44,911	)			91,617				13,836
Equity in earnings (losses) of associated companies					71				270				(813	)			928
Income before income tax expense					301,157				132,659				1,030,670				121,149
Income tax (expense) benefit					(100,321	)			(28,002	)			(354,049	)			23,153
Income from continuing operations					200,836				104,657				676,621				144,302
Discontinued operations
Gain from the disposal of Sidor		11			—				—				—				428,023
Profit for the period					200,836				104,657				676,621				572,325
Attributable to:
Equity holders of the Company					151,684				88,480				544,569				558,116
Non-controlling interests					49,152				16,177				132,052				14,209
					200,836				104,657				676,621				572,325
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 (expressed in USD per share) for profit:
- From continuing operations attributable to the equity holders					0.08				0.04				0.27				0.07
- From discontinued operations attributable to the equity holders					—				—				—				0.21
- For the period attributable to the equity holders					0.08				0.04				0.27				0.28

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, 2009.

TERNIUM S.A.
Consolidated condensed interim financial statements as of September 30, 2010
and for the nine-month periods ended September 30, 2010 and 2009
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

		Three-month period								Nine-month period
		ended September 30,								ended September 30,
		2010				2009				2010				2009
		(Unaudited)								(Unaudited)
Profit for the period			200,836				104,657				676,621				572,325
Other comprehensive income:
Currency translation adjustment			18,398				(54,819	)			25,152				(164,507	)
Changes in the fair value of derivatives classified as cash flow hedges			3,973				4,862				7,215				29,648
Income tax relating to cash flow hedges			(1,192	)			(1,362	)			(2,164	)			(8,302	)
Other comprehensive income (loss) for the period, net of tax			21,179				(51,319	)			30,203				(143,161	)
Total comprehensive income for the period			222,015				53,338				706,824				429,164
Attributable to:
Equity holders of the Company			173,100				47,863				588,194				476,082
Non-controlling interests			48,915				5,475				118,630				(46,918	)
			222,015				53,338				706,824				429,164

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, 2009.

TERNIUM S.A.
Consolidated condensed interim financial statements as of September 30, 2010
and for the nine-month periods ended September 30, 2010 and 2009
(All amounts in USD thousands)

CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION

		Notes				September 30, 2010								December 31, 2009
						(Unaudited)
ASSETS
Non-current assets
Property, plant and equipment, net			7				4,214,239								4,040,415
Intangible assets, net			8				1,126,961								1,085,412
Investments in associated companies							5,712								6,577
Other investments, net							35,379								16,414
Deferred tax assets							8,897								—
Receivables, net							70,097				5,461,285				101,317				5,250,135
Current assets
Receivables							113,393								136,300
Derivative financial instruments							42								1,588
Inventories, net							2,026,181								1,350,568
Trade receivables, net							715,175								437,835
Sidor financial asset			11				253,662								964,359
Other investments							284,908								46,844
Cash and cash equivalents							2,227,001				5,620,362				2,095,798				5,033,292
Non-current assets classified as held for sale											10,146								9,246
											5,630,508								5,042,538
Total assets											11,091,793								10,292,673
EQUITY
Capital and reserves attributable to the company’s equity holders											5,784,299								5,296,342
Non-controlling interests											1,108,031								964,897
Total equity											6,892,330								6,261,239
LIABILITIES
Non-current liabilities
Provisions							15,790								18,913
Deferred income tax							844,244								857,297
Other liabilities							208,431								176,626
Derivative financial instruments							21,533								32,627
Trade payables							1,132								—
Borrowings							1,420,618				2,511,748				1,787,204				2,872,667
Current liabilities
Current tax liabilities							375,114								103,171
Other liabilities							132,824								57,021
Trade payables							634,263								412,967
Derivative financial instruments							35,840								46,083
Borrowings							509,674				1,687,715				539,525				1,158,767
Total liabilities											4,199,463								4,031,434
Total equity and liabilities											11,091,793								10,292,673

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, 2009.

TERNIUM S.A.
Consolidated condensed interim financial statements as of September 30, 2010
and for the nine-month periods ended September 30, 2010 and 2009
(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												Non-
		Capital stock				offering				and other				issue discount				translation				Retained								controlling				Total
		(2)				expenses				reserves				(3)				adjustment				earnings				Total				interests				Equity
Balance at January 1, 2010			2,004,743				(23,295	)			1,726,216				(2,324,866	)			(570,844	)			4,484,388				5,296,342				964,897				6,261,239
Profit for the period																							544,569				544,569				132,052				676,621
Other comprehensive income for the period
Currency translation adjustment																			39,144								39,144				(13,992	)			25,152
Cash flow hedges, net of tax											4,481																4,481				570				5,051
Total comprehensive income for the period											4,481								39,144				544,569				588,194				118,630				706,824
Dividends paid in cash and other distributions (See Note 9)											(100,237	)															(100,237	)							(100,237	)
Dividends paid in cash and other distributions by subsidiary companies																															(38,304	)			(38,304	)
Acquisition of business (See Note 12)																															62,808				62,808
Balance at September 30, 2010 (unaudited)			2,004,743				(23,295	)			1,630,460				(2,324,866	)			(531,700	)			5,028,957				5,784,299				1,108,031				6,892,330

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, 2009.

TERNIUM S.A.
Consolidated condensed interim financial statements as of September 30, 2010
and for the nine-month periods ended September 30, 2010 and 2009
(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												Non-
		Capital stock				offering				and other				issue discount				translation				Retained								controlling				Total
		(2)				expenses				reserves				(3)				adjustment				earnings				Total				interests				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 for the period																							558,116				558,116				14,209				572,325
Other comprehensive income (loss) for the period
Currency translation adjustment																			(100,971	)							(100,971	)			(63,536	)			(164,507	)
Cash flow hedges, net of tax											18,937																18,937				2,409				21,346
Total comprehensive income (loss) for the period											18,937								(100,971	)			558,116				476,082				(46,918	)			429,164
Acquisition of non-controlling interest (4)											182																182				(378	)			(196	)
Balance at September 30, 2009 (unaudited)			2,004,743				(23,295	)			1,721,404				(2,324,866	)			(629,456	)			4,325,104				5,073,634				916,798				5,990,432

(1)		Shareholders’ equity determined in accordance with accounting principles generally accepted in Luxembourg is disclosed in Note 10 (iii).
(2)		The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of USD1.00 per share. As of September 30, 2009, there were 2,004,743,442 shares issued. All issued shares are fully paid.
(3)		Represents the difference between book value of non-monetary contributions received from shareholders under Luxembourg GAAP and IFRS.
(4)		On February 5, 2009, Ternium Internacional España S.L.U. acquired from its related company Siderca S.A.I.C., 53,452 shares of Siderar S.A.I.C., representing 0.015% of that company’s share capital, for an aggregate purchase price of USD 196 thousand. After this acquisition, Ternium increased its ownership in Siderar to 60.94%.
		As permitted by IFRS 3, the Company accounted for this acquisition under the economic entity model, which requires that the acquisition of an additional equity interest in a controlled subsidiary be accounted for at its carrying amount, with the difference arising on purchase price allocation being recorded directly in equity.

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, 2009.

TERNIUM S.A.
Consolidated condensed interim financial statements as of September 30, 2010
and for the nine-month periods ended September 30, 2010 and 2009
(All amounts in USD thousands)

CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CASH FLOWS

				Nine-month period
				ended September, 30
		Notes		2010				2009
				(Unaudited)
Cash flows from operating activities
Income from continuing operations					676,621				144,302
Adjustments for:
Depreciation and amortization		7 & 8			280,020				285,291
Income tax accruals less payments					231,157				(120,499	)
Equity in losses (earnings) of associated companies					813				(928	)
Interest accruals less payments					(8,386	)			2,593
Impairment charge		10 (ii)			—				27,022
Changes in provisions					4,221				2,631
Changes in working capital					(484,961	)			847,430
Interest income – Sidor financial asset		11			(56,685	)			(95,385	)
Net foreign exchange results and others					(61,405	)			(3,254	)
Net cash provided by operating activities					581,395				1,089,203
Cash flows from investing activities
Capital expenditures		7 & 8			(219,983	)			(145,764	)
Proceeds from the sale of property, plant and equipment					1,213				2,284
(Increase) decrease in other investments					(255,280	)			20,487
Acquisition of business
Purchase consideration					(75,000	)			(196	)
Cash acquired					6,593				—
Proceeds from Sidor financial asset		11			767,382				666,543
Net cash provided by investing activities					224,925				543,354
Cash flows from financing activities
Dividends paid in cash and other distributions					(100,237	)			—
Dividends paid in cash and other distributions by subsidiary companies					(38,304	)			—
Proceeds from borrowings					18,486				205,887
Repayments of borrowings					(555,496	)			(1,017,427	)
Net cash used in financing activities					(675,551	)			(811,540	)
Increase in cash and cash equivalents					130,769				821,017
Movement in cash and cash equivalents
At January 1,					2,095,798				1,065,552
Effect of exchange rate changes					434				(2,202	)
Increase in cash and cash equivalents					130,769				821,017
Cash and cash equivalents at September 30,					2,227,001				1,884,367

The Company did not have restricted cash in any of the periods presented in these financial statements.

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, 2009.

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
2		Accounting policies
3		Segment information
4		Cost of sales
5		Selling, general and administrative expenses
6		Other financial income (expenses), net
7		Property, plant and equipment, net
8		Intangible assets, net
9		Distribution of dividends
10		Contingencies, commitments and restrictions on the distribution of profits
11		Nationalization of Sidor
12		Acquisition of business
13		Related party transactions
14		Recently issued accounting pronouncements
15		Subsequent events – Agreement to establish a joint venture in Mexico

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, 2009.

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 date of the statement of financial position, 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 that are included in the consolidated condensed interim income statement under “Other financial income (expenses), net”.

These Consolidated Condensed Interim Financial Statements were approved by the Board of Directors of Ternium on November 3, 2010.

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, 2009, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, and adopted by the European Union.

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, 2009, except for the application of the following accounting pronouncements, which became effective on January 1, 2010:

IFRS 3 (revised January 2008), “Business Combinations”

The revised standard continues to apply the acquisition method to business combinations, with some significant changes. Those changes refer principally to the following:

•		Partial acquisitions: Non-controlling interests are measured either as their proportionate interest in the net identifiable assets (which is the original IFRS 3 requirement) or at fair value (which is the new requirement).
•		Step acquisitions: The requirement to measure at fair value every asset and liability at each step for the purposes of calculating a portion of goodwill has been removed. Instead, goodwill is measured as the difference at acquisition date between the fair value of any investment in the business held before the acquisition, the consideration transferred and the net assets acquired.
•		Acquisition-related costs: Acquisition-related costs are generally recognised as expenses (rather than included in goodwill).

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

2 Accounting policies (continued)

•

Contingent consideration: Contingent consideration must be recognised and measured at fair value at the acquisition date. Subsequent changes in fair value are recognised in accordance with other IFRSs, usually in profit or loss (rather than by adjusting goodwill).

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)
Nine-month period ended September 30, 2010
Net sales			4,708,323				604,524				141,626				5,454,473
Cost of sales			(3,534,276	)			(450,649	)			(75,858	)			(4,060,783	)
Gross profit			1,174,047				153,875				65,768				1,393,690
Selling, general and administrative expenses			(424,257	)			(44,890	)			(13,476	)			(482,623	)
Other operating income, net			8,108				869				209				9,186
Operating income			757,898				109,854				52,501				920,253
Depreciation — PP&E			209,649				14,521				4,668				228,838
Nine-month period ended September 30, 2009
Net sales			3,080,203				426,812				86,768				3,593,783
Cost of sales			(2,757,134	)			(285,200	)			(56,299	)			(3,098,633	)
Gross profit			323,069				141,612				30,469				495,150
Selling, general and administrative expenses			(353,392	)			(31,334	)			(9,001	)			(393,727	)
Other operating (expenses) income, net (*)			(21,156	)			55				(18	)			(21,119	)
Operating (loss) income			(51,479	)			110,333				21,450				80,304
Depreciation — PP&E			211,817				13,811				4,938				230,566

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

3 Segment information (continued)

Geographical information

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, Colombia, Chile, Paraguay, Ecuador, Guatemala, Costa Rica and Brazil.

		South and
		Central				North				Europe
		America				America				and others				Total
		(Unaudited)
Nine-month period ended September 30, 2010
Net sales			2,209,330				3,149,242				95,901				5,454,473
Depreciation – PP&E			83,656				145,169				13				228,838
Nine-month period ended September 30, 2009
Net sales			1,213,939				2,208,154				171,690				3,593,783
Depreciation – PP&E			84,546				146,004				16				230,566

4 Cost of sales 

		Nine-month period
		ended September 30,
		2010				2009
		(Unaudited)
Inventories at the beginning of the year			1,350,568				1,826,547
Acquisition of business			76,771				—
Translation differences			22,125				(73,210	)
Plus: Charges for the period
Raw materials and consumables used and other movements			3,623,516				1,566,923
Services and fees			130,054				90,271
Labor cost			370,975				271,322
Depreciation of property, plant and equipment			215,836				227,075
Amortization of intangible assets			13,619				11,349
Maintenance expenses			252,410				160,883
Office expenses			4,748				3,731
Freight and transportation			27,279				25,992
Insurance			5,750				7,003
Charges (recovery) of provision for obsolescence			5,032				(48,793	)
Valuation allowance			—				127,553
Recovery from sales of scrap and by-products			(32,437	)			(19,942	)
Others			20,718				14,948
Less: Inventories at the end of the period			(2,026,181	)			(1,093,019	)
Cost of sales			4,060,783				3,098,633

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

5 Selling, general and administrative expenses

		Nine-month period
		ended September 30,
		2010				2009
		(Unaudited)
Services and fees			42,897				35,030
Labor cost			115,057				107,602
Depreciation of property plant and equipment			13,002				3,491
Amortization of intangible assets			37,563				43,376
Maintenance expenses			6,494				4,792
Taxes			65,351				48,067
Office expenses			22,641				17,595
Freight and transportation			166,340				121,048
Decrease of allowances for doubtful accounts			(841	)			(1,416	)
Others			14,119				14,142
Selling, general and administrative expenses			482,623				393,727

6 Other financial income (expenses), net

		Nine-month period
		Ended September 30,
		2010				2009
		(Unaudited)
Net foreign exchange gains			100,220				10,889
Change in fair value of derivative instruments			(729	)			11,593
Debt issue costs			(3,407	)			(3,988	)
Others			(4,467	)			(4,658	)
Other financial income, net			91,617				13,836

7 Property, plant and equipment, net

		Nine-month period
		ended September 30,
		2010				2009
		(Unaudited)
At the beginning of the year			4,040,415				4,212,313
Acquisition of business			140,118				—
Currency translation differences			67,514				(137,067	)
Additions			202,744				132,251
Disposals			(3,800	)			(3,072	)
Depreciation charge			(228,838	)			(230,566	)
Transfers and other movements			(3,914	)			(6,855	)
At the end of the period			4,214,239				3,967,004

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

8 Intangible assets, net

		Nine-month period
		ended September 30,
		2010				2009
		(Unaudited)
At the beginning of the year			1,085,412				1,136,367
Acquisition of business			25,473				—
Currency translation differences			46,105				148
Additions			17,239				13,513
Amortization charge			(51,182	)			(54,725	)
Transfers and other movements			3,914				(4,677	)
Impairment charge (*)			—				(27,022	)
At the end of the period			1,126,961				1,063,604

9 Distribution of dividends

During the annual general shareholders’ meeting held on June 2, 2010, the shareholders approved the consolidated financial statements and unconsolidated annual accounts for the year ended December 31, 2009 and a distribution of dividends of USD 0.05 per share (USD 0.50 per ADS), or USD 100.2 million. The dividends were paid on June 10, 2010.

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, 2009. 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 has entered into several commitments to acquire new production equipment for a total consideration of USD 130.3 million.

Furthermore, related to operating activities and to the investment plan, Siderar entered into an agreement with Air Liquide Argentina S.A. (“Alasa”) for the supply of oxygen, nitrogen and argon for a contracted amount of USD 173.7 million which is due to terminate in 2025.

Given the severe international financial crisis initiated in 2008, its impact on the steel global market and the uncertainty about the evolution of steel demand, Siderar rescheduled the execution of its investment plan. Consequently, Siderar agreed with some suppliers to cancel or postpone some purchase orders.

Regarding the agreement entered with Alasa and after several negotiations, a provisory suspension of services and supplies from both parties related to the construction of the new gas facility was agreed until December 31, 2010. If a new postponement is not agreed, or a definitive agreement is not reached, Alasa would be entitled to claim Siderar fulfillment of the commitments starting January 1, 2011.

(b) Raw material contracts

Siderar has assumed fixed commitments for the purchase of raw materials for the next three years for a total consideration USD 649.8 million, which include purchases of certain raw materials at prices that are USD 32.4 million higher than market prices at the end of the period. The Company records the actual cost incurred for the purchase of such raw materials and does not recognize any anticipated losses, as sales prices of finished goods are expected to exceed production cost.

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

Grupo Imsa (now Ternium Mexico), together with Grupo Marcegaglia, Duferco International and Dongkuk 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 offtakers could be 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.

In addition, the offtakers were required to make, in the aggregate and according to their respective pro rata shares, significant payments to Corus to finance capital expenditures. 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.).

On April 7, 2009, Ternium Procurement S.A., together with the other offtakers, declared the early termination of the off-take framework agreement and 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, stated that it would pursue specific performance and initiated an arbitration proceeding against the offtakers and Ternium Mexico (as guarantor of Ternium Procurement’s obligations) seeking damages arising out of the alleged wrongful termination of the off-take agreements, which damages Corus did not quantify but stated would exceed the USD150 million (approximately USD 29.7 million in the case of Ternium Procurement), the maximum aggregate cap on liability that the offtakers understand would have under the off-take framework agreement (a limitation that Corus disputes). 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, for all losses caused by the alleged offtakers’ wrongful repudiation of the agreements, however, would be maintained. On July 9, 2009, Corus submitted an amended request for arbitration adding tortious claims against the offtakers and adding to its claims the payment of punitive or exemplary damages. 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.

(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 December 31, 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 December
		31, 2009
Share capital			2,004,743
Legal reserve			200,474
Distributable reserves			201,674
Non distributable reserves			1,414,123
Accumulated profit at December 31, 2009			1,535,379
Total shareholders’ equity under Luxembourg GAAP			5,356,393

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

11 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.

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 is being paid in six equal quarterly installments beginning in August 2009 until November 2010, while the second tranche will be due 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.

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

11 Nationalization of Sidor (continued)

At September 30, 2010, the carrying amount of the Sidor financial asset (following the receipt of USD 1,721.0 million cash payments) amounted to USD 253.7 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. The Company estimated the 14.36% annual discount rate on the basis of the yield (13.3%) of Venezuelan sovereign debt with maturities similar to that of the receivable held by Ternium against CVG. However, as the Venezuelan sovereign debt with similar maturities was governed by New York law while the receivable with CVG was governed by Venezuelan law, the discount rate was further adjusted to adequately reflect the specific risk of Ternium’s receivable.

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 was disclosed within “Income from discontinued operations” in the 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 35.1 million) and (ii) the carrying amount of the Sidor financial asset at March 31, 2009.

In the nine-month period ended September 30, 2010, the Company recorded a gain in the amount of USD 56.7 million included in “Interest income – Sidor financial asset” in the Income Statement, representing the accretion income over the receivable held against CVG. 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.

12 Acquisition of business

On August 25, 2010, Ternium S.A. completed the acquisition of a 54% ownership interest in Ferrasa S.A.S., a company organized under the laws of Colombia (“Ferrasa”) through a capital contribution in the amount of USD 74.5 million. Ferrasa has a 100% ownership interest in Sidecaldas S.A.S. (“Sidecaldas”), Figuraciones S.A.S. (“Figuraciones”) and Perfilamos del Cauca S.A.S. (“Perfilamos”), all of which are also Colombian companies. Ternium has also completed the acquisition of a 54% ownership interest in Ferrasa Panamá S.A. (“Ferrasa Panamá”) for USD 0.5 million. On the mentioned date the Company obtained control over the assets and liabilities of the acquired companies.

Ferrasa is a long and flat steel products processor and distributor. Sidecaldas is a scrap-based long steel making and rolling facility, with an annual production capacity of approximately 140,000 tons. Figuraciones and Perfilamos manufacture welded steel tubes, profiles and beams. These companies have combined annual sales of approximately 300,000 tons, of which approximately 70% are long products and 30% are flat and tubular products, used mainly in the construction sector. Ferrasa Panamá is a long steel products processor and distributor based in Panama, with annual sales of approximately 8,000 tons.

The former controlling shareholders have an option to sell to Ternium, at any time, all or part of their remaining 46% interest in each of Ferrasa and Ferrasa Panamá, and Ternium has an option to purchase all or part of that remaining interest from the former controlling shareholders, at any time after the second anniversary of the closing.

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

12 Acquisition of business (continued)

Ferrasa and Ferrasa Panamá contributed revenues of USD 33.1 million and a net loss of USD 0.7 million (net of USD 0.6 million of non-controlling interests) in the period from August 25, 2010 to September 30, 2010. The fair value and book value of assets and liabilities arising from the transaction are as follows:

		Fair value				Book value
Property, plant and equipment			140,118				140,413
Previously recognized goodwill			—				37,377
Trademarks			4,407				—
Customer relationships			15,403				—
Other contractual rights			4,064				—
Other intangible assets			42				42
Inventories			76,771				76,241
Cash and cash equivalents			6,593				6,593
Deferred Tax Assets			7,832				1,180
Borrowings			(134,120	)			(134,120	)
Other assets and liabilities, net			15,141				15,141
Non-controlling interest in subsidiaries			(236	)			(236	)
Net			136,015				142,631
Non-controlling interest			(62,572	)
Goodwill			1,557
Total Purchase Consideration			75,000

Goodwill, representing the excess of the purchase price paid over the fair value of identifiable assets, liabilities and contingent liabilities totaled USD 1.6 million. Goodwill derives mainly from the fair value of the going concern element of the acquiree.

The Company has chosen to recognize the non-controlling interest at its proportionate share in net identifiable assets acquired.

Acquisition related costs are included in the income statement.

13 Related party transactions

The Company is controlled by San Faustín N.V.. As of September 30, 2010, San Faustin N.V. beneficially owned 60.64% and Tenaris, which is also controlled by San Faustin, held 11.46%, of our outstanding voting stock. Rocca & Partners S.A. controls a significant portion of the voting power of San Faustin N.V. and has the ability to influence matters affecting, or submitted to a vote of the shareholders of San Faustin N.V., such as the election of directors, the approval of certain corporate transactions and other matters concerning the Company’s policies. There are no controlling shareholders for Rocca & Partners S.A..

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

13 Related party transactions (continue)

The following transactions were carried out with related parties:

		Nine-month period
		ended September, 30
		2010				2009
		(Unaudited)
(i) Transactions
(a) Sales of goods and services
Sales of goods to other related parties			138,302				23,070
Sales of services and others to associated parties			51				57
Sales of services and others to other related parties			1,395				391
			139,748				23,518
(b) Purchases of goods and services
Purchases of goods from other related parties			34,463				23,976
Purchases of services and others from associated parties			26,049				23,242
Purchases of services and others from other related parties			89,854				68,655
			150,366				115,873
(c) Financial results
Income with associated parties			55				558
Income with other related parties			—				118
Expenses with other related parties			—				(27	)
			55				649

		September 30,				December 31,
		2010				2009
		(Unaudited)
(ii) Period-end balances
(a) Arising from sales/purchases of goods/services
Receivables from associated parties			377				329
Receivables from other related parties			23,598				13,128
Advances to suppliers with other related parties			1,792				15,687
Payables to associated parties			(3,281	)			(1,775	)
Payables to other related parties			(36,922	)			(16,541	)
			(14,436	)			10,828
(b) Other investments – non current
Time deposits			17,881				16,161
			17,881				16,161