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

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):

 

 

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 Terniums’ notice of Annual General Meeting of Shareholders and of an Extraordinary General Meeting of Shareholders, the Shareholder Meeting Brochure and Proxy Statement and Ternium’s 2009 Annual Report.

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.

Dated: May 5, 2010

May 5, 2010

Dear Ternium Shareholders and ADR holders,

I am pleased to invite you to attend the Annual General Meeting of Shareholders and an Extraordinary General Meeting of Shareholders of TERNIUM S.A., société anonyme holding (the “Company”), both to be held on Wednesday, June 2, 2010, at the Company’s registered office in Luxembourg, located at 46A, avenue John F. Kennedy, L-1855 Luxembourg. The Annual General Meeting of Shareholders will begin promptly at 2:30 p.m., local time, and the Extraordinary General Meeting of Shareholders will be held immediately after the adjournment of the Annual General Meeting of Shareholders.

At the Annual General Meeting of Shareholders, you will hear a report on the Company’s business, financial condition and results of operations and will have the chance to vote on various matters, including the approval of the Company’s financial statements, the election of the members of the board of directors and the appointment of the independent auditors. Subsequently, the Extraordinary General Meeting will resolve on the renewal of the validity of the Company’s authorized share capital and the authorizations to the Board of Directors of the Company with respect to any issuance of shares within such authorized share capital, in each case, for a further five-year period and otherwise on their current terms and conditions.

The Notice and Agenda for both meetings, the Shareholder Meeting Brochure and Proxy Statement and the Company’s 2009 annual report (which includes the Company’s consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007, and the Company’s annual accounts as at December 31, 2009, together with the board of directors’ and the independent auditors’ reports thereon), are available free of charge at the Company’s registered office in Luxembourg and on our website at http://www.ternium.com/en/investor/. They may also be obtained upon request, by calling +352 26 68 31 52 or +1 800 555 2470 (the latter number is toll free if you call from the United States).

Even if you only own a few shares or ADRs, I hope that you will exercise your right to vote at both meetings. You can vote your shares personally or by proxy. If you choose to vote by proxy, you may use the enclosed dedicated proxy form. If you are a holder of ADRs, please see the letter from The Bank of New York Mellon, the depositary bank, or your broker/custodian, for instructions on how to exercise your vote by proxy.

THE BANK OF NEW YORK MELLON
101 Barclay Street
New York, NY 10286

Re: TERNIUM S.A.

To:

Registered Holders of American Depositary Receipts (“ADRs”) for ordinary shares, USD 1.00 par value each (the “Shares”), of Ternium S.A. (the “Company”):

The Company has announced that its Annual General Meeting of Shareholders will be held on June 2, 2010, at 2:30 p.m. (Central European Time) and that an Extraordinary General Meeting of Shareholders of the Company will be held immediately after the adjournment of the Annual General Meeting of Shareholders. Both meetings will take place at the Company’s registered office in Luxembourg, located at 46A, avenue John F. Kennedy L-1855 Luxembourg. A copy of the Company’s Notice of Annual General Meeting of Shareholders and Extraordinary General Meeting of Shareholders, which includes the agenda for such meetings, is available on the Company’s website at http://www.ternium.com/en/investor/.

The enclosed dedicated proxy form is provided to allow you to give voting instructions in respect of the Shares represented by your ADRs. The Notice of the Annual General Meeting of Shareholders and of an Extraordinary General Meeting of Shareholders, the Shareholder Meeting Brochure and Proxy Statement and the Company’s 2009 annual report (which includes the Company’s consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007; and the Company’s annual accounts as at December 31, 2009, together with the Board of Directors and independent auditors reports thereon), are available on the Company’s website at http://www.ternium.com/en/investor/ and may also be obtained upon request at +352 26 68 31 52 or +1-800-555-2470 (the latter number is toll free if you call from the United States). They are also available free of charge at the Company’s registered office in Luxembourg.

Each holder of ADRs as of April 28, 2010 is entitled to instruct The Bank of New York Mellon, as Depositary (the “Depositary”), as to the exercise of the voting rights pertaining to the Shares represented by such holder’s ADRs. Elegible holders of ADRs who desire to give voting instructions in respect of the Shares represented by their ADRs must complete, date and sign a proxy form and return it to The Bank of New York Mellon Shareowner Services, P.O. Box 3549, S. Hackensack New Jersey 07606-9249, U.S.A. Attention: Proxy Processing, by 5:00 p.m., New York City time, on May 28, 2010. If the Depositary receives properly completed instructions by 5:00 p.m., New York City time, on May 28, 2010, then it shall endeavor, insofar as practicable, to vote or cause to be voted the shares underlying such ADRs in the manner prescribed by the instructions. However, if by 5:00 p.m., New York City time, on May 28, 2010, the Depositary receives no instructions from the holder of ADRs, or the instructions received are not in proper form, then the Depositary shall deem such holder to have instructed the Depositary to give, and the Depositary shall give, a discretionary proxy to a person designated by the Company with respect to that amount of Shares underlying such ADRs to vote that amount of Shares underlying such ADRs in favor of any proposals or recommendations of the Company (including any recommendation by the Company to vote that amount of shares underlying such ADRs on any issue in accordance with the majority shareholders’ vote on that issue) as determined by the appointed proxy. No instruction shall be deemed given and no discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary that (x) it does not wish such proxy given, (y) substantial opposition exists, or (z) the matter materially and adversely affects the rights of the holders of ADRs.

Any holder of ADRs is entitled to revoke or revise any instructions previously given to the Depositary by filing with the Depositary a written revocation or duly executed instructions bearing a later date at any time prior to 5:00 p.m., New York City time, on May 28, 2010. No instructions, revocations or revisions thereof will be accepted by the Depositary after that time.

In order to avoid the possibility of double vote, the Company’s ADR books will be closed for cancellations from April 28, 2010, until May 28, 2010.

IF YOU WANT YOUR VOTE TO BE COUNTED, THE DEPOSITARY MUST RECEIVE YOUR VOTING INSTRUCTIONS PRIOR TO 5:00 P.M. (NEW YORK CITY TIME) ON MAY 28, 2010.

THE BANK OF NEW YORK MELLON
Depositary

May 5, 2010
New York, New York

TERNIUM S.A.

Société Anonyme Holding

46A, Avenue John F. Kennedy
L-1855, Luxembourg

RCS Luxembourg B 98 668

     Notice of the Annual General Meeting of Shareholders to be held on June 2, 2010 at 2:30 p.m. C.E.T. and of an Extraordinary General Meeting of Shareholders to be held immediately after the adjournment of the Annual General Meeting of Shareholders.

Notice is hereby given to holders of shares of TERNIUM S.A., société anonyme holding (the “Company”), that the Annual General Meeting of Shareholders of the Company will be held on June 2, 2010, at 2:30 p.m. (Central European Time) and an Extraordinary General Meeting of Shareholders of the Company will be held immediately after the adjournment of the Annual General Meeting of Shareholders of the Company. Both meetings (the “Meetings”) will be held at the Company’s registered office in Luxembourg, located at 46A, avenue John F. Kennedy L-1855 Luxembourg. The items listed below will be submitted to the vote of the shareholders.

Agenda for the Annual General Meeting of Shareholders

	1.		Consideration of the Board of Directors’ and independent auditor’s reports on the Company’s consolidated financial statements. Approval of the Company’s consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007.
	2.		Consideration of the Board of Directors’ and independent auditor’s reports on the Company’s annual accounts. Approval of the Company’s annual accounts as at December 31, 2009.
	3.		Allocation of results and approval of dividend payment.
	4.		Discharge to the members of the Board of Directors for the exercise of their mandate throughout the year ended December 31, 2009.
	5.		Election of the members of the Board of Directors.
	6.		Compensation of the members of the Board of Directors.
	7.		Appointment of the independent auditors for the fiscal year ending December 31, 2010 and approval of their fees.

	8.		Authorization to the Company, or any subsidiary, from time to time to purchase, acquire or receive shares of the Company, in accordance with Article 49-2 of the Luxembourg law of 10 August 1915 and with applicable laws and regulations.
	9.		Authorization to the Board of Directors to delegate the day-to-day management of the Company’s business to one or more of its members.
	10.		Authorization to the Board of Directors to appoint one or more of its members as the Company’s attorney-in-fact.

Agenda for the Extraordinary General Meeting of Shareholders

1.

Decision on the renewal of the authorized share capital of the Company and related authorizations and waivers by:

	•		the renewal of the validity period of the Company’s authorized share capital for a period starting on the date of the Extraordinary General Meeting of Shareholders and ending on the fifth anniversary of the date of the publication in the Mémorial of the deed recording the minutes of such meeting;
	•		the renewal of the authorization to the Board of Directors, or any delegate(s) duly appointed by the Board of Directors, for a period starting on the date of the Extraordinary General Meeting of Shareholders and ending on the fifth anniversary of the date of the publication in the Mémorial of the deed recording the minutes of such meeting, from time to time to issue shares within the limits of the authorized share capital against contributions in cash, contributions in kind or by way of incorporation of available reserves at such times and on such terms and conditions, including the issue price, as the Board of Directors or its delegate(s) may in its or their discretion resolve;
	•		the renewal of the authorization to the Board of Directors, for a period starting on the date of the Extraordinary General Meeting of Shareholders and ending on the fifth anniversary of the date of the publication in the Mémorial of the deed recording the minutes of such meeting, to waive, suppress or limit any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital; waiver of any pre-emptive subscription rights provided for by law and related procedures;
	•		decision that for as long as (but only for as long as) the shares of the Company are listed on a regulated market, any issuance of shares for cash within the limits of the authorized share capital shall be subject by provision of the Company’s articles of association to the pre-emptive subscription rights of the then existing shareholders, except in the following cases (in which cases no pre-emptive rights shall apply):

	(a)		any issuance of shares for, within, in conjunction with or related to, an initial public offering of the shares of the Company on one or more regulated markets (in one or more instances); and
	(b)		any issuance of shares against a contribution other than in cash; and

	(c)		any issuance of shares upon conversion of convertible bonds or other instruments convertible into shares of the Company; provided, however, that the pre-emptive subscription rights of the then existing shareholders shall apply by provision of the Company’s articles of association in connection with any issuance of convertible bonds or other instruments convertible into shares of the Company for cash; and
	(d)		any issuance of shares (including by way of free shares or at discount), up to an amount of 1.5% of the issued share capital of the Company, to directors, officers, agents, employees of the Company, its direct or indirect subsidiaries, or its Affiliates (as such term is defined in the Company’s articles of association) (collectively, the “Beneficiaries”), including without limitation the direct issue of shares or upon the exercise of options, rights convertible into shares, or similar instruments convertible or exchangeable into shares issued for the purpose of compensation or incentive of the Beneficiaries or in relation thereto (which the Board of Directors shall be authorized to issue upon such terms and conditions as it deems fit).

	•		the acknowledgement and approval of the report of the Board of Directors in relation with the authorized share capital and the proposed authorizations to the Board of Directors with respect to any issuance of shares within the authorized share capital while suppressing any pre-emptive subscription rights of existing shareholders and related waiver; and
	•		amendment of article 5 of the articles of association of the Company to reflect the resolutions on this item of the agenda.

Pursuant to the Company’s Articles of Association, resolutions at the Annual General Meeting of Shareholders will be passed by a simple majority of the votes cast, irrespective of the number of shares present or represented. The Extraordinary General Meeting of Shareholders may validly deliberate only when at least half of the share capital is represented. If the required quorum is not met at the Extraordinary General Meeting of Shareholders, a second meeting may be convened by means of notices published twice, at fifteen (15) days interval and with the second notice being published not later than fifteen (15) days before the day of the meeting, in the Mémorial — Recueil des Sociétés et Associations (Luxembourg Official Gazette) and two newspapers in Luxembourg. Such notices shall in addition be made in accordance with the publicity requirements of the regulated markets where the Shares, or other securities representing Shares, are listed. On second call, the Extraordinary General Meeting of Shareholders may validly deliberate regardless of the number of shares represented. Either on first or second call, the Extraordinary General Meeting of Shareholders may validly adopt resolutions with a two-thirds majority of the votes of the shares represented.

Procedures for attending the Meetings

Any shareholder who holds one or more share(s) of the Company on May 28, 2010 (the “Record Date”) shall be admitted to the Meetings. Holders of shares as of the Record Date may also vote by proxy.

Those shareholders who have sold their shares between the Record Date and the date of the Meetings must not attend or be represented at any of the Meetings. In case of breach of such prohibition, criminal sanctions may apply.

Holders of American Depositary Receipts (the “ADRs”) as of April 28, 2010 are entitled to instruct The Bank of New York Mellon, as Depositary, as to the exercise of the voting rights pertaining to the Company’s shares represented by such holder’s ADRs. Elegible holders of ADRs who desire to give voting instructions in respect of the shares represented by their ADRs at the Meetings must complete, date and sign a proxy form and return it to The Bank of New York Mellon Shareowner Services, P.O. Box 3549, S. Hackensack New Jersey 07606-9249, U.S.A. Attention: Proxy Processing, by 5:00 p.m., New York City time, on May 28, 2010. Holders of ADRs maintaining non-certificated positions must follow voting instructions outlined by their broker or custodian bank.

The Shareholder Meeting Brochure and Proxy Statement (which contains reports on each item of the agenda for each of the Meetings, and further details on voting procedures) and the forms furnished by the Company in connection with the Meetings, may be obtained from the Company’s registered office located at 46A, avenue John F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg, between 10:00 a.m. and 5:00 p.m. (local time).

Copies of the Shareholder Meeting Brochure and Proxy Statement and the Company’s 2009 annual report (which includes the Company’s consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007; and the Company’s annual accounts as at December 31, 2009, together with the board of directors’ and the independent auditors’ reports thereon) are available on our website at http://www.ternium.com/en/investor/ and may also be obtained upon request, by calling +352 26 68 31 52 or +1 800 555 2470 (the latter number is toll free if you call from the United States). These documents are also available free of charge at the Company’s registered office in Luxembourg.

Raúl H. Darderes
Secretary to the Board of Directors

May 5, 2010
Luxembourg

TERNIUM S.A.

Société Anonyme Holding

46A, Avenue John F. Kennedy
L-1855, Luxembourg

RCS Luxembourg B 98 668

SHAREHOLDER MEETING BROCHURE AND PROXY STATEMENT

Annual General Meeting of Shareholders to be held on June 2, 2010 at 2:30 p.m. C.E.T. and
Extraordinary General Meeting of Shareholders to be held immediately after the adjournment of the
Annual General Meeting of Shareholders

This Shareholder Meeting Brochure and Proxy Statement is furnished by TERNIUM S.A., société anonyme holding (the “Company”), in connection with the Annual General Meeting of Shareholders of the Company to be held on June 2, 2010, starting at 2:30 p.m., Central European Time, and an Extraordinary General Meeting of Shareholders of the Company to be held immediately after the adjournment of the Annual General Meeting of Shareholders of the Company (the “Meetings”) for the purposes set forth in the accompanying Notice of the Annual General Meeting of Shareholders and of an Extraordinary General Meeting of Shareholders (the “Notice”), at the Company’s registered office in Luxembourg, located at 46A, avenue John F. Kennedy L-1855 Luxembourg.

As of April 28, 2010, there were issued and outstanding 2,004,743,442 ordinary shares, USD 1.00 par value each, of the Company (the “Shares”), including Shares (the “Deposited Shares”) deposited with The Bank of New York Mellon (the “Depositary”) under the Deposit Agreement, dated as of January 31, 2006 (the “Deposit Agreement”), among the Company, the Depositary and owners and beneficial owners from time to time of American Depositary Receipts (the “ADRs”) issued thereunder. The Deposited Shares are represented by American Depositary Shares, which are evidenced by the ADRs (one ADR equals ten Deposited Shares).

Each Share entitles the holder thereof to one vote at General Meetings of Shareholders of the Company.
Any holder of one or more Share(s) as of May 28, 2010 shall be admitted to the Meetings. Holders of Shares as of May 28, 2010 may also vote by proxy.

Each holder of ADRs as of April 28, 2010 is entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the Shares represented by such holder’s ADRs. Elegible holders of ADRs who desire to give voting instructions in respect of the Shares represented by their ADRs must complete, date and sign a proxy form and return it to The Bank of New York Mellon Shareowner Services, P.O. Box 3549, S. Hackensack New Jersey 07606-9249, U.S.A. Attention: Proxy Processing, by 5:00 p.m., New York City time, on May 28, 2010. If the Depositary receives properly completed instructions by 5:00 p.m., New York City time, on May 28, 2010, then it shall endeavor, insofar as practicable, to vote or cause to be voted the shares underlying such ADRs in the manner prescribed by the instructions. However, if by 5:00 p.m., New York City time, on May 28, 2010, the Depositary receives no instructions from the holder of ADRs, or the instructions received are not in proper form, then the Depositary shall deem such holder to have instructed the Depositary to give, and the Depositary shall give, a discretionary proxy to a person designated by the Company with respect to that amount of Shares underlying such ADRs to vote that amount of Shares underlying such ADRs in favor of any proposals or recommendations of the Company (including any recommendation by the Company to vote that amount of shares underlying such ADRs on any issue in accordance with the majority shareholders’ vote on that issue) as determined by the appointed proxy. No instruction shall be deemed given and no discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary that (x) it does not wish such proxy given, (y) substantial opposition exists, or (z) the matter materially and adversely affects the rights of the holders of ADRs. Any holder of ADRs is entitled to revoke or revise any instructions previously given to the Depositary by filing with the Depositary a written revocation or duly executed instructions bearing a later date at any time prior to 5:00 p.m., New York City time, on May 28, 2010. No instructions, revocations or revisions thereof will be accepted by the Depositary after that time. In order to avoid the possibility of double vote, the Company’s ADR books will be closed for cancellations from April 28, 2010 until May 28, 2010.

Holders of ADRs maintaining non-certificated positions must follow voting instructions outlined by their broker or custodian bank.

Holders of ADRs traded in the New York stock exchange need not have their ADRs blocked for trading.

The Meetings will appoint a chairperson pro tempore to preside over the Meetings. The chairperson pro tempore will have broad authority to conduct the Meetings in an orderly and timely manner and to establish rules for shareholders who wish to address the Meetings; the chairperson may exercise broad discretion in recognizing shareholders who wish to speak and in determining the extent of discussion on each item of the agenda.

Pursuant to the Company’s Articles of Association, resolutions at the Annual General Meeting of Shareholders will be passed by a simple majority of the votes cast, irrespective of the number of shares present or represented. The Extraordinary General Meeting of Shareholders may validly deliberate only when at least half of the share capital is represented. If the required quorum is not met at the Extraordinary General Meeting of Shareholders, a second meeting may be convened by means of notices published twice, at fifteen (15) days interval and with the second notice being published not later than fifteen (15) days before the day of the meeting, in the Mémorial — Recueil des Sociétés et Associations (Luxembourg Official Gazette) and two newspapers in Luxembourg. Such notices shall in addition be made in accordance with the publicity requirements of the regulated markets where the Shares, or other securities representing Shares, are listed. On second call, the Extraordinary General Meeting of Shareholders may validly deliberate regardless of the number of shares represented. Either on first or second call, the Extraordinary General Meeting of Shareholders may validly adopt resolutions with a two-thirds majority of the votes of the shares represented.

The Annual General Meeting of Shareholders is called to address and vote on the following agenda:

1.

Consideration of the Board of Directors’ and independent auditor’s reports on the Company’s consolidated financial statements. Approval of the Company’s consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007

The Board of Directors recommends a vote FOR approval of the Company’s consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007, after due consideration of the reports from each of the Board of Directors and the independent auditor on such consolidated financial statements. The consolidated balance sheets of the Company and its subsidiaries and the related consolidated income statements, consolidated statements of changes in shareholders’ equity, consolidated cash flow statements and the notes to such consolidated financial statements, the report from the independent auditor on such consolidated financial statements and management’s discussion and analysis on the Company’s results of operations and financial condition are included in the Company’s 2009 annual report, a copy of which is available on our website at http://www.ternium.com/en/investor/ and may also be obtained upon request, by calling +352 26 68 31 52 or +1 (800) 555 2470 (the latter number is toll free if you call from the United States). Copies of the Company’s 2009 annual report are also available free of charge at the Company’s registered office in Luxembourg.

2.

Consideration of the Board of Directors’ and independent auditor’s reports on the Company’s annual accounts. Approval of the Company’s annual accounts as at December 31, 2009

The Board of Directors recommends a vote FOR approval of the Company’s annual accounts as at December 31, 2009, after due consideration of the Board of Directors’ management report and the report from the independent auditor on such annual accounts. These documents are included in the Company’s 2009 annual report, a copy of which is available on our website at http://www.ternium.com/en/investor/ and may also be obtained upon request, by calling +352 26 68 31 52 or +1 (800) 555 2470 (the latter number is toll free if you call from the United States). Copies of the Company’s 2009 annual report are also available free of charge at the Company’s registered office in Luxembourg.

3.

Allocation of results and approval of dividend payment

The Board of Directors recommends a vote FOR approval of a dividend payable in U.S. dollars on June 10, 2010 in the amount of USD 0.05 per share issued and outstanding. Accordingly, if this dividend proposal is approved, the Company will make, or cause to be made, a dividend payment on June 10, 2010 in the amount of USD 0.05 per share issued and outstanding and USD 0.50 per ADR issued and outstanding. The aggregate amount of USD 100,237,172.10 to be distributed as dividend on June 10, 2010 is to be paid from the Company’s distributable reserve account. The profits of the year ended December 31, 2009 of USD 78,097,648.00 will be allocated to the Company’s retained earnings account.

Upon approval of this resolution, it is proposed that the Board of Directors be authorized to determine or amend, in its discretion, the terms and conditions of the dividend payment.

4.

Discharge to the members of the Board of Directors for the exercise of their mandate throughout the year ended December 31, 2009

In accordance with applicable Luxembourg law and regulations, it is proposed that, upon approval of the Company’s annual accounts as at December 31, 2009, the members of the Board of Directors be discharged from any liability in connection with the management of the Company’s affairs during such year.

5.

Election of the members of the Board of Directors

The Company’s Articles of Association provide for the annual election by the shareholders of a Board of Directors of not less than five and not more than fifteen members. Members of the Board of Directors have a term of office of one year, but may be reappointed.

Under the Company’s Articles of Association and applicable U.S. laws and regulations, effective on February 1, 2006, the Company is required to have an Audit Committee comprised solely of directors who are independent.

The present Board of Directors of the Company consists of eleven Directors. Three members of the Board of Directors (Messrs. Ubaldo Aguirre, Adrian Lajous and Pedro Pablo Kuczynski) qualify as independent members under the Company’s Articles of Association and applicable law and are members of the Audit Committee.

It is proposed that (i) the number of members of the Board of Directors be maintained at eleven, (ii) Messrs. Ubaldo Aguirre, Roberto Bonatti, Wilson Nélio Brumer, Carlos Alberto Condorelli, Pedro Pablo Kuczynski, Adrian Lajous, Bruno Marchettini, Gianfelice Mario Rocca, Paolo Rocca and Daniel Agustin Novegil be re-elected as members of the Board of Directors and (iii) Mr. Ronald Seckelmann be appointed as member of the Board of Directors.

Set forth below is summary biographical information of each of the candidates:

1) Mr. Ubaldo Aguirre*. Mr. Aguirre has served on the Company’s board of directors since 2006. He is a managing director of Aguirre, Gonzalez and Marx S.A., an Argentine investment banking firm, and also serves as a member of the board of directors of Juan Minetti S.A., a subsidiary of Holcim, the Swiss cement producer. Since 2005, he also serves as chairman of the board of directors of Permasur S.A. and since 2000 as member of the board of directors of URS Argentina S.A. Mr. Aguirre formerly served as director and chairman of the audit committee of Siderar S.A.I.C. (“Siderar”). Mr. Aguirre began his career at the World Bank in Washington, D.C. In addition, Mr. Aguirre has been a member of the boards of each of Argentina’s Central Bank —where he was responsible for that country’s external borrowing program and financial negotiations— Banco de la Nación Argentina and Banco Nacional de Desarrollo. He also served as the Republic of Argentina’s financial representative for Europe in Geneva and negotiator on behalf of the Republic of Argentina with the Paris Club. Mr. Aguirre, aged 61, is an Argentine citizen.

2) Mr. Roberto Bonatti. Mr. Bonatti has served as a director of the Company since 2005. He is a grandson of Agostino Rocca, founder of the Techint group, a group of companies controlled by San Faustin N.V. (“San Faustin”). Throughout his career in the Techint group he has been involved specifically in the engineering and construction and corporate sectors. He was first employed by the Techint group in 1976, as deputy resident engineer in Venezuela. In 1984, he became a director of San Faustín, and since 2001 he has served as its president. In addition, Mr. Bonatti currently serves as president of Techint Compañía Técnica Internacional S.A.C.I. and Tecpetrol S.A. (“Tecpetrol”). He is also a member of the board of directors of Tenaris S.A. (“Tenaris”), Siderca S.A.I.C. (“Siderca”) and Siderar. Mr. Bonatti, aged 60, is an Italian citizen.

3) Mr. Wilson Nélio Brumer. Mr. Brumer has served as a director of the Company since 2008. He is chief executive officer and former chairman of the board of directors of Usinas Siderurgicas de Minas Gerais S/A — USIMINAS (“Usiminas”). He was Secretary of State of Economic Development in the State of Minas Gerais, Brazil. He also served as Chairman and Vice-Chairman of the Board of Directors of Companhia Vale Do Rio Doce, Chairman of the Board of Directors of BHP Billiton in Brazil, and President of Acesita S.A. Throughout his career, Mr. Brumer served as member of the Board of Directors of several Brazilian companies and entities related to the steel industry. Mr. Brumer, aged 61, is a Brazilian citizen.

4) Mr. Carlos Alberto Condorelli. Mr. Condorelli has served as a director of the Company since 2005. He is currently a member of the board of directors of Tenaris. He began his career within the Techint group in 1975 as an analyst in the accounting and administration department of Siderar. He has held several positions within Tenaris and other Techint group companies, including chief financial officer of Tenaris, finance and administration director of Tubos de Acero de México, S.A. (“Tamsa”), and president of the board of directors of Empresa Distribuidora La Plata S.A., an Argentine utilities company. Mr. Condorelli, aged 59, is an Argentine citizen.

5) Mr. Pedro Pablo Kuczynski*. Mr. Kuczynski has served as a member of the Company’s Board of Directors since 2007. He was Prime Minister of Peru in 2005-2006 and prior to that he was the Minister of Economy and Finance from 2001. He was the Republic of Peru’s Minister of Energy and Mines in 1980-82. He was president until 2001 of a private equity firm he founded in 1992 after spending ten years as Chairman of First Boston International (today Credit Suisse) in New York. Since 2007, he is Senior Advisor to the Rohatyn Group, a firm specializing in emerging markets. He ran a bauxite mining company affiliated with Alcoa between 1977 and 1980. He began his career at the World Bank in 1961 and was in the 1970s head of its Policy Planning Division, Chief Economist for Latin America and Chief Economist of IFC. He was born in Peru in 1938 and educated in Peru and at Oxford and Princeton. Mr. Kuczynski, aged 71, is a U.S. and Peruvian national.

6) Mr. Adrian Lajous*. Mr. Lajous has served as a director of the Company since 2006. Mr. Lajous currently serves as the senior energy advisor to McKinsey & Company, chairman of the Oxford Institute for Energy Studies, president of Petrométrica, S.C. and non-executive director of Schlumberger, Ltd. and Trinity Industries Inc. Mr. Lajous began his career teaching economics at El Colegio de México and in 1977 was appointed director general for energy at Mexico’s Ministry of Energy. Mr. Lajous joined Pemex in 1983, where he held a succession of key executive positions including executive coordinator for international trade, corporate director of planning, corporate director of operations and director of refining and marketing. From 1994 until 1999, he served as chief executive officer of Pemex and chairman of the boards of the Pemex Group of operating companies. Mr. Lajous, aged 66, is a Mexican citizen.

7) Mr. Bruno Marchettini. Mr. Marchettini has served on the Company’s Board of Directors since 2006. Mr. Marchettini is senior advisor in technological matters for the Techint group. Mr. Marchettini has retired from executive positions and is presently engaged as a consultant by Siderar. Mr. Marchettini is a director of San Faustin and Techint Financial Corporation N.V. Mr. Marchettini, aged 68, is an Italian citizen.

8) Mr. Gianfelice Mario Rocca. Mr. Rocca has served as a director of the Company since 2006. He is a grandson of Agostino Rocca. He is chairman of the board of directors of San Faustín, a member of the board of directors of Tenaris, president of the Humanitas Group, and president of the board of directors of Tenova S.p.A. In addition, he sits on the board of directors or executive committees of several companies, including Allianz S.p.A, RCS Quotidiani and Buzzi Unicem. He is vice president of Confindustria, the leading association of Italian industrialists. He is a member of the Advisory Board of Allianz Group, of the Trilateral Commission and of the European Advisory Board of the Harvard Business School. Mr. Rocca, aged 62, is an Italian citizen.

9) Mr. Paolo Rocca. Mr. Rocca has served as chairman of the Company’s Board of Directors since 2005. He is a grandson of Agostino Rocca. He is also chairman and chief executive officer of Tenaris and chairman of the board of directors of Tamsa. In addition, he is a member of the board of directors and vice president of San Faustín and a director of Techint Financial Corporation N.V. Mr. Rocca is chairman of the World Steel Association and member of the International Advisory Committee of NYSE Euronext (New York Stock Exchange). Mr. Rocca, aged 57, is an Italian citizen.

10) Mr. Ronald Seckelmann. Mr. Seckelmann currently serves as chief financial officer of Usiminas. He began his career in Cargill Agricola S.A. (1978) and continued in Alcoa Aluminio S.A. (1980-1988) and Cía. Vidraria Santa Marina S.A. (1988-1992). In 1992 he joined Igaras Papéis e Embalagens S.A. reaching the position of Vicepresident, Administration & Finance. He was chief financial officer and investor relation officer of Klabin S.A. (2000-2008) and Director Vicepresident, Finance of Bertin S.A. (2008-2009). Mr. Seckelmann, aged 53, is a Brazilian citizen.

11) Mr. Daniel Agustin Novegil. Mr. Novegil has served as a director and chief executive officer of the Company since 2005. Mr. Novegil joined Propulsora Siderurgica in 1978 and was appointed as its general director in 1991. In 1993, following the merger of the privatized company Somisa with Propulsora, he was appointed managing director of Siderar. In 1998, after the acquisition of Sidor, Mr. Novegil was appointed chairman and chief executive officer of Sidor. In March 2003, Mr. Novegil was designated executive vice-president of the Techint Flat and Long Steel Division, with executive responsibilities over Siderar and Sidor. He became president of Siderar in May 2005. Mr. Novegil, aged 57, is an Argentine citizen.

Each elected director will hold office until the next Annual General Meeting of Shareholders. Under the current Company’s Articles of Association, such meeting is required to be held on June 1, 2011.

The Board of Directors of the Company met eight times during 2009. On January 12, 2006, the Board of Directors created an Audit Committee pursuant to Article 11 of the Articles of Association of the Company. As permitted under applicable laws and regulations, the Board of Directors does not have any executive, nominating or compensation committee, or any committees exercising similar functions.

6.

Compensation of the members of the Board of Directors

It is proposed that each of the members of the Board of Directors receive an amount of USD 70,000.00 as compensation for their services during the fiscal year 2010, and that the Chairman of the Board of Directors receive, further, an additional fee of USD 280,000.00. It is further proposed that each of the members of the Board of Directors who are members of the Audit Committee receive an additional fee of USD 50,000.00, and that the Chairman of such committee receive, further, an additional fee of USD 10,000.00.

7.

Appointment of the independent auditors for the fiscal year ending December 31, 2010 and approval of their fees

Based on the recommendation from the Audit Committee, the Board of Directors recommends a vote FOR the appointment of PricewaterhouseCoopers (acting, in connection with the Company’s annual accounts and annual consolidated financial statements required under Luxembourg law, through PricewaterhouseCoopers S.àr.l., Réviseur d’entreprises agréé, and, in connection with the Company’s annual and interim consolidated financial statements required under the laws of any other relevant jurisdiction, through Price Waterhouse & Co. S.R.L.) as the Company’s independent auditors for the fiscal year ending December 31, 2010, to be engaged until the next Annual General Meeting of Shareholders that will be convened to decide on the 2010 accounts.

In addition, the Board of Directors recommends a vote FOR approval of the independent auditors’ fees for audit, audit-related and other services to be rendered during the fiscal year ending December 31, 2010, broken-down into four currencies (Argentine Pesos, Euro, Mexican Pesos, and U.S. Dollars), up to a maximum amount for each currency equal to ARS 5,860,046.00; EUR 71,762.00; MXN 12,273,345.00 and USD 197,726.00. Such fees would cover the audit of the Company’s consolidated financial statements and annual accounts, the audit of the Company’s internal controls over financial reporting as mandated by the Sarbanes-Oxley Act of 2002, other audit-related services, and other services rendered by the independent auditors. The Board of Directors also recommends that its Audit Committee be authorized to approve any increase or reallocation of the independent auditors’ fees as may be necessary, appropriate or desirable under the circumstances.

8.

Authorization to the Company, or any subsidiary, from time to time to purchase, acquire or receive shares of the Company, in accordance with Article 49-2 of the Luxembourg law of 10 August 1915 and with applicable laws and regulations

It is recommended that the authorization to the Company and to the Company’s subsidiaries to acquire, from time to time, Shares, including Shares represented by ADRs, granted by the Annual General Meeting of Shareholders held on June 3, 2009, be cancelled and that a new authorization be granted to the Company and to the Company’s subsidiaries to purchase, acquire or receive, from time to time, Shares, including Shares represented by ADRs, on the following terms and conditions:

	1.		The maximum number of Shares, including Shares represented by ADRs, acquired pursuant to this authorization may not exceed 10% of the Company’s issued and outstanding shares or, in the case of acquisitions made through a stock exchange in which the Shares or ADRs are traded, such lower amount as may not be exceeded pursuant to any applicable laws or regulations of such market.
	2.		The acquisitions of Shares may be made in one or more transactions as the Board of Directors of the Company or the board of directors or other governing body of the relevant entity, as applicable, considers advisable. The number of Shares acquired as a block may amount to the maximum permitted amount of purchases.
	3.		The purchase price per ADR to be paid in cash may not exceed 125% (excluding transaction costs and expenses), nor may it be lower than 75% (excluding transaction costs and expenses), in each case of the average of the closing prices of the ADRs in the New York Stock Exchange during the five trading days in which transactions in the ADRs were recorded in the New York Stock Exchange preceding (but excluding) the day on which the ADRs are purchased. In the case of purchases of Shares other than in the form of ADRs, the maximum and minimum per Share purchase prices shall be equal to the prices that would have applied in case of an ADR purchase pursuant to the formula above divided by the number of underlying Shares represented by an ADR at the time of the relevant purchase. Such maximum and minimum purchase prices shall also apply to over-the-counter or off-market transactions. Compliance with maximum and minimum purchase price requirements in any and all acquisitions made pursuant to this authorization (including, without limitation, acquisitions carried out through the use of derivative financial instruments or option strategies) shall be determined on and as of the date on which the relevant transaction is entered into, irrespective of the date on which the transaction is to be settled.
	4.		The above maximum and minimum purchase prices shall, in the event of a change in the par value of the Shares, a capital increase by means of a capitalization of reserves, a distribution of Shares under compensation or similar programs, a stock split or reverse stock split, a distribution of reserves or any other assets, the redemption of capital, or any other transaction impacting on the Company’s equity be adapted automatically, so that the impact of any such transaction on the value of the Shares shall be reflected.
	5.		The acquisitions of Shares may not have the effect of reducing the Company’s net assets below the sum of the Company’s capital stock plus its undistributable reserves.
	6.		Only fully paid-up Shares may be acquired pursuant to this authorization.
	7.		The acquisitions of Shares may be carried out for any purpose, as may be permitted under applicable laws and regulations, including, without limitation, to reduce the share capital of the Company, to offer such shares to third parties in the context of corporate mergers or acquisitions of other entities or participating interests therein, for distribution to the Company’s or the Company’s subsidiaries’ directors, officers or employees or to meet obligations arising from convertible debt instruments.
	8.		The acquisitions of Shares may be carried out by any and all means, as may be permitted under applicable laws and regulations, including through any stock exchange in which the Shares or other securities representing Shares are traded, through public offers to all shareholders of the Company to buy Shares, through the use of derivative financial instruments or option strategies, or in over the counter or off-market transactions or in any other manner.
	9.		The acquisitions of Shares may be carried out at any time and from time to time during the duration of the authorization, including during a tender offer period, as may be permitted under applicable laws and regulations.

	10.		The authorization granted to acquire Shares shall be valid for such maximum period as may be provided for under applicable Luxembourg law as in effect from time to time (such maximum period being, as of to date, five years).
	11.		The acquisitions of Shares shall be made at such times and on such other terms and conditions as may be determined by the Board of Directors of the Company or the board of directors or other governing body of the relevant Company subsidiary, provided that any such purchase shall comply with Article 49-2 et. seq. of the Luxembourg Law of 10 August 1915 on commercial companies, as amended (or any successor law) and, in the case of acquisitions of Shares made through a stock exchange in which the Shares or other securities representing Shares are traded, with any applicable laws and regulations of such market.

It is recommended that the Annual General Meeting of Shareholders grant this authorization and further grant all powers to the Board of Directors and to the board of directors or other governing bodies of the Company’s subsidiaries, in each case with powers to delegate in accordance with applicable laws, the Company’s Articles of Association or the articles of association or other applicable organizational documents of the relevant Company’s subsidiary, to decide on and implement this authorization, to define, if necessary, the terms and procedures for carrying out any purchase, acquisition or reception of Shares, and, in particular, to place any stock exchange orders, conclude any agreements, including, without limitation, for keeping registers of purchases and sales of Shares, make any declarations to the applicable regulatory authorities, carry out all formalities and, generally, do all such other acts and things as may be necessary, appropriate or desirable for the purposes aforesaid. The Board of Directors is expressly authorized to delegate to its Chairman, with the latter having the option to sub-delegate to any other person(s), the performance of the actions entrusted to the Board of Directors, pursuant to, or in connection with, this authorization.

9.

Authorization to the Board of Directors to delegate the day-to-day management of the Company’s business to one or more of its members

It is proposed that the Board of Directors of the Company be authorized to delegate the management of the Company’s day-to-day business and the authority to represent and bind the Company with his sole signature in such day-to-day management to Mr. Daniel Agustin Novegil, and to appoint Mr. Novegil as chief executive officer (administrateur délégué) of the Company.

10.

Authorization to the Board of Directors to appoint one or more of its members as the Company’s attorney-in-fact

In order to provide for the necessary flexibility in the management of the Company’s affairs, it is proposed to authorize the Board of Directors of the Company (the “Board”) to appoint any or all members of the Board from time to time as the Company’s attorney-in-fact, delegating to such directors any management powers (including, without limitation, any day-to-day management powers) to the extent the Board may deem appropriate in connection therewith, this authorization to be valid until expressly revoked by the Company’s General Shareholders Meeting, it being understood, for the avoidance of doubt, that this authorization does not impair nor limit in any way the powers of the Board to appoint any non-members of the Board as attorneys-in-fact of the Company pursuant to the provisions of article 10.1(iii) of the Articles of Association of the Company.

The Extraordinary General Meeting of Shareholders is called to address and vote on the following agenda:

1.

Decision on the renewal of the authorized share capital of the Company and related authorizations and waivers by:

	•		the renewal of the validity period of the Company’s authorized share capital for a period starting on the date of the Extraordinary General Meeting of Shareholders and ending on the fifth anniversary of the date of the publication in the Mémorial of the deed recording the minutes of such meeting;
	•		the renewal of the authorization to the Board of Directors, or any delegate(s) duly appointed by the Board of Directors, for a period starting on the date of the Extraordinary General Meeting of Shareholders and ending on the fifth anniversary of the date of the publication in the Mémorial of the deed recording the minutes of such meeting, from time to time to issue shares within the limits of the authorized share capital against contributions in cash, contributions in kind or by way of incorporation of available reserves at such times and on such terms and conditions, including the issue price, as the Board of Directors or its delegate(s) may in its or their discretion resolve;
	•		the renewal of the authorization to the Board of Directors, for a period starting on the date of the Extraordinary General Meeting of Shareholders and ending on the fifth anniversary of the date of the publication in the Mémorial of the deed recording the minutes of such meeting, to waive, suppress or limit any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital; waiver of any pre-emptive subscription rights provided for by law and related procedures;
	•		decision that for as long as (but only for as long as) the shares of the Company are listed on a regulated market, any issuance of shares for cash within the limits of the authorized share capital shall be subject by provision of the Company’s articles of association to the pre-emptive subscription rights of the then existing shareholders, except in the following cases (in which cases no pre-emptive rights shall apply):

	(a)		any issuance of shares for, within, in conjunction with or related to, an initial public offering of the shares of the Company on one or more regulated markets (in one or more instances); and
	(b)		any issuance of shares against a contribution other than in cash; and
	(c)		any issuance of shares upon conversion of convertible bonds or other instruments convertible into shares of the Company; provided, however, that the pre-emptive subscription rights of the then existing shareholders shall apply by provision of the Company’s articles of association in connection with any issuance of convertible bonds or other instruments convertible into shares of the Company for cash; and
	(d)		any issuance of shares (including by way of free shares or at discount), up to an amount of 1.5% of the issued share capital of the Company, to directors, officers, agents, employees of the Company, its direct or indirect subsidiaries, or its Affiliates (as such term is defined in the Company’s articles of association) (collectively, the “Beneficiaries”), including without limitation the direct issue of shares or upon the exercise of options, rights convertible into shares, or similar instruments convertible or exchangeable into shares issued for the purpose of compensation or incentive of the Beneficiaries or in relation thereto (which the Board of Directors shall be authorized to issue upon such terms and conditions as it deems fit).

	•		the acknowledgement and approval of the report of the Board of Directors in relation with the authorized share capital and the proposed authorizations to the Board of Directors with respect to any issuance of shares within the authorized share capital while suppressing any pre-emptive subscription rights of existing shareholders and related waiver; and
	•		amendment of article 5 of the articles of association of the Company to reflect the resolutions on this item of the agenda.

The Board of Directors recommends a vote FOR the approval of the renewal of the authorized share capital of the Company and related authorizations and waivers on the terms set forth in the above Agenda.

The Board of Directors is of the opinion that the successful implementation and development of the Company and its group’s long term strategy will depend, among other factors, on the Company’s ability to grow through acquisitions or other investments on the best possible terms, and that the existence of the preferential subscription rights provided for by Luxembourg law for the benefit of existing shareholders will seriously reduce the flexibility of the Company to finance its operations and potential growth through issuances of shares; in addition, the preferential subscription rights procedure contemplated by Luxembourg law would, in some cases, risk delaying increases in share capital and issuances of new shares at times when timing may be of the essence.

Accordingly, the Board of Directors believes it to be in the Company’s best interest that the Board of Directors be authorized to negotiate and conclude acquisitions, investments, joint venture and other transactions using shares or rights to shares (either at or below market price, and including by way of incorporation of reserves) of the Company’s capital as consideration. Similarly, the Board of Directors believes that the interest of the Company requires that maximum flexibility be granted so that the Company is able to react quickly and without delay to any suitable acquisition, investment, joint venture or other strategic proposals or projects and/or to secure financing in connection thereto by issuing or offering to issue shares within the limits of the proposed authorization.

The Board of Directors also believes that the interest of the Company requires that the Board of Directors be authorized to issue such shares or rights thereto either at or below market price, as it may be necessary or convenient in light of the facts and circumstances of the transaction in question or its strategic significance.

The Board of Directors further believes that in order for the Company and its group to maximize its ability to attract and retain valuable directors, managers, officers, agent or employees, it is in the best interest of the Company to retain the flexibility to offer to such persons shares or conversion, option or similar plans or incentive programs permitting the subscription of shares in the Company either at or below market price. Such plans and programs, by serving the purpose of facilitating the recruitment or retention of key employees and executives, would enable the Company and its group to secure, further strengthen and develop its market position and continue the implementation of the Company’s long term strategy.

Accordingly, the Board of Directors believes that issuances of shares as compensation to, or to satisfy conversion or option rights created to provide compensation to directors, officers, agents or employees of the Company, its subsidiaries or its affiliated companies should be made by the Board of Directors upon such terms and conditions as it deems fit and without reserving pre-emptive subscription rights to existing shareholders; provided, however, that any such issuances shall be limited to 1.5% of the Company’s issued share capital from time to time.

The Company anticipates that the next Annual General Meeting of Shareholders will be held on June 1, 2011. Any shareholder who intends to present a proposal to be considered at the next Annual General Meeting of Shareholders must submit the proposal in writing to the Company at the registered office of the Company, located at 46A, avenue John F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg, not later than 4:00 P.M. (local time) on February 18, 2011, in order for such proposal to be considered for inclusion on the agenda for the 2011 Annual General Meeting of Shareholders.

PricewaterhouseCoopers are the Company’s independent auditors. A representative of the independent auditors will be present at the Annual General Meeting of Shareholders to respond to questions.

Raúl H. Darderes
Secretary to the Board of Directors

Ternium

2009 Annual Report

Ternium 2009 Annual Report Contents

Company Profile & Strategy			3
Operating and Financial Highlights			4
Chairman’s Letter			5
Management Report
Business Review			7
Corporate Governance			19
Board of Directors and Executive Officers			21
Corporate Information / Investor Information			22
Management Discussion and Analysis			23
Financial Statements			30

Company Profile & Strategy

Ternium is a leading steel company in Latin America. We manufacture and process a broad range of value-added steel products, including galvanized and electro-galvanized sheets, pre-painted sheets, tinplate, welded pipes, and hot-rolled and cold-rolled steel, as well as slit and cut-to-length offerings through our service centers. We also produce long steel products, such as bars and wire rod, and metal building components.

Our customers range from large global companies to small businesses operating in the construction, home appliances, capital goods, container, food, energy and automotive industries. We aim to build close relationships with our customers and recognize that our success is closely linked with theirs.

Ternium has a deeply engrained industrial culture. With an annual production capacity of approximately 9 million tons of finished steel products and 14,000 employees, Ternium has production facilities located in Mexico, Argentina, the southern United States and Guatemala, as well as a network of service and distribution centers in Latin America that provide it with a strong position from which to serve its core markets.

Our favorable access to iron ore sources and proprietary mines, diversified steel production technology and proximity to local steel consuming markets, enable us to optimize logistic costs, adapt to fluctuating input cost conditions and differentiate from our competitors through the offer of valuable services to our customer base.

We operate with a broad and long-term perspective. We take steps to improve the quality of life for our employees and their families as well as the local communities in which we operate.

Note:

Ternium S.A. is a Luxembourg company and its securities are listed on the New York Stock Exchange (NYSE: TX). We refer to Ternium S.A. and its consolidated subsidiaries as “Ternium” or “we.”

Operating and Financial Highlights

The financial and operational information contained in this annual report is based on the consolidated financial statements of Ternium S.A. (the “Company”), prepared in accordance with International Financial Reporting Standards (IFRS) and presented in US dollars and metric tons.

		2009				2008				2007				2006
SALES VOLUME (thousand tons)
Flat products			5,305.2				6,325.5				5,718.9				4,693.3
Long products			1,055.6				1,217.2				1,261.2				1,234.6
Total flat and long products			6,360.8				7,542.7				6,980.1				5,927.8
FINANCIAL INDICATORS (US$ millions)
Net sales			4,959.0				8,464.9				5,633.4				4,484.9
Operating income			296.4				1,676.0				836.8				1,001.8
EBITDA (1)			708.5				2,089.6				1,192.1				1,253.2
Income before income tax expense			430.4				880.8				707.2				899.2
Discontinued operations (2)			428.0				157.1				579.9				444.5
Net income attributable to:
Equity holders of the Company			717.4				715.4				784.5				795.4
Minority interest			49.7				159.7				211.3				195.2
Net income for the year			767.1				875.2				995.8				990.6
Free cash flow (3)			953.2				(70.4	)			592.1				439.1
Capital expenditures			208.6				587.9				344.3				314.9
BALANCE SHEET (US$ millions)
Total assets			10,292.7				10,671.2				13,649.1				8,658.3
Total financial debt			2,326.7				3,267.3				4,082.3				1,053.8
Net financial debt			184.1				2,111.8				2,891.1				410.6
Total liabilities			4,031.4				5,109.8				7,391.2				3,274.6
Capital and reserves attributable to the Company’s equity holders			5,296.3				4,597.4				4,452.7				3,757.6
Minority interest			964.9				964.1				1,805.2				1,626.1
STOCK DATA (US$  per share / ADS)
Basic earnings per share			0.36				0.36				0.39				0.41
Basic earnings per ADS (4)			3.58				3.57				3.91				4.11
Weighted average number of shares outstanding (5) (thousand shares)			2,004,743.4				2,004,743.4				2,004,743.4				1,936,833.1

Chairman’s Letter

In 2009, the effects of the global financial and economic crisis were clearly felt in our industry. With the remarkable exception of China, apparent consumption of steel was affected by the decline in industrial production and adjustment of inventories. Global steel consumption ex-China declined by 25% year on year marking an abrupt end to the strong expansionary cycle that began in 2002. As we enter 2010, however, the recovery in demand, which began to manifest itself in the second half of 2009, is slowly consolidating along with industrial production.

Ternium has performed well in the crisis and is in a good position to resume growth as the recovery unfolds. Net sales fell 41% year on year to US$5.0 billion but operating results remained positive as we took quick action to adjust production levels, reduce working capital and structural costs, and downsize capital expenditure. Our financial position has been transformed as net debt was reduced by US$1.9 billion to US$0.2 billion at the end of the year.

In May 2009, we reached an agreement with the Venezuelan government over compensation for the nationalization of Sidor. To date, we have collected US$1.25 billion out of the US$1.97 billion settlement. The amounts collected have contributed to the reduction in our net debt position.

The recovery in demand for our products is being led by higher industrial activity in Mexico, where the export oriented industries are benefiting from the country’s strong competitiveness, and by higher demand from our industrial customers in South America, a region that is being favored by high commodity prices. As a result, capacity utilization in our facilities, currently at approximately 85%, should continue improving gradually during the year.

Steel prices are increasing as raw material costs reflect increased demand, mainly from China. In addition, the new dynamic of quarterly pricing in iron ore contracts will bring higher volatility to the steel industry cost base. We have relatively low exposure to iron ore price fluctuations due to our mines in Mexico and in our Mexican operations we use natural gas to process iron ore thus limiting our exposure to metallurgical coal prices. Our diversified and flexible cost structure should help us sustain our margins in this environment of rising costs for the industry.

After re-dimensioning our investment and expansion plans in the light of the new market realities, we are moving forward with a series of initiatives aimed at securing and strengthening our competitive advantages for the long-term and at developing products and services that foster investment in our markets and facilitate enduring relationships with our customers. While in South America we are working on different projects to increase our semi-finished products integration, in Mexico we are working on a project to build additional cold rolling and coating lines to expand our product range available to the automotive industry, and we are enhancing our service and distribution center network to be able to better reach the largest retail steel consumption areas in the country. In addition, we recently announced an acquisition in Colombia that will expand our presence in this country’s flat and long steel market through an extensive processing and distribution network, as well as long products steelmaking capacity.

Our program to support small and medium enterprises, both suppliers and customers, in Mexico and Argentina, was particularly active in 2009. The program, now in its eighth year, focuses on improving the competitiveness of these entities through transferring managerial and technical skills. By supporting these enterprises, we help to strengthen the industrial value chain in our markets and, accordingly, sustain and increase demand for our products. Our safety indicators showed a small improvement over the previous year, thus consolidating the significant improvement shown in 2008, following the integration of IMSA into our Mexican operations. To promote further improvements in our safety performance, we are now developing a comprehensive medium-term safety program inspired by industry best practices.

We have played an active role in promoting a sector-wide approach to sustainable development in collaboration with the World Steel Association, of which I have the honor of serving as Chairman this year. Last year, the Association recognized Ternium’s participation in its CO2 emissions data collection program with a Climate Action Certificate, among other large steel producers from around the world. We will continue to participate in this program and to invest in our operations to minimize their impact on the environment.

Now that the economic situation is more stable and our financial position more secure, we propose to resume payment of an annual dividend of US$0.50 per ADS. If approved by shareholders, this will be distributed in June.

As we went into 2009, the economic and financial crisis was still unfolding and there was considerable uncertainty as to the depth and course it would take. I wish to thank our employees for their extraordinary response and commitment during the crisis and for their efforts to sustain and enhance the competitive position of the company. I also thank our customers, suppliers and shareholders for their continuing support and confidence in Ternium.

Paolo Rocca
Chairman

Business Review

In 2009, business conditions in Ternium’s steel markets have been challenging, particularly during the first half of the year. Beginning in the fourth quarter of 2008, the global economic downturn spread to Latin American economies, causing a decrease in sales of capital goods and consumer durables, which in turn resulted in a significant contraction in steel consumption and a generalized de-stocking of the steel industry’s value chain that persisted through the second half of 2009.

The decrease in apparent steel demand in Ternium’s markets forced us to reduce capacity utilization rates at our facilities. We made adjustments to our production configuration taking into consideration, among other factors, market demand, inventory resizing goals and cost. We were able to operate our crude steel production facilities at relatively high utilization rates in 2009 but we reduced labor shifts at many of our production lines, supplementing these measures with the downsizing of corporate and other staff, and other company-wide cost cutting initiatives.

We also engaged in extensive marketing efforts in 2009 and benefited from our ability to offer differentiated services vis-à-vis importers, our favorable location relative to our competitors and our excess production capacity, to gain an increased market share in our natural markets.

In 2009, we faced no financial constraints in spite of the worldwide financial crisis. In addition to the year’s operating income contribution in the reduction of our net debt, we freed substantial cash flows as a result of our inventory reduction program. Furthermore, we reassessed, early in the year, our entire short-to medium-term capital expenditure plans and slowed down or suspended major capital expenditure projects to strengthen our balance sheet.

Through these initiatives, we managed to significantly mitigate the impact of the global crisis on our margins. We finished the year with EBITDA of US$708.5 million and free cash flow of US$953.2 million, despite the context of relatively low utilization rates in the industry and adverse steel market conditions.

Net debt decreased by US$1.9 billion in 2009, to US$184.1 million as of December 31, 2009. This significant decrease in net debt is primarily attributable to our strong free cash flow generation and to the collection of US$953.6 million in connection with the transfer of the Sidor shares to Venezuela, as discussed below.

On May 7, 2009 Ternium completed the transfer of its entire 59.7% interest in Sidor, C.A. to Corporación Venezolana de Guayana, or CVG, a Venezuelan governmental entity. The transfer was effected as a result of Venezuela’s Decree Law 6058, which ordered that Sidor and its subsidiaries and associated companies be transformed into state-owned enterprises and declared the activities of such companies of public and social interest. Ternium agreed to receive an aggregate amount of US$1.97 billion as compensation for its Sidor shares. Of that amount, CVG paid US$400 million in cash on May 7, 2009 and the balance was divided in two tranches: the first tranche of US$945 million to be paid in six equal quarterly installments, and the second tranche to 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. As of the date of this annual report, CVG paid US$1.25 billion, including payments during the first quarter 2010, and the outstanding principal is US$720 million.

Following the downturn in 2009, we expect the South America economies to see a significant recovery, driven by strong worldwide demand for commodities. We anticipate that the NAFTA region will grow at a more moderate pace, and that a dynamic Mexican industrial sector will support local demand for steel products. In addition, we foresee a gradual recovery in production capacity utilization rates during the year.

North America Region

During 2009, Ternium has been the leading supplier of flat steel products in Mexico and has also been active in the south of the United States. Steel shipments and prices in North America remained subdued during the first half of 2009, but gradually recovered during the second half of the year.

The economies in the North America Region contracted in 2009. GDP in Mexico suffered a 6.9% contraction, higher than the regional average, as a result of the downturn in the US economy and a sharp depreciation of the Mexican Peso vis-à-vis other currencies.

GDP performance — Mexico1		GDP performance — United States1

Mexican export-oriented industries were particularly affected by the severe activity downturn in the United States. In turn, the US economy suffered from the effects of weakening consumer confidence and increasing unemployment, accentuated by financing constraints.

While apparent steel use in Mexico decreased 15% year-over-year in 2009 to approximately 13.9 million tons, it decreased 37% in the entire North America Region due to even steeper drops in steel consumption rates in the United States and Canada, coupled with a de-stocking process mainly during the first half of the year.

Apparent Steel Use — Mexico1		Apparent Steel Use — United States1

Steel consuming sectors in Mexico, such as construction and the automotive industry, showed disparate degrees of contraction in 2009.

Construction — Mexico2		Motor vehicles — Mexico2

In order to adapt to a subdued steel demand scenario, Ternium’s strategy focused on keeping its integrated facilities working at high utilization rates and substantially reducing utilization rates in its non-integrated facilities.

In addition, Ternium prioritized in 2009 the use of direct reduced iron (DRI) over steel scrap in the metallic mix of its steel shops. By keeping very high utilization rates in its iron ore mines and direct reduction units and reducing scrap purchases, Ternium benefited from its excess production capacity of iron ore pellets and relatively low natural gas prices in North America.

In 2009, Ternium leveraged upon its excess production capacity and its widespread service infrastructure in Mexico to gain market share by developing new customers that formerly relied on imported material. Furthermore, the industry’s excess steelmaking capacity that resulted from the economic downturn allowed Ternium to widen its supplier base of third-party semi-finished steel products for its non-integrated operations, mainly for specialty steel grades.

Ternium slowed down its previously announced capital expenditure project in Mexico, consisting of a mini-mill in the Monterrey area with an annual production capacity of two million tons of hot-rolled coils, one million tons of cold-rolled coils and 300,000 tons of hot-dipped galvanized coils, aimed at serving Mexican local steel markets. Lately, the Company has been evaluating the alternative of launching the cold-rolling and galvanizing facilities first. Ternium has acquired the land, has advanced on relevant permits and has been working on the basic engineering designs.

For 2010, Ternium anticipates a more dynamic industrial sector in Mexico that will support local demand for steel products.

South and Central America Region

During 2009, Ternium was the leading supplier of flat steel products to Argentina, Paraguay and Uruguay and kept a significant presence in the steel markets of Chile and Bolivia. In addition, Ternium continued serving customers in Colombia, Peru and Ecuador and in the markets for coated steel products in Guatemala, Honduras, Nicaragua, El Salvador and Costa Rica.

Ternium adjusted its industrial and marketing activities to a pronounced decline in apparent steel demand in this region in 2009. While the downturn in economic activity was softened by the recovery of commodity prices during the year, the steel industry’s value chain went through a de-stocking phase that depressed steel shipment levels, particularly during the first half of 2009. With steel inventory levels largely adjusted and the economic activity returning to positive territory, in 2010 apparent steel demand has recovered in the region, though to levels that are below those achieved before the global economic downturn.

GDP performance — Latin America³

Finished steel apparent demand decreased severely in 2009 in our main markets in the region. Apparent steel use in South and Central America is estimated to have decreased 24% year-over-year in 2009, well above the decrease recorded by key steel consuming sectors such as construction, which evidences the size of the de-stocking in the steel industry’s value chain.

Apparent Steel Use — South and Central America³

While construction was among the sectors least affected by the economic downturn, the automotive sector was among the most affected. In Argentina, construction activity is estimated to have decreased 6.5% year-over-year in 2009, while activity in the automotive sector is estimated to have decreased 25.6% year-over-year.

Construction — Argentina3		Motor vehicles — Argentina3

In Argentina, apparent steel demand decreased 33% to about 3.2 million tons for the year 2009 due to the combination of lower economic activity and relatively high inventories in the steel industry’s value chain early in 2009. The country’s economy, as measured by its GDP, is estimated to have contracted 4% year-over-year in 2009, reflecting a drop in consumption and capital investments.

In Chile, Paraguay and Uruguay, finished steel apparent demand decreased as well. Though the economies of these countries stagnated or contracted in 2009, recording GDP growth rates of between 1% and minus 3% year-over-year, we increased market share in these markets in 2009. Lower demand in Argentina in 2009 allowed us to increase supplies to our customers in Chile, as tight production rates in the first nine months of 2008 constrained our supplying capabilities to the Chilean steel market during 2008.

Apparent steel demand in Colombia, Peru and Ecuador was also weak. The economies of these countries, however, were among the least affected in the region, particularly Peru which recorded an estimated 2% year-over-year GDP growth rate in 2009. Overall, Ternium kept its presence in these countries in the finished steel products segment and substantially reduced billet steel shipments due to lack of demand.

The decrease in apparent steel demand led Ternium to adjust its production configuration and selectively reduce capacity utilization rates in its facilities. During 2009, Ternium’s subsidiary Siderar kept its steel shop working at relatively high utilization rates while it substantially reduced utilization rates in its downstream facilities.

The resizing of Siderar’s operations led to the reduction of labor shifts, the closure of some production lines, corporate and other staff reductions, and other company-wide cost-cutting initiatives.

In addition, Siderar reassessed its capacity expansion plan in Argentina, “and is currently analyzing when to follow up with this investment”. In October 2008, and as part of this plan, Siderar started the relining of blast furnace #1 in San Nicolás. The relining of the blast furnace is aimed at enabling the continuous operation of the mill for a 12- to 15-year production period and, more broadly, is part of Siderar’s plan to increase its annual steelmaking capacity in Argentina by 1.2 million tons to a total of 4.0 million tons, thus increasing the availability of slabs within Ternium. Initially scheduled to be completed early in 2009, the relining was later slowed down and completed during the first quarter of 2010.

Despite the slow recovery anticipated, high commodity export prices in the international markets are expected to have a positive impact on steel consumption rates in South and Central America in 2010.

On April 8, 2010, Ternium announced it had entered into a definitive agreement to acquire a 54% ownership interest in Colombia-based Ferrasa through a capital contribution in the amount of US$74.5 million. Upon completion of this transaction, Ferrasa will have a 100% ownership interest in Sidecaldas, Figuraciones and Perfilamos del Cauca.

Ferrasa is a leading 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 del Cauca 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.

The transaction, which is subject to Colombian antitrust clearance and other customary conditions, is expected to close in the third quarter of 2010. Upon its completion Ferrasa is expected to have consolidated financial debt of approximately US$120 million.

Ternium also has agreed to purchase a 54% ownership interest in Ferrasa Panamá for US$0.5 million. Ferrasa Panamá is a long steel products processor and distributor based in Panama, with annual sales of approximately 8,000 tons.

In addition, the former controlling shareholders will 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 will have 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.

Through these investments Ternium expects to expand its business and commercial presence in Colombia, a country that is experiencing significant growth and is presently the fifth largest steel consuming market in Latin America, as well as in Central America.

Iron Ore Mining

Ternium’s mining activities are aimed at securing the supply of iron ore for our facilities in Mexico for at least a 20-year operating period. Surplus production of iron ore is commercialized to hedge the iron ore procurement requirements of Ternium’s facilities in Argentina.

The extraction, processing and production of iron ore is organized under two operating companies: Las Encinas, which is wholly owned by Ternium; and Peña Colorada, which is 50% owned by Ternium and 50% by ArcelorMittal.

As of year-end 2009, the mining activities employed approximately 1,300 direct employees and had a combined production capacity of 5.9 million tons per year of pellets, 0.4 million tons per year of concentrate and 0.4 million tons per year of fines.

Las Encinas

The Las Encinas mining facilities include a pelletizing plant located in the community of Alzada, in Mexico’s state of Colima, which has a production capacity of 1.9 million tons per year. In addition, approximately 0.4 million tons per year of hematite iron ore is produced as fines for export.

As of year-end 2009, Las Encinas had two active iron ore mines in Mexico: Aquila, located in nearby Michoacán, and El Encino, located in nearby Jalisco. The El Encino mine restarted operations in the fourth quarter 2009 to replace Cerro Nahuatl, a mine exhausted and shut down during 2008. In addition, Ternium commissioned during 2009 a new crushing facility in order to replace and increase ore processing capacity in Aquila.

During 2009, exploration activities were carried out in Ternium’s concessions in Michoacán and Jalisco in order to increase iron ore resources. These areas are located close to Las Encinas’ current facilities. Accordingly, if these activities prove to be successful, its proximity to the Las Encinas mines is expected to facilitate the new mines’ integration with the existing facilities.

Peña Colorada

The Peña Colorada mining facilities include a two-line pelletizing plant in the Manzanillo port in Colima, with a production capacity of 4.0 million tons per year of pellets and 0.4 million tons per year of concentrate. Of these totals, ArcelorMittal and Ternium are each entitled to receive 50% of the production. The pelletizing plant is fed from a mine in the Minatitlán municipality, located in Colima. Peña Colorada continued its exploration activities in 2009 at the existing mine’s nearby areas with the purpose of expanding current iron ore resources.

Turning to our plans for 2010, we intend to continue running Las Encinas and Peña Colorada mining facilities at full capacity, as they represent a low cost raw material option for the production of steel. We will continue pursuing the expansion of our iron ore resources through exploration activities, mainly in the Jalisco and Colima areas.

Support Program for Small- and Medium-Sized Enterprises

Ternium sponsors, as it has done for many years, a small- and medium-sized enterprise (SME) support program called “ProPymes.” Created by the Techint group in 2002, the program is focused on helping SMEs in the steel industry’s value chain to grow. The program’s ultimate goal is to enhance SMEs’ competitiveness and to stimulate investments in the steel industry’s value chain. Serving that goal, ProPymes provides a diversity of services including management training, industrial advisory, institutional assistance, commercial support and financial aid. In 2009, ProPymes assisted approximately 530 SMEs in Mexico and Argentina.

In 2009, Ternium supervised the execution of the ProPymes programs through two departments operating under local management supervision, one in Mexico and the other in Argentina.

In Mexico, approximately 150 SMEs participate in ProPymes including customers and suppliers. While suppliers are selected according to their ability to competitively increase domestic value content to their products, customers are selected according to their ability to add value to the steel products and to their potential to increase exports or substitute imports.

In 2009, in light of the relatively low capacity utilization of several Mexican SMEs’ facilities following the world’s economic downturn, the program focused on strengthening the competitiveness of SMEs with the aim at their gaining share in the Mexican market for industrialized products. Accordingly, the program continued focusing on management training and industrial assistance, including the technological upgrade of some facilities under the cooperation of and support from the Mexican SMEs program and ProPymes. Furthermore, ProPymes promoted business conventions in selected cities in Mexico in coordination with local industrial chambers in order to identify and promote new companies that could be developed as steel industry suppliers.

In 2010, ProPymes’ activities in Mexico are expected to continue focusing on programs aimed at strengthening SME’s competitiveness and ultimately helping them increase their capacity utilization rates.

In Argentina, approximately 380 SMEs participate in ProPymes. These companies were selected to take part in the program based upon their management skills, their exporting profile and their growth potential, among other attributes.

In 2009, the program developed special workshops for SMEs’ executives, focused on business management, human resources and work organization. Other workshops, aimed at the development of managerial and technical skills, were addressed to supervisors and workers, emphasizing aspects such as safety, maintenance and quality. In addition, ProPymes has developed, in cooperation with local industrial chambers, strategies aimed at strengthening SMEs’ presence and competitiveness in export markets. The development of these sectorial strategies, as are shared by several member companies participating in a chamber, implies a relatively lower financial burden for individual SMEs upon its execution.

In 2010, ProPymes intends to intensify training programs in Argentina tailored to address the specific needs of SMEs and facilitate their access to fixed assets investment financing facilities.

Product Research & Development

Product research and development activities at Ternium are conducted through a central Product Development Department in coordination with local teams that operate in several of our facilities. Applied research efforts are carried out in-house and in conjunction with universities and research centers, as well as through the participation in international consortia. Ternium also develops new products and processes in cooperation with its industrial customers.

In 2009, Ternium’s product research and development activities focused on increasing the industrial integration of its facilities and on the development of products for new customers, mainly aimed at increasing capacity utilization rates at Ternium’s facilities. In addition, we continued developing new products for long-standing customers, mainly aimed at fulfilling increasing product performance requirements. Furthermore, Ternium continued carrying out its medium-term product research and development plan, encompassing foreseen product requirements and associated new equipment, which it considers a key input for the design of Ternium’s capital expenditure projects and differentiating strategies.

Integration of Processes

In 2009, Ternium continued the development of new processing routes to integrate its production units and increase shipments. These initiatives were part of its efforts to increase capacity utilization rates at its production units in the context of a pronounced steel market downturn. Ultimately, it allowed for replacing semi-finished steel products procured from third parties with products manufactured in-house and a market share increase in certain market segments. Slabs, hot-rolled coils and cold-rolled coils manufactured in our production units in Argentina were further processed in our production units in Mexico and Guatemala. In addition, new coated products were developed for processing at our Mexican production units to supply customers in Argentina and Argentina’s neighboring countries.

Construction Products

During 2009, Ternium developed structural bars for use in highway bridges and thin-gauge hot-rolled structural steels for industrial shelving and storage racks. In addition, we developed new steel chemical compositions to fulfill new customers’ requirements in our markets. Ternium also developed new hot-rolled structural grades used by welded pipe manufacturing customers serving the construction industry.

Industrial Products

During 2009, Ternium developed new industrial customers in Mexico, leveraging its extended network of service centers to differentiate and compete against imports. Among these initiatives, we launched product approval processes with new customers in the automotive and rail transportation sectors.

In addition, we continued the certification of processes with existing customers in the automotive industry in Mexico and Argentina, related to newly defined standards and new car models to be produced in these countries. We also developed new products for industrial customers, such as high-gauge hot-rolled high-strength low-alloy grade structural steel for the automotive industry, new cold-rolled re-phosphorized grade for boilers and super high-gloss coil coated products for refrigerators.

Applied Research

Ternium’s medium-term product research and development plans are based on its continuing assessment of the emerging requirements for steel product performance with leading steel customers. Based on customer feedback, we define future technology requirements at our facilities.

Presently, we are working on various medium-term projects, including advanced high strength steel for the automotive industry through the Galvanized Autobody Partnership and McMaster University; high-strength low-alloy steel for our industrial customers in collaboration with the University of Pittsburg and support by the Argentine Steel Institute; and coated products with long-term corrosion resistance for the construction industry as well as new magnesium added metallic coatings for various applications with the French Corrosion Institute.

In 2010, Ternium plans to expand its product range of hot-rolled, cold-rolled and galvanized products through the development of new automotive and heavy machinery high-strength steel grades to increase its market share. We also expect to develop new wire rod grades for the manufacturing of novel springs, aimed at reducing weight and extending service life, driven by the specifications of some European carmakers. In addition, Ternium plans to develop hot-rolled and cold-rolled steel grades to increase shipments to welded pipe manufactures serving the automotive and industrial sectors.

Human Resources & Communities

As previously discussed, the challenging business conditions in Ternium’s steel markets led us to reduce labor shifts at many of our production lines during the fourth quarter 2008 and first half 2009. These measures were supplemented with corporate and other staff downsizing and other cost-cutting initiatives. While by the end of 2009 operating rates and labor shifts at Ternium’s facilities mostly recovered to their previous levels, the number of employees decreased to approximately 13,900, or 900 fewer employees than at year-end 2008.

Within this difficult context, Ternium maintained its medium-term activities aimed at developing and upgrading its human resources. Training and recruiting activities during the year geared on our ongoing program for recent graduates, which has already contributed to approximately 70% of our current management positions. Ternium training programs are generally intended to create a unique managerial profile that combines the ability to integrate into a regional culture with a global approach to business.

In addition, Ternium implemented a number of customized courses, focused on leadership, performance and technical knowledge, encompassing management, staff and operating employees. These courses are designed to train employees in the latest concepts and tools in their relevant fields, to encourage them to achieve the highest possible levels of productivity and operating efficiency. Furthermore, Ternium was involved in a wide range of initiatives through its network with academic and government organizations, particularly in Mexico and Argentina.

During 2009, we continued strengthening our financial support and contribution to key joint industry and university programs that align the industry’s technological and talent requirements with those offered by leading academic and research institutions worldwide. Current initiatives include the funding of scholarship and fellowship grants and the endowed Chair sponsoring at targeted universities. Throughout the year we hosted various courses for graduate and undergraduate students and fostered conferences on technical subjects.

To complete efforts towards the excellence in its human resources, Ternium combined professional and technical training and development programs with initiatives aimed at ensuring the quality of life of its employees, inside and outside of Ternium. In this regard, during 2010 our focus will continue to be on the rationalization of tasks, mainly for areas that have showed stressed workloads after the restructuring.

Community Relations

During 2009, with a view towards consolidating long-term sustainable relationships and promoting a sense of collaboration in the communities where we operate, Ternium continued supporting a select number of high-impact programs adapted to the social and economic realities of the mining and industrial areas where we operate.

In the mining areas in Mexico, we financed educational initiatives, such as basic literacy programs for adults and support courses for teachers, as well as granted scholarships. In addition, we supported skill academies and fostered small entrepreneurial activities in order to promote the labor insertion of underprivileged community members. Under its healthcare initiatives, Ternium continued a general and dental health enhancement program in the region, including prophylactic medicine campaigns, preventive and urgent care medicine practices and disease treatments.

In the Monterrey industrial area in Mexico, Ternium’s programs fostered sports and cultural activities among its employees, their families and the broader communities, as well as educational activities for children, mainly related with the environment and the steel industry.

In Argentina, Ternium’s subsidiary Siderar continued its program intended to reduce student drop-out rates within the communities that are located near its facilities. In this program, Siderar continued granting scholarships to students who were at risk of dropping out.

In the Ramallo and Ensenada industrial areas in Argentina, Siderar maintained its support of a program initiated in 2006 aimed to strengthen specific technical schools. This endeavor, which includes five technical schools near the facilities, focuses on the enhancement of institutions’ technical education to match the increasingly demanding requirements of the industrial labor market. Under this program, we funded scholarships and provided training to the schools’ teachers and managers, and provided scholarships at our own workshops to the students.

In addition, in the Ramallo industrial area, after contributing to the remodeling and expansion of a public hospital, the company supported training programs to enhance the overall administration of this institution. Siderar also fostered sports activities for children, as well as among its employees, their families and the broader communities.

Environment, Health & Safety

Ternium’s environment, health and safety policies abide by the World Steel Association’s policy statement and its principles for excellence in safety and occupational health, as well as the Occupational Health and Safety Administration’s (OHSA) 18000 and ISO 14000 international standard directives.

Ternium’s commitment toward communities’ efforts in preserving the environment has been recognized by the Mexican Government and by the World Steel Association for our participation in their respective greenhouse gas emission reporting programs. During 2009, the Mexican Government issued Clean Industry certifications for each and every of our steelmaking and steel processing facilities in the country. In Argentina, Ternium continued validating the ISO 14001 certificates for its local facilities as well as clean industry certificates for selected operations.

Ternium’s health and safety activities are organized into two departments, one responsible for the production units located in North and Central America and the other for the production units located in Argentina. Each department operates under local management supervision and is centrally coordinated. Environmental policies are coordinated by a corporate technical director and executed by local engineering and environment managers.

Ternium’s average injuries frequency rate⁴ (IFR) in 2009 was 6.2, slightly lower than that of the previous year and the lowest on record. Our average lost time injuries frequency rate⁵ (LTIFR) in 2009 was 3.5, down from 3.8 in the previous year. These measurements cover all of Ternium’s facilities and both our personnel and the personnel of third-party contractors operating in our facilities.

In 2009, we continued focusing on the consolidation of our Zero Serious Injuries program. This program, initiated in 2007, requires periodic audits to reassess critical tasks and ensure the continuous commitment to safety of managers and workers involved.

Ternium is in the process of developing a comprehensive new medium-term safety program, which is expected to further improve safety management and performance standards. Inspired by the industry best safety practices, this program includes, among other initiatives, standardization of safety practices across our production units, training of managers in the newly adopted best-in-industry management safety tools, and reassessing of contractor obligations towards pre-defined safety programs.

During 2009, we continued participating in the World Steel Association forums. These forums, which are focused on sustainable development, environment, safety and occupational health, are in the process of developing consistent measurements, statistics and databases of selected variables, aiming to enable steelmaking companies to benchmark performance, share state-of-the-art best practices and ultimately set improvement plans for its processes. These forums include the Climate Change Policy Group, Life Cycle Assessment, CO2 Breakthrough Program, Water Management, Sustainability Reporting, By-product Management, and the Safety and Occupational Health Committee and its working subgroups.

Environment, Health & Safety Management System

As of year end 2009, Ternium completed the implementation of a unified safety, health and environment (SHE) management information system in its steelmaking and steel processing facilities in Mexico and Argentina. The system supports the implementation and execution of SHE management programs, chief among our top management’s core responsibilities. In addition, the software enables any personnel in any location to report SHE incidents, generating instant and valuable information for local and central SHE staff, and thus contributing to its proper and timely management.

During 2010, we expect to complete the project by implementing our unified SHE management information system in our facilities in the United States, Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica.

Emissions Control

During 2009, a dust collection and handling system at one steel shop in Mexico was upgraded. In Argentina, new air emission control equipment was installed at a steel coil painting line. In addition, a project to reduce defuse emissions was launched, encompassing all three basic oxygen furnaces at our steel shop in the country. In this regard, works at the first of the basic oxygen furnaces are expected to be concluded during 2010. These activities are encompassed in an ongoing program that monitors and reviews the facilities, aimed at maximizing the efficient use of energy resources, the re-use of by-products and the appropriate treatment and disposal of wastes, air emissions and waste water.

Greenhouse Gas Emissions

The accompanying graph shows Ternium’s estimated emission of carbon dioxide (CO₂) per ton of liquid steel produced, as reported to the World Steel Association. We support the steel industry’s ongoing effort to develop innovative solutions to reduce greenhouse gas (GHG) emissions over the lifecycle of steel products. According to the Intergovernmental Panel on Climate Change (IPCC), the steel industry accounts for approximately 3% to 4% of total world GHG emissions.

Our steel production facilities in Mexico have achieved GHG-specific emission levels that are close to the theoretical minimum. In Argentina, Siderar’s GHG-specific emission levels are close to the industry average for blast furnace technology.

PCB

Studies made on polychlorinated biphenyl (PCB) questioned the utilization of this product as cooling oil in electric transformers, among other applications, as PCB may pose inappropriate risks to health and the environment. Consequently, and in compliance with local laws and regulations as well as with the Stockholm Convention Guidelines, Ternium developed an ongoing plan to replace and manage all PCB-based electric transformers according to each country’s defined schedule.

Our Mexican steel production and processing facilities became free of PCB-based electric transformers in 2008 and Siderar’s facilities in Argentina have advanced their replacement plan toward a 70% completion rate as of year end 2009. Ternium’s current PCB-based electric transformers replacement plan is expected to be completed during 2010, far ahead of schedules suggested by the Stockholm Convention Guidelines.

Underground Water Management

Ternium has in place a water management policy and monitoring system, aimed at ensuring the efficient use and long-term preservation of this resource. Under this program, during 2009 we concluded the hydrological studies, new monitoring wells and reports and analysis on the mid-term balance between the supply and demand of the resource in the surrounding areas of two of our facilities in Argentina.

Corporate Governance

Shares

The Company has a single class of shares, each having a nominal value of US$1.00 per share and equal economic and voting rights, including the right to vote at its general shareholders’ meetings. Our articles of association provide that our annual ordinary general shareholders meetings must take place in Luxembourg on the first Wednesday of every June at 2:30 p.m., Luxembourg time. At these meetings, our annual financial statements are approved and the members of our board of directors are elected. No attendance quorum is required at annual ordinary general shareholders meetings and resolutions are adopted by a simple majority vote of the shares present or represented at the meeting.

The Company has an authorized share capital of US$3.5 billion, of which US$2,004,743,442 was issued and outstanding as of December 31, 2009.

The Company’s articles of association currently authorize the board of directors, for a period that ends on October 26, 2010⁶, to issue shares within the limits of its authorized share capital at such times and on such terms and conditions as the board of directors or its delegates may determine. Accordingly, until October 26, 2010 “(unless this time limit is extended by our shareholder meeting)”, shares may be issued up to the authorized share capital limit of US$3.5 billion by a decision of the board of directors. With the exception of certain cases set out in the articles of association, any issuance of shares for cash within the limits of the authorized share capital shall be, as long as the Company’s shares are listed on a regulated market, subject to the pre-emptive subscription rights of the then-existing shareholders.

There are no limitations currently imposed by Luxembourg law on the rights of non-resident shareholders to hold or vote the Company’s shares.

The Company may repurchase its own shares in the cases and subject to the conditions set by the Luxembourg law of August 10, 1915, as amended.

Board of Directors

The Company’s articles of association provide for a board of directors consisting of a minimum of five members (when the shares of the Company are listed on a regulated market, as they currently are) and a maximum of fifteen. The board of directors is vested with the broadest powers to act on behalf of the Company and accomplish or authorize all acts and transactions of management and disposition that are within its corporate purpose and are not specifically reserved in the articles of association or by applicable law to the general shareholders meeting.

The board of directors is required to meet as often as required by the interests of the Company and at least four times per year. A majority of the members of the board of directors in office present or represented at each board of directors’ meeting constitutes a quorum, and resolutions may be adopted by the vote of a majority of the directors present or represented. In case of a tie, the chairman is entitled to cast the deciding vote.

Directors are elected at the annual ordinary general shareholders’ meeting to serve one-year renewable terms, as determined by the general shareholders meeting. The general shareholders meeting may dismiss all or any one member of the board of directors at any time, with or without cause, by resolution passed by a simple majority vote. The Company’s current board of directors is composed of eleven directors, three of whom are independent directors.

Audit Committee

The board of directors has an audit committee consisting of three independent directors. The members of the audit committee are not eligible to participate in any incentive compensation plan for employees of the Company or any of its subsidiaries. Under the Company’s articles of association and the audit committee charter, the audit committee:

	•		assists the board of directors in fulfilling its oversight responsibilities relating to the integrity of the financial statements of the Company, including periodically reporting to the board of directors on its activity and the adequacy of the Company’s systems of internal control over financial reporting;
	•		is responsible for making recommendations for the appointment, compensation, retention and oversight of, and assessment of the independence of the Company’s independent auditors;
	•		reviews Material Transactions (as such term is defined in the Company’s articles of association and the audit committee charter) between the Company or its subsidiaries with Related Parties (as such term is defined in the Company’s articles of association) (other than transactions that were reviewed and approved by the independent members of the board of directors or other governing body of any subsidiary of the Company) to determine whether their terms are consistent with market conditions or are otherwise fair to the Company and its subsidiaries; and
	•		performs such other duties imposed to it by applicable laws and regulations of the regulated market or markets on which the shares of the Company are listed, as well as any other duty entrusted to it by the board of directors.

The audit committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and has direct access to the Company’s internal and external auditors as well as the Company’s management and employees and, subject to applicable laws, its subsidiaries.

Auditors

The Company’s articles of association require the appointment of at least one independent auditor chosen from among the members of the Luxembourg Institute of Independent Auditors. Auditors are appointed by the general shareholders meeting, on the audit committee’s recommendation, through a resolution passed by a simple majority vote. Shareholders may determine the number and the term of the office of the auditors at the ordinary general shareholders’ meeting, provided however that an auditor’s term shall not exceed one year and that any auditor may be reappointed or dismissed by the general shareholders meeting at any time, with or without cause. As part of their duties, the auditors report directly to the audit committee.

PricewaterhouseCoopers (acting, in connection with the Company’s annual accounts and annual consolidated financial statements required under Luxembourg law, through PricewaterhouseCoopers S.ár.l., Réviseur d’entreprises, and, in connection with the Company’s annual and interim consolidated financial statements required under the laws of other relevant jurisdictions, through Price Waterhouse & Co. S.R.L.) was appointed as the Company’s independent auditor for the fiscal year ended December 31, 2009, at the ordinary general shareholders’ meeting held on June 3, 2009.

Board of Directors and Executive Officers

Board of Directors

Chairman
Paolo Rocca

Ubaldo Aguirre (*)
Roberto Bonatti
Wilson Nélio Brumer
Carlos Condorelli
Pedro Pablo Kuczynski (*)
Adrián Lajous (*)
Bruno Marchettini
Daniel Novegil
Gianfelice Rocca
Marco Antônio Soares da Cunha Castello Branco

Secretary
Raúl Darderes

Senior Management

Chief Executive Officer
Daniel Novegil

Chief Financial Officer
Pablo Brizzio

North Region Area Manager
Julián Eguren

South Region Area Manager
Martín Berardi

Planning and Operations General Director
Oscar Montero

Engineering and Environment Director
Luis Andreozzi

Human Resources Director
Miguel Angel Punte

Chief Information Officer
Rubén Bocanera

Quality and Product Director
Rubén Herrera

Corporate Information

Registered Office
46a Avenue John F. Kennedy
L1855 — Luxembourg
Luxembourg
+352 26 68 31 52 phone
+352 26 68 31 53 fax
Principal Executive Offices
México		Argentina
Av. Eugenio Clariond 101, Colonia Cuauhtémoc		Av. Leandro N. Alem 1067 21st Floor
San Nicolás de los Garza — Nuevo León		C1001AAF — Buenos Aires
66452 México		Argentina
+52 81 8865 2828 phone		+54 11 4018 4100 phone
		+54 11 4018 1000 fax

Investor Information

Investor Relations Director		IR Inquiries
Sebastián Martí		TERNIUM Investor Relations
smarti@ternium.com		ir@ternium.com
Toll free number for US calls: +1 866 890 0443
International calls: +54 11 4018 2389
Stock Information		ADS Depositary Bank
New York Stock Exchange (TX)		The Bank of New York Mellon
		BNY Mellon Shareowner Services
		PO Box 358516
		Pittsburgh, PA 15252-8516
		Toll free number for US calls: +1 888 BNY ADRS
		International calls: +1 201 680 6825
		shrrelations@bnymellon.com
		www.bnymellon.com\shareowner
		CUSIP Number: 880890108
Internet
www.ternium.com

Management Discussion and Analysis

The review of Ternium’s financial condition and results of operations is based on, and should be read in conjunction with, the company’s consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007 (including the notes thereto), which are included elsewhere in this annual report.

The Company prepares its consolidated financial statements according to International Financial Reporting Standards (IFRS). Financial and operational information is presented in US dollars and metric tons.

Net results

The following table sets forth, for the periods indicated, selected financial data from the Company’s consolidated income statement.

All amounts in US$ million		2009								2008
Net sales			4,959.0				100.0	%			8,464.9				100.0	%
Cost of sales			(4,110.4	)			-82.9	%			(6,128.0	)			-72.4	%
Gross profit			848.6				17.1	%			2,336.9				27.6	%
Selling, general and administrative expenses			(531.5	)			-10.7	%			(669.5	)			-7.9	%
Other operating (expenses) income, net			(20.7	)			-0.4	%			8.7				0.1	%
Operating income			296.4				6.0	%			1,676.0				19.8	%
Interest income (expenses), net			51.3				1.0	%			(103.9	)			-1.2	%
Other financial income (expenses), net			81.6				1.6	%			(693.2	)			-8.2	%
Equity in earnings of associated companies			1.1				0.0	%			1.9				0.0	%
Income before income tax expenses			430.4				8.7	%			880.8				10.4	%
Income tax expenses			(91.3	)			-1.8	%			(162.7	)			-1.9	%
Income from continuing operations			339.1				6.9	%			718.1				8.5	%
Income from discontinued operations			428.0				8.6	%			157.1				1.9	%
Net income for the year			767.1				15.5	%			875.2				10.3	%
ATTRIBUTABLE TO:
Equity holders of the Company			717.4				14.5	%			715.4				8.5	%
Minority interest			49.7				1.0	%			159.7				1.9	%
			767.1				15.5	%			875.2				10.3	%

Net sales

Net sales for 2009 decreased 41% to US$5.0 billion compared to 2008. Net sales decreased due to lower shipments and lower revenue per ton. Shipments of flat and long products were 6.4 million tons during 2009, a decrease of 16% compared to 2008, due to lower shipments in Ternium’s core markets as a result of the effects of the global economic downturn. Revenue per ton shipped was US$758 in 2009, a decrease of 30% when compared to 2008, mainly as a result of lower prices in all of Ternium’s markets.

During 2009 steel consumption in the North American market decreased 37% year-over-year. The economies in the North America Region contracted in 2009, particularly the Mexican economy which, in addition to the downturn in the United States, was affected by a sharp depreciation of the Mexican Peso vis-à-vis other currencies. The entire NAFTA region suffered a reduction in steel consumption rates that not only reflected a decrease in end user demand from steel consuming sectors but also a significant de-stocking process in the steel value chain, particularly during the first half of the year.

Likewise, the steel markets in Central and South America showed an estimated 24% decrease in apparent steel use during 2009, well above the decrease recorded by key steel consuming sectors, an evidence of the size of the de-stocking in the steel industry’s value chain. Countries neighboring Argentina, the natural export markets for Ternium in that geographic area, stagnated or contracted in 2009, recording GDP growth rates of between 1% and minus 3% year-over-year.

Argentina, the main market for Ternium in South America, showed an estimated 33% decrease in steel consumption, due to the combination of lower economic activity and relatively high inventories in the steel industry’s value chain early in 2009. The markets in Central and South America experienced the effects of the global slowdown with some delay.

Tons (thousands)		2009				2008
SHIPMENTS
South & Central America			1,903.6				2,604.2
North America			3,114.5				3,666.1
Europe & Other			287.0				55.2
Total flat steel			5,305.2				6,325.5
South & Central America			118.4				302.5
North America			931.2				901.3
Europe & Other			6.1				13.3
Total long steel			1,055.6				1,217.2
Total flat and long sales			6,360.8				7,542.7

US$/Ton		2009				2008
REVENUE PER TON
South & Central America			902				1,068
North America			762				1,171
Europe & Other			561				860
Total flat steel			801				1,126
South & Central America			484				907
North America			550				878
Europe & Other			583				669
Total long steel			543				883
Total flat and long sales			758				1,087

US$ (million)		2009				2008
NET SALES
South & Central America			1,717.1				2,782.5
North America			2,371.9				4,294.7
Europe & Other			161.0				47.5
Total flat steel			4,250.0				7,124.7
South & Central America			57.3				274.4
North America			512.0				791.8
Europe & Other			3.5				8.9
Total long steel			572.9				1,075.1
Total flat and long sales			4,822.9				8,199.8
Other products7			136.1				265.1
Total net sales			4,959.0				8,464.9

Sales of flat products during 2009 were US$4.3 billion, a decrease of 40% compared to 2008. Net sales decreased as a result of lower shipments and revenue per ton. Shipments of flat products were 5.3 million tons in 2009, a decrease of 16% compared to 2008, mainly due to lower shipments in the South & Central America and the North America regions, partially offset by higher shipments in the “Europe and other” Region. Revenue per ton decreased 29% to US$801 in 2009 compared to 2008, as a result of lower steel prices.

Sales of long products were US$572.9 million during 2009, a decrease of 47% compared to 2008 due to lower revenue per ton and shipments. Revenue per ton was US$543 in 2009, a decrease of 39% compared to 2008 as a result of lower prices. Shipments of long products were 1.1 million tons in 2009, a 13% decrease versus 2008, mainly due to lower billet shipments in the South & Central America Region partially offset by higher bar shipments in the North America Region.

Sales of other products were US$136.1 million during 2009, compared to US$265.1 million during 2008. The decrease was mainly driven by lower iron ore shipments and prices and lower sales of pre-engineered metal buildings.

Sales of flat and long products in the North America Region totaled US$2.9 billion in 2009, a decrease of 43% versus 2008, mainly due to the effect of lower shipments and prices. Shipments in the region totaled 4.0 million tons during 2009, or 11% lower than during 2008. Revenue per ton shipped was US$713 in 2009, a decrease of 36% compared to 2008, as a result of lower prices.

Flat and long product sales in the South & Central America Region were US$1.8 billion during 2009, a decrease of 42% versus 2008. This decrease was due to lower volumes and revenue per ton. Shipments in the region totaled 2.0 million tons during 2009, or 30% lower than in 2008. Revenue per ton shipped in the South & Central America Region was US$878 in 2009, a decrease of 17% compared to 2008, mainly due to lower prices.

Cost of sales

Cost of sales was US$4.1 billion in 2009 compared to US$6.1 billion in 2008. Cost of sales decreased as a result of lower shipments and lower cost per ton. Cost per ton decreased year-over-over mainly as a result of lower costs for third party steel, raw materials, energy, labor and services, the impact on costs of the lower value of the Mexican Peso and Argentine Peso versus the US dollar in 2009, and the cost-cutting initiatives implemented to mitigate the effects of the global economic downturn.

Energy prices for our operations in Mexico, mainly natural gas and electricity, decreased significantly year-over-year in 2009, following the trend in the US energy markets. Energy prices for our operations in Argentina, mainly coal, petroleum coke and to a lesser extent natural gas, also decreased in 2009, due to lower contract prices for coal and petroleum coke, partially offset by higher natural gas prices. Our operations in Argentina are less exposed to electricity prices as it has self-generating capabilities for a large share of its consumption.

Selling, general and administrative (SG&A) expenses

SG&A expenses in 2009 were US$531.5 million, or 11% of net sales, compared to US$669.5 million, or 8% of net sales, in 2008. The decrease in SG&A was due mainly to Ternium’s efforts to reduce headcount and services costs in response to the economic downturn, as well as lower freight volumes, tax charges and the impact on costs of the lower value of the Mexican Peso and Argentine Peso versus the US dollar in 2009.

Operating income and EBITDA⁸

Operating income in 2009 was US$296.4 million, or 6% of net sales, compared to US$1.7 billion, or 20% of net sales, in 2008. This significant decrease was mainly due to lower sales prices and volumes, partially offset by lower costs of sales. EBITDA in 2009 was US$708.5 million, or 14% of net sales, compared to US$2.1 billion, or 25% of net sales, in 2008. The decrease in Ternium’s EBITDA margin in 2009 as compared to 2008 was mainly the result of lower steel prices, partially offset by lower operating costs per ton.

Net financial results

Net financial income was US$132.9 million in 2009, compared to a net financial expense of US$797.1 million in 2008. During 2009, Ternium’s net interest expense was US$84.7 million, a decrease of US$19.3 million, compared to 2008 due to lower indebtedness as a result of amortizations of debt and lower interest rates.

Net foreign exchange result was a gain of US$83.1 million in 2009, compared to a loss of US$632.7 million in 2008. These results were primarily due to the impact of the Mexican Peso’s 4% revaluation in 2009 and 25% devaluation in 2008, respectively, on Ternium’s Mexican subsidiary’s US dollar denominated debt. These results are non-cash when measured in US dollars and are offset by changes in Ternium’s net equity position in the currency translation adjustments line, as the value of Ternium Mexico’s US dollar denominated debt is not altered by the Mexican Peso fluctuation when stated in US dollars in Ternium’s consolidated financial statements. In accordance with IFRS, Ternium Mexico prepares its financial statements in Mexican Pesos and registers foreign exchange results on its net non-Mexican Pesos positions when the Mexican Peso revaluates or devaluates to other currencies.

Interest income on the Sidor financial asset⁹ was US$136.0 million in 2009.

Fair value of derivatives was a gain of US$10.6 million in 2009, compared to a loss of US$32.5 million in 2008. The result was related to certain derivative instruments entered into primarily to mitigate the effect of interest rate and currency fluctuations.

Income tax expense

Income tax expense in 2009 was US$91.3 million, or 21% of income before income tax, discontinued operations and minority interest, compared to US$162.7 million, or 18% of income before income tax, discontinued operations and minority interest, in 2008. The income tax expense in 2008 included a non-recurring gain of US$96.3 million attributable to Hylsa’s reversal of a deferred statutory profit sharing that reduced its effective tax rate for that year.

Net result of discontinued operations

Net result of discontinued operations in 2009 showed a gain of US$428.0 million attributable to the transfer of the Sidor shares to Venezuela on May 7, 2009. In 2008, the net result of discontinued operations comprised an after-tax gain of US$59.6 million related to Sidor and an after-tax gain of US$97.5 million from the sale of non-core US assets during the first quarter of 2008.

Income attributable to minority interest

Income attributable to minority interest in 2009 was US$49.7 million, compared to US$159.7 million in 2008. The decrease was mainly due to lower income attributable to Siderar’s lower net income.

Liquidity and financial resources

Ternium’s financing strategy is to maintain adequate financial resources in hand and access to additional liquidity to achieve its objective of maximizing financial flexibility at a reasonable cost. In 2008, Ternium completed the integration of Grupo Imsa, which came under its control in July 26, 2007. There were no new acquisitions in 2009, with capital expenditures being limited to brown-field projects. During the period, Ternium only accessed the banking market to obtain short-term bank financing for working capital purposes, relying largely on cash flow from operations as it principal source of funding during the year.

Ternium holds money market investments and variable-rate or fixed-rate securities from investment grade issuers. Ternium concentrates cash in major financial centers, mainly New York. Ternium holds cash primarily in US dollars and limit its holdings of other currencies to the minimum required to fund its cash operating needs. Liquid financial assets as a whole represented 20.8% of its total assets at the end of 2009 or US$2.1 billion.

In a context of significant downturn of steel markets, in 2009 Ternium freed substantial cash flows as a result of its inventory reduction programs. In addition, we reassessed our capital expenditure plans and slowed down or suspended major capital expenditure projects.

Historical cash flows

Operating activities

Net cash provided by continuing operations in 2009 was US$1.2 billion, higher than the US$517.5 million reported in 2008, mainly due to a working capital decrease of US$635.2 million in 2009, compared to a working capital increase of US$1.1 billion in 2008, partially offset by a lower operating income in 2009. Working capital decreased in 2009 mainly as a result of a US$429.1 million decrease in inventories and a US$308.9 million decrease in trade and other receivables, partially offset by an aggregate US$102.9 million decrease in accounts payable and other liabilities. Inventories decreased during 2009 as a result of lower costs due to lower input prices as well as a lower volume of finished goods, goods in process and raw materials.

All amounts in US$ million		2009				2008
Net income from continuing operations			339.1				718.1
Depreciation and amortization			385.1				413.5
Net foreign exchange results and other			(53.6	)			629.5
Changes in working capital			635.2				(1,071.5	)
Other operating activities, net			(144.1	)			(172.2	)
Net cash provided by operating activities			1,161.8				517.5
Capital expenditures			(208.6	)			(587.9	)
Proceeds from Sidor financial asset			953.6				—
Proceeds from sale of discontinued operations			—				718.6
Discontinued operations			—				242.4
Other investing activities, net			46.2				(22.6	)
Net cash provided by investing activities			791.2				350.5
Net cash used in financing activities			(922.6	)			(752.9	)
Increase in cash and cash equivalents			1,030.4				115.1
Effect of exchange rate changes			(0.2	)			(17.5	)
Cash and cash equivalents at January 1			1,065.6				1,125.8
Cash and cash equivalents from discontinued operations at March 31, 2008			—				(157.9	)
Cash and cash equivalents at December 31			2,095.8				1,065.6

Investing activities

Net cash provided by investing activities during 2009 was US$791.2 million, compared to US$350.5 million in 2008. Net cash provided by investing activities in 2009 consisted mainly of US$953.6 million proceeds from the Sidor financial asset, less US$208.6 million used in capital expenditures. Net cash provided by investing activities in 2008 consisted mainly of US$718.6 million of proceeds from the sale of certain non-core US assets, and US$242.4 million of cash from discontinued operations, mainly coming from Sidor, less US$587.9 million disbursed for capital expenditures.

Capital expenditures disbursed in 2009 included the following main investments:

	•		Mexico: iron ore mining and processing activities, and upgrading of one hot strip mill.
	•		Argentina: relining of blast furnace #1 and revamping and expansion of the coking facilities.

Ternium’s capital expenditures disbursed in 2008 included the following investments:

	•		Mexico: expansion of the flat steel shop in Monterrey, upgrading of one hot strip mill and upgrading of one cold-rolled mill.
	•		Argentina: relining of blast furnace #2 and #1 and revamping and expansion of the coking facilities.

Financing activities

Net cash used by financing activities in 2009 was US$922.6 million, compared to US$752.9 million in 2008. Proceeds from borrowings during 2009 amounted to US$219.0 million, mainly short-tem debt used for working capital needs. Repayments of borrowings in 2009 reached US$1.1 billion related to maturities of long-term debt and prepayments on bank facilities associated with the Grupo Imsa transaction. Proceeds from borrowings during 2008 amounted to US$519.8 million, mainly short-tem debt used for working capital needs. Repayments of borrowings in 2008 reached US$1.2 billion related to maturities of long-term debt and prepayments on bank facilities associated with the Grupo Imsa transaction. The Company paid dividends of US$100.2 million in 2008.

Principal sources of funding

Funding policy

Ternium’s policy is to maintain a high degree of flexibility in operating and investment activities by maintaining adequate liquidity levels and ensuring access to readily available sources of financing. Most of Ternium’s financing is conducted in US dollars. Ternium selects the type of facility, associated rate and term after considering the intended use of proceeds.

Financial liabilities

Ternium’s borrowings as of December 31, 2009, consisted mainly of different bank loans and facilities. Outstanding financial debt amounted to US$2.3 billion at year end, compared to US$3.3 billion as of December 31, 2008, a decrease of US$922.6 million, largely resulting from the application of cash provided by operating activities to the payment of bank debt. Ternium’s net debt position (borrowings less cash and cash equivalents and other current investments) decreased by US$1.9 billion during 2009 to US$184.1 million as of December 31, 2009, compared to net debt of US$2.1 billion as of December 31, 2008.

At December 31, 2009, Ternium’s outstanding financial debt US dollar-denominated portion and floating-rate portion were 99.5% and 99.3%, respectively. Ternium entered into derivative instruments to manage the impact of the floating interest rate changes on its financial debt. At December 31, 2009, these instruments, consisting on interest rate collars and knock-in swaps for an aggregate contractual amount of US$1.1 billion, had an aggregate negative fair value of US$78.7 million. At December 31, 2009, the weighted average interest rate of Ternium’s outstanding financial debt, including the cost related to derivative instruments, was 3.04%. For additional information on the amounts, tenor and main characteristics of these instruments, please see note 25 (Derivative financial instruments) to the Company’s consolidated financial statements included elsewhere in this annual report.

TERNIUM S.A.

CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2009 and 2008 and
for the years ended December 31, 2009, 2008 and 2007

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

TERNIUM S.A.

Index to financial statements

Consolidated Financial Statements

		Page
Report of Independent Registered Public Accounting Firm			1
Consolidated income statements for the years ended December 31, 2009, 2008 and 2007			2
Consolidated statements of comprehensive income for the years ended December 31, 2009, 2008 and 2007			3
Consolidated statements of financial position as of December 31, 2009 and 2008			4
Consolidated statements of changes in shareholders’ equity for the years ended December 31, 2009, 2008 and 2007			5
Consolidated statements of cash flows for the years ended December 31, 2009, 2008 and 2007			8
Notes to the consolidated financial statements			9

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
Ternium S.A.:

In our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Ternium S.A. and its subsidiaries at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and in conformity with International Financial Reporting Standards as adopted by the European Union. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Buenos Aires, Argentina

May 4, 2010

TERNIUM S.A.
Consolidated financial statements
as of December 31, 2009 and 2008 and
for the years ended December 31, 2009, 2008 and 2007
(All amounts in USD thousands)

CONSOLIDATED INCOME STATEMENTS

				Year ended December 31,
		Notes		2009				2008				2007
Continuing operations
Net sales					4,958,983				8,464,885				5,633,366
Cost of sales		6			(4,110,370	)			(6,128,027	)			(4,287,671	)
Gross profit					848,613				2,336,858				1,345,695
Selling, general and administrative expenses		7			(531,530	)			(669,473	)			(517,433	)
Other operating (expenses) income, net		9			(20,700	)			8,662				8,514
Operating income					296,383				1,676,047				836,776
Interest expense					(105,810	)			(136,111	)			(133,109	)
Interest income					21,141				32,178				41,613
Interest income — Sidor financial asset					135,952				—				—
Other financial income (expenses), net		10			81,639				(693,192	)			(38,498	)
Equity in earnings of associated companies		14			1,110				1,851				434
Income before income tax expense					430,415				880,773				707,216
Income tax (expense) benefit
Current and deferred income tax expense		11			(91,314	)			(258,969	)			(291,345	)
Reversal of deferred statutory profit sharing		4 (m)			—				96,265				—
Income from continuing operations					339,101				718,069				415,871
Discontinued operations
Income from discontinued operations		29			428,023				157,095				579,925
Profit for the year					767,124				875,164				995,796
Attributable to:
Equity holders of the Company		28			717,400				715,418				784,490
Minority interest					49,724				159,746				211,306
					767,124				875,164				995,796
Weighted average number of shares outstanding		28			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 of the Company					0.15				0.27				0.15
- From discontinued operations attributable to the equity holders of the Company					0.21				0.09				0.24
- For the year attributable to the equity holders of the Company					0.36				0.36				0.39

The accompanying notes are an integral part of these consolidated financial statements.

TERNIUM S.A.
Consolidated financial statements
as of December 31, 2009 and 2008 and
for the years ended December 31, 2009, 2008 and 2007
(All amounts in USD thousands)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

		Year ended December 31, 2009												Year ended December 31, 2008												Year ended December 31, 2007
		Attributable												Attributable												Attributable
		to the												to the												to the
		Company’s												Company’s												Company’s
		equity				Minority								equity				Minority								equity				Minority
		holders				interest				Total				holders				interest				Total				holders				interest				Total
Profit for the year			717,400				49,724				767,124				715,418				159,746				875,164				784,490				211,306				995,796
Other comprehensive income:
Currency translation adjustment			(42,359	)			(51,563	)			(93,922	)			(417,746	)			(85,250	)			(502,996)	(1)			10,869				(13,152	)			(2,283	)
Cash flow hedges			31,831				4,050				35,881				(73,257	)			(9,317	)			(82,574	)			—				—				—
Income tax relating to cash flow hedges			(8,083	)			(1,029	)			(9,112	)			20,512				2,609				23,121				—				—				—
Other comprehensive (loss) income for the year, net of tax			(18,611	)			(48,542	)			(67,153	)			(470,491	)			(91,958	)			(562,449	)			10,869				(13,152	)			(2,283	)
Total comprehensive income for the year			698,789				1,182				699,971				244,927				67,788				312,715				795,359				198,154				993,513

The accompanying notes are an integral part of these consolidated financial statements.

TERNIUM S.A.
Consolidated financial statements
as of December 31, 2009 and 2008 and
for the years ended December 31, 2009, 2008 and 2007
(All amounts in USD thousands)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		Notes		December 31, 2009								December 31, 2008
ASSETS
Non-current assets
Property, plant and equipment, net		12			4,040,415								4,212,313
Intangible assets, net		13			1,085,412								1,136,367
Investments in associated companies		14			6,577								5,585
Other investments, net		15			16,414								16,948
Receivables, net		16			101,317				5,250,135				120,195				5,491,408
Current assets
Receivables		17			136,300								248,991
Derivative financial instruments		25			1,588								1,516
Inventories, net		6 & 18			1,350,568								1,826,547
Trade receivables, net		19			437,835								622,992
Sidor financial asset		29 (ii)			964,359								—
Available for sale assets — discontinued operations		29 (ii)			—								1,318,900
Other investments		20			46,844								90,008
Cash and cash equivalents		20			2,095,798				5,033,292				1,065,552				5,174,506
Non-current assets classified as held for sale									9,246								5,333
									5,042,538								5,179,839
Total assets									10,292,673								10,671,247
EQUITY
Capital and reserves attributable to the company’s equity holders									5,296,342								4,597,370
Minority interest									964,897								964,094
Total equity									6,261,239								5,561,464
LIABILITIES
Non-current liabilities
Provisions		21			18,913								24,400
Deferred income tax		23			857,297								810,160
Other liabilities		24			176,626								148,690
Derivative financial instruments		25			32,627								65,847
Borrowings		26			1,787,204				2,872,667				2,325,867				3,374,964
Current liabilities
Current tax liabilities					103,171								194,075
Other liabilities		24			57,021								103,376
Trade payables					412,967								438,711
Derivative financial instruments		25			46,083								57,197
Borrowings		26			539,525				1,158,767				941,460				1,734,819
Total liabilities									4,031,434								5,109,783
Total equity and liabilities									10,292,673								10,671,247

The accompanying notes are an integral part of these consolidated financial statements.

TERNIUM S.A.
Consolidated financial statements
as of December 31, 2009 and 2008 and
for the years ended December 31, 2009, 2008 and 2007
(All amounts in USD thousands)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

		Attributable to the Company’s equity holders (1)
						Initial								Capital
						public				Revaluation				stock				Currency
		Capital				offering				and other				issue				translation				Retained								Minority				Total
		stock (2)				expenses				reserves				discount (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 for the year																							717,400				717,400				49,724				767,124
Other comprehensive income (loss) for the year											23,748								(42,359	)							(18,611	)			(48,542	)			(67,153	)
Total comprehensive income (loss) for the year											23,748								(42,359	)			717,400				698,789				1,182				699,971
Acquisition of business (4)											183																183				(379	)			(196	)
Balance at December 31, 2009			2,004,743				(23,295	)			1,726,216				(2,324,866	)			(570,844	)			4,484,388				5,296,342				964,897				6,261,239