-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WX+ayALR7H9lzhoYOzGs2rdhPIdyk1E2EdwWWt0nNO/L8K6a8x4SkweoiG54kwTF 0sk1QUYy1x6O9g4zxUagsQ== 0000891092-05-002084.txt : 20051028 0000891092-05-002084.hdr.sgml : 20051028 20051028152550 ACCESSION NUMBER: 0000891092-05-002084 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20051031 FILED AS OF DATE: 20051028 DATE AS OF CHANGE: 20051028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GROUP SIMEC SA DE CV CENTRAL INDEX KEY: 0000887153 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11176 FILM NUMBER: 051163067 BUSINESS ADDRESS: STREET 1: CALZADA LAZARO CARDENAS 601 CITY: 44910 GUADALAJARA JA STATE: O5 ZIP: 10022 MAIL ADDRESS: STREET 1: CALZADA LAZARO CARDENAS CITY: GUADALAJARA JALISCO STATE: O5 ZIP: 999999999 6-K 1 e22702_6k.txt FORM 6-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of October , 2005. ------------------------------------------------------- Group Simec, Inc. - -------------------------------------------------------------------------------- (Translation of Registrant's Name Into English) Mexico - -------------------------------------------------------------------------------- (Jurisdiction of incorporation or organization) Av. Lazaro Cardenas 601, Colonia la Nogalera, Guadalajara, Jalisco, Mexico 44440 - -------------------------------------------------------------------------------- (Address of principal executive office) (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.) Form 20-F |X| Form 40-F |_| (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 |_| No |X| (If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______________________.) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GRUPO SIMEC, S.A. de C.V. -------------------------------- (Registrant) Date: October 28, 2005. By: Name: Luis Garcia Limon -------------------------------- Title: Chief Executive Officer GRUPO SIMEC [LOGO] PRESS RELEASE Contact: Adolfo Luna Luna Jose Flores Flores Grupo Simec, S.A. de C.V. Calzada Lazaro Cardenas 601 44440 Guadalajara, Jalisco, Mexico 52 33 1057 5740 GRUPO SIMEC ANNOUNCES RESULTS OF OPERATIONS FOR THE FIRST NINE MONTHS OF 2005 GUADALAJARA, MEXICO, October 26, 2005- Grupo Simec, S.A. de C.V. (AMEX-SIM) ("Simec") announced today its results of operations for the nine-month period ended September 30, 2005. Net sales increased 99% to Ps. 7,988 million in the first nine months of 2005 compared to Ps. 4,017 million in the same period of 2004, primarily due to the inclusion of net sales generated by the newly acquired plants in Apizaco and Cholula of Ps. 2,119 million and Ps. 2,827 million generated by the newly acquired plants of PAV Republic, Inc. ("Republic"). Simec recorded net income of Ps. 976 million in the first nine months of 2005 versus net income of Ps. 1,079 million for the first nine months of 2004. On July 22, 2005 Simec and its parent company Industrias CH, S.A. de C.V. ("ICH") acquired 100% of the stock of Republic. Simec, ICH's largest subsidiary, acquired 50.2% of Republic's stock, and ICH purchased the remaining 49.8%. The cash purchase price of U.S. $229 million was financed by internally generated funds. At September 30, 2005, the total amount of Republic's liabilities was of U.S. $66 million (Ps. 715 million), with a weighted average cost per year of 6.02%. With the acquisition of Republic, Simec has become the largest producer of special bar quality (SBQ) steel in North America. On September 10, 2004 Simec completed the acquisition of the property, plant and equipment and inventories, and assumed liabilities associated with seniority premiums of employees of the Mexican steel-making facilities of Industrias Ferricas del Norte, S.A. (Corporacion Sidenor of Spain) located in Apizaco, Tlaxcala and Cholula, Puebla. Simec's total investment in this transaction was approximately U.S. $135 million, funded with internally generated resources of Simec and capital contributions from its parent company ICH of U.S. $19 million for capital stock issued in the second quarter of 2005. Simec began to operate the plants on August 1, 2004, and, as a result, the operations of both plants are reflected in Simec's financial results as of such date. Simec sold 1,115,054 metric tons of basic steel products during the nine-month period ended September 30, 2005 (including 324,026 metric tons produced by the newly acquired plants in Apizaco and Cholula and 308,719 metric tons produced by the newly acquired plants of Republic), an increase of 105% as compared to 542,705 metric tons in the same period of 2004. Exports (including sales by U.S. subsidiaries) of basic steel products were 418,380 metric tons in the first nine months of 2005 (including 17,626 metric tons produced by the newly acquired plants in Apizaco and Cholula and 308,719 metric tons generated by the newly acquired plants of Republic) versus 70,112 metric tons in the same period of 2004. Additionally Simec sold 13,305 metric tons of billet in the nine-month period ended September 30, 2005 as compared to 40,791 metric tons of billet in the same period of 2004. Prices of finished products (excluding the sales of Republic) sold in the first nine months of 2005 decreased 8.5% in real terms versus the same period of 2004. Simec's direct cost of sales was Ps. 6,013 million in the nine-month period ended September 30, 2005 (including Ps. 1,540 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 2,619 million relating to the newly acquired plants of Republic, including U.S. $17.6 million, Ps. 191 million, of costs related to the application of the Financial Accounting Standard Board "FASB" 141) although this provision does not affect the cash flow of Simec, or 75% of net sales, versus Ps. 2,288 million, or 57% of net sales, for the 2004 period. The average cost of raw materials used to produce steel products (excluding the production of Republic) increased 5.6% in real terms in the nine-month period ended September 30, 2005 versus the same period of 2004, primarily as a result of increases in the price of scrap and certain other raw materials. Indirect manufacturing, selling, general and administrative expenses (including depreciation) were Ps. 663 million during the nine-month period ended September 30, 2005 (including Ps. 184 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 115 million relating to the newly acquired plants of Republic), compared to Ps. 420 million in the same period of 2004 (including Ps. 54 million relating to the newly acquired plants in Apizaco and Cholula). Simec's operating income increased 0.2% to Ps. 1,312 million during the nine-month period ended September 30, 2005 (including Ps. 395 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 94 million relating to the newly acquired plants of Republic) from Ps. 1,309 million in the first nine months of 2004 (including Ps. 135 million relating to the newly acquired plants in Apizaco and Cholula). Operating income was 16% of net sales in the nine-month period ended September 30, 2005 compared to 33% of net sales in the same period of 2004. Simec recorded other income, net, from other financial operations of Ps. 15 million in the nine-month period ended June 30, 2005 compared to other income, net, of Ps. 17 million in the same period of 2004. In addition, Simec recorded a provision for income tax and employee profit sharing of Ps. 239 million in the nine-month period ended September 30, 2005 versus a provision of Ps. 231 million in the same period of 2004. Simec recorded financial expense of Ps. 85 million in the nine-month period ended September 30, 2005 compared to financial expense of Ps. 16 million in the same period of 2004 as a result of (i) net interest income of Ps. 2 million in the nine-month period ended September 30, 2005 compared to Ps. 4 million of net interest income in the same period of 2004, (ii) an exchange loss of Ps. 69 million in the nine-month period ended September 30, 2005 compared to an exchange gain of Ps. 12 million in the same period of 2004 and an increase of 3.7% in the value of the peso versus the dollar in the nine-month period ended September 30, 2005 compared to a decrease of 1.6% in the value of the peso versus the dollar in the nine-month period ended September 30, 2004 and (iii) a loss from monetary position of Ps. 18 million in the nine-month period ended September 30, 2005 compared to a loss from monetary position of Ps. 32 million in the nine-month period ended September 30, 2004, reflecting the domestic inflation rate of 1.7% in the nine-month period ended September 30, 2005 compared to the domestic inflation rate of 3.4% in the same period in 2004 and lower debt levels during the 2005 period. At September 30, 2005, Simec's total consolidated debt consisted of approximately $66.3 million of U.S. dollar-denominated debt. At December 31, 2004, Simec had outstanding approximately $13.9 million of U.S. dollar-denominated debt, including a refinanced letter of credit for U.S. $13.6 million. All figures were prepared in accordance with Mexican generally accepted accounting principles and are stated in constant Pesos at September 30, 2005. Simec is a mini-mill steel producer in Mexico and manufactures a broad range of non-flat structural steel products. ### MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED FINANCIAL STATEMENT AT SEPTEMBER 30 OF 2005 AND 2004 (thousands of pesos)
- --------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - --------------------------------------------------------------------------------------------------------------------------- S AMOUNT % AMOUNT % - --------------------------------------------------------------------------------------------------------------------------- 1 TOTAL ASSETS 14,708,827 100 8,278,250 100 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 2 CURRENT ASSETS 7,087,607 48 2,164,878 26 - --------------------------------------------------------------------------------------------------------------------------- 3 CASH AND SHORT-TERM INVESTMENTS 542,725 4 331,891 4 - --------------------------------------------------------------------------------------------------------------------------- 4 ACCOUNTS AND DOCUMENTS RECEIVABLE (NET) 2,675,620 18 964,218 12 - --------------------------------------------------------------------------------------------------------------------------- 5 OTHER ACCOUNTS AND DOCUMENTS RECEIVABLE 50,261 0 142,778 2 - --------------------------------------------------------------------------------------------------------------------------- 6 INVENTORIES 3,630,559 25 660,690 8 - --------------------------------------------------------------------------------------------------------------------------- 7 OTHER CURRENT ASSETS 188,442 1 65,301 1 - --------------------------------------------------------------------------------------------------------------------------- 8 LONG-TERM 0 0 10,662 0 - --------------------------------------------------------------------------------------------------------------------------- 9 ACCOUNTS AND DOCUMENTS RECEIVABLE (NET) 0 0 10,662 0 - --------------------------------------------------------------------------------------------------------------------------- 10 INVESTMENT IN SHARES OF SUBSIDIARIES AND NON-CONSOLIDATED 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 11 OTHER INVESTMENTS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 12 PROPERTY, PLANT AND EQUIPMENT 6,848,459 47 5,855,749 71 - --------------------------------------------------------------------------------------------------------------------------- 13 PROPERTY 2,334,759 16 2,268,128 27 - --------------------------------------------------------------------------------------------------------------------------- 14 MACHINERY AND INDUSTRIAL 6,354,724 43 5,715,848 69 - --------------------------------------------------------------------------------------------------------------------------- 15 OTHER EQUIPMENT 156,054 1 155,297 2 - --------------------------------------------------------------------------------------------------------------------------- 16 ACCUMULATED DEPRECIATION 2,348,270 16 2,304,652 28 - --------------------------------------------------------------------------------------------------------------------------- 17 CONSTRUCTION IN PROGRESS 351,192 2 21,128 0 - --------------------------------------------------------------------------------------------------------------------------- 18 DEFERRED ASSETS (NET) 772,761 5 246,961 3 - --------------------------------------------------------------------------------------------------------------------------- 19 OTHER ASSETS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 20 TOTAL LIABILITIES 4,829,976 100 2,050,005 100 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 21 CURRENT LIABILITIES 2,236,707 46 653,587 32 - --------------------------------------------------------------------------------------------------------------------------- 22 SUPPLIERS 1,316,136 27 435,941 21 - --------------------------------------------------------------------------------------------------------------------------- 23 BANK LOANS 17,631 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 24 STOCK MARKET LOANS 3,277 0 3,567 0 - --------------------------------------------------------------------------------------------------------------------------- 25 TAXES TO BE PAID 208,519 4 35,913 2 - --------------------------------------------------------------------------------------------------------------------------- 26 OTHER CURRENT LIABILITIES 691,144 14 178,166 9 - --------------------------------------------------------------------------------------------------------------------------- 27 LONG-TERM LIABILITIES 697,133 14 0 0 - --------------------------------------------------------------------------------------------------------------------------- 28 BANK LOANS 697,133 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 29 STOCK MARKET LOANS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 30 OTHER LOANS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 31 DEFERRED LOANS 1,896,136 39 1,396,418 68 - --------------------------------------------------------------------------------------------------------------------------- 32 OTHER LIABILITIES 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 33 CONSOLIDATED STOCKHOLDERS' EQUITY 9,878,851 100 6,228,245 100 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 34 MINORITY INTEREST 1,240,002 13 236 0 - --------------------------------------------------------------------------------------------------------------------------- 35 MAJORITY INTEREST 8,638,849 87 6,228,009 100 - --------------------------------------------------------------------------------------------------------------------------- 36 CONTRIBUTED CAPITAL 5,364,273 54 4,225,211 68 - --------------------------------------------------------------------------------------------------------------------------- 37 PAID-IN CAPITAL STOCK (NOMINAL) 2,012,147 20 1,948,155 31 - --------------------------------------------------------------------------------------------------------------------------- 38 RESTATEMENT OF PAID-IN CAPITAL STOCK 1,387,972 14 1,385,566 22 - --------------------------------------------------------------------------------------------------------------------------- 39 PREMIUM ON SALES OF SHARES 826,470 8 667,185 11 - --------------------------------------------------------------------------------------------------------------------------- 40 CONTRIBUTIONS FOR FUTURE CAPITAL INCREASES 1,137,684 12 0 0 - --------------------------------------------------------------------------------------------------------------------------- 41 CAPITAL INCREASE (DECREASE) 3,274,576 33 2,002,798 32 - --------------------------------------------------------------------------------------------------------------------------- 42 RETAINED EARNINGS AND CAPITAL RESERVE 3,083,027 31 1,652,596 27 - --------------------------------------------------------------------------------------------------------------------------- 43 REPURCHASE FUND OF SHARES 85,675 1 85,684 1 - --------------------------------------------------------------------------------------------------------------------------- 44 EXCESS (SHORTFALL) IN RESTATEMENT OF STOCKHOLDERS EQUITY (870,507 (9) (814,460) (13) - --------------------------------------------------------------------------------------------------------------------------- 45 NET INCOME FOR THE YEAR 976,381 10 1,078,978 17 - ---------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED FINANCIAL STATEMENT BREAKDOWN OF MAIN CATEGORIES (thousands of pesos)
- --------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - --------------------------------------------------------------------------------------------------------------------------- S AMOUNT % AMOUNT % - --------------------------------------------------------------------------------------------------------------------------- 3 CASH AND SHORT-TERM INVESTMENTS 542,725 100 331,891 100 - --------------------------------------------------------------------------------------------------------------------------- 46 CASH 99,078 18 247,908 75 - --------------------------------------------------------------------------------------------------------------------------- 47 SHORT-TERM INVESTMENTS 443,647 82 83,983 25 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 18 DEFERRED ASSETS (NET) 772,761 100 246,961 100 - --------------------------------------------------------------------------------------------------------------------------- 48 AMORTIZED OR REDEEMED EXPENSES 601,469 78 244,934 99 - --------------------------------------------------------------------------------------------------------------------------- 49 GOODWILL 166,988 22 0 0 - --------------------------------------------------------------------------------------------------------------------------- 50 DEFERRED TAXES 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 51 OTHERS 4,304 1 2,027 1 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 21 CURRENT LIABILITIES 2,236,707 100 653,587 100 - --------------------------------------------------------------------------------------------------------------------------- 52 FOREIGN CURRENCY LIABILITIES 1,391,790 62 128,083 20 - --------------------------------------------------------------------------------------------------------------------------- 53 MEXICAN PESOS LIABILITIES 844,917 38 525,504 80 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 24 STOCK MARKET LOANS 3,277 100 3,567 100 - --------------------------------------------------------------------------------------------------------------------------- 54 COMMERCIAL PAPER 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 55 CURRENT MATURITIES OF MEDIUM TERM NOTES 3,277 100 3,567 100 - --------------------------------------------------------------------------------------------------------------------------- 56 CURRENT MATURITIES OF BONDS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 26 OTHER CURRENT LIABILITIES 691,144 100 178,166 100 - --------------------------------------------------------------------------------------------------------------------------- 57 OTHER CURRENT LIABILITIES WITH COST 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 58 OTHER CURRENT LIABILITIES WITHOUT COST 691,144 100 178,166 100 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 27 LONG-TERM LIABILITIES 697,133 100 0 0 - --------------------------------------------------------------------------------------------------------------------------- 59 FOREIGN CURRENCY LIABILITIES 697,133 100 0 0 - --------------------------------------------------------------------------------------------------------------------------- 60 MEXICAN PESOS LIABILITIES 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 29 STOCK MARKET LOANS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 61 BONDS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 62 MEDIUM TERM NOTES 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 30 OTHER LOANS 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 63 OTHER LOANS WITH COST 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 64 OTHER LOANS WITHOUT COST 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 31 DEFERRED LOANS 1,896,136 100 1,396,418 100 - --------------------------------------------------------------------------------------------------------------------------- 65 NEGATIVE GOODWILL 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 66 DEFERRED TAXES 1,756,608 93 1,386,758 99 - --------------------------------------------------------------------------------------------------------------------------- 67 OTHERS 139,528 7 9,660 1 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 32 OTHER LIABILITIES 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 68 RESERVES 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- 69 OTHER LIABILITIES 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 44 EXCESS (SHORTFALL) IN RESTATEMENT OF STOCKHOLDERS" EQUITY (870,507 (100) (814,460) (100) - --------------------------------------------------------------------------------------------------------------------------- 70 ACCUMULATED INCOME DUE TO MONETARY POSITION (870,507 (100) (814,460) (100) - --------------------------------------------------------------------------------------------------------------------------- 71 INCOME FROM NON-MONETARY POSITION ASSETS 0 0 0 0 - ---------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED FINANCIAL STATEMENT OTHER CONCEPTS (thousands of pesos)
- ------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - ------------------------------------------------------------------------------------------------------------------------- S AMOUNT AMOUNT - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 72 WORKING CAPITAL 4,850,900 1,511,291 - ------------------------------------------------------------------------------------------------------------------------- 73 PENSIONS FUND AND SENIORITY PREMIUMS 0 0 - ------------------------------------------------------------------------------------------------------------------------- 74 EXECUTIVES (*) 55 22 - ------------------------------------------------------------------------------------------------------------------------- 75 EMPLOYERS (*) 1,179 686 - ------------------------------------------------------------------------------------------------------------------------- 76 WORKERS (*) 3,199 1,347 - ------------------------------------------------------------------------------------------------------------------------- 77 COMMON SHARES (*) 137,929,599 133,542,984 - ------------------------------------------------------------------------------------------------------------------------- 78 REPURCHASED SHARES (*) 0 0 - -------------------------------------------------------------------------------------------------------------------------
(*) THESE ITEMS SHOULD BE EXPRESSED IN UNITS MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED EARNING STATEMENT FROM JANUARY 1 TO SEPTEMBER 30 OF 2005 AND 2004 (thousands of pesos)
- ------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - ------------------------------------------------------------------------------------------------------------------------- R AMOUNT % AMOUNT % - ------------------------------------------------------------------------------------------------------------------------- 1 NET SALES 7,988,244 100 4,017,811 100 - ------------------------------------------------------------------------------------------------------------------------- 2 COST OF SALES 6,012,750 75 2,288,329 57 - ------------------------------------------------------------------------------------------------------------------------- 3 GROSS INCOME 1,975,494 25 1,729,482 43 - ------------------------------------------------------------------------------------------------------------------------- 4 OPERATING EXPENSES 662,661 8 420,206 10 - ------------------------------------------------------------------------------------------------------------------------- 5 OPERATING INCOME 1,312,833 16 1,309,276 33 - ------------------------------------------------------------------------------------------------------------------------- 6 TOTAL FINANCING COST 85,214 1 16,328 0 - ------------------------------------------------------------------------------------------------------------------------- 7 INCOME AFTER FINANCING COST 1,227,619 15 1,292,948 32 - ------------------------------------------------------------------------------------------------------------------------- 8 OTHER FINANCIAL OPERATIONS (15,107) 0 (16,919) 0 - ------------------------------------------------------------------------------------------------------------------------- 9 INCOME BEFORE TAXES AND WORKERS' PROFIT SHARING 1,242,726 16 1,309,867 33 - ------------------------------------------------------------------------------------------------------------------------- 10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING 239,087 3 230,889 6 - ------------------------------------------------------------------------------------------------------------------------- 11 NET INCOME AFTER TAXES AND WORKERS' PROFIT SHARING 1,003,639 13 1,078,978 27 - ------------------------------------------------------------------------------------------------------------------------- 12 SHARE IN NET INCOME OF SUBSIDIARIES AND NON-CONSOLIDATED ASSOCIATES 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 13 CONSOLIDATED NET INCOME FROM CONTINUOUS OPERATIONS 1,003,639 13 1,078,978 27 - ------------------------------------------------------------------------------------------------------------------------- 14 INCOME FROM DISCONTINUOUS OPERATIONS 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 15 CONSOLIDATED NET INCOME BEFORE EXTRAORDINARY ITEMS 1,003,639 13 1,078,978 27 - ------------------------------------------------------------------------------------------------------------------------- 16 EXTRAORDINARY ITEMS NET EXPENSES (INCOME) 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 17 NET EFFECT AT THE BEGINNING OF THE YEAR BY CHANGES IN ACCOUNTING PRINCIPLES 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 18 NET CONSOLIDATED INCOME 1,003,639 13 1,078,978 27 - ------------------------------------------------------------------------------------------------------------------------- 19 NET INCOME OF MINORITY INTEREST 27,258 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 20 NET INCOME OF MAJORITY INTEREST 976,381 12 1,078,978 27 - -------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED EARNING STATEMENT BREAKDOWN OF MAIN CONCEPTS (thousands of pesos)
- -------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - -------------------------------------------------------------------------------------------------------------------------- R AMOUNT % AMOUNT % - -------------------------------------------------------------------------------------------------------------------------- 1 NET SALES 7,988,244 100 4,017,811 100 - -------------------------------------------------------------------------------------------------------------------------- 21 DOMESTIC 4,523,385 57 3,560,136 89 - -------------------------------------------------------------------------------------------------------------------------- 22 FOREIGN 3,464,859 43 457,675 11 - -------------------------------------------------------------------------------------------------------------------------- 23 TRANSLATED INTO DOLLARS (***) 318,948 1 38,605 1 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- 6 TOTAL FINANCING COST 85,214 100 16,328 100 - -------------------------------------------------------------------------------------------------------------------------- 24 INTEREST PAID 16,006 19 15,416 94 - -------------------------------------------------------------------------------------------------------------------------- 25 EXCHANGE LOSSES 68,991 81 0 0 - -------------------------------------------------------------------------------------------------------------------------- 26 INTEREST EARNED 17,575 21 18,976 116 - -------------------------------------------------------------------------------------------------------------------------- 27 EXCHANGE PROFITS 0 0 11,942 73 - -------------------------------------------------------------------------------------------------------------------------- 28 (GAIN) LOSS FROM MONETARY POSITION 17,792 21 31,830 195 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- 8 OTHER FINANCIAL OPERATIONS (15,107) (100) (16,919) (100) - -------------------------------------------------------------------------------------------------------------------------- 29 OTHER NET EXPENSES (INCOME) NET (15,107) (100) (16,919) (100) - -------------------------------------------------------------------------------------------------------------------------- 30 (PROFIT) LOSS ON SALE OF OWN SHARES 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- 31 (PROFIT) LOSS ON SALE OF SHORT-TERM INVESTMENTS 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- 10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING 239,087 100 230,889 100 - -------------------------------------------------------------------------------------------------------------------------- 32 INCOME TAX 388,162 162 23,272 10 - -------------------------------------------------------------------------------------------------------------------------- 33 DEFERRED INCOME TAX (149,075) (62) 207,617 90 - -------------------------------------------------------------------------------------------------------------------------- 34 WORKERS' PROFIT SHARING 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- 35 DEFERRED WORKERS' PROFIT SHARING 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------
(***) THOUSANDS OF DOLLARS MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED EARNING STATEMENT OTHER CONCEPTS (thousands of pesos)
- ------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - ------------------------------------------------------------------------------------------------------------------------- R AMOUNT AMOUNT - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 36 TOTAL SALES 8,457,370 4,269,526 - ------------------------------------------------------------------------------------------------------------------------- 37 NET FISCAL INCOME OF THE YEAR 0 0 - ------------------------------------------------------------------------------------------------------------------------- 38 NET SALES (**) 9,761,966 4,826,560 - ------------------------------------------------------------------------------------------------------------------------- 39 OPERATION INCOME (**) 1,839,531 1,463,435 - ------------------------------------------------------------------------------------------------------------------------- 40 NET INCOME OF MAJORITY INTEREST (**) 1,277,515 1,086,901 - ------------------------------------------------------------------------------------------------------------------------- 41 NET CONSOLIDATED INCOME (**) 1,304,773 1,086,902 - -------------------------------------------------------------------------------------------------------------------------
(**) THE RESTATED INFORMATION FOR THE LAST TWELVE MONTHS SHOULD BE USED MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED EARNING STATEMENT OF THE THIRD QUARTER FROM JULY 1 TO SEPTEMBER 30 OF 2005 AND 2004 (thousands of pesos)
- ------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - ------------------------------------------------------------------------------------------------------------------------- R AMOUNT % AMOUNT % - ------------------------------------------------------------------------------------------------------------------------- 1 NET SALES 4,493,673 100 1,702,120 100 - ------------------------------------------------------------------------------------------------------------------------- 2 COST OF SALES 3,737,568 83 926,222 54 - ------------------------------------------------------------------------------------------------------------------------- 3 GROSS INCOME 756,105 17 775,898 46 - ------------------------------------------------------------------------------------------------------------------------- 4 OPERATING EXPENSES 296,273 7 175,809 10 - ------------------------------------------------------------------------------------------------------------------------- 5 OPERATING INCOME 459,832 10 600,089 35 - ------------------------------------------------------------------------------------------------------------------------- 6 TOTAL FINANCING COST 50,913 1 13,188 1 - ------------------------------------------------------------------------------------------------------------------------- 7 INCOME AFTER FINANCING COST 408,919 9 586,901 34 - ------------------------------------------------------------------------------------------------------------------------- 8 OTHER FINANCIAL OPERATIONS (7,642) 0 (4,013) 0 - ------------------------------------------------------------------------------------------------------------------------- 9 INCOME BEFORE TAXES AND WORKERS' PROFIT SHARING 416,561 9 590,914 35 - ------------------------------------------------------------------------------------------------------------------------- 10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING 909 0 86,982 5 - ------------------------------------------------------------------------------------------------------------------------- 11 NET INCOME AFTER TAXES AND WORKERS' PROFIT SHARING 415,652 9 503,932 30 - ------------------------------------------------------------------------------------------------------------------------- 12 SHARE IN NET INCOME OF SUBSIDIARIES AND NON-CONSOLIDATED 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 13 CONSOLIDATED NET INCOME FROM CONTINUOUS OPERATIONS 415,652 9 503,932 30 - ------------------------------------------------------------------------------------------------------------------------- 14 INCOME FROM DISCONTINUOUS OPERATIONS 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 15 CONSOLIDATED NET INCOME BEFORE EXTRAORDINARY ITEMS 415,652 9 503,932 30 - ------------------------------------------------------------------------------------------------------------------------- 16 EXTRAORDINARY ITEMS NET EXPENSES (INCOME) 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 17 NET EFFECT AT THE BEGINNING OF THE YEAR BY CHANGES IN ACCOUNTING PRINCIPLES 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------- 18 NET CONSOLIDATED INCOME 415,652 9 503,932 30 - ------------------------------------------------------------------------------------------------------------------------- 19 NET INCOME OF MINORITY INTEREST 27,258 1 0 0 - ------------------------------------------------------------------------------------------------------------------------- 20 NET INCOME OF MAJORITY INTEREST 388,394 9 503,932 30 - -------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED EARNING STATEMENT OF THE THIRD QUARTER BREAKDOWN OF MAIN CONCEPTS FROM JULY 1 TO SEPTEMBER 30 OF 2005 AND 2004 (thousands of pesos)
- -------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - -------------------------------------------------------------------------------------------------------------------------- R AMOUNT % AMOUNT % - -------------------------------------------------------------------------------------------------------------------------- 1 NET SALES 4,493,673 100 1,702,120 100 - -------------------------------------------------------------------------------------------------------------------------- 21 DOMESTIC 4,294,848 96 1,553,581 91 - -------------------------------------------------------------------------------------------------------------------------- 22 FOREIGN 198,825 4 148,539 9 - -------------------------------------------------------------------------------------------------------------------------- 23 TRANSLATED INTO DOLLARS (***) 18,488 12,475 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- 6 TOTAL FINANCING COST 50,913 100 13,188 100 - -------------------------------------------------------------------------------------------------------------------------- 24 INTEREST PAID 13,343 26 443 3 - -------------------------------------------------------------------------------------------------------------------------- 25 EXCHANGE LOSSES 33,855 66 0 0 - -------------------------------------------------------------------------------------------------------------------------- 26 INTEREST EARNED 6,643 13 3,503 27 - -------------------------------------------------------------------------------------------------------------------------- 27 EXCHANGE PROFITS 0 0 3,736 28 - -------------------------------------------------------------------------------------------------------------------------- 28 (GAIN) LOSS FROM MONETARY POSITION 10,358 20 19,984 152 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- 8 OTHER FINANCIAL OPERATIONS (7,642) 100 (4,013) 100 - -------------------------------------------------------------------------------------------------------------------------- 29 OTHER NET EXPENSES (INCOME) NET (7,642) 100 (4,013) 100 - -------------------------------------------------------------------------------------------------------------------------- 30 (PROFIT) LOSS ON SALE OF OWN SHARES 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- 31 (PROFIT) LOSS ON SALE OF SHORT-TERM INVESTMENTS 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- 10 RESERVE FOR TAXES AND WORKERS' PROFIT SHARING 909 100 86,982 100 - -------------------------------------------------------------------------------------------------------------------------- 32 INCOME TAX 86,119 9,474 8,159 9 - -------------------------------------------------------------------------------------------------------------------------- 33 DEFERRED INCOME TAX (85,210) (9,374) 78,823 91 - -------------------------------------------------------------------------------------------------------------------------- 34 WORKERS' PROFIT SHARING 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- 35 DEFERRED WORKERS' PROFIT SHARING 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------
(***) THOUSANDS OF DOLLARS MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION FROM JANUARY 1 TO SEPTEMBER 30 OF 2005 AND 2004 (thousands of pesos) - ------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - ------------------------------------------------------------------------------------------------------------------------- C AMOUNT AMOUNT - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 1 CONSOLIDATED NET INCOME 1,003,639 1,078,978 - ------------------------------------------------------------------------------------------------------------------------- 2 + (-) ITEMS ADDED TO INCOME WHICH DO NOT REQUIRE CASH 69,075 366,540 - ------------------------------------------------------------------------------------------------------------------------- 3 CASH FLOW FROM NET INCOME OF THE YEAR 1,072,714 1,445,518 - ------------------------------------------------------------------------------------------------------------------------- 4 CASH FLOW FROM CHANGE IN WORKING CAPITAL (2,759,943) (710,287) - ------------------------------------------------------------------------------------------------------------------------- 5 CASH GENERATED (USED) IN OPERATING ACTIVITIES (1,687,229) 735,231 - ------------------------------------------------------------------------------------------------------------------------- 6 CASH FLOW FROM EXTERNAL FINANCING 1,779,167 (20,476) - ------------------------------------------------------------------------------------------------------------------------- 7 CASH FLOW FROM INTERNAL FINANCING 1,137,684 248,458 - ------------------------------------------------------------------------------------------------------------------------- 8 CASH FLOW GENERATED (USED) BY FINANCING 2,916,851 227,982 - ------------------------------------------------------------------------------------------------------------------------- 9 CASH FLOW GENERATED (USED) IN INVESTMENT ACTIVITIES (1,202,083) (1,183,595) - ------------------------------------------------------------------------------------------------------------------------- 10 NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 27,539 (220,382) - ------------------------------------------------------------------------------------------------------------------------- 11 CASH AND SHORT-TERM INVESTMENTS AT THE BEGINNING OF PERIOD 515,186 552,273 - ------------------------------------------------------------------------------------------------------------------------- 12 CASH AND SHORT TERM INVESTMENTS AT THE END OF PERIOD 542,725 331,891 - -------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION BREAKDOWN OF MAIN CONCEPTS (thousands of pesos)
- ------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - ------------------------------------------------------------------------------------------------------------------------- C AMOUNT AMOUNT - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 2 + (-) ITEMS ADDED TO INCOME WHICH DO NOT REQUIRE CASH 69,075 366,540 - ------------------------------------------------------------------------------------------------------------------------- 13 DEPRECIATION AND AMORTIZATION FOR THE YEAR 218,150 158,923 - ------------------------------------------------------------------------------------------------------------------------- 14 + (-) NET INCREASE (DECREASE) IN PENSIONS FUND AND SENIORITY PREMIUMS 0 0 - ------------------------------------------------------------------------------------------------------------------------- 15 + (-) NET LOSS (PROFIT) IN MONEY EXCHANGE 0 - ------------------------------------------------------------------------------------------------------------------------- 16 + (-) NET LOSS (PROFIT) IN ASSETS AND LIABILITIES ACTUALIZATION 0 0 - ------------------------------------------------------------------------------------------------------------------------- 17 + (-) OTHER ITEMS 0 0 - ------------------------------------------------------------------------------------------------------------------------- 40 + (-) OTHER ITEMS WHICH DO NOT AFFECT EBITDA (149,075) 207,617 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 4 CASH FLOW CHANGE IN WORKING CAPITAL (2,759,943) (710,287) - ------------------------------------------------------------------------------------------------------------------------- 18 + (-) DECREASE (INCREASE) IN ACCOUNT RECEIVABLES (1,695,852) (502,720) - ------------------------------------------------------------------------------------------------------------------------- 19 + (-) DECREASE (INCREASE) IN INVENTORIES (2,481,263) (351,580) - ------------------------------------------------------------------------------------------------------------------------- 20 + (-) DECREASE (INCREASE) IN OTHER ACCOUNT RECEIVABLES (32,853) (182,832) - ------------------------------------------------------------------------------------------------------------------------- 21 + (-) DECREASE (INCREASE) IN SUPPLIER ACCOUNT 717,123 214,503 - ------------------------------------------------------------------------------------------------------------------------- 22 + (-) DECREASE (INCREASE) IN OTHER LIABILITIES 732,902 112,342 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 6 CASH FLOW FROM EXTERNAL FINANCING 1,779,167 (20,476) - ------------------------------------------------------------------------------------------------------------------------- 23 + SHORT-TERM BANK AND STOCK MARKET FINANCING 16,369 (732) - ------------------------------------------------------------------------------------------------------------------------- 24 + LONG-TERM BANK AND STOCK MARKET FINANCING 697,133 0 - ------------------------------------------------------------------------------------------------------------------------- 25 + DIVIDEND RECEIVED 0 0 - ------------------------------------------------------------------------------------------------------------------------- 26 OTHER FINANCING 1,220,345 0 - ------------------------------------------------------------------------------------------------------------------------- 27 BANK FINANCING AMORTIZATION (154,680) (19,744) - ------------------------------------------------------------------------------------------------------------------------- 28 (-) STOCK MARKET AMORTIZATION 0 0 - ------------------------------------------------------------------------------------------------------------------------- 29 (-) OTHER FINANCING AMORTIZATION 0 0 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 7 CASH FLOW FROM INTERNAL FINANCING 1,137,684 248,458 - ------------------------------------------------------------------------------------------------------------------------- 30 + (-) INCREASE (DECREASE) IN CAPITAL STOCK 0 24,153 - ------------------------------------------------------------------------------------------------------------------------- 31 (-) DIVIDENDS PAID 0 0 - ------------------------------------------------------------------------------------------------------------------------- 32 + PREMIUM ON SALE OF SHARES 0 0 - ------------------------------------------------------------------------------------------------------------------------- 33 + CONTRIBUTION FOR FUTURE CAPITAL INCREASES 1,137,684 224,305 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- 9 CASH FLOW GENERATED (UTILIZED) IN INVESTMENT ACTIVITIES (1,202,083) (1,183,595) - ------------------------------------------------------------------------------------------------------------------------- 34 + (-) INCREASE 8DECREASE) IN STOCK INVESTMENTS OF A PERMANENT NATURE 0 0 - ------------------------------------------------------------------------------------------------------------------------- 35 (-) ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT (1,379,758) (1,217,865) - ------------------------------------------------------------------------------------------------------------------------- 36 (-) INCREASE IN CONSTRUCTION PROGRESS 0 0 - ------------------------------------------------------------------------------------------------------------------------- 37 + SALE OF OTHER PERMANENT INVESTMENTS 0 0 - ------------------------------------------------------------------------------------------------------------------------- 38 + SALE OF TANGIBLE FIXED ASSETS 0 0 - ------------------------------------------------------------------------------------------------------------------------- 39 + (-) OTHER ITEMS 177,675 34,270 - -------------------------------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. RATIOS CONSOLIDATED
- --------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - --------------------------------------------------------------------------------------------------------------------------- P - --------------------------------------------------------------------------------------------------------------------------- YIELD - --------------------------------------------------------------------------------------------------------------------------- 1 NET INCOME TO NET SALES 12.56% 26.85% - --------------------------------------------------------------------------------------------------------------------------- 2 NET INCOME TO STOCKHOLDERS' EQUITY (**) 14.79% 17.45% - --------------------------------------------------------------------------------------------------------------------------- 3 NET INCOME TO TOTAL ASSETS (**) 8.87% 13.13% - --------------------------------------------------------------------------------------------------------------------------- 4 CASH DIVIDENDS TO PREVIOUS YEAR NET INCOME 0.00% 0.00% - --------------------------------------------------------------------------------------------------------------------------- 5 INCOME DUE TO MONETARY POSITION TO NET INCOME (1.77)% (2.95)% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- ACTIVITY - --------------------------------------------------------------------------------------------------------------------------- 6 NET SALES TO NET ASSETS (**) 0.66 times 0.58 times - --------------------------------------------------------------------------------------------------------------------------- 7 NET SALES TO FIXED ASSETS (**) 1.43 times 0.82 times - --------------------------------------------------------------------------------------------------------------------------- 8 INVENTORIES ROTATION (**) 1.94 times 4.27 times - --------------------------------------------------------------------------------------------------------------------------- 9 ACCOUNTS RECEIVABLE IN DAYS OF SALES 79 days 56 days - --------------------------------------------------------------------------------------------------------------------------- 10 PAID INTEREST TO TOTAL LIABILITIES WITH COST (**) 2.36% 450.69% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- LEVERAGE - --------------------------------------------------------------------------------------------------------------------------- 11 TOTAL LIABILITIES TO TOTAL ASSETS 32.84% 24.76% - --------------------------------------------------------------------------------------------------------------------------- 12 TOTAL LIABILITIES TO STOCKHOLDERS' EQUITY 0.49 times 0.33 times - --------------------------------------------------------------------------------------------------------------------------- 13 FOREIGN CURRENCY LIABILITIES TO TOTAL LIABILITIES 43.25% 6.25% - --------------------------------------------------------------------------------------------------------------------------- 14 LONG-TERM LIABILITIES TO FIXED ASSETS 10.18% 0.00% - --------------------------------------------------------------------------------------------------------------------------- 15 OPERATING INCOME TO INTEREST PAID 82.02 times 84.93 times - --------------------------------------------------------------------------------------------------------------------------- 16 NET SALES TO TOTAL LIABILITIES (**) 2.02 times 2.35 times - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- LIQUIDITY - --------------------------------------------------------------------------------------------------------------------------- 17 CURRENT ASSETS TO CURRENT LIABILITIES 3.17 times 3.31 times - --------------------------------------------------------------------------------------------------------------------------- 18 CURRENT ASSETS LESS INVENTORY TO CURRENT LIABILITIES 1.55 times 2.30 times - --------------------------------------------------------------------------------------------------------------------------- 19 CURRENT ASSETS TO TOTAL LIABILITIES 1.47 times 1.06 times - --------------------------------------------------------------------------------------------------------------------------- 20 AVAILABLE ASSETS TO CURRENT LIABILITIES 24.26% 50.78% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- CASH FLOW - --------------------------------------------------------------------------------------------------------------------------- 21 CASH FLOW FROM NET INCOME TO NET SALES 13.43% 35.98% - --------------------------------------------------------------------------------------------------------------------------- 22 CASH FLOW FROM CHANGES IN WORKING CAPITAL TO NET SALES (34.55)% (17.68)% - --------------------------------------------------------------------------------------------------------------------------- 23 CASH GENERATED (USED) IN OPERATING TO INTEREST PAID (105.41) times 47.69 times - --------------------------------------------------------------------------------------------------------------------------- 24 EXTERNAL FINANCING TO CASH GENERATED (USED) IN FINANCING 61.00% (8.98)% - --------------------------------------------------------------------------------------------------------------------------- 25 INTERNAL FINANCING TO CASH GENERATED (USED) IN FINANCING 39.00% 108.98% - --------------------------------------------------------------------------------------------------------------------------- 26 ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT TO CASH GENERATED (USED) IN INVESTMENT ACTIVITIES 114.78% 102.90% - ---------------------------------------------------------------------------------------------------------------------------
(**) IN THESE RATIOS PROVIDE INFORMATION FOR THE LAST TWELVE MONTHS MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. DATE PER SHARE CONSOLIDATED
- --------------------------------------------------------------------------------------------------------------------------- REF CATEGORIES QUARTER OF PRESENT QUARTER OF PREVIOUS FINANCIAL YEAR FINANCIAL YEAR - --------------------------------------------------------------------------------------------------------------------------- D - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- 1 BASIC PROFIT PER ORDINARY SHARE (**) $ 9.64 $ 8.28 - --------------------------------------------------------------------------------------------------------------------------- 2 BASIC PROFIT PER PREFERENCE SHARE (**) $ 0.00 $ 0.00 - --------------------------------------------------------------------------------------------------------------------------- 3 DILUTED PROFIT PER ORDINARY SHARE (**) $ 0.00 $ 0.00 - --------------------------------------------------------------------------------------------------------------------------- 4 CONTINUOUS OPERATING PROFIT PER COMMON SHARE (**) $ 9.64 $ 8.28 - --------------------------------------------------------------------------------------------------------------------------- 5 EFFECT OF DISCONTINUED OPERATIONS ON CONTINUOUS OPERATING PROFIT PER SHARE (**) $ 0.00 $ 0.00 - --------------------------------------------------------------------------------------------------------------------------- 6 EFFECT OF EXTRAORDINARY PROFIT AND LOSS ON CONTINUOUS OPERATING PROFIT PER SHARE (**) $ 0.00 $ 0.00 - --------------------------------------------------------------------------------------------------------------------------- 7 EFFECT BY CHANGES IN ACCOUNTING POLICIES ON CONTINUOUS OPERATING PROFIT PER SHARE (**) $ 0.00 $ 0.00 - --------------------------------------------------------------------------------------------------------------------------- 8 CARRYING VALUE PER SHARE $62.63 $46.64 - --------------------------------------------------------------------------------------------------------------------------- 9 CASH DIVIDEND ACCUMULATED PER SHARE $ 0.00 $ 0.00 - --------------------------------------------------------------------------------------------------------------------------- 10 DIVIDEND IN SHARES PER SHARE 0.00 shares 0.00 shares - --------------------------------------------------------------------------------------------------------------------------- 11 MARKET PRICE TO CARRYING VALUE 0.78 times 0.98 times - --------------------------------------------------------------------------------------------------------------------------- 12 MARKET PRICE TO BASIC PROFIT PER COMMON SHARE (**) 5.08 times 5.50 times - --------------------------------------------------------------------------------------------------------------------------- 13 MARKET PRICE TO BASIC PROFIT PER PREFERENCE SHARE (**) 0.00 times 0.00 times - ---------------------------------------------------------------------------------------------------------------------------
(**) TO CALCULATE THE DATE PER SHARE USE THE NET INCOME FOR THE LAST TWELVE MONTHS. MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. FINANCIAL STATEMENT NOTES CONSOLIDATED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS On September 10, 2004 Simec completed the acquisition of the property, plant and equipment and the inventories, and assumed liabilities associated with seniority premiums of employees, of the Mexican steel-making facilities of Industrias Ferricas del Norte, S.A. (Corporacion Sidenor of Spain) located in Apizaco, Tlaxcala and Cholula, Puebla. Simec estimates that its total investment in this transaction was approximately U.S. $135 million. Simec began to operate the plants in Apizaco, Tlaxcala and Cholula, Puebla on August 1, 2004, and, as a result, the operation of both plants is reflected in Simec's financial results as of such date. On July 22, 2005 Simec and its parent company ICH have acquired 100% of the Stock of PAV Republic, Inc. ("Republic"). Simec, ICH's largest subsidiary, has acquired 50.2% of Republic's stock, and ICH purchased the remaining 49.8%. The cash purchase price of USD $229 million was financed by internally generated funds. At September 30, 2005, the total amount of Republic's liabilities was of USD $66 million (Ps. 715 millones), with a weighted average cost per year of 7.78%. Republic is the leading producer of special bar quality (SBQ) steel in the United States and, together with Simec, will become the largest producer of this kind of steel in North America. Simec began to operate the plants of Republic on July 22, 2005 and, as a result the operation is reflected in Simec's financial results as of such date. According with the established in the articles 35 and 81 of the dispositions of general character applicable to the registrants and other participants of the market of values in Mexico, next consolidated earning statements from January 1 to September 30, appear pro forma of Simec by the period 2005 and 2004, in order to be comparable and the consolidated balance sheet appear Pro Forma of Simec at September 30, 2004 in order to be comparable against September 30, 2005. CONSOLIDATED PRO FORMA EARNING STATEMENT (Thousands of Pesos) FROM JANUARY 1 TO SEPTEMBER 30 OF 2005
- --------------------------------------------------------------------------------------------------------------- Simec without Consolidated Apizaco, Cholula Apizaco and Republic Simec and Republic Cholula Earning Statement - --------------------------------------------------------------------------------------------------------------- Steel Sales (Metric Tons) 482,309 324,026 1,271,350 2,077,685 - --------------------------------------------------------------------------------------------------------------- Net Sales 3,041,657 2,119,100 12,442,094 17,602,851 - --------------------------------------------------------------------------------------------------------------- Cost of Sales 1,854,400 1,539,611 11,012,706 14,406,717 - --------------------------------------------------------------------------------------------------------------- Gross Income 1,187,257 579,489 1,429,388 3,196,134 - --------------------------------------------------------------------------------------------------------------- Operating Expenses 361,962 185,691 691,949 1,239,602 - --------------------------------------------------------------------------------------------------------------- Operating Income 825,295 393,798 737,439 1,956,532 - --------------------------------------------------------------------------------------------------------------- Total Financing Cost 54,476 9,210 108,365 172,051 - --------------------------------------------------------------------------------------------------------------- Other Financial Operations (8,361) (7) (13,598) (21,966) - --------------------------------------------------------------------------------------------------------------- Income Taxes 138,503 68,758 241,601 448,862 - --------------------------------------------------------------------------------------------------------------- Extraordinary gain 0 0 (19,276) (19,276) - --------------------------------------------------------------------------------------------------------------- Net Income Before Minority Interest 640,677 315,837 420,347 1,376,861 - ---------------------------------------------------------------------------------------------------------------
CONSOLIDATED PRO FORMA EARNING STATEMENT (Thousands of Pesos) FROM JANUARY 1 TO SEPTEMBER 30 OF 2004
- --------------------------------------------------------------------------------------------------------------- Simec without Consolidated Apizaco, Cholula Apizaco and Republic Simec and Republic Cholula Earning Statement - --------------------------------------------------------------------------------------------------------------- Steel Sales (Metric Tons) 478,278 270,359 1,228,788 1,977,425 - --------------------------------------------------------------------------------------------------------------- Net Sales 3,514,540 1,769,651 9,932,256 15,216,447 - --------------------------------------------------------------------------------------------------------------- Cost of Sales 1,974,532 1,209,993 9,112,644 12,297,169 - --------------------------------------------------------------------------------------------------------------- Gross Income 1,540,008 559,658 819,612 2,919,278 - --------------------------------------------------------------------------------------------------------------- Operating Expenses 366,115 286,064 425,419 1,077,598 - --------------------------------------------------------------------------------------------------------------- Operating Income 1,173,893 273,594 394,193 1,841,680 - --------------------------------------------------------------------------------------------------------------- Total Financing Cost 16,091 61,760 174,434 252,285 - --------------------------------------------------------------------------------------------------------------- Other Financial Operations (16,831) 15,278 (1,693) (3,246) - --------------------------------------------------------------------------------------------------------------- Income Taxes 230,889 0 82,016 312,905 - --------------------------------------------------------------------------------------------------------------- Extraordinary gain 0 0 (104,172) (104,172) - --------------------------------------------------------------------------------------------------------------- Net Income Before Minority Interest 943,744 196,556 243,608 1,383,908 - ---------------------------------------------------------------------------------------------------------------
The earnings statement Pro forma for the period January 1 to September 30 2004, includes the information by the period from January 1 to July 31 of 2004, of the companies Atlax and Metamex, previous owners of the plants of Cholula and Puebla and for the earnings statements of Republic includes the results of January 1 to September 30 of 2004 and January 1 to July 22 of 2005 that corresponded to the previous owners of Republic. CONSOLIDATED BALANCE SHEET (Thousands of Pesos) SEPTEMBER 30
- --------------------------------------------------------------------------------------------------------------- 2005 Pro-forma 2004 - --------------------------------------------------------------------------------------------------------------- Consolidated Simec Adjustments Consolidated Simec Balance without Republic Simec Balance Sheet Republic Sheet - --------------------------------------------------------------------------------------------------------------- Current Assets 7,087,607 2,164,878 4,076,837 6,241,715 - --------------------------------------------------------------------------------------------------------------- Long-Term Assets 0 10,662 0 10,662 - --------------------------------------------------------------------------------------------------------------- Property, Plant and Equipment 6,848,459 5,855,749 167,745 6,023,494 - --------------------------------------------------------------------------------------------------------------- Deferred Assets 772,761 246,961 146,291 393,252 - --------------------------------------------------------------------------------------------------------------- Total Assets 14,708,827 8,278,250 4,390,873 12,669,123 - --------------------------------------------------------------------------------------------------------------- Current Liabilities 2,236,707 653,587 1,231,576 1,885,163 - --------------------------------------------------------------------------------------------------------------- Long-Term Liabilities 697,133 0 2,329,526 2,329,526 - --------------------------------------------------------------------------------------------------------------- Deferred Liabilities 1,896,136 1,396,418 5,389 1,401,807 - --------------------------------------------------------------------------------------------------------------- Total Stockholder's Equity 9,878,851 6,228,245 824,382 7,052,627 - ---------------------------------------------------------------------------------------------------------------
The consolidated balance sheet at September 30 of 2005 includes the plants of Apizaco, Cholula and Republic and for the consolidated balance sheet Pro forma at September 30, 2004 includes the information of Republic at September 30, 2004, the plants of Apizaco and Cholula already are integrated in the consolidated balance sheet of Simec at September 30, 2004. s35 Stockholders' Equity: Effects of inflation - The effects of inflation on stockholders' equity at September 30, 2005 are as follows:
Historical Restated Cost Amount Total Capital stock Ps. 2,012,147 Ps. 1,387,972 Ps. 3,400,119 Additional paid-in capital 702,224 124,246 826,470 Contributions for future Capital increases 1,137,684 0 1,137,684 Retained earnings 3,534,330 610,753 4,145,083 Excess resulting from restating Stockholders' equity to reflect Certain effects of inflation -- 15,449 15,449 Effect deferred income tax Bulletin D-4 (662,340) (223,616) (885,956)
s39 Premium in subscription of Capital Stock made in March 29, 2001 and April 29, 2005. s44 In 1999, the Mexican Institute of Public Accountants issued Bulletin D-4, "Accounting for Income and Asset Taxes and Employee Profit Sharing", which is effective for all fiscal years beginning January 1, 2000. Bulletin D-4 establishes financial accounting and reporting standards for the effects of asset tax, income tax and employee profit sharing that result from enterprise activities during the current and preceding years. Simec's long-term liabilities resulted of the adoption of this Bulletin was Ps. 1,756,608 at September 30, 2005 compared to Ps. 1,386,758 at September 30, 2004. The effect on Simec's consolidated statement of income in the nine-month period ended September 30, 2005, was a decrease of Ps. 149,075 in the provision for income tax and employee profit sharing compared to an increase of Ps. 207,617 in the same period of 2004. These provisions do not affect the cash flow of Simec. r24 There are not interest paid in UDI's r26 There are not interest earned in UDI's c02 Consolidated Statements of Changes in Financial Position The net loss in money exchange and net profit in liabilities actualization are as follows:
September 30, 2005 September 30, 2004 Net loss (profit) in money exchange Ps. (603) Ps. (291) Net loss (profit) in liabilities actualization (2,693) (784)
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR: 2005 GRUPO SIMEC, S.A. DE C.V. DIRECTOR REPORT ANNEX 1 CONSOLIDATED INFORMATION CONCERNING LIQUIDITY AND CAPITAL RESOURCES AND DEBT OBLIGATIONS WITH BANKS AND COMMERCIAL CREDITORS Liquidity and Capital Resources At September 30, 2005, Simec's total consolidated debt consisted of U.S. $66.3 million (Ps. 718 million), of which $61.3 million is debt held by GE Capital, $4.7 million dollars held by the Ohio Department of Development Loan, and U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998 (accrued interest at September 30, 2005 was U.S. 302,803 dollars). At December 31, 2004, Simec had outstanding approximately $13.9 million of U.S. dollar-denominated debt, including a refinanced letter of credit for $13.6 million and $0.3 million of MTN's due 1998. At September 30, 2005 Simec owed no debt to its parent company, Industrias CH, S.A. de C.V. ("ICH"). Simec's bank debt repayment in March 2004 resulted in the payment in full of its outstanding bank debt. This payment permitted Simec to cancel the industrial mortgage securing the bank debt and Simec is no longer required to comply with various affirmative and negative covenants. On July 22, 2005 Simec and its parent company ICH acquired 100% of the stock of PAV Republic, Inc. ("Republic"). Simec, ICH's largest subsidiary, acquired 50.2% of Republic's stock, and ICH purchased the remaining 49.8%. The cash purchase price of U.S. $229 million was financed by internally generated funds. At September 30, 2005, the total amount of Republic's liabilities was of U.S. $66 million (Ps. 715 millones), with a weighted average cost per year of 6.02%. Republic is the leading producer of special bar quality (SBQ) steel in the United States and, together with Simec, will become the largest producer of this kind of steel in North America. On September 10, 2004 Simec completed the acquisition of the property, plant and equipment and the inventories, and assumed liabilities associated with seniority premiums of employees, of the Mexican steel-making facilities of Industrias Ferricas del Norte, S.A. (Corporacion Sidenor of Spain) located in Apizaco, Tlaxcala and Cholula, Puebla. Simec's total investment in this transaction was approximately U.S. $135 million, funded with internally generated resources of Simec and capital contributions from ICH of U.S. $19 million for capital stock issued in the second quarter of 2005. Simec began operating the plants in Apizaco, Tlaxcala and Cholula, Puebla on August 1, 2004, and, as a result, the operation of both plants is reflected in Simec's financial results as of such date. Net resources used by operations were Ps. 1,687 million in the nine-month period ended September 30, 2005 (including the effects of the acquisition of Republic) versus Ps. 735 million of net resources provided by operations in the same period of 2004. Net resources provided by financing activities were Ps. 2,917 million in the nine-month period ended September 30, 2005 (which amount includes the purchase by ICH of the capital stock of Republic for Ps. 1,220 million and a capital contribution from ICH to Simec in the amount of Ps. 1,138 million for capital stock to be issued in the future) versus Ps. 228 million of net resources provided by financing activities in the same period of 2004 (which amount reflects the prepayment of Ps. 20 million (U.S. $1.7 million) of bank debt, a capital contribution from ICH to Simec in the amount of Ps. 224 million ($19 million) for capital stock to be issued in the future and a capital contribution of certain minority shareholders of Simec for Ps. 24 million). Net resources used by investing activities (to acquire property, plant and equipment and other non-current assets) were Ps. 1,202 million in the nine-month period ended September 30, 2005 (including Ps. 1,328 from the acquisition of property, plant and equipment of Republic) versus net resources used in investing activities of Ps. 1,184 million in the same period of 2004 (which amount reflects the acquisition of the Apizaco and Cholula facilities). MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine-Month Period Ended September 30, 2005 compared to Nine-Month Period Ended September 30, 2004 Net Sales Net sales of Simec increased 99% to Ps. 7,988 million in the nine-month period ended September 30, 2005 (including the net sales generated by the newly acquired plants in Apizaco and Cholula of Ps. 2,119 million and the newly acquired plants of Republic of Ps. 2,827 million), compared to Ps. 4,017 million in same period of 2004 (including the net sales generated by the newly acquired plants in Apizaco and Cholula of Ps. 503 million). Sales in metric tons of basic steel products increased 105% to 1,115,054 metric tons in the nine-month period ended September 30, 2005 (including 324,026 metric tons generated by the newly acquired plants in Apizaco and Cholula and 308,719 metric tons generated by the newly acquired plants of Republic) compared to 542,705 metric tons in the same period of 2004 (including 64,427 metric tons relating to the newly acquired plants in Apizaco and Cholula). Exports (including sales by U.S. subsidiaries) of basic steel products increased 497% to 418,380 metric tons in the nine-month period ended September 30, 2005 (including 17,626 tons relating to the newly acquired plants in Apizaco and Cholula and 308,719 metric tons generated by the newly acquired plants of Republic) versus 70,112 metric tons in the same period of 2004 (including 1,205 metric tons relating to the newly acquired plants in Apizaco and Cholula). Additionally, Simec sold 13,305 metric tons of billet in the nine-month period ended September 30, 2005, compared to 40,791 tons of billet in the first nine months of 2004. The average price of steel products (excluding the sales of Republic) decreased 8.5% in real terms in the nine-month period ended September 30, 2005 versus the same period of 2004. Direct Cost of Sales Simec's direct cost of sales increased 163% to Ps. 6,013 million in the nine-month period ended September 30, 2005 (including Ps. 1,540 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 2,619 million relating to the newly acquired plants of Republic, including $17.6 million, Ps. 191 million, of costs related to the application of the Financial Accounting Standard Board "FASB" 141, although this provision does not affect the cash flow of Simec.) compared to Ps. 2,288 million in the same period of 2004 (including Ps. 314 million relating to the newly acquired plants in Apizaco and Cholula). Direct cost of sales as a percentage of net sales was 75% in the nine-month period ended September 30, 2005 compared to 57% in the same period of 2004. The average cost of raw materials used to produce steel products (excluding the production of Republic) increased 5.6% in real terms in the nine-month period ended September 30, 2005 versus the same period of 2004, primarily as a result of increases in the price of scrap and certain other raw materials. Marginal Profit Simec's marginal profit increased 14% to Ps. 1,975 million in the nine-month period ended September 30, 2005 (including Ps. 579 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 209 million relating to the newly acquired plants of Republic) compared to Ps. 1,729 million in the first nine months of 2004 (including Ps. 189 million relating to the newly acquired plants in Apizaco and Cholula). As a percentage of net sales, marginal profit was 25% in the nine-month period ended September 30, 2005 compared to 43% in the same period of 2004. Indirect Manufacturing, Selling, General and Administrative Expenses Indirect manufacturing, selling, general, and administrative expenses (which include depreciation and amortization) increased 58% to Ps. 663 million in the nine-month period ended September 30, 2005 (including Ps. 184 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 115 million relating to the newly acquired plants of Republic) from Ps. 420 million in the same period of 2004 (including Ps. 54 million relating to the newly acquired plants in Apizaco and Cholula); Simec recorded an increase of Ps. 59 million in depreciation and amortization expense, which in the nine-month period ended September 30, 2005 was Ps. 218 million (including Ps. 37 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 28 million relating to the newly acquired plants of Republic) compared to Ps. 159 million in the same period of 2004 (including Ps. 10 million relating to the newly acquired plants in Apizaco and Cholula). Operating Income Simec's operating income increased 0.2% to Ps. 1,312 million in the nine-month period ended September 30, 2005 (including Ps. 395 million relating to the newly acquired plants in Apizaco and Cholula and Ps. 94 million relating to the newly acquired plants of Republic) compared to Ps. 1,309 million in the same period of 2004 (including Ps. 135 million relating to the newly acquired plants in Apizaco and Cholula). Operating income was 16% of net sales in the nine-month period ended September 30, 2005 and 33% of net sales in the same period of 2004. Financial Income (Expense) Simec recorded financial expense of Ps. 85 million in the nine-month period ended September 30, 2005 compared to financial expense of Ps. 16 million in the same period of 2004. Simec recorded an exchange loss of approximately Ps. 69 million in the nine-month period ended September 30, 2005 compared to an exchange gain of Ps. 12 million in the same period of 2004, reflecting a 3.7% increase in the value of the peso versus the dollar in the nine-month period ended September 30, 2005 compared to a 1.6% decrease in the value of the peso versus the dollar in the same period of 2004. Net interest income was Ps. 2 million in the nine-month period ended September 30, 2005 versus net interest income of Ps. 4 million in the same period of 2004. Simec recorded a loss from monetary position of Ps. 18 million in the nine-month period ended September 30, 2005 compared to a loss from monetary position of Ps. 32 million in the same period of 2004, reflecting the domestic inflation rate of 1.7% in the nine-month period ended September 30, 2005 as compared to 3.4% in the same period of 2004 and lower debt levels during the nine-month period ended September 30, 2005. Other Income (Expense), Net Simec recorded other income, net, of Ps. 15 million in the nine-month period ended September 30, 2005 compared to other income, net, of Ps. 17 million in the same period of 2004 (reflecting (i) income from the recovery of an account recorded as a doubtful account of Ps. 12 million and (ii) other income, net related to other financial operations of Ps. 5 million). Income Tax and Employee Profit Sharing Simec recorded a provision of Ps. 239 million for income tax and employee profit sharing in the nine-month period ended September 30, 2005 (including a decrease in the provision of Ps. 149 million from the application of Bulletin D-4 with respect to deferred income tax described below) compared to a provision of Ps. 231 million in the same period of 2004 (including a provision of Ps. 208 million from the application of Bulletin D-4 with respect to deferred income tax described below). Net Income Before Minority Interest Simec recorded net income before minority interest of Ps. 1,003 million in the nine-month period ended September 30, 2005 compared to net income before minority interest of Ps. 1,079 million in the same period of 2004. Minority Interest Simec recorded minority interest of Ps. 27 million in the nine-month period ended September 30, 2005 versus no minority interest recorded in the same period of 2004. The minority interest reflects the 49.8% interest in Republic held by ICH. Net Income As a result of the foregoing Simec recorded net income of Ps. 976 million in the nine-month period ended September 30, 2005 compared to net income of Ps. 1,079 million in the same period of 2004. Purchase Price Accounting Under purchase price accounting (US accounting standard FASB #141) the company is required to value the assets (current assets, primarily inventories, property, plant & equipment and intangible assets) and liabilities (primarily deferred taxes) at market as of the purchase date. The purchase price accounting adjustments were recorded on the opening balance sheet for Republic. Due to our higher basis in the inventory (market value rather than production costs) our cost of sales expense increased approximately $17.6 million in July, August and September. This provision does not affect the cash flow of Simec. Pronouncements Applicable to Mexican GAAP In 1999, the Mexican Institute of Public Accountants issued Bulletin D-4, "Accounting for Income and Asset Taxes and Employee Profit Sharing", which is effective for all fiscal years beginning January 1, 2000. Bulletin D-4 establishes financial accounting and reporting standards for the effects of asset tax, income tax and employee profit sharing that result from enterprise activities during the current and preceding years. Simec's long-term liability resulting from the adoption of this Bulletin was Ps. 1,757 million at September 30, 2005 compared to Ps. 1,387 million at September 30, 2004. The effect on Simec's consolidated statement of income in the nine-month period ended September 30, 2005 was a decrease of Ps. 149 million in the provision for income tax and employee profit sharing compared to an increase in the provision of Ps. 208 million in the same period of 2004. These provisions do not affect the cash flow of Simec. MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR: 2005 GRUPO SIMEC, S.A. DE C.V. FINANCIAL STATEMENT NOTES ANNEX 2 CONSOLIDATED (1) Operations preparation bases and summary of significant accounting policies: Grupo Simec, S.A. de C.V. and its Subsidiaries ("the Company") are subsidiaries of Industrias CH, S.A. de C.V. ("ICH"), and their main activities consist of the manufacturing and sale of steel products primarily destined for the construction sector of Mexico and other countries. Significant accounting policies and practices followed by the Companies which affect the principal captions of the financial statements are described below: a. Financial statement presentation - The consolidated financial statements have been prepared in accordance with principles generally accepted in Mexico, which include the recognition of the effects of inflation on the financial information and the presentation in constant Mexican pesos. b. Principles of Consolidation - As part of the financial debt restructuring agreement into during 1997, Compania Siderurgica de Guadalajara, S.A. de C.V. ("CSG") assumed all of the debt of the Company in return for an equity interest in its subsidiaries. As a result of the above, the Company is the principal shareholder of CSG, and CSG is the principal shareholder of the other subsidiaries that Grupo Simec, S.A. de C.V. ("Simec") controlled before the restructuring. The main subsidiaries of CSG are the following: o Compania Siderurgica de California, S.A. de C.V. o Industrias del Acero y del Alambre, S.A. de C.V. o Pacific Steel Inc. o SimRep Corporation and PAV Republic and Subsidiaries All significant intercompany balances and transactions have been eliminated in consolidation. c. Cash and cash equivalents - The Company considers short-term investments with original maturities not greater than three months to be cash equivalent. Cash equivalents includes temporary investments and Mexican Government Treasury Bonds, and are stated at market value, which approximates cost plus earned interest. Any increase in market value is credited to operations for the period. d. Inventories - The inventories are originally stated at average cost and subsequently adjusted to replacement value at the balance sheet date. The replacement values do not exceed market and are determined as follows: Billet finished goods and work in process - At the latest production cost for the month. Raw materials - According to purchase prices prevailing in the market at the balance sheet date. Materials, supplies and rollers - At historical cost, restated by applying the steel industry inflation index. The Company presents as non-current inventories the rollers and spare parts, which according to historical data and production trends will not be used within a one-year period. e.- Derivative financial instruments-- The Company is using derivative financial instruments for hedging risks associated with natural gas prices and conducted studies on historical consumption, future requirements and commitments; thus it avoided exposure to risks other than the normal operating risks. Management of the Company examines its financial risks by continually analyzing price, credit and liquidity risks. The Company uses futures contracts for hedging risks from fluctuations in natural gas prices, which are based on demand and supply at the principal international markets. As applicable, the Company recognized the fair value of instruments either as liabilities or assets. Such fair value and thus, the value of these assets or liabilities were restated at each month's-end. The Company opted for the early adoption of Bulletin C-10 "Derivative Financial Instruments and Hedging"; therefore, at December 31, 2003 the fair value of natural gas in force during 2004, 2005 and 2006 and which effective portions will not be offset against the asset risks until consumed, were recognized within the comprehensive income account in stockholders' equity. f. Property, plant and equipment - Property, plant and equipment of domestic origin are restated by using factors derived from The National Consumer Price Index ("NCPI") from the date of their acquisition, and imported machinery and equipment are restated by applying devaluation and inflation factors of the country of origin. Depreciation recorded in the consolidated statement of income (loss) is computed based upon the estimated useful life and the restated cost of each asset. In addition, Financial expense incurred during the construction period is capitalized as construction in progress. The capitalized amounts are restated using a factor derived from the NCPI cumulative from the date of capitalization through period-end and are amortized over the average depreciation period of the corresponding assets. The estimated useful lives of assets as of September 30, 2005 are as follows: Years ----- Buildings....................................... 15 to 50 Machinery and equipment ........................ 10 to 40 Buildings and improvements (Republic)........... 10 to 25 Land improvements (Republic).................... 5 to 25 Machinery and equipment (Republic).............. 5 to 20 g. Other assets - Organization and pre-operating expenses are capitalized and restated using a factor derived from the NCPI cumulative from the date of generation through period-end, and their amortization is calculated by the straight-line method over a period of 20 years. h. Seniority premiums and severance payments - According to Federal Labor Law, employees are entitled to seniority premiums after fifteen years or more of services. These premiums are recognized as expenses in the years in which the services are rendered, using actuarial calculations based on the projected unit credit method, and since 1996 by applying real interest and salary increases. Any other payments to which employees may be entitled in case of separation, disability or death, are charged to operations in the period in which they become payable. i. Pension plan - Until 1995, the Company provided pension benefits for all personnel with a minimum of 10 years of service and 35 years of age. The Company had established an irrevocable trust for its contributions, which were based on actuarial calculations. In December 1995, the board of directors of the Company, in agreement with the trade union, discontinued these benefits and related contributions to the trust fund. This decision was made because of the new Mexican pension fund system, Administradoras de Fondos para el Retiro, which establishes similar benefits for the employees. The balance of the trust fund will be applied to the retirement benefits of qualifying employees until the fund is exhausted due to the irrevocable status of the fund. The Company does not have any contractual obligation regarding the payment of pensions of retirements. j. Cost of sales - Cost of sales related to sales of inventory items is recorded at standard cost, which approximates the replacement cost at the date of sale. k. Income tax and employee profit sharing - In 1999, the Mexican Institute of Public Accountants issued Bulletin D-4, "Accounting for Income and Asset Taxes and Employee Profit Sharing", which is effective for all fiscal years beginning January 1, 2000. Bulletin D-4 establishes financial accounting and reporting standards for the effects of asset tax, income tax and employee profit sharing that result from enterprise activities during the current and preceding years. The Company and its subsidiaries are included in the consolidated tax returns of the company's parent. l. Foreign currency transactions and exchange differences - All transactions in foreign currency are recorded at the exchange rates prevailing on the date of their execution or liquidation. Foreign currency denominated assets and liabilities are translated at the exchange rates prevailing at the balance sheet date. Any exchange differences incurred with regard to assets or liabilities denominated in foreign currency are charged to operations of the period and are included in financial income (expense) in the accompanying consolidated statements of income (loss). The financial statements of foreign subsidiaries are translated into Mexican pesos in conformity with Bulletin B-15 "Transactions in Foreign Currency and Translation of Financial Statements of Foreign Operations". All foreign subsidiaries are considered to be "integrated foreign operations", as defined in Bulletin B-15, and accordingly such financial statements were translated as follows: - - Monetary items at the exchange rate at the balance sheet date. - - Non-monetary items and stockholders' equity at the exchange rate prevailing at the date the transactions occurred. - - Income and expense items at an appropriate average exchange rate. - - The resulting foreign currency translation differences are included in the financial income (expense) in the statement of income (loss). - - All resulting Mexican peso amounts are restated for the effects of inflation in accordance with the dispositions of Bulletin B-10 using the NCPI, where such effects are considered significant. m. Geographic concentration of credit risk - The Company sells its products primarily to distributors for the construction industry with no specific geographic concentration. Additionally, no single customer accounted for a significant amount of the Company's sales, and there were no significant accounts receivable from a single customer or affiliate at September 30, 2005 and 2004. The Company performs evaluations of its customers' credit histories and establishes and allowance for doubtful accounts based upon the credit risk of specific customers and historical trends. n. Other income (expenses) - Other income (expenses) shown in the consolidated statements of operations primarily includes other financial operations. o. Gain on monetary position - The gain on monetary position in the consolidated statements of income (loss) is determined by applying to net monetary assets or liabilities at the beginning of each month the factor of inflation derived from the NCPI and is restated at period-end with the corresponding factor. p. Restatement of capital stock and retained earnings (losses) - This is determined by multiplying capital stock contributions and retained earnings (losses) by factors derived from the NCPI, which measure the cumulative inflation from the date when capital stock contributions were made and earnings (losses) were generated, through the latest period-end. q. Effect of restatement of stockholders' equity - The effect resulting from restating stockholders' equity includes the accumulated effect from holding non-monetary assets, which represents the change in the specific price level of those assets compared to the change in the NCPI. (2) Financial Debt: At September 30, 2005, Simec's total consolidated debt consisted of U.S. $66.3 million (Ps. 718 millones), of which $61,3 million is debt in favor of GE Capital, $4,7 million dollars in favor of the Ohio Department of Development Loan and capital pending of payment of 8 7/8% medium-term notes ("MTN's") by Ps. 3.3 million ($302,000 dollars and the interests payable ascend to $302.803 dollars) which were issued in 1993 as part of a U.S. $68 million issuance. At December 31, 2004, Simec had outstanding approximately $13.9 million of U.S. dollar-denominated debt, including a refinanced letter of credit for $13.6 million and $0.3 million of MTN's due 1998. At September 30, 2005 Simec owed no debt to its parent company, Industrias CH, S.A. de C.V. ("ICH"). (3) Commitments and contingent liabilities: a. Pacific Steel, Inc. (a wholly-owned subsidiary located in the U.S.A.) has been named in various claims and suits relating to the generation, storage, transport, disposal and cleanup of materials classified as hazardous waste. The Company has accrued approximately Ps. 16,015 (U.S. $1,476,069) at September 30, 2005, (included in accrued liabilities) relating to these actions; the reduction of this reserve from previous levels reflects clean-up activities undertaken by Simec. Management believes the ultimate liability with respect to this matter will not exceed the amounts that have been accrued. b. The Company is subject to various other legal proceeding and claims, which have arisen, in the ordinary course of its business. It is the opinion of management that their ultimate resolution will not have a material adverse effect on the Company's consolidated financial position or consolidated results of operations. c. Compania Siderurgica de Guadalajara, S.A. de C.V. has entered into a gas and liquid oxygen purchase agreement with Praxair de Mexico, S.A. de C.V., under which it is committed to acquire monthly over a fifteen-year period beginning January 1, 1989, a certain amount of product. At present required purchases amount to Ps. 1,200 per month. MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. RELATIONS OF SHARES INVESTMENTS ANNEX 3 CONSOLIDATED
- -------------------------------------------------------------------------------------------------------------------------- COMPANY NAME MAIN ACTIVITIES NUMBER OF OWNERSHIP TOTAL AMOUNT SHARES (Thousands of Pesos) - -------------------------------------------------------------------------------------------------------------------------- SUBSIDIARIES ACQUISITION PRESENT COST VALUE - -------------------------------------------------------------------------------------------------------------------------- 1 CIA SIDERURGICA DE MINI-MILL 474,393,215 99.99 38,359 6,477,659 GUADALAJARA - -------------------------------------------------------------------------------------------------------------------------- 2 ADMINISTRADORA DE CARTERA DE OCCIDENTE 49,999 99.99 50 (31,800) - -------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT IN SUBSIDIARIES 38,409 6,445,859 - -------------------------------------------------------------------------------------------------------------------------- ASSOCIATEDS 0 0.00 0 0 - -------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT IN ASSOCIATEDS 0 0 - -------------------------------------------------------------------------------------------------------------------------- OTHER PERMANENT INVESTMENTS 0 - -------------------------------------------------------------------------------------------------------------------------- TOTAL 6,445,859 - --------------------------------------------------------------------------------------------------------------------------
NOTES MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CREDITS BREAK DOWN (THOUSANDS OF PESOS) ANNEX 5 CONSOLIDATED - -------------------------------------------------------------------------------- Denominated In Pesos - -------------------------------------------------------------------------------- Credit Type / Amortization Rate of Until More Than Institution Date Interest 1 Year 1 Year - -------------------------------------------------------------------------------- BANKS - -------------------------------------------------------------------------------- WITH WARRANTY - -------------------------------------------------------------------------------- GE CAPITAL 20/05/2009 6.25 OHIO DEPARTMENT OF DEVEL. 31/07/2008 3.00 - -------------------------------------------------------------------------------- TOTAL BANKS 0 0 - -------------------------------------------------------------------------------- LISTED IN THE MEXICAN STOCK EXCHANGE - -------------------------------------------------------------------------------- UNSECURED DEBT - -------------------------------------------------------------------------------- MEDIUM TERM NOTES 15/12/1998 9.33 0 0 - -------------------------------------------------------------------------------- TOTAL STOCK EXCHANGE 0 0 - -------------------------------------------------------------------------------- SUPPLIERS - -------------------------------------------------------------------------------- VARIOUS 466,686 0 - -------------------------------------------------------------------------------- TOTAL SUPPLIERS 466,686 0 - -------------------------------------------------------------------------------- OTHER CURRENT LIABILITIES AND OTHER CREDITS - -------------------------------------------------------------------------------- VARIOUS 169,712 0 - -------------------------------------------------------------------------------- OTHER CURRENT LIABILITIES 169,712 0 AND OTHER CREDITS - -------------------------------------------------------------------------------- TOTAL 636,398 0 - -------------------------------------------------------------------------------- Amortization of Credits in Foreign Currency With National Entities (Thousands of Pesos) Time Interval - -------------------------------------------------------------------------------- Credit Until 5 Type / Current Until 1 Until 2 Until 3 Until 4 Years or Institution Year Year Years Years Years More - -------------------------------------------------------------------------------- BANKS - -------------------------------------------------------------------------------- WITH WARRANTY - -------------------------------------------------------------------------------- GE CAPITAL OHIO DEPARTMENT OF DEVEL. - -------------------------------------------------------------------------------- TOTAL BANKS 0 0 0 0 0 0 - -------------------------------------------------------------------------------- LISTED IN THE MEXICAN STOCK EXCHANGE - -------------------------------------------------------------------------------- UNSECURED DEBT - -------------------------------------------------------------------------------- MEDIUM TERM NOTES 0 0 0 0 0 0 - -------------------------------------------------------------------------------- TOTAL STOCK EXCHANGE 0 0 0 0 0 0 - -------------------------------------------------------------------------------- SUPPLIERS - -------------------------------------------------------------------------------- VARIOUS 0 87,588 0 0 0 0 - -------------------------------------------------------------------------------- TOTAL SUPPLIERS 0 87,588 0 0 0 0 - -------------------------------------------------------------------------------- OTHER CURRENT LIABILITIES AND OTHER CREDITS - -------------------------------------------------------------------------------- VARIOUS 0 0 0 0 0 0 - -------------------------------------------------------------------------------- OTHER CURRENT LIABILITIES 0 0 0 0 0 0 AND OTHER CREDITS - -------------------------------------------------------------------------------- TOTAL 0 87,588 0 0 0 0 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Amortization of Credits in Foreign Currency With Foreign Entities (Thousands of Pesos) Time Interval - -------------------------------------------------------------------------------- Credit Until 5 Type / Current Until 1 Until 2 Until 3 Until 4 Years or Institution Year Year Years Years Years More - -------------------------------------------------------------------------------- BANKS - -------------------------------------------------------------------------------- WITH WARRANTY - -------------------------------------------------------------------------------- GE CAPITAL 665,074 OHIO DEPARTMENT OF DEVEL. 17,631 21,210 10,849 - -------------------------------------------------------------------------------- TOTAL BANKS 0 17,631 21,210 10,849 665,074 0 - -------------------------------------------------------------------------------- LISTED IN THE MEXICAN STOCK EXCHANGE - -------------------------------------------------------------------------------- UNSECURED DEBT - -------------------------------------------------------------------------------- MEDIUM TERM NOTES 3,277 0 0 0 0 - -------------------------------------------------------------------------------- TOTAL STOCK EXCHANGE 3,277 0 0 0 0 0 - -------------------------------------------------------------------------------- SUPPLIERS - -------------------------------------------------------------------------------- VARIOUS 0 761,862 0 0 0 0 - -------------------------------------------------------------------------------- TOTAL SUPPLIERS 0 761,862 0 0 0 0 - -------------------------------------------------------------------------------- OTHER CURRENT LIABILITIES AND OTHER CREDITS - -------------------------------------------------------------------------------- VARIOUS 0 521,432 0 0 0 0 - -------------------------------------------------------------------------------- OTHER CURRENT LIABILITIES AND OTHER CREDITS 0 521,432 0 0 0 0 - -------------------------------------------------------------------------------- TOTAL 3,277 1,300,925 21,210 10,849 665,074 0 - -------------------------------------------------------------------------------- NOTES: 1.- The exchange rate of the peso to the U.S. Dollar at September 30, 2005 was Ps. 10.8495 MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR: 2005 GRUPO SIMEC, S.A. DE C.V. MONETARY POSITION IN FOREIGN EXCHANGE (Thousands of Pesos) ANNEX 6 CONSOLIDATED
- ---------------------------------------------------------------------------------------------- DOLLARS OTHER CURRENCIES TOTAL - ---------------------------------------------------------------------------------------------- THOUSANDS THOUSANDS THOUSANDS THOUSANDS THOUSANDS TRADE BALANCE OF DOLLARS OF PESOS OF DOLLARS OF PESOS OF PESOS - ---------------------------------------------------------------------------------------------- FOREIGN MONETARY POSITION - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- TOTAL ASSETS 214,660 2,328,945 0 0 2,328,945 - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- LIABILITIES POSITION 192,262 2,085,935 275 2,988 2,088,923 - ---------------------------------------------------------------------------------------------- SHORT TERM LIABILITIES POSITION 128,007 1,388,802 275 2,988 1,391,790 - ---------------------------------------------------------------------------------------------- LONG TERM LIABILITIES POSITION 64,255 697,133 0 0 697,133 - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- NET BALANCE 22,398 243,010 (275) (2,988) 240,022 - ----------------------------------------------------------------------------------------------
NOTES THE EXCHANGE RATE OF THE PESO TO THE U.S. DOLLAR AT SEPTEMBER 30, 2005 WAS PS. 10.8495 MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. INTEGRATION AND INCOME CALCULATION BY MONETARY POSITION (Thousands of Pesos) ANNEX 7 CONSOLIDATED - ------------------------------------------------------------------------------- (ASSET) LIABILITIES MONTHLY MONETARY MONETARY MONETARY MONTHLY PROFIT MONTH ASSETS LIABILITIES POSITION INFLATION AND (LOSS) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- JANUARY 1,799,870 972,894 (826,976) 0.00 0 - ------------------------------------------------------------------------------- FEBRUARY 1,918,511 1,026,720 (891,791) 0.33 (2,971) - ------------------------------------------------------------------------------- MARCH 1,948,041 966,819 (981,222) 0.45 (4,423) - ------------------------------------------------------------------------------- APRIL 2,091,477 914,341 (1,177,136) 0.36 (4,192) - ------------------------------------------------------------------------------- MAY 2,169,331 1,037,828 (1,131,503) (0.25) 2,843 - ------------------------------------------------------------------------------- JUNE 2,293,416 859,419 (1,433,997) (0.10) 1,376 - ------------------------------------------------------------------------------- JULY 2,407,446 851,441 (1,556,005) 0.39 (6,068) - ------------------------------------------------------------------------------- AUGUST 3,781,343 3,861,719 80,376 0.12 96 - ------------------------------------------------------------------------------- SEPTEMBER 3,990,458 2,904,299 (1,086,159) 0.40 (4,353) - ------------------------------------------------------------------------------- ACTUALIZATION (100) - ------------------------------------------------------------------------------- CAPITALIZATION 0 - ------------------------------------------------------------------------------- FOREIGN CORPORATION 0 - ------------------------------------------------------------------------------- OTHER 0 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TOTAL (17,792) - ------------------------------------------------------------------------------- MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. BONDS AND MEDIUM TERM NOTES LISTING IN STOCK MARKET ANNEX 8 CONSOLIDATED FINANCIAL LIMITED BASED IN ISSUED DEED AND/OR TITLE MEDIUM TERM NOTES A) Current assets to current liabilities must be 1.0 times or more. B) Total liabilities to total assets do not be more than 0.60. C) Operating income plus items added to income which do not require using cash must be 2.0 times or more. This notes was offered in the international market. ACTUAL SITUATION OF FINANCIAL LIMITED MEDIUM TERM NOTES A) Accomplished the actual situation is 3.17 times. B) Accomplished the actual situation is 0.33 C) Accomplished the actual situation is 95.65 As of September 30, 2005, the remaining balance of the MTNs not exchanged amounts to Ps. 3,277 ($302,000 dollars). C.P. Jose Flores Flores Chief Financial Officer BONDS AND/OR MEDIUM TERM NOTES CERTIFICATE MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. PLANTS, COMMERCE CENTERS OR DISTRIBUTION CENTERS ANNEX 9 CONSOLIDATED - -------------------------------------------------------------------------------- PLANT UTILIZATION PLANT OR CENTER ECONOMIC ACTIVITY CAPACITY (%) - -------------------------------------------------------------------------------- GUADALAJARA MINI MILL PRODUCTION AND SALES OF STEEL PRODUCTS 480 87 - -------------------------------------------------------------------------------- MEXICALI MINI MILL PRODUCTION AND SALES OF STEEL PRODUCTS 250 88 - -------------------------------------------------------------------------------- INDUSTRIAS DEL ACERO Y DEL ALAMBRE SALE OF STEEL PRODUCTS 0 0 - -------------------------------------------------------------------------------- APIZACO AND CHOLULA PLANTS PRODUCTION AND SALES OF STEEL PRODUCTS 460 94 - -------------------------------------------------------------------------------- CANTON CASTER FACILITY PRODUCTION OF BILLET 874 77 - -------------------------------------------------------------------------------- LORAIN CASTER FACILITY PRODUCTION OF BILLET 1,252 68 - -------------------------------------------------------------------------------- LORAIN HOT-ROLLING MILL PRODUCTION AND SALES OF STEEL PRODUCTS 816 67 - -------------------------------------------------------------------------------- LACKAWANNA HOT-ROLLING MILL PRODUCTION AND SALES OF STEEL PRODUCTS 533 96 - -------------------------------------------------------------------------------- MASSILLON COLD-FINISH FACILITY PRODUCTION AND SALES OF STEEL PRODUCTS 114 79 - -------------------------------------------------------------------------------- GARY COLD-FINISH FACILITY PRODUCTION AND SALES OF STEEL PRODUCTS 76 51 - -------------------------------------------------------------------------------- ONTARIO COLD-FINISH FACILITY PRODUCTION AND SALES OF STEEL PRODUCTS 59 54 - -------------------------------------------------------------------------------- MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. MAIN RAW MATERIALS ANNEX 10 CONSOLIDATED
- ------------------------------------------------------------------------------------------------ MAIN MAIN DOMESTIC COST DOMESTIC SUPPLIERS FOREIGN SUPPLIERS SUBSTITUTION PRODUCTION (%) - ------------------------------------------------------------------------------------------------ SCRAP VARIOUS SCRAP VARIOUS YES 43.47 - ------------------------------------------------------------------------------------------------ ELECTRICITY C.F.E NO 8.29 - ------------------------------------------------------------------------------------------------ FERROALLOYS MINERA AUTLAN FERROALLOYS GFM TRADING YES 8.44 - ------------------------------------------------------------------------------------------------ ELECTRODES UCAR CARBON ELECTRODES SGL CARBON GROUP MEXICANA YES 3.85 - ------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. SELLS DISTRIBUTION BY PRODUCT ANNEX 11 CONSOLIDATED DOMESTIC SELLS
- ------------------------------------------------------------------------------------------------- MAIN PRODUCTS TOTAL PRODUCTION NET SELLS MAIN DESTINATION - ------------------------------------------------------------------------------------------------- VOLUME AMOUNT VOLUME AMOUNT TRADEMARKS COSTUMERS - ------------------------------------------------------------------------------------------------- STRUCTURAL PROFILES 140 547,644 140 928,384 - ------------------------------------------------------------------------------------------------- COMMERCIAL PROFILES 114 457,944 107 660,649 - ------------------------------------------------------------------------------------------------- REBAR 202 746,326 135 719,119 - ------------------------------------------------------------------------------------------------- FLAT BAR 138 635,617 135 857,021 - ------------------------------------------------------------------------------------------------- STEEL BARS 184 849,680 173 1,258,889 - ------------------------------------------------------------------------------------------------- OTHER 0 0 4 40,640 - ------------------------------------------------------------------------------------------------- BILLET 13 39,220 13 58,683 - ------------------------------------------------------------------------------------------------- HOT-ROLLED BARS 184 1,415,710 - ------------------------------------------------------------------------------------------------- COLD-FINISHED BARS 30 228,269 - ------------------------------------------------------------------------------------------------- SEMI-FINISHED SEAMLESS TUBE ROUNDS 76 585,690 - ------------------------------------------------------------------------------------------------- OTHER SEMI-FINISHED TRADE PRODUCTS 19 145,896 - ------------------------------------------------------------------------------------------------- T O T A L 5,651,996 4,523,385 - -------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. SELLS DISTRIBUTION BY PRODUCT ANNEX 11 CONSOLIDATED FOREIGN SELLS
- ------------------------------------------------------------------------------------------------- MAIN PRODUCTS TOTAL PRODUCTION NET SELLS MAIN DESTINATION - ------------------------------------------------------------------------------------------------- VOLUME AMOUNT VOLUME AMOUNT TRADEMARKS COSTUMERS - ------------------------------------------------------------------------------------------------- STRUCTURAL PROFILES 9 47,832 - ------------------------------------------------------------------------------------------------- COMMERCIAL PROFILES 8 44,061 - ------------------------------------------------------------------------------------------------- REBAR 73 387,650 - ------------------------------------------------------------------------------------------------- STEEL BARS 19 134,938 - ------------------------------------------------------------------------------------------------- FLAT BAR 3 20,738 - ------------------------------------------------------------------------------------------------- BILLET 2,153 - ------------------------------------------------------------------------------------------------- HOT-ROLLED BARS 184 1,758,674 - ------------------------------------------------------------------------------------------------- COLD-FINISHED BARS 30 397,421 - ------------------------------------------------------------------------------------------------- SEMI-FINISHED SEAMLESS TUBE - ------------------------------------------------------------------------------------------------- ROUNDS 76 515,456 - ------------------------------------------------------------------------------------------------- OTHER SEMI-FINISHED TRADE - ------------------------------------------------------------------------------------------------- PRODUCTS 19 155,936 - ------------------------------------------------------------------------------------------------- T O T A L 3,464,859 - -------------------------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED INTEGRATION OF THE PAID SOCIAL CAPITAL STOCK CHARACTERISTICS OF THE SHARES
- ------------------------------------------------------------------------------------------------------- CAPITAL STOCK NUMBER OF SHARES (Thousands of Pesos) NOMINAL VALID FIXED VARIABLE FREE SERIES VALUE COUPON PORTION PORTION MEXICAN SUBSCRIPTION FIXED VARIABLE - ------------------------------------------------------------------------------------------------------- B 30,283,350 107,646,249 0 137,929,599 441,786 1,570,361 - ------------------------------------------------------------------------------------------------------- TOTAL 30,283,350 107,646,249 0 137,929,599 441,786 1,570,361 - -------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF SHARES REPRESENTING THE PAID-IN CAPITAL STOCK ON THE DATE OF SENDING THE INFORMATION: 137,929,599 SHARES PROPORTION BY: CPO'S : 0 ADRS's : 3,203,951 ADR'S OF 1 SHARE EACH ONE. UNITS : 0 GDRS's : 0 ADS's : 0 GDS's : 0 REPURCHASED OWN SHARES NUMBER MARKET VALUE OF THE SHARE SERIES OF SHARES AT REPURCHASE AT QUARTER NOTES MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSTRUCTION IN PROGRESS (Project, Total Investment and % of Advance) ANNEX 13 CONSOLIDATED THE PROJECTS IN PROGRESS AT SEPTEMBER 30, 2005, ARE: TOTAL PHYSICAL PROJECTS IN PROGRESS INVESTMENT ADVANCE FINISHED AT CASTER PROJECT IN 211,804 82% DECEMBER 2005 CANTON VARIOUS PROJECTS IN REPUBLIC 95,541 MEXICALI 29,973 90% MARCH 2006 VARIOUS PROJECTS IN MEXICO 13,874 ------- TOTAL INVESTMENT AT SEPTEMBER 30, 2005 351,192 ======= MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. FOREIGN CURRENCY TRANSACTION AND EXCHANGE DIFFERENCES ANNEX 14 CONSOLIDATED Foreign currency transactions and exchange differences - All transactions in foreign currency are recorded at the exchange rates prevailing on the date of their execution or liquidation. Foreign currency denominated assets and liabilities are translated at the exchange rates prevailing at the balance sheet date. Any exchange differences incurred with regard to assets or liabilities denominated in foreign currency are charged to operations of the period and are included in financial income (expense) in the accompanying consolidated statements of income (loss). The financial statements of foreign subsidiaries are translated into Mexican pesos in conformity with Bulletin B-15 "Transactions in Foreign Currency and Translation of Financial Statements of Foreign Operations". All foreign subsidiaries are considered to be "integrated foreign operations", as defined in Bulletin B-15, and accordingly such financial statements were translated as follows: - - Monetary items at the exchange rate at the balance sheet date. - - Non-monetary items and stockholders' equity at the exchange rate prevailing at the date the transactions occurred. - - Income and expense items at an appropriate average exchange rate. - - The resulting foreign currency translation differences are included in the financial income (expense) in the statement of income (loss). - - All resulting Mexican peso amounts are restated for the effects of inflation in accordance with the dispositions of Bulletin B-10 using the NCPI, where such effects are considered significant. MEXICAN STOCK EXCHANGE SIFIC / ICS STOCK EXCHANGE CODE: SIMEC QUARTER: 3 YEAR:2005 GRUPO SIMEC, S.A. DE C.V. CONSOLIDATED DECLARATION OF THE COMPANY OFFICIALS RESPONSIBLE FOR THE INFORMATION CONTAINED IN THIS REPORT. LUIS GARCIA LIMON AND JOSE FLORES FLORES CERTIFY THAT BASED ON OUR KNOWLEDGE, THIS REPORT DOES NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE HEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH SUCH STATEMENTS WERE MADE, NOT MISLEADING WITH RESPECT TO THE PERIOD COVERED BY THIS THIRD QUARTER REPORT. ING LUIS GARCIA LIMON C.P. JOSE FLORES FLORES CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER GUADALAJARA, JAL, AT OCTOBER 26 OF 2005 -----END PRIVACY-ENHANCED MESSAGE-----