6-K 1 e17101_6k.htm 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 March , 2004.

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: March 1, 2004.	By:	/s/ Luis García Limón
		Name:   Luis García Limón Title:     Chief Executive Officer

 

PRESS RELEASE Contact: Adolfo Luna Luna
José Flores Flores
Grupo Simec, S.A. de C.V.
Calzada Lazaro Cardenas 601
44440 Guadalajara, Jalisco, Mexico
52 33 1057 5740

GRUPO SIMEC ANNOUNCES PRELIMINARY (UNAUDITED) RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003

GUADALAJARA, MEXICO, February 27, 2004- Grupo Simec, S.A. de C.V. (AMEX-SIM) (“Simec”) announced today its preliminary (unaudited) results of operations for the year ended December 31, 2003. Net sales increased 27% to Ps. 2,787 million in 2003 compared to Ps. 2,197 million in 2002 primarily due to higher finished product prices and also resulting from modestly higher production levels. Primarily as a result of the foregoing and significantly lower financial expense in 2003, Simec recorded net income of Ps. 433 million in 2003 versus net income of Ps. 123 million for 2002.

Simec sold 628,243 metric tons of basic steel products during 2003 as compared to 609,202 metric tons in 2002. Exports of basic steel products were 80,744 metric tons in 2003 versus 80,179 metric tons in 2002. Additionally Simec sold 63,616 tons of billet in 2003 as compared to 23,137 tons of billet in 2002. Prices of finished products sold in 2003 increased 18% in real terms versus 2002.

Simec’s direct cost of sales was Ps. 1,828 million in 2003, or 66% of net sales, versus Ps. 1,470 million, or 67% of net sales, for 2002. Indirect manufacturing, selling, general and administrative expenses (including depreciation) was Ps. 462 million during 2003, compared to Ps. 461 million in 2002.

Simec’s operating income increased 87% to Ps. 497 million during 2003 from Ps. 266 million in 2002. Operating income was 18% of net sales in 2003 compared to 12% of net sales in 2002.

Simec recorded other expense, net, from other financial operations of Ps. 18 million in 2003 compared to other expense, net, of Ps. 37 million in 2002. In addition, Simec recorded a provision for income tax and employee profit sharing of Ps. 21 million in 2003 versus a positive provision of Ps. 23 million in 2002.

Simec recorded financial expense of Ps. 25 million in 2003 compared to financial expense of Ps. 129 million in 2002 as a result of (i) net interest expense of Ps. 13 million in 2003 compared to net interest expense of Ps. 56 million in 2002,

reflecting lower debt levels in 2003, (ii) an exchange loss of Ps. 2 million in 2003 compared to an exchange loss of Ps. 104 million in 2002, reflecting lower debt levels in 2003 and a decrease of 9% in the value of the peso versus the dollar in 2003 compared to a decrease of 12.8% in the value of the peso versus the dollar in 2002 and (iii) a loss from monetary position of Ps. 10 million in 2003 compared to a gain from monetary position of Ps. 31 million in 2002, reflecting the domestic inflation rate of 4% in 2003 compared to the domestic inflation rate of 5.7% in 2002 and lower debt levels during 2003.

At December 31, 2003, Simec’s total consolidated debt consisted of approximately $2 million of U.S. dollar-denominated debt, while at December 31, 2002, Simec had outstanding approximately $47.8 million of U.S. dollar-denominated debt. Simec’s lower debt level at December 31, 2003 reflects the prepayment of $31.4 million of bank debt in 2003, the conversion to common stock in March 2003 of $16.1 million of loans (plus accrued interest thereon) from Simec’s parent company Industrias CH, S.A. de C.V. (“ICH”) at a conversion price equivalent to U.S. $1.35 (Ps. 14.588) per American Depositary Share and the conversion to common stock in November 2003 of a capital contribution from ICH made to Simec in May 2003, in the amount of $14.5 million (the proceeds of which were used to retire debt owed to ICH) at a conversion price equivalent to U.S $1.41 (Ps. 14.588) per American Depositary Share. Simec currently owes no amounts to ICH.

All figures were prepared in accordance with Mexican generally accepted accounting principles and are stated in constant Pesos at December 31, 2003.

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: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED FINANCIAL STATEMENT
AT DECEMBER 31 OF 2003 AND 2002
(Thousands of Pesos)

REF			QUARTER OF PRESENT				QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR				FINANCIAL YEAR
S			AMOUNT		%		AMOUNT		%
1		TOTAL ASSETS	6,167,636		100		5,429,856		100
2		CURRENT ASSETS	1,405,039		23		876,856		16
3		CASH AND SHORT-TERM INVESTMENTS	517,096		8		113,399		2
4		ACCOUNTS AND DOCUMENTS RECEIVABLE (NET)	446,640		7		421,563		8
5		OTHER ACCOUNTS AND DOCUMENTS RECEIVABLE	159,827		3		55,818		1
6		INVENTORIES	276,171		4		279,860		5
7		OTHER CURRENT ASSETS	5,305		0		6,216		0
8		LONG-TERM	0		0		0		0
9		ACCOUNTS AND DOCUMENTS RECEIVABLE (NET)	0		0		0		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	4,507,470		73		4,272,906		79
13		PROPERTY	1,911,613		31		1,910,173		35
14		MACHINERY AND INDUSTRIAL	4,541,230		74		3,806,836		70
15		OTHER EQUIPMENT	147,752		2		194,583		4
16		ACCUMULATED DEPRECIATION	2,099,755		34		1,668,432		31
17		CONSTRUCTION IN PROGRESS	6,630		0		29,746		1
18		DEFERRED ASSETS (NET)	255,127		4		280,094		5
19		OTHER ASSETS	0		0		0		0
20		TOTAL LIABILITIES	1,412,732		100		1,692,109		100
21		CURRENT LIABILITIES	475,785		34		886,683		52
22		SUPPLIERS	209,655		15		216,640		13
23		BANK LOANS	19,078		1		354,729		21
24		STOCK MARKET LOANS	3,393		0		3,238		0
25		TAXES TO BE PAID	59,491		4		48,881		3
26		OTHER CURRENT LIABILITIES	184,168		13		263,195		16
27		LONG-TERM LIABILITIES	0		0		0		0
28		BANK LOANS	0		0		0		0
29		STOCK MARKET LOANS	0		0		0		0
30		OTHER LOANS	0		0		0		0
31		DEFERRED LOANS	936,947		66		805,426		48
32		OTHER LIABILITIES	0		0		0		0
33		CONSOLIDATED STOCKHOLDERS’ EQUITY	4,754,904		100		3,737,747		100
34		MINORITY INTEREST	250		0		252		0
35		MAJORITY INTEREST	4,754,654		100		3,737,495		100
36		CONTRIBUTED CAPITAL	3,713,074		78		3,358,213		90
37		PAID-IN CAPITAL STOCK (NOMINAL)	1,925,252		40		1,575,987		42
38		RESTATEMENT OF PAID-IN CAPITAL STOCK	1,164,298		24		1,158,702		31
39		PREMIUM ON SALES OF SHARES	623,524		13		623,524		17
40		CONTRIBUTIONS FOR FUTURE CAPITAL INCREASES			0		0		0
41		CAPITAL INCREASE (DECREASE)	1,041,580		22		379,282		10
42		RETAINES EARNINGS AND CAPITAL RESERVE	1,251,490		26		1,128,728		30
43		REPURCHASE FUND OF SHARES	80,078		2		80,078		2
44		EXCESS (SHORTFALL) IN RESTATEMENT OF
		STOCKHOLDERS’ EQUITY	(722,645)		(15)		(952,286)		(25)
45		NET INCOME FOR THE YEAR	432,657		9		122,762		3

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC					QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED FINANCIAL STATEMENT
BREAKDOWN OF MAIN CATEGORIES
(Thousands of Pesos)

REF			QUARTER OF PRESENT				QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR				FINANCIAL YEAR
S			AMOUNT		%		AMOUNT		%
3		CASH AND SHORT TERM INVESTMENTS	517,096		100		113,399		100
46		CASH	165,697		32		85,752		76
47		SHORT-TERM INVESTMENTS	351,399		68		27,647		24
18		DEFERRED ASSETS (NET)	255,127		100		280,094		100
48		AMORTIZED OR REDEEMED EXPENSES	252,898		99		277,774		99
49		GOODWILL	0		0		0		0
50		DEFERRED TAXES	0		0		0		0
51		OTHERS	2,229		1		2,320		1
21		CURRENT LIABILITIES	475,785		100		886,683		100
52		FOREIGN CURRENCY LIABILITIES	84,180		18		566,961		64
53		MEXICAN PESOS LIABILITIES	391,605		82		319,722		36
24		STOCK MARKET LOANS	3,393		100		3,238		100
54		COMMERCIAL PAPER	0		0		0		0
55		CURRENT MATURITIES OF MEDIUM TERM NOTES	3,393		100		3,238		100
56		CURRENT MATURITIES OF BONDS	0		0		0		0
26		OTHER CURRENT LIABILITIES	184,168		100		263,195		100
57		OTHER CURRENT LIABILITIES WITH COST	0		0		157,838		60
58		OTHER CURRENT LIABILITIES WITHOUT COST	184,168		100		105,357		40
27		LONG-TERM LIABILITIES	0		0		0		0
59		FOREIGN CURRENCY LIABILITIES	0		0		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
64		OTHER LOANS WITHOUT COST			0		0		0
31		DEFERRED LOANS	936,947		100		805,426		100
65		NEGATIVE GOODWILL	0		0		0		0
66		DEFERRED TAXES	927,859		99		796,759		99
67		OTHERS	9,088		1		8,667		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	722,645		(100)		(952,286)		(100)
70		ACCUMULATED INCOME DUE TO MONETARY POSITION	722,645		(100)		(952,286)		(100)
71		INCOME FROM NON-MONETARY POSITION ASSETS	0		0		0		0

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC			QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED FINANCIAL STATEMENT
OTHER CONCEPTS
(Thousands of Pesos)

REF			QUARTER OF PRESENT		QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR		FINANCIAL YEAR
S			AMOUNT		AMOUNT
72		WORKING CAPITAL	929,254		(9,827)
73		PENSIONS FUND AND SENIORITY PREMIUMS	0		0
74		EXECUTIVES (*)	25		28
75		EMPLOYERS (*)	374		390
76		WORKERS (*)	889		915
77		COMMON SHARES (*)	131,973,022		2,160,625,003
78		REPURCHASED SHARES (*)	0		0
(*) THESE ITEMS SHOULD BE EXPRESSED IN UNITS

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC			QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED EARNING STATEMENT
FROM JANUARY 1 TO DECEMBER 31 OF 2003 AND 2002
(Thousands of Pesos)

REF			QUARTER OF PRESENT				QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR				FINANCIAL YEAR
R			AMOUNT		%		AMOUNT		%
1		NET SALES	2,787,013		100		2,196,533		100
2		COST OF SALES	1,828,282		66		1,469,767		67
3		GROSS INCOME	958,731		34		726,766		33
4		OPERATING EXPENSES	462,225		17		461,435		21
5		OPERATING INCOME	496,506		18		265,331		12
6		TOTAL FINANCING COST	24,432		1		128,641		6
7		INCOME AFTER FINANCING COST	472,074		17		136,690		6
8		OTHER FINANCIAL OPERATIONS	18,353		1		37,152		2
9		INCOME BEFORE TAXES AND WORKERS’ PROFIT
		SHARING	453,721		16		99,538		5
10		RESERVE FOR TAXES AND WORKERS’ PROFIT
		SHARING	21,064		1		(23,233)		(1)
11		NET INCOME AFTER TAXES AND WORKERS’ PROFIT
		SHARING	432,657		16		122,771		6
12		SHARE IN NET INCOME OF SUBSISIARIES AND
		NON-CONSOLIDATED ASSOCIATES	0		0		0		0
13		CONSOLIDATED NET INCOME FROM CONTINUOUS
		OPERATIONS	432,657		16		122,771		6
14		INCOME FROM DISCONTINUOUS OPERATIONS	0		0		0		0
15		CONSOLIDATED NET INCOME BEFORE
		EXTRAORDINARY ITEMS	432,657		16		122,771		6
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	432,657		16		122,771		6
19		NET INCOME OF MINORITY INTEREST	0		0		9		0
20		NET INCOME OF MAJORITY INTEREST	432,657		16		122,762		6

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC
GRUPO SIMEC, S.A. DE C.V.									QUARTER: 4 YEAR: 2003
CONSOLIDATED EARNING STATEMENT
BREAKDOWN OF MAIN CONCEPTS
(Thousands of Pesos)

REF			QUARTER OF PRESENT				QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR				FINANCIAL YEAR
R			AMOUNT		%		AMOUNT		%
1		NET SALES	2,787,013		100		2,196,533		100
21		DOMESTIC	2,467,840		89		1,930,116		88
22		FOREIGN	319,173		11		266,417		12
23		TRANSLATED INTO DOLLARS (***)	28,810				25,655
6		TOTAL FINANCING COST	24,432		100		128,641		100
24		INTEREST PAID	17,751		73		56,614		44
25		EXCHANGE LOSSES	2,541		10		103,703		81
26		INTEREST EARNED	5,417		22		1,130		1
27		EXCHANGE PROFITS	0		0		0		0
28		GAIN FROM MONETARY POSITION	9,557		39		(30,546)		(24)
8		OTHER FINANCIAL OPERATIONS	18,353		100		37,152		100
29		OTHER NET EXPENSES (INCOME) NET	18,353		100		37,152		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 TAXESS AND WORKERS’ PROFIT SHARING	21,064		100		(23,233)		100
32		INCOME TAX	31,492		150		35,415		(152)
33		DEFERED INCOME TAX	(11,628)		(55)		(58,968)		254
34		WORKERS’ PROFIT SHARING	1,200		6		320		(1)
35		DEFERED WORKERS’ PROFIT SHARING	0		0		0		0
(***) THOUSANDS OF DOLLARS

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC					QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED EARNING STATEMENT
OTHER CONCEPTS
(Thousands of Pesos)

REF			QUARTER OF PRESENT		QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR		FINANCIAL YEAR
R			AMOUNT		AMOUNT
36		TOTAL SALES	2,987,568		2,339,918
37		NETR INCOME OF THE YEAR	0		0
38		NET SALES (**)	2,787,013		2,196,533
39		OPERATION INCOME (**)	496,506		265,331
40		NET INCOME OF MAJORITY INTEREST (**)	432,657		122,762
41		NET CONSOLIDATED INCOME (**)	432,657		122,771
(***) THE RESTATED INFORMATION FOR THE LAST TWELVE MONTHS SHOULD BE USED

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC							QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED EARNING STATEMENT OF THE THIRD QUARTER
FROM OCTOBER 1 TO DECEMBER 31 OF 2003 AND 2002
(Thousands of Pesos)

REF			QUARTER OF PRESENT				QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR				FINANCIAL YEAR
R			AMOUNT		%		AMOUNT		%
1		NET SALES	757,384		100		580,050		100
2		COST OF SALES	499,277		66		385,482		66
3		GROSS INCOME	258,107		34		194,568		34
4		OPERATING EXPENSES	109,407		14		118,061		20
5		OPERATING INCOME	148,700		20		76,507		13
6		TOTAL FINANCING COST	(91)		0		10,871		2
7		INCOME AFTER FINANCING COST	148,791		20		65,636		11
8		OTHER FINANCIAL OPERATIONS	18,636		2		48,016		8
9		INCOME BEFORE TAXES AND WORKERS’ PROFIT
		SHARING	130,155		17		17,620		3
10		RESERVE FOR TAXES AND WORKERS’ PROFIT
		SHARING	(16,930)		(2)		(37,729)		(7)
11		NET INCOME AFTER TAXES AND WORKERS’ PROFIT
		SHARING	147,085		19		55,349		10
12		SHARE IN NET INCOME OF SUBSISIARIES AND
		NON-CONSOLIDATED ASSOCIATES	0		0		0		0
13		CONSOLIDATED NET INCOME FROM CONTINUOUS
		OPERATIONS	147,085		19		55,349		10
14		INCOME FROM DISCONTINUOUS OPERATIONS	0		0		0		0
15		CONSOLIDATED NET INCOME BEFORE
		EXTRAORDINARY ITEMS	147,085		19		55,349		10
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	147,085		19		55,349		10
19		NET INCOME OF MINORITY INTEREST	0		0		9		0
20		NET INCOME OF MAJORITY INTEREST	147,085		19		55,340		10

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC									QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED EARNING STATEMENT OF THE THIRD QUARTER
BREAKDOWN OF MAIN CONCEPTS
FROM OCTOBER 1 TO DECEMBER 31 OF 2003 AND 2002
(Thousands of Pesos)

REF			QUARTER OF PRESENT				QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR				FINANCIAL YEAR
R			AMOUNT		%		AMOUNT		%
1		NET SALES	757,384		100		580,050		100
21		DOMESTIC	645,098		85		516,533		89
22		FOREIGN	112,286		15		63,517		11
23		TRANSLATED INTO DOLLARS (***)	9,971				5,959
6		TOTAL FINANCING COST	(91)		100		10,871		100
24		INTEREST PAID	482		(530)		9,675		89
25		EXCHANGE LOSSES	0		0		6,646		61
26		INTEREST EARNED	2,736		(3,007)		214		2
27		EXCHANGE PROFITS	6,705		(7,368)		0		0
28		GAIN FROM MONETARY POSITION	8,868		(9,745)		(5,236)		(48)
8		OTHER FINANCIAL OPERATIONS	18,636		100		48,016		100
29		OTHER NET EXPENSES (INCOME) NET	18,636		100		48,016		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 TAXESS AND WORKERS’ PROFIT SHARING	(16,930)		100		(37,729)		100
32		INCOME TAX	7,508		(44)		7,708		(20)
33		DEFERED INCOME TAX	(24,540)		145		(45,644)		121
34		WORKERS’ PROFIT SHARING	102		(1)		207		(1)
35		DEFERED WORKERS’ PROFIT SHARING	0		0		0		0
(***) THOUSANDS OF DOLLARS

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC			QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FROM JANUARY 1 TO DECEMBER 31 OF 2003 AND 2002
(Thousands of Pesos)

REF			QUARTER OF PRESENT		QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR		FINANCIAL YEAR
C			AMOUNT		AMOUNT
1		CONSOLIDATED NET INCOME	432,657		122,771
2		+ (-) ITEMS ADDED TO INCOME WHICH DO NOT REQUIRE
		CASH	188,985		134,376
3		CASH FLOW FROM NET INCOME OF THE YEAR	621,642		257,147
4		CASH FLOW FROM CHANGE IN WORKING CAPITAL	(199,888)		72,271
5		CASH GENERATED (USED) IN OPERATING ACTIVITIES	421,754		329,418
6		CASH FLOW FROM EXTERNAL FINANCING	(335,496)		(529,169)
7		CASH FLOW FROM INTERNAL FINANCING	354,861		290,624
8		CASH FLOW GENERATED (USED) BY FINANCING	19,365		(238,545)
9		CASH FLOW GENERATED (USED) IN INVESTMENT
		ACTIVITIES	(37,422)		(44,817)
10		NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
		INVESTMENTS	403,697		46,056
11		CASH AND SHORT-TERM INVESTMENTS AT THE
		BEGINNING OF PERIOD	113,399		67,343
12		CASH AND SHORT TERM INVESTMENTS AT THE END
		OF PERIOD	517,096		113,399

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC			QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
BREAKDOWN OF MAIN CONCEPTS
(Thousands of Pesos)

REF			QUARTER OF PRESENT		QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR		FINANCIAL YEAR
C			AMOUNT		AMOUNT
2		+ (-) ITEMS ADDED TO INCOME WHICH DO NOT REQUIRE
		CASH	188,985		134,376
13		DEPRECIATION AND AMORTIZATION FOR THE YEAR	180,293		162,122
14		+ (-) NET INCREASE (DECREASE IN PENSIONS FUNS
		AND SENIORITY PREMIUMS	0		139
15		+ (-) NET LOSS (PROFIT) IN MONEY EXCHANGE	0		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	8,692		(27,885)
4		CASH FLOW FROM CHANGE IN WORKING CAPITAL	(199,888)		72,271
18		+ (-) DECREASE (INCREASE) IN ACCOUNT RECEIVABLES	(25,077)		(77,519)
19		+ (-) DECREASE (INCREASE) IN INVENTORIES	3,689		18,533
20		+ (-) DECREASE (INCREASE) IN OTHER ACCOUNT
		RECEIVABLES	(103,098)		10,769
21		+ (-) INCREASE (DECREASE) IN SUPPLIER ACCOUNT	(6,985)		73,844
22		+ (-) INCREASE (DECREASE) IN OTHER LIABILITIES	(68,417)		46,644
6		CASH FLOW FROM EXTERNAL FINANCING	(335,496)		(529,169)
23		+ SHORT-TERM BANK AND STOCK MARKET FINANCING	1,544		40,926
24		+ LONG-TERM BANK AND STOCK MARKET FINANCING	0		0
25		+ DIVIDEND RECEIVED	0		0
26		OTHER FINANCING	0		(892)
27		(-) BANK FINANCING AMORTIZATION	(337,040)		(567,165)
28		(-) STOCK MARKET AMORTIZATION	0		(2,038)
29		(-) OTHER FINANCING AMORTIZATION	0		0
7		CASH FLOW FROM INTERNAL FINANCING	354,861		290,624
30		+ (-) INCREASE (DECREASE) IN CAPITAL STOCK	354,861		290,624
31		(-) DIVIDENDS PAID	0		0
32		+ PREMIUM ON SALE OF SHARES	0		0
33		+ CONTRIBUTION FOR FUTURE CAPITAL INCREASES			0
9		CASH FLOW GENERATED (UTILIZED) IN INVESTMENT
		ACTIVITIES	(37,422)		(44,817)
34		+(-) INCREASE (DECREASE) IN STOCK INVESTMENTS
		OF A PERMANENT NATURE	0		0
35		(-) ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT	(58,841)		(9,272)
36		(-) INCREASE IN CONSTRUCTION PROGRESS	0		0
37		+ SALO OF OTHER PERMANENT INVESTMENTS	0		0
38		+ SALE OF TANGIBLE FIXED ASSETS	0		0
39		+(-) OTHER ITEMS	21,419		(35,545)

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC				QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
RATIOS
CONSOLIDATED

REF			QUARTER OF PRESENT			QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR			FINANCIAL YEAR
C			AMOUNT			AMOUNT
		YIELD
1		NET INCOME TO NET SALES	15.52%			5.59%
2		NET INCOME TO STOCKHOLDERS’ EQUITY (**)	9.10%			3.28%
3		NET INCOME TO TOTAL ASSETS (**)	7.01%			2.26%
4		CASH DIVIDENDS TO PREVIOUS YEAR NET INCOME	0.00%			0.00%
5		INCOME DUE TO MONETARY POSITION TO NET INCOME	-2.21%			24.88%
		ACTIVITY
6		NET SALES TO NET ASSETS (**)	0.45		times	0.40		times
7		NET SALES TO FIXED ASSETS (**)	0.62		times	0.51		times
8		INVENTORIES ROTATION (**)	6.62		times	5.25		times
9		ACCOUNTS RECEIVABLE IN DAYS OF SALES	50		days	60		days
10		PAID INTEREST TO TOTAL LIABILITIES WITH COST (**)	79.00%			8.40%
		LEVERAGE
11		TOTAL LIABILITIES TO TOTAL ASSETS	22.91%			31.16%
12		TOTAL LIABILITIES TO STOCKHOLDERS’ EQUITY	0.30		times	0.45		times
13		FOREIGN CURRENCY LIABILITIES TO TOTAL LIABILITIES	5.96%			33.51%
14		LONG-TERM LIABILITIES TO FIXED ASSETS	0.00%			0.00%
15		OPERATING INCOME TO INTEREST PAID	27.97		times	4.69		times
16		NET SALES TO TOTAL LIABILITIES (**)	1.97		times	1.30		times
		LIQUIDITY
17		CURRENT ASSETS TO CURRENT LIABILITIES	2.95		times	0.99		times
18		CURRENT ASSETS LESS INVENTORY TO CURRENT
		LIABILITIES	2.37		times	0.67		times
19		CURRENT ASSETS TO TOTAL LIABILITIES	0.99		times	0.52		times
20		CURRENT ASSETS TO CURRENT LIABILITIES	108.68%			12.79%
		CASH FLOW
21		CASH FLOW FROM NET INCOME TO NET SALES	22.30%			11.71%
22		CASH FLOW FROM CHANGES IN WORKING CAPITAL
		TO NET SALES	-7.17%			3.29%
23		CASH GENERATED (USED) IN OPERATING TO
		INTEREST PAID	23.76		times	5.82		times
24		EXTERNAL FINANCING TO CASH GENERATED
		(USED) IN FINANCING	-1732.49%			221.83%
25		INTERNAL FINANCING TO CASH GENERATED (USED)
		IN FINANCING	1832.49%			-121.83%
26		ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT
		TO CASH GENERATED (USED) IN INVESTMENT
		ACTIVITIES	157.24%			20.69%
(**) IN THESE RATIOS PROVIDE INFORMATION FOR THE LAST TWELVE MONTHS.

 

MEXICAN STOCK EXCHANGE
SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC			QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.
DATA PER SHARE
CONSOLIDATED
(Pesos)

REF			QUARTER OF PRESENT			QUARTER OF PREVIOUS
		CATEGORIES	FINANCIAL YEAR			FINANCIAL YEAR
C			AMOUNT			AMOUNT
1		BASIC PROFIT PER ORDINARY SHARE (**)	$3.63			$0.06
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 (**)	$3.63			$0.06
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	$36.03			$1.73
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	1.04		times	0.31		times
12		MARKET PRICE TO BASIC PROFIT PER COMMON SHARE (**)	10.33		times	8.83		times
13		MARKET PRICE TO BASIC PROFIT PER PREFERENCE
		SHARE (**)	0.00		times	0.00		times
(**) TO CALCULATE THE DATA PER SHARE USE THE NET INCOME FOR THE LAST TWELVE MONTHS.

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		FINANCIAL STATEMENT NOTES (1)
				CONSOLIDATED

s35 Stockholders’ Equity:
Effects of inflation - The effects of inflation on stockholders’ equity at December 31, 2003 are as follows:

		Historical Cost		Restated Amount		Total
Capital stock		Ps. 1,925,252		Ps. 1,164,298		Ps. 3,089,550
Additional paid-in capital		549,517		74,007		623,524
Retained earnings		1,291,231		472,994		1,764,225
Excess resulting from restating
Stockholders’ equity to reflect
Certain effects of inflation		—		105,437		105,437
Effect deferred income tax
Bulletin D-4		(662,340	)	(165,742	)	(828,082	)

s39 Premium in subscription of Capital Stock made in March 29, 2001.

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 resulting from the adoption of this Bulletin was Ps. 927,859 at December 31, 2003 compared to Ps. 796,759 at December 31, 2002. The effect on Simec’s consolidated statement of income in 2003 was a decrease of Ps. 11,628 in the provision for income tax and employee profit sharing compared to a decrease of Ps. 58,968 in 2002. These provisions do not affect the cash flow of Simec.

r24 We don’t have interest paid in UDI’s

r26 We don’t have 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:

			December 31, 2003				December 31, 2002
Net loss (profit) in money exchange		Ps.	5,527			Ps.	73,253
Net loss (profit) in liabilities actualization			(13,702	)			(47,792	)

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		DIRECTOR REPORT (1)
		ANNEX 1		CONSOLIDATED

INFORMATION CONCERNING LIQUIDITY AND CAPITAL RESOURCES AND DEBT OBLIGATIONS
WITH BANKS AND COMMERCIAL CREDITORS

Liquidity and Capital Resources

At December 31, 2003, Simec’s total consolidated debt consisted of approximately $2.0 million of U.S. dollar-denominated debt, while at December 31, 2002, Simec had outstanding approximately $47.8 million of U.S. dollar-denominated debt (including $14.4 million of debt owed to its parent company Industrias CH, S.A. de C.V.) (“ICH”). Simec’s lower debt level at December 31, 2003 reflected (i) the prepayment of $30 million of bank debt in 2003 (Simec financed $16.2 million of this prepayment with loans from ICH), (ii) the semi-annual amortization installments on its bank debt of $1.4 million in 2003, (iii) the conversion to common stock in March 2003 of $16.1 million of loans (plus accrued interest thereon) from ICH at a conversion price equivalent to U.S. $1.35 (Ps.14.588) per American Depositary Share and (iv) the conversion to common stock in November 2003 of a capital contribution from ICH made to Simec in May 2003, in the amount of $14.5 million (the proceeds of which were used to retire debt owed to ICH) at a conversion price equivalent to U.S $1.41 (Ps. 14.588) per American Depositary Share. Simec’s outstanding $1.7 million of bank debt at December 31, 2003 consisted of (i) $0.2 million which matures in 2007 and amortizes in equal semi-annual installments and (ii) $1.5 million which matures in 2009 and has no amortization payments. In addition Simec had outstanding $302,000 of 8 7/8% MTN’s due 1998 (accrued interest at December 31, 2003 was $254,860) which were issued in 1993 as part of a $68 million issuance. At December 31, 2003 Simec owed no debt to ICH.

In December 2003 Simec acquired Administradora de Cartera de Occidente, S.A. de C.V. (“Acosa”) from ICH for nominal consideration. Acosa’s sole assets are a portfolio of defaulted receivables it acquired in June 2003 from various Mexican banks which are in the process of liquidation. The purchase price of the portfolio was Ps. 10.3 million, which amount is payable by Acosa solely from recoveries if any, net of expenses of collection, with respect to the defaulted receivables; upon payment of the purchase price from recoveries on the portfolio, Acosa and the Mexican banks will share in any additional recoveries, net of expenses of collection, on a 50%/50% basis. The principal amount of the defaulted receivables in the portfolio acquired is approximately Ps. 1,734 million.

At December 31, 2003, Compañia Siderúrgica de Guadalajara, S.A. de C.V. (“CSG”) was not in compliance with various financial covenants contained in its bank loan instruments pursuant to which Simec’s $1.7 million of bank debt is outstanding. In accordance with Mexican generally accepted accounting principles, Simec’s long term bank debt has been reclassified as current liabilities. This noncompliance results from intercompany debt owed from CSG to its parent company Simec.

In February 2003, Simec effected a 1 for 20 reverse split of its Series B common stock; as a result its American Depositary Shares now represent 1 share of Series B Common Stock. In March 2003, ICH converted approximately $16.1 million of loans to Simec plus accrued interest thereon (which loans were made to fund the prepayment of Simec bank debt) into common shares of Simec at a conversion price equivalent to U.S. $1.35 per American Depositary Share. On October 2, 2003, certain minority shareholders of Simec exercised their pre-emptive rights arising as a result of the conversion of ICH debt to purchase capital stock for Ps. 19.4 million at the price per share of Ps. 14.588 (the equivalent of U.S. $1.35 per American Depositary Share). In November 2003, ICH converted into common shares of Simec the capital contribution to Simec made in May 2003, in the amount of $14.5 million (the proceeds of which were used to retire debt owed to ICH) for capital stock to be issued in the fourth quarter of 2003, at a conversion price equivalent to U.S $1.41 (Ps. 14.588) per American Depositary Share. The minority shareholders of Simec could exercise their pre-emptive rights arising as a result of the conversion of ICH for capital contribution to Simec made in May 2003 to purchase Series B Common Stock at the price share of

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		DIRECTOR REPORT (1)
		ANNEX 1		CONSOLIDATED

Ps. 14.588 when the Comisión Nacional Bancaria y de Valores approves the actualization of the capital stock of Simec.

Net resources provided by operations were Ps. 422 million in 2003 (which amount reflects the conversion of loans of ICH into common shares of Simec for Ps. 184 million) versus Ps. 329 million of net resources provided in operations in 2002. Net resources provided by financing activities were Ps. 19 million in 2003 (which amount reflects the semi-annual amortization installments on its bank debt of Ps. 15 million ($1.4 million), the prepayment of Ps. 322 million ($30 million) of bank debt, the conversion by ICH of Ps. 184 million of loans (plus accrued interest thereon) into common shares, the increase of the capital stock by the minority shareholders for Ps. 19 million and the conversion into common shares of the capital contribution from ICH to Simec in the amount of Ps. 151 million ($14.5 million) in November 2003 versus Ps. 239 million of net resources used by financing activities in 2002 (which amount reflects the semi-annual amortization installments on its bank debt of Ps. 69 million ($6.7 million), the prepayment of Ps. 500 million ($48 million) of bank debt, the conversion by ICH of Ps. 263 million of loans into common shares and the exercise by certain minority shareholders of their pre-emptive rights arising as a result of the conversion of ICH debt to purchase capital stock for Ps. 28 million). Net resources used in investing activities (to acquire property, plant and equipment and other non-current assets) were Ps. 37 million in 2003 versus net resources used in investing activities of Ps. 45 million in 2002.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Year Ended December 31, 2003 compared to Year Ended December 31, 2002

Net Sales

Net sales of Simec increased 27% to Ps. 2,787 million in 2003 compared to Ps. 2,197 million in 2002. Sales in tons of basic steel products increased 3% to 628,243 tons in 2003 compared to 609,202 tons in 2002. Exports of basic steel products were 80,744 tons in 2003 versus 80,179 tons in 2002. Additionally, Simec sold 63,616 tons of billet in 2003 compared to 23,137 tons of billet in 2002. The average price of steel products increased 18% in real terms in 2003 versus 2002.

Direct Cost of Sales

Simec’s direct cost of sales increased 24% to Ps. 1,828 million in 2003 compared to Ps. 1,470 million in 2002. Direct cost of sales as a percentage of net sales decreased to 66% in 2003 from 67% in 2002. The average cost of raw materials used to produce steel products increased 14% in real terms in 2003 versus 2002 primarily as a result of increases in the price of scrap, electricity and gas.

Marginal Profit

Simec’s marginal profit increased 32% to Ps. 959 million in 2003 compared to Ps. 727 million in 2002. As a percentage of net sales, marginal profit was 34% in 2003 compared to 33% in 2002.

Indirect Manufacturing, Selling, General And Administrative Expenses

Indirect manufacturing, selling, general, and administrative expenses (which include depreciation and amortization) increased 0.2% to Ps. 462 million in 2003 from Ps. 461 million in 2002; Simec recorded an increase of Ps. 18 million in depreciation and amortization expense which in 2003 was Ps. 180 million compared to Ps. 162 million in 2002.

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		DIRECTOR REPORT (1)
		ANNEX 1		CONSOLIDATED

Operating Income

Simec’s operating income increased 87% to Ps. 497 million in 2003 compared to Ps. 266 million in 2002. Operating income was 18% of net sales in 2003 and 12% of net sales in 2002.

Financial Income (Expense)

Simec recorded financial expense in 2003 of Ps. 25 million compared to financial expense of Ps. 129 million in 2002. Simec recorded an exchange loss of approximately Ps. 2 million in 2003 compared to an exchange loss of Ps. 104 million in 2002, reflecting the 9% decrease in the value of the peso versus the dollar in 2003 versus a decrease of 12.8% in the value of the peso versus the dollar in 2002 and lower debt levels in 2003. Net interest expense was Ps. 13 million in 2003 versus Ps. 56 million in 2002 reflecting a lower amount of debt outstanding during 2003. Simec recorded a loss from monetary position of Ps. 10 million in 2003 compared to a gain from monetary position of Ps. 31 million in 2002, reflecting the domestic inflation rate of 4% in 2003 as compared to 5.7% in 2002 and lower debt levels during 2003.

Other Income (Expense), Net

Simec recorded other expense, net, of Ps. 18 million in 2003 (reflecting (i) a reserve of Ps. 11 million relating to the clean-up of contaminated land at the Pacific Steel facilities, (ii) a reserve of Ps. 9 million relating to the realizable value of idle machinery and equipment and (iii) other income, net related to other financial operations of Ps. 2 million) compared to other expense, net, of Ps. 37 million in 2002 (reflecting (i) other income relating to tax benefits associated with the acquisition of machinery and equipment made in 2001 of Ps. 6 million, (ii) a gain of Ps. 2 million in respect of $200,000 principal amount of Simec’s MTNs which were acquired at 50% of the principal amount thereof, without provision for accrued interest, and were subsequently cancelled, (iii) income of Ps. 3 million relating to insurance payments received in respect of the breakdown of the scrap shredder machine at the Mexicali mini-mill, (iv) expenses relating to an adjustment in the value of the land of its subsidiary Pacific Steel of Ps. 21 million, (v) expenses of Ps. 2 million for fees relating to obtaining the approval of the Comisión Nacional Bancaria y de Valores to increase the capital stock of Simec, (vi) a reserve of Ps. 10 million relating to the realizable value of idle machinery and equipment, (vii) a reserve of Ps. 8 million relating to the clean-up of contaminated land at the Pacific Steel facilities and (viii) expenses related to other financial operations of Ps. 7 million).

Income Tax and Employee Profit Sharing

Simec recorded a provision of Ps. 21 million for income tax and employee profit sharing in 2003 (including a decrease in the provision of Ps. 12 million from the application of Bulletin D-4 with respect to deferred income tax described below) compared to a positive provision of Ps. 23 million in 2002 (including a decrease in the provision of Ps. 59 million from the application of Bulletin D-4 with respect to deferred income tax described below).

Net Income

As a result of the foregoing, Simec recorded net income of Ps. 433 million in 2003 compared to net income of Ps. 123 million in 2002.

Recent 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 liabilities resulting from the adoption of this Bulletin was Ps. 928 million at December 31, 2003 compared to Ps. 797 million at December 31, 2002. The effect on Simec’s consolidated statement of income in 2003 was a decrease of Ps. 12 million in the provision for income tax and employee profit sharing compared to a decrease of Ps. 59 million in 2002. These provisions do not affect the cash flow of Simec.

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		FINANCIAL STATEMENT NOTES (1)
		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, Compañía Siderúrgica 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:

• Compañía Siderúrgica de California, S.A. de C.V.

• Industrias del Acero y del Alambre, S.A. de C.V.

• Pacific Steel Inc.

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. 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

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		FINANCIAL STATEMENT NOTES (1)
		ANNEX 2		CONSOLIDATED

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 December 31, 2003 are as follows:

		Years
	Buildings	15 to 50
	Machinery and equipment	10 to 40

f. 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.

g. 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.

h. 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.

i. 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.

j. 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.

k. 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

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		FINANCIAL STATEMENT NOTES (1)
		ANNEX 2		CONSOLIDATED

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.

l. 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 December 31, 2003 and 2002. 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.

m. Other income (expenses) - Other income (expenses) shown in the consolidated statements of operations primarily includes other financial operations.

n. 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.

o. 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.

p. 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 December 31, 2003, Simec’s total consolidated debt consisted of approximately $2.0 million of U.S. dollar-denominated debt, while at December 31, 2002, Simec had outstanding approximately $47.8 million of U.S. dollar-denominated debt (including $14.4 million of debt owed to its parent company Industrias CH, S.A. de C.V.) (“ICH”); Simec’s lower debt level at December 31, 2003 reflected the prepayment of $30 million of bank debt in 2003 (Simec financed $16.2 million of this prepayment with loans from ICH), the semi-annual amortization installment on its bank debt of $1.4 million in May and November 2003, the conversion to

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		FINANCIAL STATEMENT NOTES (1)
		ANNEX 2		CONSOLIDATED

common stock in March 2003 of $16.1 million of loans (plus accrued interest thereon) from ICH at a conversion price equivalent to U.S. $1.35 (Ps.14.588) per American Depositary Share and the conversion to common stock in November 2003 of a capital contribution from ICH made to Simec in May 2003, in the amount of $14.5 million (the proceeds of which were used to retire debt owed to ICH) at a conversion price equivalent to U.S $1.41 (Ps. 14.588) per American Depositary Share. Simec’s remaining outstanding $1.7 million of bank debt consisted of (i) $0.2 million which matures in 2007 and amortizes in equal semi-annual installments and (ii) $1.5 million which matures in 2009 and has no amortization payments. In addition Simec had outstanding $302,000 of 8 7/8% MTN’s due 1998 (accrued interest at December 31, 2003 was $254,860) which were issued in 1993 as part of a $68 million issuance. At December 31, 2003 Simec owed no debt to 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. 18,665 (U.S. $1,661,182) at December 31, 2003, (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. Compañía Siderúrgica de Guadalajara, S.A. de C.V. has entered into a gas and liquid oxygen purchase agreement with Praxair de México, 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. 1,644 per month.

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		RELATIONS OF SHARES INVESTMENTS
		ANNEX 3		CONSOLIDATED

COMPANY NAME (1)	MAIN ACTIVITIES		NUMBER OF SHARES		OWNERSHIP (2)		TOTAL AMOUNT (Thousands of Pesos)
SUBSIDIARIES							ACQUISITION COST		PRESENT VALUE (3)
2 CIA. SIDERURGICA DE    GUADALAJARA	MINI-MILL		474,393,215		99.99		38,359		2,242,609
2 CIA. SIDERURGICA DE    CALIFORNIA	MINI-MILL		504,816		0.04		505		1,188
ADMINISTRADORA DE CARTERA DE OCCIDENTE			49,999		99.99		50		-15
TOTAL INVESTMENT IN SUBSIDIARIES							38,914		2,243,782
ASSOCIATEDS			0		0.00		0		0
TOTAL INVESTMENT IN ASSOCIATEDS							0		0
OTHER PERMANENT INVESTMENTS									0
TOTAL									2,243,782

NOTES

STOCK EXCHANGE CODE: SIMEC		MEXICAN STOCK EXCHANGE			QUARTER: 4 YEAR: 2003
GRUPO SIMEC, S.A. DE C.V.		ANNEX 05
		CREDITS BREAK DOWN
(THOUSANDS OF PESOS)

CONSOLIDATED
			Demoninated in Pesos
Credit Type / Institution	Amortization Date	Rate of Interest	Until 1 Year	More Than 1 Year
					BANKS
WITH WARRANTY
BANCO BILBAO VIZCAYA	11/15/2009	5.81
BANCO BILBAO VIZCAYA	11/15/2007	5.81
TOTAL BANKS			0	0
LISTED IN THE MEXICAN
STOCK EXCHANGE
UNSECURED DEBT
MEDIUM TERM NOTES	12/15/1998	9.33	0	0
TOTAL STOCK EXCHANGE			0	0
SUPPLIERS
VARIOUS			171,683	0
TOTAL SUPPLIERS			171,683	0
OTHER CURRENT LIABILITIES
AND OTHER CREDITS
VARIOUS			160,431	0
OTHER CURRENT LIABILITIES			160,431	0
AND OTHER CREDITS
TOTAL GENERAL			332,114	0

CONSOLIDATED
	Amortization of Credits in Fireign Currency With Foregn Entities (Thousand of Pesos)
	Time Interval
Credit Type / Institution	Current Year	Until 1 Year	Until 2 Years	Until 3 Years	Until 4 Years	Until 5 Years or More
							BANKS
							WITH WARRANTY
BANCO BILBAO VIZCAYA		16,421
BANCO BILBAO VIZCAYA		2,657
TOTAL BANKS	0	19,078	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	13,032	0	0	0	0
TOTAL SUPPLIERS	0	13,032	0	0	0	0
OTHER CURRENT LIABILITIES
AND OTHER CREDITS
VARIOUS	0	135	0	0	0	0
OTHER CURRENT LIABILITIES	0	135	0	0	0	0
AND OTHER CREDITS
TOTAL GENERAL	0	32,245	0	0	0	0

CONSOLIDATED
	Amortization of Credits in Fireign Currency With Foreing Entities (Thousand of Pesos
	Time Interval
Credit Type / Institution	Current Year	Until 1 Year	Until 2 Years	Until 3 Years	Until 4 Years	Until 5 Years or More
							BANKS
							WITH WARRANTY
BANCO BILBAO VIZCAYA
BANCO BILBAO VIZCAYA
TOTAL BANKS	0	0	0	0	0	0
LISTED IN THE MEXICAN
STOCK EXCHANGE
UNSECURED DEBT
MEDIUM TERM NOTES	3,393	0	0	0	0	0
TOTAL STOCK EXCHANGE	3,393	0	0	0	0	0
SUPPLIERS
VARIOUS	0	24,940	0	0	0	0
TOTAL SUPPLIERS	0	24,940	0	0	0	0
OTHER CURRENT LIABILITIES
AND OTHER CREDITS
VARIOUS	0	23,602	0	0	0	0
OTHER CURRENT LIABILITIES	0	23,602	0	0	0	0
AND OTHER CREDITS
TOTAL GENERAL	3,393	48,542	0	0	0	0

NOTES:
	1.-		At December 31, 2003, Compañía Siderúrgica de Guadalajara, S.A. de C.V. (“CSG”) was not in compliance with various financial covenants contained in its bank loan instruments. In accordance with Mexican generally accepted accounting principles, Simec’s long term bank debt has been reclassified as current liabilities.
	2.-		Simec’s bank debt is secured by a lien on all of the plant, property and equipment of Simec
	3.-		The exchange rate of the peso to the U.S. Dollar at December 31, 2003 was Ps. 11.2360

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		MONETARY POSITION IN FOREIGN EXCHANGE (Thousands of Pesos)
		ANNEX 6		CONSOLIDATED

	DOLLARS				OTHER CURRENCIES				TOTAL
TRADE BALANCE	THOUSANDS OF DOLLARS		THOUSANDS OF PESOS		THOUSANDS OF DOLLARS		THOUSANDS OF PESOS		THOUSANDS OF PESOS
FOREING MONETARY POSITION
TOTAL ASSETS	45,275		508,696		0		0		508,696
LIABILITIES POSITION	7,159		80,440		333		3,740		84,180
SHORT TERM LIABILITIES POSITION	7,159		80,440		333		3,740		84,180
LONG TERM LIABILITIES POSITION	0		0		0		0		0
NET BALANCE	38,116		428,256		(333	)	(3,740	)	424,516

NOTES

     THE EXCHANGE RATE OF THE PESO TO THE U.S. DOLLAR AT DECEMBER 31, 2003 WAS PS. 11.2360

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		INTEGRATION AND INCOME CALCULATION BY MONETARY POSITION (1) (Thousands of Pesos)
		ANNEX 7		CONSOLIDATED

MONTH	MONETARY ASSETS		MONETARY LIABILITIES		ASSET (LIABILITIES) MONETARY POSITION		MONTHLY INFLATION			MONTHLY PROFIT AND (LOSS)
JANUARY	599,332		870,175		(270,843	)	0.40			1,095
FEBRUARY	496,349		770,972		(274,623	)	0.28			763
MARCH	540,635		777,637		(237,002	)	0.63			1,496
APRIL	541,513		566,310		(24,797	)	0.17			42
MAY	578,184		548,013		30,171		-0.32			97
JUNE	547,495		340,066		207,429		0.08			(171	)
JULY	604,584		323,902		280,682		0.14			(407	)
AUGUST	664,648		310,488		354,160		0.30			(1,063	)
SEPTEMBER	750,161		319,022		431,139		0.60			(2,567	)
OCTOBER	805,442		329,170		476,272		0.37			(1,746	)
NOVEMBER	870,617		336,930		533,687		0.83			(4,430	)
DECEMBER	945,456		328,828		616,628		0.43			(2,651	)
ACTUALIZATION:	0		0		0		0.00			(15	)
CAPITALIZATION:	0		0		0		0.00			0
FOREIGN CORP.:	0		0		0		0.00			0
OTHER	0		0		0		0.00			0
T O T A L										(9,557	)

NOTES

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		BONDS AND MEDIUM TERM NOTES LISTING IN STOCK MARKET (1)
		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 2.95 times.

B) Accomplished the actual situation is 0.23

C) Accomplished the actual situation is 36.20

As of December 31, 2003, the remaining balance of the MTNs not exchanged amounts to Ps. 3,393 ($302,000 dollars).

C.P. Adolfo Luna Luna
Chief Financial Officer

BONDS AND/OR MEDIUM TERM NOTES CERTIFICATE

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		PLANTS, COMMERCE CENTERS OR DISTRIBUTION CENTERS
		ANNEX 9		CONSOLIDATED

PLANT OR CENTER		ECONOMIC ACTIVITY	PLANT CAPACITY (1)		UTILIZATION (%)
CIA. SIDERURGICA DE GUAD		PRODUCTION AND SALES OF STEEL PRODUCTS	480		85
CIA. SIDERURGICA DE CALIF		PRODUCTION AND SALES OF STEEL PRODUCTS	250		79
INDUSTRIAS DEL ACERO Y DEL ALAMBRE		SALE OF STEEL PRODUCTS	0		0

NOTES

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		MAIN RAW MATERIALS
		ANNEX 10		CONSOLIDATED

DOMESTIC		MAIN SUPPLIERS		FOREIGN		MAIN SUPPLIERS		DOM. SUBST.		COST PRODUCTION (%)
SCRAP		VARIOUS		SCRAP		VARIOUS		YES		51.64
ELECTRICITY		C.F.E.						NO		12.60
FERROALLOYS		MINERA AUTLAN		FERROALLOYS		GFM TRADING		YES		6.53
ELECTRODES		UCAR CARBON MEXICANA		ELECTRODES		SGL CARBON GROUP		YES		2.42

NOTES

 

MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.					QUARTER: 4      YEAR: 2003
		SELLS DISTRIBUTION BY PRODUCT
		ANNEX 11			CONSOLIDATED
		DOMESTIC SELLS			MAIN
			DESTINATION
MAIN PRODUCTS	TOTAL PRODUCTION	NET SELLS
				TRADEMARKS	COSTUMERS

	VOLUME		AMOUNT		VOLUME		AMOUNT
STRUCTURAL PROFILES	184		522,811		173		753,113
COMMERCIAL PROFILES	56		140,394		47		192,823
REBAR	125		293,672		93		374,006
FLAT BAR	25		66,300		17		71,840
STEEL BARS	213		578,625		209		857,202
OTHER
					8		48,102
BILLET	64		121,067		64		170,754
T O T A L			1,722,869				2,467,840

 

MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.					QUARTER: 4      YEAR: 2003
		SELLS DISTRIBUTION BY PRODUCT
		ANNEX 11			CONSOLIDATED
		DOMESTIC SELLS			MAIN
			DESTINATION
MAIN PRODUCTS	TOTAL PRODUCTION	NET SELLS
				TRADEMARKS	COSTUMERS

	VOLUME		AMOUNT		VOLUME		AMOUNT
STRUCTURAL PROFILES					11		42,569
COMMERCIAL PROFILES					12		47,303
REBAR					46		178,174
STEEL BARS					9		37,677
FLAT BAR					3		13,450
T O T A L							319,173

NOTES

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.					QUARTER: 4      YEAR: 2003
		INTEGRATION OF THE PAID SOCIAL CAPITAL STOCK CHARACTERISTICS OF THE SHARES

				NUMBER OF SHARES
SERIES	NOMINAL VALUE	VALID CUPON	PORTION		PORTION	MEXICAN	FREE SUSCRIPTION		CAPITAL STOCK (Thousands of Pesos)
									FIXED	VARIABLE
B		0	15,283,350		116,689,672		131,973,022		222,963	1,702,289
TOTAL			15,283,350		116,689,672	0	131,973,022		222,963	1,702,289

TOTAL NUMBER OF SHARES REPRESENTING THE PAID-IN CAPITAL STOCK ON THE DATE OF SENDING THE INFORMATION : 131,973,022

SHARES PROPORTION BY :

CPO’S :	0
ADRS’s :	1,268,213 ADR’S OF 1 SHARE EACH ONE:
UNITS :	0
GDRS’s :	0
ADS’s :	0
GDS’s :	0

					REPURCHASED OWN SHARES
					MARKET VALUE OF THE SHARE
	SERIES		NUMBER OF SHARES		AT REPURCHASE		AT QUARTER

NOTES

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		CONSTRUCTION IN PROGRESS (Proyect, Total Investment and % of Advance)
		ANNEX 13		CONSOLIDATED

THE PROYECTS IN PROGRESS AT DECEMBER 31, 2003, ARE:

PROYECTS IN PROGRESS	TOTAL INVESTMENT			PHISICAL ADVANCE			FINISHED AT
SLITTING SYSTEM TO ROLLING MILL WITH TWO ROWS	Ps.	5,533		90%			February 2004
VARIOUS		1,097
TOTAL INVESTMENT AT DECEMBER 31, 2003		6,630

 

		MEXICAN STOCK EXCHANGE SIFIC / ICS
STOCK EXCHANGE CODE: SIMEC GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR: 2003
		FOREIGN CURRENCY TRANSACTIONS 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 GRUPO SIMEC, S.A. DE C.V.				QUARTER: 4      YEAR:2003
		ANNEX 14		CONSOLIDATED

DECLARATION OF THE COMPANY OFFICIALS RESPONSIBLE FOR THE INFORMATION CONTAINED IN THIS REPORT.

LUIS GARCIA LIMON AND ADOLFO LUNA LUNA 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 FOURTH QUARTER REPORT.

  ING LUIS GARCIA LIMON
CHIEF EXECUTIVE OFFICER   C.P. ADOLFO LUNA LUNA
CHIEF FINANCIAL OFFICER

GUADALAJARA, JAL, AT FEBRUARY 27 OF 2004