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<TITLE>FORM 20-F</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

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<P align="center"><FONT size="4"><B>SECURITIES AND EXCHANGE COMMISSION</B>
</FONT>

<DIV align="center"><FONT size="3">Washington, D.C. 20549
</FONT></DIV>
<DIV align="center"><HR align="center" size="1" width="25%" noshade></DIV>
<P align="center"><FONT size="5"><B>FORM 20-F</B>
</FONT>

<DIV align="center"><HR align="center" size="1" width="25%" noshade></DIV>
<P align="left"><FONT size="2">(Mark One)
</FONT>

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<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT Face="wingdings">o</FOnt></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="3">
Registration statement pursuant to Section&nbsp;12(b) or 12(g) of the Securities Exchange Act of 1934</FONT></TD>
</TR>
</TABLE>
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<P align="center"><FONT size="2">or
</FONT>

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<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT Face="wingdings">x</FOnt></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="3">
Annual report pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" colspan="3" valign="top"><FONT size="2">
for the fiscal year ended December&nbsp;31, 2002</FONT></TD>
</TR>
</TABLE>
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<P align="center"><FONT size="2">or
</FONT>

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<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT Face="wingdings">o</FOnt></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Transition report pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" align="left" valign="top"><FONT size="2">
for the transition period from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
</TR>
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<DIV align="center"><FONT size="2">Commission file number: 1-4870
</FONT></DIV>
<P align="center"><FONT size="6"><B>TUBOS DE ACERO DE MEXICO, S.A.</B>
</FONT>

<DIV align="center"><FONT size="2">(Exact name of registrant as specified in its charter)
</FONT></DIV>
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    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
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<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2"><B>Tubes of Steel of Mexico, S.A.</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>United Mexican States</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">(Translation of registrant&#146;s name into English)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
(Jurisdiction of incorporation or organization)</FONT></TD>
</TR>
</TABLE>
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<P align="center"><FONT size="2"><B>Edificio Parque Reforma<BR>
Campos El&#237;seos 400-17 Piso<BR>
Col. Chapultepec Polanco<BR>
11560 M&#233;xico, D.F., M&#233;xico</B><BR>
(Address of principal executive offices)
</FONT>

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<P align="center"><FONT size="2">Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act:
</FONT>

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    <TD width="51%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
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<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">Title of Each Class</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Name of Each Exchange On Which Registered</FONT></TD>
</TR>
<TR>
    <TD align="center" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2"><B>American Depositary Shares</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>American Stock Exchange</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2"><B>Common Stock (no par value)</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>American Stock Exchange*</B></FONT></TD>
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<P align="left"><FONT size="2">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock of Tubos de Acero de M&#233;xico, S.A. is not listed for trading but
only in connection with the registration of American Depositary Shares which
are evidenced by American Depositary Receipts.
</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the
Act:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>None</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>None</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Indicate the number of outstanding shares of each of the issuer&#146;s classes
of capital or common stock as of the close of the period covered by the annual report.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>342,934,120 shares of common stock (no par value)</B></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports
required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12&nbsp;months (or for such shorter period
that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.</FONT></TD>
</TR>
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<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Yes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<FONT Face="wingdings">x</FOnt>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">No
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2"><FONT Face="wingdings">o</FOnt></FONT></TD>
</TR>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Indicate by check mark which financial statement item the registrant has
elected to follow.</FONT></TD>
</TR>
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<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Item&nbsp;17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<FONT Face="wingdings">o</FOnt>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Item&nbsp;18
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2"><FONT Face="wingdings">x</FOnt></FONT></TD>
</TR>
</TABLE>
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<P align="center"><FONT size="2"><I>Please send copies of notices and communications from the Securities and Exchange Commission to:</I>
</FONT>

<P align="center"><FONT size="2"><B>Ann B. Fisher, Esq.<BR>
Sullivan &#038; Cromwell LLP<BR>
125 Broad Street<BR>
New York, New York 10004<BR>
(212)&nbsp;558-4000</B>
</FONT>

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<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
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<TR>
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<TR><TD colspan="9"><A HREF="#000">PART I</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Item&nbsp;1.Identity of Directors, Senior Management and Advisers</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Item&nbsp;2.Offer Statistics and Expected Timetable</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item&nbsp;3. Key Information</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Item 4. Information on the Company</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">Item&nbsp;5. Operating and Financial Review and Prospects</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Item&nbsp;6. Directors, Senior Management and Employees</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Item&nbsp;7. Major Shareholders and Related Party Transactions.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Item&nbsp;8. Financial Information</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">Item&nbsp;9. The Offer and Listing</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Item&nbsp;10. Additional Information</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011">Item&nbsp;11. Quantitative and Qualitative Disclosure About Market Risk</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#012">Item&nbsp;12. Description of Securities Other Than Equity Securities</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">PART II</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">Item&nbsp;15. Controls and Procedures</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">Item&nbsp;16A. Audit Committee Financial Expert</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#018">Item&nbsp;16B. Code of Ethics</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">Item&nbsp;16C. Principal Accountant Fees and Services</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">PART III</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#021">Item&nbsp;17. Financial Statements</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#022">Item&nbsp;18. Financial Statements</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#023">Item&nbsp;19. Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#025">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87729exv1w1.txt">BY-LAWS OF TAMSA</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87729exv4w1.txt">ATLAS BRADFORD TECHNOLOGY SUBLICENSE AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87729exv4w2.txt">TENARIS PREMIUM CONNECTIONS TECHNOLOGY LICENSE AGM</A></TD></TR>
<TR><TD colspan="9"><A HREF="y87729exv8w1.txt">LIST OF TAMSA SUBSIDIARIES</A></TD></TR>
</TABLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="center"><FONT size="2"><B>TABLE OF CONTENTS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">PART I</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;1.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Identity of Directors, Senior Management and Advisers
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;2.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Offer Statistics and Expected Timetable
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;3.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Key Information
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;4.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Information on the Company
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">15</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;5.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Operating and Financial Review and Prospects
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">41</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;6.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Directors, Senior Management and Employees
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">54</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;7.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Major Shareholders and Related Party Transactions
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">58</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;8.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Financial Information
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">59</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;9.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The Offer and Listing
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">60</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;10.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Additional Information
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">63</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;11.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Quantitative and Qualitative Disclosure About Market Risk
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">69</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;12.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Description of Securities Other Than Equity Securities
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">70</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">PART II</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">71</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;13.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Defaults, Dividend Arrearages and Delinquencies
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">71</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;14.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Material Modifications to the Rights of Security Holders and Use of Proceeds
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">71</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;15.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Controls and Procedures
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">71</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;16A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Audit Committee Financial Expert
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">71</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;16B</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Code of Ethics
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">71</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;16C</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Principal Accountant Fees and Services
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">71</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">PART III</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">72</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;17.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Financial Statements
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">72</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;18.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Financial Statements
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">72</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;&nbsp;&nbsp;Item&nbsp;19.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Exhibits
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">72</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">i</FONT>


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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Definition of Certain Terms</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this annual report, unless otherwise specified or the context otherwise
requires:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;we,&#148; &#147;us,&#148; &#147;our&#148; and &#147;Tamsa&#148; each refers to Tubos de Acero
de M&#233;xico, S.A., a Mexican corporation, and its consolidated
subsidiaries.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;Tenaris&#148; refers to Tenaris S.A., a Luxembourg corporation, and its consolidated subsidiaries.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;Siderca&#148; refers to Siderca S.A.I.C., an Argentine corporation, and its consolidated subsidiaries.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;Dalmine&#148; refers to Dalmine S.p.A., an Italian corporation, and its consolidated subsidiaries.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;the Tenaris companies&#148; collectively refers to Siderca,
Dalmine and Tamsa and their respective subsidiaries.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;Tenaris Global Services&#148; refers to Tenaris Global Services S.A., a Uruguayan corporation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;Tavsa&#148; refers to Tubos de Acero de Venezuela, S.A., a Venezuelan corporation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;shares&#148; refers to ordinary shares representing common stock of Tamsa with no par value.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;tons&#148; refers to metric tons.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">one &#147;billion&#148; refers to one thousand million, or 1,000,000,000.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain figures contained in this annual report have been rounded.
Accordingly, these figures may not always sum to the total provided.
</FONT>
<P align="left"><FONT size="2"><B>Currencies</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this annual report, unless otherwise specified or the context otherwise requires:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;dollars,&#148; &#147;U.S. dollars&#148; or &#147;USD&#148; each refers to the United States dollar.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&#147;Mexican pesos&#148; or &#147;Ps&#148; each refers to the Mexican peso.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa publishes its financial statements in Mexican pesos. This annual
report contains translations of some Mexican peso amounts into U.S. dollars.
These amounts are provided solely for your convenience. Unless otherwise
indicated, translations of Mexican peso amounts into U.S. dollars were made at
the rate of Ps10.3125 = USD1.00, which was the exchange rate published by Banco
de M&#233;xico in the <I>Diario Oficial de la Federaci&#243;n</I>, or the Official Gazette, on
December&nbsp;31, 2002. We do not represent that Mexican pesos could be converted
into U.S. dollars at that rate or any other rate. See Item&nbsp;3.E. &#147;Key
Information &#151; Exchange Rates&#148; for additional information regarding the
exchange rate between the Mexican peso and the U.S. dollar.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;24, 2003, the noon buying rate published by the Federal Reserve
Bank of New York for the Mexican peso was Ps10.53 = USD1.00.
</FONT>
<P align="left"><FONT size="2"><B>Accounting Principles</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa prepares its financial statements in conformity with generally
accepted accounting principles in Mexico, commonly referred to as &#147;Mexican
GAAP.&#148; Mexican GAAP differs in significant respects from U.S. GAAP. See note 12
to the audited consolidated financial statements of Tamsa included in this
annual report for a description of the principal differences between Mexican
GAAP and U.S. GAAP as they relate to Tamsa and for a reconciliation of net
income and total shareholders&#146; equity for the years and at the dates indicated.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements of Tamsa included in this annual report were
prepared giving effect to Bulletin B-10 &#147;Recognition of Effect of Inflation on
Financial Information,&#148; as amended, and Bulletin B-12, &#147;Statements of Changes
in Financial Position,&#148; issued by the Mexican Institute of Public Accountants,
or the MIPA, each of which became effective in 1990, and Bulletin B-15,
&#147;Foreign Currency Transactions and Translation of Financial Statements of
Foreign Operations,&#148; also issued by the MIPA and adopted by Tamsa in 1998.
Generally, Bulletin B-10 provides for the recognition of the effects of
inflation by requiring Mexican companies to restate inventories and fixed
assets at current replacement cost, to restate all other nonmonetary assets and
nonmonetary liabilities as well as the components of shareholders&#146; equity using
the Mexican Consumer Price Index and to record
<P align="center"><FONT size="2">ii</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

</FONT>
<P align="left"><FONT size="2">gains or losses in purchasing power from holding monetary liabilities or assets.
The Third Amendment to Bulletin B-10 requires restatement of all financial
statements to constant Mexican pesos as of the date of the most recent balance
sheet presented. The Fifth Amendment to Bulletin B-10 was issued effective
January&nbsp;1, 1997 by the MIPA. Under the Fifth Amendment, Mexican companies are
no longer permitted to restate fixed assets at current replacement cost, but
are instead required to restate them using the Mexican Consumer Price Index or
inflation factors of the country of origin in the case of imported assets.
Bulletin B-12 specifies the appropriate presentation of the statement of
changes in financial position when the financial statements have been restated
in constant Mexican pesos in accordance with Bulletin B-10. Bulletin B-12
identifies the sources and applications of resources representing differences
between beginning and ending financial statement balances in constant Mexican
pesos. Bulletin B-15 prescribes the methodology for foreign currency
transactions and the recognition of inflation in the financial information of
foreign subsidiaries. Accordingly, unless otherwise noted, all data in the
financial statements and the financial information derived therefrom included
elsewhere in this annual report and all other Tamsa financial data included
throughout this annual report have been restated in constant Mexican pesos as
of December&nbsp;31, 2002.
</FONT>
<P align="left"><FONT size="2"><B>No Internet Site Is Part of This Annual Report</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa maintains an Internet site at www.tamsa.com.mx. Information
contained in or otherwise accessible through this website is not a part of this
annual report. All references in this annual report to this Internet site are
inactive textual references to this URL, or &#147;uniform resource locator,&#148; and are
for your informational reference only.
</FONT>
<P align="left"><FONT size="2"><B>Forward-Looking Statements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This annual report contains certain statements that we consider to be
&#147;forward-looking statements&#148; as defined in, and subject to the safe harbor
provisions of, the U.S. Private Securities Litigation Act of 1995. The
statements appear throughout this annual report and are subject to risks and
uncertainties. These statements include information regarding:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">management strategy;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">capital spending;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">development and growth of the seamless steel pipe and oil and gas industries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">trends and other prospective data, including trends regarding
the levels of oil and gas drilling worldwide; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">general economic conditions in Mexico, Venezuela and other
countries in which Tamsa operates and makes sales.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sections of this annual report that by their nature contain
forward-looking statements include Item&nbsp;3. &#147;Key Information,&#148; Item&nbsp;4.
&#147;Information on the Company,&#148; Item&nbsp;5. &#147;Operating and Financial Review and
Prospects&#148; and Item&nbsp;11. &#147;Quantitative and Qualitative Disclosure About Market
Risk.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forward-looking statements also may be identified by the use of words such
as &#147;believes,&#148; &#147;expects,&#148; &#147;anticipates,&#148; &#147;projects,&#148; &#147;intends,&#148; &#147;should,&#148;
&#147;seeks,&#148; &#147;estimates,&#148; &#147;probability,&#148; &#147;risk,&#148; &#147;target,&#148; &#147;goal,&#148; &#147;objective,&#148;
&#147;future&#148; or similar expressions or variations of such expressions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The forward-looking statements contained in this annual report speak only
as of the date of this document, and we do not undertake to update any
forward-looking statement to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.
</FONT>
<P align="center"><FONT size="2">iii</FONT>
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<!-- link1 "PART I" -->
<DIV align="left"><A NAME="000"></A></DIV>
<P align="left"><FONT size="2"><B>PART I</B>
</FONT>

<!-- link2 "Item&nbsp;1.Identity of Directors, Senior Management and Advisers" -->
<DIV align="left"><A NAME="001"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;1.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Identity of Directors, Senior Management and Advisers</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<!-- link2 "Item&nbsp;2.Offer Statistics and Expected Timetable" -->
<DIV align="left"><A NAME="002"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;2.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Offer Statistics and Expected Timetable</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P align="center"><FONT size="2">1</FONT>
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<!-- link2 "Item&nbsp;3. Key Information" -->
<DIV align="left"><A NAME="003"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;3.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Key Information</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Selected Financial Data</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selected historical consolidated financial data of Tamsa have been
derived from its audited consolidated financial statements, which are prepared
in accordance with Mexican GAAP (unless otherwise indicated) for each of the
periods and at the dates indicated. The consolidated financial statements have
been audited by PricewaterhouseCoopers, independent accountants in Mexico.
Tamsa&#146;s audited consolidated financial statements are prepared in accordance
with Mexican GAAP, which differ in certain significant respects from U.S. GAAP.
See note 12 to Tamsa&#146;s audited consolidated financial statements, which
provides a description of the principal differences between Mexican GAAP and
U.S. GAAP as they relate to Tamsa&#146;s financial statements and a reconciliation
to U.S. GAAP of net income and total shareholders&#146; equity for the periods and
at the dates indicated therein. The selected historical consolidated financial
data of Tamsa are stated in constant Mexican pesos as of December&nbsp;31, 2002.
For a discussion of the currencies used in this annual report, exchange rates
and accounting principles affecting the financial information contained in this
annual report, see &#147;Currencies&#148;, Item&nbsp;3.E. &#147;Key Information &#151; Exchange Rates&#148;
and &#147;Accounting Principles.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Selected consolidated income statement data</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="19"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos, except share and per share amounts)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B><I>Mexican GAAP</I></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,728,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,899,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,463,007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">5,103,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">8,269,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating cost and expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,337,052</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,356,242</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,406,737</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,542,881</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,863,429</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,391,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,542,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,056,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">560,435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,405,768</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Comprehensive
financing cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(165,924</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(42,106</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(88,544</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(146,049</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(489,759</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Gain on sale of subsidiary<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">527,451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in loss of associated
companies<SUP>(2)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16,047</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(290,930</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52,608</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(379,135</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(233,420</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income (loss)&nbsp;before the
following items</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,136,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">590,205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">421,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(358,046</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,393,860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Extraordinary item<SUP>(3)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">265,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">564,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of change
in accounting principle<SUP>(4)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,567</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)&nbsp;for the year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,136,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">578,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">421,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">(92,871</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,957,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted average number of
shares outstanding<SUP>(5)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,409,820</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345,467,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net earnings (loss)&nbsp;per share
before the following items</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">3.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1.74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">(1.05</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">4.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Extraordinary item</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of change
in accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.03</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earnings (loss)&nbsp;per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">3.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">(0.27</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">5.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B><I>U.S. GAAP</I></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,860,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,905,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,173,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">5,103,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">8,269,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,534,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,496,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">924,017</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">515,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,357,172</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income (loss)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,381,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">734,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">500,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(34,395</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,542,071</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earnings (loss)&nbsp;per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(0.10</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Income from the sale of TF de M&#233;xico, S.A. de C.V., a subsidiary of
Tamsa.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Mainly corresponding to Tamsa&#146;s equity participation in the <I>Consorcio
Siderurgia Amazonia</I>, or Amazonia. See note 11 to Tamsa&#146;s audited
consolidated financial statements.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Mainly a tax benefit from the utilization of tax losses incurred in
previous years.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(4)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Corresponds to the net effect at the beginning of the year from changes
in accounting principles as a result of the adoption of Statement C-2,
effective January&nbsp;1, 2001, which establishes the accounting treatment for
derivatives and financial instruments.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">2</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(5)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Amounts for 2002, 2001, 2000, 1999 and 1998 exclude 3,650,000 shares
which were held in treasury in 2002 and held in 2001, 2000, 1999 and 1998
by a wholly-owned subsidiary of Tamsa. During 1998, 1,001,790 shares held
in treasury were cancelled. Tamsa purchased 10,100,000 shares which were
canceled on April&nbsp;28, 1999. On July&nbsp;10, 2001, each outstanding share of
Tamsa&#146;s common stock was split into five shares; concurrently, the
American Depositary Receipt, or ADR, ratio was modified from one ADR for
each share of common stock to one ADR for five shares of common stock. For
comparative purposes, the number of shares shown for prior years has been
adjusted to reflect the split retroactively. See note 5 to Tamsa&#146;s audited
consolidated financial statements.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Selected consolidated balance sheet data</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>At December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="19"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos, except share and per share amounts)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B><I>Mexican GAAP</I></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">5,509,924</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">3,954,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">4,010,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">3,979,045</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">5,384,512</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Investments in associated
companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">517,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">614,351</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,035,358</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">830,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,371,577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Property, plant and equipment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,280,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,928,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,757,946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,317,591</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,568,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">81,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">14,320,112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">12,578,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">12,804,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">13,127,508</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">16,324,148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Current liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">2,342,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,241,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,487,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">2,268,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">2,653,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-term debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">683,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,361,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,056,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">666,158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other liabilities<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,343,110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,346,158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,473,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">166,243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">181,696</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">5,368,728</FONT></TD>

    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">4,949,637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">5,017,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">2,434,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">3,501,268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity of majority shareholders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">8,963,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">7,598,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">7,755,729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">10,662,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">12,753,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Minority interest in
consolidated subsidiaries</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(12,330</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31,042</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69,210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total shareholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">8,951,384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">7,628,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">7,786,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">10,693,199</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">12,822,880</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted average number of
shares outstanding<SUP>(2)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,409,820</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">345,467,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total shareholders&#146; equity per
share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">26.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">22.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">22.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">31.51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">37.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B><I>U.S. GAAP</I></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">16,883,708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">15,562,756</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">15,390,273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">15,144,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">17,055,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net assets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,832,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,692,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,561,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,651,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,466,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total shareholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,844,732</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,662,896</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,530,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,620,892</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,397,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total shareholders&#146; equity per
share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">29.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes a deferred tax liability of Ps2,171,121 in 2002, Ps2,154,157 in
2001 and Ps2,306,472 in 2000 resulting from the adoption of Statement D-4
(deferred income tax) under Mexican GAAP effective January&nbsp;1, 2000.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Amounts for 2002, 2001, 2000, 1999 and 1998 exclude 3,650,000 shares
which were held in treasury in 2002 and held in 2001, 2000, 1999 and 1998
by a wholly-owned subsidiary of Tamsa. During 1998, 1,001,790 shares held
in treasury were cancelled. Tamsa purchased 10,100,000 shares which were
canceled on April&nbsp;28, 1999. On July&nbsp;10, 2001, each outstanding share of
Tamsa&#146;s common stock was split into five shares; concurrently, the ADR
ratio was modified from one ADR for each share of common stock to one ADR
for five shares of common stock. For comparative purposes, the number of
shares shown for prior years has been adjusted to reflect the split
retroactively. See note 5 to Tamsa&#146;s audited consolidated financial
statements.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>B.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Capitalization and Indebtedness</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>C.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Reasons for the Offer and Use of Proceeds</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>

<P align="center"><FONT size="2">3</FONT>



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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>D.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Risk Factors</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You should carefully consider the following risks, together with the other
information contained in this annual report, before making an investment
decision. Any of these risks could have a material adverse effect on Tamsa&#146;s
business, financial condition and results of operations, which could in turn
adversely affect the price of Tamsa&#146;s shares and American Depositary Shares, or
ADSs.</I>
</FONT>
<P align="center"><FONT size="2"><B>Risks Relating to the Seamless Steel Pipe Industry</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sales and revenues may fall as a result of downturns in the international
price of oil and other circumstances affecting the oil and gas industry.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The oil and gas industry is the largest consumer of seamless steel pipe
products worldwide. This industry has historically been volatile, and downturns
in the oil and gas markets adversely affect the demand for seamless steel pipe
products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand for these products depends primarily upon the number of oil and
natural gas wells being drilled, completed and reworked, and the depth and
drilling conditions of these wells. The level of these activities depends
primarily on current and expected future prices of oil and natural gas. Several
factors, such as the supply and demand for oil and natural gas and general
economic conditions, affect these prices. When the price of oil and gas falls,
oil and gas companies generally reduce spending on production and exploration
activities and, accordingly, make fewer purchases of seamless steel pipe
products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other circumstances may also affect drilling activity and, as a result,
cause pipe consumption to decline. For example, in 2002, although oil prices
remained at levels which, under typical circumstances, would have been expected
to result in sustained levels of investment in oil and gas drilling, oil and
gas exploration and production activity were affected by increased uncertainty
over the future level of oil prices as a result of the prospects of military
action against Iraq and production cutbacks established by the Organization of
Petroleum Exporting Countries, or OPEC. As a result, Tamsa&#146;s sales volume of
seamless steel pipes for 2002 decreased 6.5% compared to the previous year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the future, sales and revenues may again fall as a result of downturns
in the international price of oil and other circumstances affecting the oil and
gas industry.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Adverse economic or political conditions in the countries where we operate
or sell our products may decrease our sales and revenues.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to adverse economic and political conditions in the
countries where we operate or sell our products. The economies of these
countries are in different stages of socioeconomic development. Like other
companies with significant international operations, Tamsa is exposed to risks
from changes in foreign currency exchange rates, interest rates, inflation,
governmental spending, social instability and other political, economic or
social developments in the countries in which it operates. Risks associated
with foreign political, economic or social developments also may adversely
affect Tamsa&#146;s sales volume or revenues from exports and, as a result, its
financial condition and results of operations. For example, continuing adverse
political and economic developments in Venezuela have already had an adverse
impact on Tamsa&#146;s sales in that country. For additional information on risks
relating to Tamsa&#146;s operations in Venezuela, see &#147; &#151; Risks Relating to Mexico
and Venezuela.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sales and revenues may fall as a result of fluctuations in industry
inventory levels.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory levels of seamless steel pipe in the oil and gas industry can
vary significantly from period to period. These fluctuations can affect the
demand for our products, as customers draw from existing inventory during
periods of low investments in drilling and other activities and accumulate
inventory during periods of high investments. Even if the prices of oil and gas
rise or remain stable, oil and gas companies may not purchase additional
seamless steel pipe products or maintain their current purchasing volume.
</FONT>
<P align="center"><FONT size="2">4</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Competition in the global market for seamless steel pipe products may
cause us to lose market share in particular markets and hurt our sales and
revenues.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The global market for the seamless steel pipe products is highly
competitive, with the primary competitive factors being price, quality and
service. Aside from the Tenaris companies, there are approximately four major
exporters of premium-quality seamless steel pipe products worldwide. In
addition, a large number of producers manufacture and export generally lower
quality seamless steel pipes. Competition from these lower end producers,
particularly those from Russia, China and the Ukraine, have, at times,
adversely affected Tamsa and the other Tenaris companies because they have
offered products at significantly lower prices. In addition, these producers
are improving the range and quality of pipes, thereby increasing their ability
to compete with us. Tamsa and the other Tenaris companies may not continue to
be able to compete effectively against existing or potential producers and
preserve their current shares of the relevant geographic or product markets. In
addition, if import restrictions are imposed upon our competitors in our
domestic markets, they may increase their marketing efforts in other countries
where Tamsa and the other Tenaris companies sell their products and thus
increase the competitive pressure on the Tenaris companies in such markets.
Furthermore, because two of the Tenaris companies&#146; four major competitors are
Japanese companies, any decline in the value of the Japanese yen relative to
the U.S. dollar could make those Japanese companies more competitive.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Mexico is removing barriers to imported products, which will lead to
increased competition and may hurt our sales and revenues.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the increasing globalization of major economic markets, some
countries are lifting quotas and other restrictions on imports, including
imports of seamless steel pipe products, and are forming trade blocs. Mexico is
party to the North American Free Trade Agreement, or NAFTA. In addition, Mexico
is party to bilateral and multilateral trade agreements (for example, Mexico&#146;s
trade agreement with the EU) that remove barriers to the import of foreign
products. As import barriers have fallen, the domestic markets in Mexico for
seamless steel pipe products have become more competitive. Tamsa may not be
able to maintain its share of its domestic market as foreign producers take
advantage of recent trade liberalization and the expected elimination of
remaining barriers to foreign trade in Tamsa&#146;s domestic markets. Furthermore,
while trade liberalization may also provide Tamsa with greater access to
foreign markets, increases in sales to those foreign markets may not adequately
offset any loss in domestic sales arising from increased foreign competition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>As a result of antidumping and countervailing duty proceedings and other
import restrictions, we may not be allowed to sell our products in important
geographic markets such as the United States.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. producers have filed antidumping and countervailing duty actions
against us and other producers in several instances in the past, leading to
significant penalties, including the imposition of antidumping and
countervailing duties. Products manufactured by Tamsa have been and continue to
be subject to such duties in the United States. Antidumping or countervailing
duty proceedings or any resulting penalties or any other form of import
restriction may impede Tamsa&#146;s access to one or more important export markets
for its products and in the future additional markets could be closed to Tamsa
as a result of similar proceedings. The U.S. market is effectively closed to
some of Tamsa&#146;s principal products, limiting its current business and potential
growth in that market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Further consolidation among oil and gas companies may force us to reduce
our prices and hurt our profits.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A large percentage of our sales are directed to international oil and gas
companies. Recently, oil and gas companies throughout the world have
experienced a high level of consolidation which has reduced the number of
companies dedicated to providing these services. To the extent this
consolidation trend continues, the surviving companies may enjoy significant
bargaining power that could affect the prices of our products and services.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fluctuations in the cost of raw materials and energy may hurt our profits.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The manufacturing of seamless steel pipe products requires substantial
amounts of raw materials and energy from domestic and foreign suppliers. The
availability and price of a significant portion of the raw materials and energy
required by Tamsa are subject to market conditions and government regulation
affecting supply and demand that can affect their continuity and cost of
production. Increased costs of production may not be recoverable through
increased product prices and could adversely affect our profitability.
</FONT>
<P align="center"><FONT size="2">5</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our inability to reduce some of our costs in response to lower sales
volume may hurt our profits.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Like other manufacturers of steel-related products, we have fixed and
semi-fixed costs that cannot adjust rapidly to fluctuations in the demand for
our products. Our fixed and semi-fixed costs (excluding depreciation and
amortization) represented approximately 16% of total costs in 2002 and 15% in
2001. If demand for our products falls significantly, these costs may adversely
affect our profitability.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Potential environmental, product liability and other claims may create
significant liabilities for us that would hurt our net worth.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s oil and gas casing, tubing and line pipe products are sold
primarily for use in oil and gas drilling and transportation activities, which
are subject to inherent risks, including well failures, line pipe leaks and
fires, that could result in death, personal injury, property damage,
environmental pollution or loss of production. Any of these hazards and risks
can result in the loss of hydrocarbons, environmental liabilities, personal
injury claims and property damage. Correspondingly, defects in Tamsa&#146;s products
could result in death, personal injury, property damage, environmental
pollution or damage to equipment and facilities. Tamsa warrants its oilfield
products and the Tenaris companies products it sells or distributes in
accordance with customer specifications. Actual or claimed defects in its
products may give rise to claims against Tamsa for losses and expose Tamsa to
claims for damages. Tamsa&#146;s insurance coverage may not be adequate or available
to protect it in the event of a claim or its coverage may be canceled or
otherwise terminated.
</FONT>
<P align="center"><FONT size="2"><B>Risks Relating to Our Business</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our controlling shareholder can take actions that do not reflect the will
or best interest of our other shareholders.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of May&nbsp;30, 2003, Tenaris, directly or indirectly, beneficially owned
94.44% of Tamsa&#146;s outstanding voting stock. As a result, Tenaris is effectively
able to elect all the members of the board of directors of Tamsa and has the
effective power to determine the outcome of any actions requiring shareholder
approval, including, subject to the requirements of Mexican law, the payment of
dividends by Tamsa. As of May&nbsp;30, 2003, San Faust&#237;n N.V. beneficially owned
61.2% of Tenaris&#146;s outstanding voting stock. Until June&nbsp;10, 2003, San Faust&#237;n
was ultimately controlled by Roberto Rocca, either directly or through Rocca &#038;
Partners S.A., a British Virgin Islands corporation. Following Mr.&nbsp;Rocca&#146;s
death on June&nbsp;10, 2003, San Faust&#237;n is controlled by Rocca &#038; Partners. See
Item&nbsp;6. &#147;Directors, Senior Management and Employees&#148; and Item&nbsp;7. &#147;Major
Shareholders and Related Party Transactions.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Recent and future acquisitions and strategic partnerships may disrupt our
operations and hurt our profits.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In recent years, we have acquired interests in various companies, such as
<I>Consorcio Siderurgia Amazonia Ltd</I>., or Amazonia (which holds an interest in
Sider&#250;rgica del Orinoco, C.A., or Sidor), Tavsa and <I>Empresas Riga S.A. de C.V.</I>,
or Riga, and engaged in strategic partnerships. Our profits have been adversely
affected by our investment in Amazonia, and the value of our investment has
declined. Risks associated with an investment in Sidor through Amazonia are
discussed further below. With respect to all of our investments and strategic
partnerships, in the future we may not be successful in our plans regarding
their operation, or they could be affected by developments affecting our
partners. For example, any negative development in the operations of Sidor, or
a change of control at Sidor could adversely affect Tavsa&#146;s access to raw
materials and, consequently, negatively impact Tavsa&#146;s operations and financial
results. For a description of Sidor see Item&nbsp;4.A. &#147;Information on the Company
&#151; Tamsa &#151; Investments in Other Companies.&#148; We will continue to actively
consider other strategic acquisitions and partnerships from time to time. We
must necessarily base any assessment of potential acquisitions and partnerships
on assumptions with respect to operations, profitability and other matters that
may subsequently prove to be incorrect. Our acquisition and partnership
activities may not perform in accordance with our expectations and could
adversely affect our operations and profitability.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our related party transactions with Tenaris Global Services and other
related parties may not always be on terms as favorable as those that could be
obtained from unaffiliated third parties.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa obtains from Tenaris Global Services and other related parties an
important number of services that are significant to our business, including
marketing and sales services. We will likely continue to obtain those services
from Tenaris Global Services and other related parties. If we could no longer
rely on Tenaris Global
</FONT>
<P align="center"><FONT size="2">6</FONT>
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<P align="left"><FONT size="2">Services and other related parties to provide these services, we may not
be able to obtain services of similar quality without delay or additional
expense. These transactions and agreements are made in the ordinary course of
business, and we believe that these transactions and agreements are made on
terms no less favorable than those we could obtain from unaffiliated third
parties. We will continue to engage in related party transactions in the future
and we intend that these transactions be on terms as favorable as
those that could be obtained from unaffiliated third parties but no assurance can be given in this respect. See
Item&nbsp;4.B. &#147;Information on the Company &#151; Tenaris&#148; and Item&nbsp;7. &#147;Major
Shareholders and Related Party Transactions.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The cost of complying with environmental regulations and paying unforeseen
environmental liabilities may increase our operating costs or hurt our net
worth.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to a wide range of state and federal laws, regulations,
permits and decrees in Mexico relating to the protection of human health and
the environment including regulations concerning water pollution, air
pollution, noise pollution and hazardous substance discharges. State and
federal authorities in Mexico have been moving toward more stringent
enforcement of these laws. This trend is likely to continue and may be
influenced by the environmental agreement entered into by Mexico, the United
States and Canada in connection with NAFTA. We estimate that we will incur
expenditures aggregating approximately USD1.5&nbsp;million in 2003, to satisfy
existing Mexican environmental requirements. In addition, our consolidated
subsidiary, Tavsa, has manufacturing operations in Venezuela and is subject to
environmental and health regulations in Venezuela, and will continue to incur
expenditures to comply with those regulations. These expenditures may not be
sufficient to enable us and them to comply with applicable requirements in the
future. Future changes in laws and technology and the enforcement of existing
laws could require further significant expenditures. In addition, unforeseen
expenditures necessary to remain in compliance with future environmental laws
and regulations, including site or other remediation costs, or unforeseen
environmental liabilities, could have a material adverse effect on our
financial condition and results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Any decline in purchases by our largest customer may hurt our sales and
revenues in the future.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa enjoys a strong relationship with Petr&#243;leos Mexicanos, or Pemex, one
of the world&#146;s largest crude oil and condensates producers. Pemex has been
Tamsa&#146;s single largest customer. Sales to Pemex, including drilling companies
contracted by Pemex, as a percentage of Tamsa&#146;s total sales volume, amounted to
14.8% in 2002. The volume of sales to Pemex has fluctuated historically and may
continue to fluctuate in the future in response to diverse factors, such as
changes in the amounts budgeted by Pemex for exploration and production and
changes in drilling activity by Pemex or the drilling companies contracted by
Pemex, as they may not maintain their current volume of purchases of Tamsa&#146;s
products. The loss of Pemex as a customer or a reduction in the volume of sales
to Pemex (or drilling companies contracted by Pemex) would have a material
adverse effect on Tamsa&#146;s results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We may continue to lose the value of our investment in Sidor, which would have a negative impact
on our net worth.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 1998, an international consortium of companies, Amazonia,
purchased a 70.0% equity interest in Sidor from the Venezuelan government,
which retained the remaining 30.0%. Tamsider, a wholly-owned subsidiary of
Tamsa, held an initial 12.5% equity interest in Amazonia, which increased to
14.1% in March 2000 as a result of additional investments described below. As
of December&nbsp;31, 2002, Tamsider&#146;s equity interest in Amazonia remained at 14.1%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the 2003 restructuring of Sidor and Amazonia&#146;s debt
discussed below, Tamsider is in the process of purchasing a 24.4% equity interest in Ylopa Servi&#231;os
de Consultadoria Lda., or Ylopa, a newly created company. After the
consummation of the restructuring on June&nbsp;20, 2003, Tamsider capitalized in
Amazonia a convertible subordinated loan made to Amazonia in connection with
the 2000 restructuring described below and, as a result, increased its
participation in Amazonia to a 14.5% equity interest, and Ylopa held new debt
instruments of Amazonia convertible, at Ylopa&#146;s option at any time after June
20, 2005, into a 67.4% equity interest of Amazonia. In addition, the Venezuelan
government&#146;s ownership in Sidor increased to 40.3%, while Amazonia&#146;s beneficial
ownership in Sidor decreased to 59.7%. As part of the June 2003 restructuring,
all the Amazonia shares, as well as all the shares of Sidor held by
Amazonia were placed in trust with Banesco Banco Universal,
C.A., as trustee.
</FONT>
<P align="center"><FONT size="2">7</FONT>

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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sidor has experienced significant financial losses and other problems
since the acquisition by Amazonia in January 1998, despite a significant
reduction in Sidor&#146;s workforce and management&#146;s efforts to improve the
production process and reduce operating costs. In 1999, due to negative
conditions in the international steel market, a sustained and intensifying
domestic recession in Venezuela, deteriorating conditions in the credit
markets, an increase in the value of the Venezuelan currency relative to the
U.S. dollar and other adverse factors, Sidor and Amazonia incurred substantial
losses and were unable to make payments due under loan agreements with their
respective creditors. In 2000, these loan agreements were restructured. Despite
continued efforts by Sidor&#146;s management to improve technology and optimize
production levels, in late 2001 Sidor and Amazonia were again unable to make
payments due under the restructured loan agreements, following a continuation
and aggravation of the same negative factors described above accompanied by
increased competition from steel imports in Venezuela. As of December&nbsp;31, 2002,
Sidor had approximately USD1.58&nbsp;billion of indebtedness (secured in part by
fixed assets valued at USD827&nbsp;million as determined at the time Sidor&#146;s loans
were restructured in March 2000) and Amazonia had approximately USD313&nbsp;million
of indebtedness.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2000 Restructuring</I>. As a result of the adverse trends discussed above, in
connection with the restructuring concluded in 2000 Tamsider made additional
capital contributions to Amazonia, while recording significant losses in the
value of its investment. In addition to its initial capital contribution of
USD87.8&nbsp;million, Tamsider was required to make capital contributions to
Amazonia in the amount of USD36.1&nbsp;million (of which USD18.1&nbsp;million was an
additional capital contribution and USD18.0&nbsp;million took the form of a
convertible subordinated loan to Amazonia). The value of Tamsider&#146;s investments
(as recorded in our audited consolidated financial statements) has decreased
significantly since 1998, from Ps910,306 thousand as of December&nbsp;31, 1998, to
Ps422,140 thousand as of December&nbsp;31, 1999, Ps649,834 thousand as of December
31, 2000, Ps238,233 thousand as of December&nbsp;31, 2001 and Ps136,433 thousand as
of December&nbsp;31, 2002. Due to Sidor&#146;s financial situation, as described above,
at December&nbsp;31, 2001, Tamsider recorded a valuation allowance in the amount of
Ps154,688 thousand in order to reduce the value of its investment in Amazonia
and the subordinated convertible debentures.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expiration of Performance Bond</I>. The Sidor purchase agreement between
Amazonia and the Venezuelan government required the shareholders of Amazonia,
including Tamsider, to indemnify the government for breaches by Amazonia of the
Sidor purchase agreement up to a maximum amount of USD150&nbsp;million, for five
years from the acquisition. In connection with this indemnity, the shareholders
of Amazonia were required to maintain a performance bond (which Tamsa guaranteed
directly in proportion to its interest in Amazonia) for five years, beginning in 1998, in the amount of USD150&nbsp;million
during the first three years, USD125&nbsp;million in the fourth year and USD75
million in the fifth year. The guarantee expired in January 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2003 Restructuring</I>. On June&nbsp;20, 2003, Sidor, Amazonia and their creditors
(including the Venezuelan government) consummated a restructuring of the Sidor
and Amazonia debt. Under the terms of the restructuring:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Ylopa purchased all of Amazonia&#146;s bank debt and a portion of Sidor&#146;s bank
debt for a total amount of USD133.5&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Sidor purchased a portion of its own bank debt for a total amount of
USD37.9&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">the remainder of Sidor&#146;s bank debt was refinanced and the lenders agreed
to the payment by Sidor of lower interest rates and a longer tenor;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Ylopa assigned to Amazonia all of the debt it purchased in exchange for
debt instruments of Amazonia convertible into a 67.4% equity interest in
Amazonia at Ylopa&#146;s option;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">the Venezuelan government capitalized half of the debt owed to it by
Sidor and consequently increased its equity ownership interest in Sidor to
40.3%;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">the remainder of the debt owed to the Venezuelan government was
refinanced;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">certain agreements entered to in connection with the 2000 restructuring
were terminated and the Amazonia shareholders, including
Tamsider, were released from:</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">8</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the guarantees they had provided with respect to the principal and
a portion of the interest payable under the loan made to Sidor by the
Venezuelan government;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">their obligations under a certain put agreement that previously
required them to purchase up to USD25&nbsp;million in loans payable by
Amazonia to its private lenders, <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">their obligations under a letter to these lenders contemplating the
possibility of additional capital contributions of up to USD20&nbsp;million
in the event of extreme financial distress of Sidor, <I>and</I></FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&#149;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" width="96%"><FONT size="2">beginning in 2004, but in no event before the first USD11&nbsp;million of
Sidor&#146;s excess cash (determined in accordance with the restructuring
documents) has been applied to repay Sidor&#146;s bank debt, 30% of Sidor&#146;s
distributable excess cash for each year (determined in accordance with the
restructuring documents) will be applied to repay Sidor&#146;s restructured debt, and
any remaining distributable excess cash for such year will be paid as
follows:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">59.7% to Ylopa (until 2012 or such
earlier year in which Ylopa has received an aggregate amount of
USD324&nbsp;million) or Amazonia (after expiration of Ylopa&#146;s
right to receive Sidor&#146;s remaining distributable excess cash),
as the case may be, <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">40.3% to the Venezuelan government.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">Tamsa, through Tamsider, participated in the 2003 restructuring by making an
aggregate cash contribution (mainly in the form of subordinated convertible
debt) of USD32.9&nbsp;million to Ylopa and by capitalizing in Amazonia convertible
debt previously held by Tamsa in the amount of USD18.0&nbsp;million plus accrued
interest. Tenaris&#146;s indirect participation in Amazonia increased from 14.1% to
14.5% and may further increase up to 21.2% if and when all of its subordinated
convertible debt is converted into equity.
</FONT>
<P align="left"><FONT size="2">Following completion of the restructuring between Sidor, Amazonia and their
creditors (including the Venezuelan government), Sidor had approximately
USD791.0&nbsp;million of indebtedness outstanding and Amazonia had no financial
indebtedness outstanding. Sidor&#146;s financial indebtedness was made up of three
tranches, one of USD350.5&nbsp;million to be repaid over 8&nbsp;years with one year of
grace, one of USD26.3&nbsp;million to be repaid over 12&nbsp;years with one year of grace
and the remaining tranche of USD368.6&nbsp;million, to be repaid over 15&nbsp;years with
one year of grace. In addition, Sidor&#146;s commercial indebtedness with certain
Venezuelan government-owned suppliers amounted to USD45.4&nbsp;million, to be repaid
over the next five years.
</FONT>
<P align="left"><FONT size="2">After consummation of the 2003 restructuring, Tamsider continues to bear the
risk of further losses in the equity value of its investment in Amazonia as
well as losses in the equity value of its investment in Ylopa, but none of
Tamsa, Tamsider or Ylopa guarantees the restructured indebtedness of Sidor. The
restructuring agreements contemplate, however, certain continuing obligations
and restrictions, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">pledges to the Sidor financial lenders of Sidor and Amazonia shares,
which will remain in effect for two years from the date of the
restructuring so long as no event of default has occurred and is
continuing under Sidor&#146;s refinanced loan agreements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">pledges to the Sidor financial lenders of any future debt of Amazonia,
which will remain in effect until such time as the pledges of the Amazonia
and Sidor shares referred to above are released;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">negative pledges not to create, incur or suffer to exist a lien (other
than certain permitted liens) over any of the equity or debt of Amazonia
held by, or owed to, the Amazonia shareholders; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">restrictions on the ability to institute or join a proceeding seeking the
liquidation, bankruptcy or reorganization of Amazonia or Sidor.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">9</FONT>

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<P align="center"><FONT size="2"><B>Risks Relating to Mexico and Venezuela</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Negative economic, political and regulatory developments in Mexico may
hurt our domestic sales volume and disrupt our manufacturing process, thereby
adversely affecting our results of operations and financial condition.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most of our manufacturing operations and assets are located in Mexico and
a substantial portion of our sales are made in Mexico. Tamsa&#146;s business may be
affected by economic, political and regulatory developments in Mexico. The
discussion of recent developments in Mexico that follows was mainly derived
from information recently filed by the Mexican government and Pemex with the
U.S. Securities and Exchange Commission, or SEC.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Economic situation</I>. Beginning in December 1994, and continuing through
1995, Mexico experienced an economic crisis characterized by exchange
rate instability, a devaluation of the Mexican peso, high inflation, high
domestic interest rates, economic contraction, a reduction of
international capital flows, reduced consumer purchasing power and high
unemployment. In response to the economic crisis, the Mexican government
implemented broad economic reform programs which improved economic
conditions in 1996 and 1997. However, a combination of factors led to a
reduction of Mexico&#146;s economic growth in 1998, including the economic
crises in Asia, Russia, Brazil and other emerging markets that began in
late 1997.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">In 1999, GDP grew by 3.6% and in 2000, by 6.6%. During 2001, the Mexican
economy experienced a slowdown, which was mainly due to a decline in global
and domestic consumption. GDP decreased by 0.3% in 2001 and increased by
0.9% in 2002. The Mexican government currently estimates that GDP will
increase by 3.0% in 2003. A deterioration in Mexico&#146;s economic conditions
may adversely affect Tamsa&#146;s business, results of operations, financial
condition, liquidity or prospects.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Impact of significant inflation and interest rates</I>. The annual rate of
inflation in Mexico, as measured by changes in the Consumer Price Index,
was 9.0% during 2000, 4.4% in 2001 and 5.7% in 2002. Banco de M&#233;xico
currently estimates that the annual rate of inflation for 2003, as
measured by changes in the Consumer Price Index, will be 4.3%, which is
above the official target established for the year of 4.2%. Interest
rates on 28-day Mexican treasury bills, or <I>Cetes</I>, averaged 15.27% in
2000, 11.26% in 2001 and 7.08% in 2002, and closed on June&nbsp;24, 2003 at
5.11%.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If inflation in Mexico is not maintained within the government&#146;s
projections, the Mexican economy and, consequently, Tamsa&#146;s financial
condition and results of operations may be adversely affected.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Price controls</I>. Seamless steel pipe products, like most products in
Mexico, historically were subject to price controls imposed by the
Mexican government. Although seamless steel pipe prices were officially
decontrolled in September 1989, the Mexican government maintained other
price restrictions until August 1990 as an inflation reduction measure.
In 1995, as part of its response to the Mexican economic crisis, the
Mexican government sought to minimize inflation by promoting the gradual
implementation of domestic price increases. Currently, domestic steel
pipe prices are not regulated; if any price control regulations were
reimposed in the future, Tamsa&#146;s sales revenues might be adversely
affected.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Government control of the economy</I>. The Mexican government has
exercised, and continues to exercise, significant influence over the
Mexican economy. Mexican government actions concerning the economy may
have adverse effects on private sector entities in general and on Tamsa
in particular. Further, the Mexican government exercises significant
influence over Pemex and its budget for exploration, which largely
determines the volume of Pemex&#146;s purchase of seamless steel pipe products
from Tamsa. Economic plans of the Mexican government in the past have
not, in many respects, fully achieved their objectives, and these and
other economic plans of the Mexican government may not achieve their
stated goals. Similarly, it is not possible to determine what effect
those plans or their implementation will have on the Mexican economy or
on Tamsa&#146;s financial condition or results of operations.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Political events</I>. Mexican political events may also affect Tamsa&#146;s
financial condition and results of operations and the performance of
securities issued by Mexican companies. The Mexican political environment
is in a period of change. In July 2000, Vicente Fox, a member of the
National Action Party (<I>Partido Acci&#243;n Nacional</I>, or PAN), the oldest
opposition party in the country, won the Presidential election. He took
office on December&nbsp;1, 2000, ending 71&nbsp;years of rule by the Institutional
Revolutionary Party (<I>Partido Revolucionario Institucional</I>, or PRI). In
addition, parties opposed to the PRI increased their representation in
the Mexican Congress, and, as a result, the PRI lost its congressional
majority. Currently, no</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">10</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">party has a working majority in either house of the Mexican Congress, which
has made governability and the passage of legislation more difficult. The
next major federal election will be held in July 2003, when all seats in
the Chamber of Deputies will be at stake. The Senate will maintain its
current composition until 2006. If neither the PAN (which currently holds
206 of the 500 seats), nor the PRI (which currently holds 211 of the 500
seats) gains a working majority in the Chamber of Deputies, problems of
gridlock will persist in both houses of the Mexican Congress.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Negative economic, political and regulatory developments in Venezuela may
hurt Tavsa&#146;s sales volume in Venezuela and disrupt Tavsa&#146;s manufacturing
process, thereby adversely affecting our results of operations and financial
condition.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The manufacturing operations and assets of Tavsa, a consolidated
subsidiary of Tamsa, are located in Venezuela, and virtually all of Tavsa&#146;s
sales are made in Venezuela. Tamsa also makes sales directly into Venezuela.
Tavsa&#146;s and Tamsa&#146;s results of operations and financial condition have been and
may continue to be affected by economic and political events in Venezuela. The
discussion of recent developments below in &#147;Political Events&#148; and &#147;Impact of
Exchange Controls&#148; was mainly derived from information recently filed by
Petr&#243;leos de Venezuela, S.A., or PDVSA, or its affiliates with the SEC or from
other public sources.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Political Events. </I>Venezuela has had continuous democratically elected
governments since 1958, but has from time to time experienced, and is
currently experiencing, social tension and civil unrest. In 1992, two
attempts were made to overthrow the government (including one by current
President Hugo Ch&#225;vez) which were quickly suppressed by military forces.
President Ch&#225;vez, who was elected in December 1998 and took office in
February 1999, was himself subject to a governmental coup that lasted
three days, and which ended with his reinstatement as president on April
14, 2002. President Ch&#225;vez has implemented significant political
changes, including convening a national constituent assembly which wrote
a new Venezuelan constitution (approved by public referendum in December
1999) and enacting a number of laws by presidential decree, pursuant to
an Enabling Law passed by the Venezuelan Congress in November 2000.
Together, these laws may affect present and future private and foreign
investment and could jeopardize property rights.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The discontent in Venezuela with these new laws, as well as with management
of economic policy and international relations and the increasingly
confrontational attitude of the President against diverse social sectors,
have developed into massive public protests that have raised the level of
political instability. These protest actions include several large-scale
strikes, including a national strike on December&nbsp;10, 2001 which paralyzed
essentially all commercial activity on that day, a general strike in early
April 2002, and a nation-wide work stoppage that began on December&nbsp;2, 2002
and that lasted through the first half of January 2003.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The general strike in April 2002 was initially led by managers of PDVSA,
the Venezuelan state-owned petroleum company and an important customer of
Tavsa, who did not support the President&#146;s new appointments to PDVSA&#146;s
board of directors. The work stoppage that began in December 2002
disrupted most commercial and economic activity in Venezuela, including the
operations of PDVSA and private-sector operators in the oil and gas sector,
stopped oil and gas production by PDVSA almost completely, and,
consequently, reduced PDVSA&#146;s demand for pipe products. The work stoppage
that began in December 2002 also led to an employee termination process, an
organizational restructuring of PDVSA and a governmental declaration of
force majeure, which temporarily released PDVSA and its clients from
contractual obligations. In addition, PDVSA&#146;s production of crude oil and
gas was severely affected by these events and is likely to continue to be
so affected.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These protest actions have had a direct impact on Tavsa&#146;s business.
Largely as a result of these disruptions, Tavsa&#146;s production of seamless steel
pipe decreased from 41,412 tons in 2001 to 20,327 tons in 2002, a reduction of
49.1%, and Tamsa&#146;s net sales in Venezuela (including sales through Tavsa)
decreased from Ps1,287,787 thousand to Ps387,400, a reduction of approximately
70%. There can be no assurance that the economic and political uncertainty in
Venezuela will not persist, or that PDVSA&#146;s oil production will reach a
sustained recovery.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Impact of Exchange Controls</I>. The Venezuelan government has imposed in
the past, and currently has in place, foreign currency exchange controls
that limit the availability of foreign currency and set the rates at
which Venezuelan currency can be exchanged for U.S. dollars. On June&nbsp;27,
1994, the Venezuelan government established certain foreign currency
exchange controls and soon thereafter set an official Bolivar/U.S. dollar
exchange rate. These controls were lifted on April&nbsp;22, 1996. More
recently, on February</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">11</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2"><FONT size="2">&nbsp;</FONT></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">5, 2003 a new exchange control regime became effective in Venezuela,
providing for the creation of a government entity in charge of issuing the
necessary currency exchange regulations. The current regime, among other
matters, provides for the centralization in the Central Bank of Venezuela
of the sale and purchase of foreign currency, sets a specific exchange rate
for the purchase and sale of foreign currency, establishes a mandatory sale
to the Central Bank of such foreign currency and establishes requirements
for the registration of private indebtedness. Additional regulations are in
process of being issued. In addition to this, the current exchange
controls have caused a temporary freeze of import and export activities in
Venezuela while regulations applicable to importers and exporters are
issued.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current exchange controls limit Tavsa&#146;s ability to make purchases in
foreign currency and to distribute profits to Tamsa. There can be no assurance
when, if at all, the Venezuelan government will lift these controls or
otherwise take future action to allow for greater flexibility in the
repatriation of capital. Furthermore, these exchange controls could also lead
to an overvaluation of the Bolivar, thereby adversely affecting the Venezuelan
economy. Such developments could adversely affect Tamsa&#146;s financial condition
and results of operations.
</FONT>

<P align="center"><FONT size="2"><B>Risks Relating to Our Shares and ADSs</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The trading price of our shares and ADSs may suffer as a result of lower
liquidity in the Mexican equity market.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prices in publicly-traded Mexico equity securities have been more volatile
than in many other markets. Total capitalization increased from USD106.8
billion as of December&nbsp;31, 1996, to USD126.6&nbsp;billion as of December&nbsp;31, 2001,
and decreased to USD104.7&nbsp;billion as of December&nbsp;31, 2002. The average daily
trading volume of shares included in the principal equity index on the Mexican
Stock Exchange decreased from USD144.6&nbsp;million in 1996 to USD137.8&nbsp;million in
1999, increased to USD165.1&nbsp;million in 2000 and decreased to USD150.9&nbsp;million
in 2001 and USD105.9&nbsp;million in 2002, due to the fluctuation in capital inflows
in 1999, 2000, 2001 and 2002. Reduced liquidity in the Mexican Stock Exchange
may increase the volatility of the trading price of our shares and ADSs, and
may impair your ability to readily buy or sell our shares and ADSs in desired
amounts and at satisfactory prices.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The trading price of our shares and ADSs may suffer as a result of lower
liquidity due to a lower number of outstanding shares and ADSs as a result of
past and proposed acquisitions by Tenaris, our controlling shareholder.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for our shares and ADSs may become less liquid as a result of
decreases in the number of outstanding shares and ADSs not beneficially owned,
directly or indirectly, by Tenaris, and as a result of the possible delisting
of our shares from the Mexican Stock Exchange and our ADSs from the American
Stock Exchange. The amount of our outstanding capital stock held by the public
was reduced in connection with the consummation of an exchange offer by Tenaris
on December&nbsp;17, 2002. As a result of that exchange offer, Tenaris held
directly, or indirectly, 94.50% of Tamsa&#146;s outstanding capital stock, an
increase from the 50.77% of Tamsa&#146;s outstanding capital stock held directly or
indirectly by Tenaris prior to that exchange offer. On April&nbsp;30, 2003, Tamsa
cancelled 3,650,000 shares of Tamsa held by its subsidiary Tamsider and, as a
result, Tenaris&#146;s ownership of Tamsa&#146;s outstanding capital stock was reduced to
94.44%. On March&nbsp;31, 2003, Tenaris announced that it intends to cause, among
other things, the delisting of Tamsa from the Mexican Stock Exchange and the
American Stock Exchange. Following its delisting from the Mexican Stock
Exchange, Tamsa will no longer be required to have independent directors and is
expected not to have any independent directors in the future. Tenaris also
announced that, subject to the approvals of the U.S. and Mexican securities
regulators, it intends to effect an exchange of Tenaris&#146;s shares and ADSs for
any Tamsa shares and ADSs not held by Tenaris or its affiliates in accordance
with Mexican and U.S. laws. On April&nbsp;30, 2003, Tamsa&#146;s shareholders&#146; meeting
gave the requisite approvals to effect such exchange. For more information,
see Item&nbsp;7 &#147;Major Shareholders and Related Party Transactions&#148; and Item&nbsp;5
&#147;Operating and Financial Review and Prospects &#151; Recent Events.&#148; The liquidity
of our shares and ADSs will be further reduced (and the trading price will
suffer) if this proposed exchange offer is consummated and if our shares or
ADSs are delisted from the Mexican Stock Exchange or the American Stock
Exchange.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The trading price of our shares and ADSs may suffer as a result of
developments in other emerging markets.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican financial and securities markets are, to varying degrees,
influenced by economic and market conditions in other emerging market
countries. Although economic conditions are different in each country, investor
</FONT>
<P align="center"><FONT size="2">12</FONT>
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</FONT>
<P align="left"><FONT size="2">reaction to developments in one country can have significant effects on
the securities of issuers with assets or operations in other emerging markets,
including Argentina, Brazil, Mexico and Venezuela. In late October 1997, prices
of Latin American debt securities and equity securities dropped substantially,
precipitated by a sharp drop in value of Asian markets. Similarly, in the
second half of 1998, prices of Latin American securities were adversely
affected by the economic crises in Russia and in Brazil. Various markets in
Latin America, notably Argentina and Venezuela, are currently experiencing
severe political and economic crises, which adversely affect the prices of
securities of Latin American issuers or issuers with significant Latin American
operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>In deciding whether to purchase, hold or sell our shares or ADSs, you may
not be able to access as much information about us as you would in the case of
a U.S. company.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A principal objective of the securities laws of Mexico, like those of the
United States, is to promote the full and fair disclosure of all material
information. There may, however, be less publicly available information about
Mexican issuers of securities than is regularly published by or about U.S.
issuers and the available information may be in Spanish. Also, the accounting
standards used in Mexico, in accordance with which Tamsa&#146;s audited consolidated
financial statements are prepared, differ in certain material respects from the
accounting standards used in the United States. For a description of the
principal differences between Mexican GAAP and U.S. GAAP as they relate to
Tamsa, see note 12 to our audited consolidated financial statements included in
this annual report and a reconciliation to U.S. GAAP of net income and
shareholders&#146; equity for the periods. Further, Mexican regulations governing
the securities of Mexican companies may not be as extensive as those in effect
in the United States, and Mexican law and regulations in respect of corporate
governance matters might not be as protective of minority shareholders as state
corporations laws in the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Holders of our ADSs may encounter difficulties in the exercise of dividend
and voting rights.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may encounter difficulties in the exercise of some of your rights as a
shareholder if you hold ADSs rather than common shares. For example if we pay a
dividend, the depositary may not be able to obtain the currency necessary to
distribute the dividend in U.S. dollars. Further, if we make a distribution in
the form of securities and you have the right to acquire a portion of them, the
depositary is allowed, in its discretion, to sell on your behalf that right to
acquire those securities and instead distribute the net proceeds to you. Also,
under some circumstances, such as our failure to provide the depositary with
voting materials on a timely basis, you may not be able to vote by giving
instructions to the depositary on how to vote for you. See Item&nbsp;8.C. &#147;Financial
Information &#151; Dividend Policy.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Holders of our ADSs in the United States may not be able to exercise
preemptive or accretion rights.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mexican corporate law and Tamsa&#146;s by-laws require Tamsa, in the event of a
capital increase, to offer rights to its existing shareholders to subscribe for
a number of shares of the same class sufficient to maintain the holders&#146;
existing proportionate holdings of shares of that class. Shareholders who
exercise preemptive rights are also entitled to exercise additional rights,
known as accretion rights, <I>pro rata </I>to their respective subscriptions, with
respect to any unsubscribed shares of the class. Thereafter, to the extent any
shares of that class remain unsubscribed, shareholders of other classes may
exercise preemptive or accretion rights. Holders of ADSs in the United States
may not be able to exercise preemptive rights for shares underlying their ADSs
unless additional shares and ADSs are registered under the U.S. Securities Act
of 1933, as amended, or the Securities Act, with respect to those rights or an
exemption from the registration requirements of the Securities Act is
available. Tamsa intends to evaluate at the time of any rights offering the
costs and potential liabilities associated with the exercise by holders of ADSs
of the preemptive rights and accretion rights for common shares underlying
their ADSs and any other factors Tamsa considers appropriate at the time and
then to make a decision as to whether to register additional common shares and
ADSs. Tamsa may decide not to register any additional common shares or ADSs, in
which case the depositary would be required to sell the holders&#146; rights and
distribute the proceeds thereof. Should the depositary not be permitted or
otherwise be unable to sell preemptive rights, the rights may be allowed to
lapse with no consideration to be received by the holders of the ADSs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>It may be difficult to enforce judgments against us in U.S. courts.</I></B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a corporation organized under the laws of Mexico, and most of our
assets are located in Mexico. Furthermore, most of our directors and officers
and some experts named in this annual report reside outside the United States.
As a result, investors may not be able to effect service of process within the
United States upon us or
</FONT>
<P align="center"><FONT size="2">13</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">our directors or officers or some experts or to enforce against us or them
in U.S. courts judgments predicated upon the civil liability provisions of U.S.
federal securities law. There is doubt as to the enforceability in original
actions in Mexican courts of civil liabilities predicated solely upon U.S.
federal securities laws, and the enforceability in Mexican courts of judgments
entered by U.S. courts predicated upon the civil liability provisions of U.S.
federal securities law will be subject to compliance with procedural
requirements under Mexican law, including the condition that the judgment does
not violate Mexican public policy.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>E.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Exchange Rates</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables show, for the periods indicated, information
concerning the exchange rate between the U.S. dollar and the Mexican peso. The
average rates presented in these tables were calculated by using the average of
the exchange rates on the last day of each month during the relevant period.
These rates are provided solely for your convenience. We do not represent that
Mexican pesos could be converted into U.S. dollars at these rates or at any
other rate.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The data provided in the following table is expressed in nominal Mexican
pesos per dollar and is based on noon buying rates published by the Federal
Reserve Bank of New York for the Mexican peso. On June&nbsp;24, 2003, the exchange
rate between the Mexican peso and the U.S. dollar expressed in nominal Mexican
pesos per dollar was Ps10.53 = USD1.00.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Year ended December 31,</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Average</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Period end</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1998</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">1999</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2000</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2001</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="54%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Last Six Months</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Between November 1991 and December 1994, the Mexican Central Bank
maintained the exchange rate between the U.S. dollar and the Mexican peso
within a prescribed range through intervention in the foreign exchange market.
The Mexican Central Bank intervened in the foreign exchange market as the
exchange rate reached either the minimum or the maximum of the prescribed range
in order to reduce day-to-day fluctuations in the exchange rate. On December
20, 1994, the Mexican government modified the prescribed range within which the
Mexican peso was permitted to float by increasing the maximum Mexican peso
price of the U.S. dollar by Ps0.53, equivalent to an effective devaluation of
15.3%. On December&nbsp;22, 1994, the Mexican government suspended intervention by
the Mexican Central Bank and allowed the Mexican peso to float freely against
the U.S. dollar. Factors that contributed to this decision included the size of
Mexico&#146;s current account deficit, a decline in the Mexican Central Bank&#146;s
foreign exchange reserves, rising interest rates for other currencies
(especially the U.S. dollar) and reduced confidence in the Mexican economy on
the part of investors due to political uncertainty associated with events in
the state of Chiapas and presidential and congressional elections in that year.
The value of the Mexican peso against the U.S. dollar rapidly declined by 42.9%
from December&nbsp;19, 1994 to December&nbsp;31, 1994. The Mexican government has since
allowed the Mexican peso to float freely against the U.S. dollar.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, the Mexican economy has suffered balance of payment deficits
and shortages in foreign exchange reserves. While the Mexican government does
not currently restrict the ability of Mexican or foreign persons or entities to
convert Mexican pesos to U.S. dollars and the terms of the NAFTA, to which
Mexico is a signatory, generally prohibit exchange controls, no assurance can
be given that the Mexican government will not institute a restrictive exchange
control policy in the future.
</FONT>
<P align="center"><FONT size="2">14</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "Item 4. Information on the Company" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="left"><FONT size="2"><B>Item&nbsp;4. </B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>Information on the Company</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Tamsa</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Introduction</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is the sole Mexican producer and a leading global producer of
seamless steel pipe products, including casing, tubing, line pipe and various
other mechanical and structural seamless pipes for different uses.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa was incorporated in 1952 for a period of 90&nbsp;years as a corporation
(<I>Sociedad An&#243;nima</I>) under the laws of Mexico and commenced operations in 1954 as
the sole producer and supplier in Mexico of various types of seamless steel
pipe. On April&nbsp;30, 1997, the bylaws were amended to extend the duration of the
corporation for an additional 90&nbsp;years. Tamsa&#146;s ordinary stock has been listed
on the Mexican Stock Exchange since 1953, and its ADSs have been listed on the
American Stock Exchange, or AMEX, since 1967. Until December&nbsp;13, 2002, the
principal trading market for Tamsa&#146;s shares was the Mexican Stock Exchange.
Although Tamsa&#146;s shares continue to be listed on the Mexican Stock Exchange,
following the announcement of the results of the exchange offer by Tenaris,
described below, there have been no transactions with respect to the Tamsa
shares on the Mexican Stock Exchange. Its corporate offices are located at
Edificio Parque Reforma, Campos El&#237;seos 400, Piso 17, 11560 M&#233;xico, D.F.,
M&#233;xico, and its registered headquarters and principal industrial facility are
located at Km. 433.7 Carretera, M&#233;xico-Jalapa-Veracruz, Veracruz, M&#233;xico.
Tamsa&#146;s agent in the United States is Alfredo Berisso, whose office is located
at 420 Fifth Avenue, 18th Floor, New York, New York 10018.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 1993, Siderca acquired a substantial interest in Tamsa. Siderca
has increased its interest in Tamsa since this initial acquisition. Beginning
in 1996, Tamsa, Siderca and Dalmine formed a strategic alliance, known as DST,
in an effort to enhance the ability and competitiveness of each company in an
increasingly global industry. Subsequently, Siderca acquired controlling
interests in Confab Industrial, S.A., or Confab, NKKTUBES K.K., or NKKTubes,
and Algoma Tubes Inc., or AlgomaTubes, and Tamsa acquired a controlling
interest in Tavsa. With this expanded network of steel pipe manufacturing
facilities, Tamsa, Siderca and Dalmine extended the DST concept and unified
their commercial strategy by launching, in May 2001, the Tenaris brand.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Siderca&#146;s controlling shareholder then entered into various corporate
reorganization transactions which resulted in Tenaris S.A., a recently
incorporated Luxembourg company, as of October&nbsp;18, 2002, holding, directly or
indirectly, approximately 50.77% of Tamsa&#146;s outstanding capital stock. On
November&nbsp;11, 2002, Tenaris launched an exchange offer for all the outstanding
shares and ADSs of Tamsa that it did not already own. After consummation of
that exchange offer on December&nbsp;17, 2002, Tenaris held, directly or indirectly,
94.50% of Tamsa&#146;s outstanding capital stock. On April&nbsp;30, 2003, Tamsa
cancelled 3,650,000 shares of Tamsa held by its subsidiary Tamsider and, as a
result, Tenaris&#146;s ownership of Tamsa&#146;s outstanding capital stock was reduced to
94.44%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;31, 2003, Tenaris announced that it intends to cause the
delisting of Tamsa from the Mexican Stock Exchange and the American Stock
Exchange, the termination of Tamsa&#146;s ADR facility and, if and when appropriate,
the termination of Tamsa&#146;s registration with the SEC. Following its delisting
from the Mexican Stock Exchange, Tamsa will no longer be required to have
independent directors and is expected not to have any independent directors in
the future. Tenaris also announced that, subject to the approvals of the U.S.
and Mexican securities regulators, it intends to effect an exchange of its
shares and ADSs for any Tamsa shares and ADSs not held by Tenaris or its
affiliates in accordance with Mexican and U.S. laws. Tenaris stated that it did
not expect to obtain the requisite approvals, and consequently be in a position
to propose any exchange of shares and ADSs, prior to June 2003. On April&nbsp;30,
2003, Tamsa&#146;s shareholders&#146; meeting gave the requisite approvals to effect such
exchange.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Products</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s principal finished products are oil country tubular goods, or
OCTG. It also produces seamless steel line pipe and various other mechanical
and structural seamless pipes for different uses. Tamsa manufactures most of
its products in a wide range of specifications, which vary in width, length,
thickness, finishings and grades.
</FONT>
<P align="center"><FONT size="2">15</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Seamless steel casing</I>. Seamless steel casing is used to sustain the walls
of oil and gas wells during and after drilling.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Seamless steel tubing</I>. Seamless steel tubing is used to extract crude oil
and natural gas after drilling has been completed.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Seamless steel line pipe</I>. Seamless steel line pipe is used to transport
crude oil and natural gas from wells to refineries, storage tanks and loading
and distribution centers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Seamless steel mechanical and structural pipes</I>. Seamless steel mechanical
and structural pipes are used by the general industry for various applications,
including the transportation of other forms of gas and liquids under high
pressure.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cold-drawn pipe</I>. The cold-drawing process permits the production of pipe
with the diameter and wall thickness required for use in boilers, superheaters,
condensers, heat exchangers, automobile production and several other industrial
applications.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Weldable pipe fittings. </I>Weldable pipe fittings are used to connect pipes
that transport water, vapor, petrochemicals, chemicals, natural gas and other
gases and liquids for various applications, including heating systems,
plumbing, air conditioning and irrigation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows Tamsa&#146;s installed production capacity by product
at the dates indicated as well as actual production for the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>At or for the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(thousands of tons)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Steel ingots and bars
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">
<I>Installed Capacity</I><SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2"><I>Actual Production</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">743</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">779</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Seamless steel pipe
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2">
<I>Installed Capacity</I><SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2"><I>Actual Production</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Installed capacity may exceed effective capacity. The installed
capacities referred to in this table exceed Tamsa&#146;s estimates of its
effective production capacity under present conditions.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Production Process and Facilities</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Veracruz Facility</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s integrated manufacturing facility is located near Pemex&#146;s major
exploration and drilling operations, about thirteen kilometers from the port of
Veracruz. Veracruz is located on the east coast of Mexico, approximately 400
kilometers from Mexico City. Tamsa owns substantially all of the properties at
its manufacturing plants and such plants are not subject to any encumbrances.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Situated on an area of 200 hectares, the plant includes a state-of-the-art
seamless pipe mill and has an installed annual production capacity of 780,000
tons of seamless steel pipes (with an outside diameter range of 2 to 20 inches)
and 850,000 tons of steel bars. The plant is served by two highways and a
railroad and is close to the port of Veracruz, allowing Tamsa to reduce
transportation costs and facilitate the shipment to export markets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Veracruz facility comprises:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a steel shop, including an electric arc furnace, refining
equipment, four-strand continuous caster and a cooling bed;</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">16</FONT>




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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a multi-stand pipe mill, including a continuous mandrel mill, rotary
furnace, direct piercing equipment and a cooling bed;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a pilger pipe mill, including a rotary furnace, direct piercing equipment, a reheating furnace and a cooling bed;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">six finishing lines, including heat treatment facilities, upsetting machines and threading and inspection equipment;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a stretch reducing mill, including cutting saws and a cooling bed;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a cold-drawn mill; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">automotive components production machinery.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Monterrey Facility</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2001, Tamsa broadened its product range with the acquisition in
June 2001 of Riga. Riga is a Mexican company engaged in the manufacture of
weldable pipe fittings. The company was created in 1989, and its production
facility is located within a total surface of 120,000 square meters in the
municipality of Ci&#233;nega de Flores, Nuevo Le&#243;n, approximately 200 kilometers
south of Laredo, Texas. The plant, which is served by a major highway, has
received the ISO 9002 certification. Riga&#146;s products, which are certified by
Pemex and other key clients, complement Tamsa&#146;s existing line of pipe
accessories. Riga currently sells its products domestically and exports to
North America, South America and Europe.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tavsa</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operations at Tavsa were restarted during the first quarter of 1999. Tamsa
began to consolidate Tavsa&#146;s results in the first quarter of 1999. Tavsa&#146;s
sales volume totaled 9,630 tons in 1999, 38,905 tons in 2000 and
41,658 tons in
2001. The increase in Tavsa&#146;s sales volume subsequent to 1999 reflects the
expansion of production capacity completed in the second half of 2000. Tavsa&#146;s
sales volume decreased to 21,188 tons in 2002, as a result of economic and
political events in Venezuela. For discussion, see &#147;&#151;Investments in Other
Companies&#151;Tavsa&#148; and Item&nbsp;3.D &#147;Risk Factors&#151;Risks Relating to Mexico and
Venezuela.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tavsa has a seamless steel pipe plant in Venezuela, located within the
Sidor manufacturing complex on the banks of the Orinoco river in the eastern
part of the country. Situated on an area of 38 hectares, the plant includes a
pilger mill and finishing line (including threading facilities) and produces
seamless pipe products with an outside diameter range of 6 to 16 inches. The
plant was operated as part of Sidor until shortly before it was privatized and
sold to Tamsa in 1998. After conclusion of a modernization program in 2000,
Tavsa reached an annual installed production capacity of 65,000 tons. Steel
bars used to produce seamless steel pipe in Venezuela are supplied by Sidor.
For discussion of risks associated with Sidor, see &#147;&#151;Investments in Other
Companies&#151;Amazonia&#148; and Item&nbsp;3.D &#147;Risk Factors&#151;Risks Relating to Our Business.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows Tavsa&#146;s installed production capacity by product
at the dates indicated as well as actual production for the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>At or for the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(thousands of tons)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Seamless steel pipe</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2"><I>Installed
Capacity</I><SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:20px; text-indent:-10px"><FONT size="2"><I>Actual Production</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Installed capacity may exceed effective capacity. The installed
capacities referred to in this table exceed Tamsa&#146;s estimates of Tavsa&#146;s
effective production capacity under present conditions.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">17</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The major operational units at Tamsa&#146;s facilities and corresponding
installed production capacity (in thousands of tons per year, except for
Tamsa&#146;s auto components facility, which is in millions of parts) as of December
31, 2002 and the year operations commenced are as follows:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="78%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Installed</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Year</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Production</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Operations</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Capacity</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Commenced</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Pilger Mill (Veracruz)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1954</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Multi-Stand Pipe Mill (Veracruz)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Steel Shop (Veracruz)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cold-Drawn Mill (Veracruz)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Auto Components Facility (Veracruz)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weldable pipe fittings facility (Monterrey)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Tavsa (Venezuela)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1999</FONT></TD>
    <TD nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Operations at Riga commenced in 1989. Tamsa acquired Riga in June 2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Operations at Tavsa commenced in 1997. Operations were restarted and
Tamsa began to consolidate Tavsa&#146;s results in the first quarter of 1999.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Warehouse Facilities and Sales Offices</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s warehouse facilities are located in Dos Bocas, in the State of
Tabasco, Poza Rica in the State of Veracruz and Reynosa in the State of
Tamaulipas. Additionally, Tamsa has sales and technical offices in Ciudad del
Carmen, in the State of Campeche, Villahermosa and Comalcalco in the State of
Tabasco, Monterrey in the State of Nuevo Le&#243;n and Guadalajara in the State of
Jalisco.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Sales and Marketing</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows Tamsa&#146;s total sales volume by product and market
for the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(tons)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Domestic pipe sales (Mexico)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">138,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export sales and Tavsa</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">510,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">575,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">498,696</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other products and Riga</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">685,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">732,945</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">679,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">18</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows Tamsa&#146;s total revenues by product and market for
the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>(thousands of constant December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Mexican pesos)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Domestic pipe sales (Mexico)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,066,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,944,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,320,882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export sales and Tavsa</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,375,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,645,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,919,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other products and Riga</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">286,535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">308,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">222,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,728,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,899,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,463,007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Domestic Market</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican market accounted for 22.6% of Tamsa&#146;s total sales volume for
2002, 19.0% in 2001 and 24.6% in 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since 1954, Tamsa has enjoyed a long and mutually beneficial relationship
with Pemex, one of the world&#146;s largest crude oil and condensates producers.
Pemex is Tamsa&#146;s single largest customer in Mexico. Combined sales to Pemex and
drilling companies contracted by Pemex represented 14.8% of total sales volume
in 2002, compared to 11.3% in 2001 and 11.2% in 2000. Fluctuations in oil
prices have an important impact on Tamsa&#146;s domestic and export sales volume.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 1994, Tamsa signed a just-in-time, or JIT, agreement with Pemex to
provide comprehensive inventory management services on a continuous basis. The
JIT agreement provides for just-in-time delivery of pipe from Tamsa to Pemex
within 72 hours. Under the JIT agreement, Tamsa is kept informed of Pemex&#146;s
drilling program and pipe requirements, and a team of engineers from Tamsa
works closely with Pemex to plan and design the well sites. In addition, Tamsa
is permitted to bring its engineers to Pemex drilling locations in order to
maintain adequately supplied warehouse inventories in its custom-designed
facilities in the towns of Dos Bocas, Reynosa and Poza Rica. Tamsa also
maintains technical representative offices in Villahermosa, Poza Rica, Reynosa
and Ciudad del Carmen where Pemex&#146;s main offices are located. Tamsa believes
that the JIT agreement minimizes Pemex&#146;s inventory operation and maintenance
costs while strengthening Tamsa&#146;s position as a first-line supplier.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 1998, Tamsa and Pemex signed a three-year extension to the JIT
agreement. This extension expanded the JIT agreement to include additional
field services designed to assure product performance for Pemex. In addition to
threading and torque inspections, Tamsa technicians began offering pipe
inspections and re-certification of used pipe at the storage yards and
continued providing supervision services to Pemex&#146;s offshore drilling sites. On
March&nbsp;23, 2001, Tamsa renewed its relationship with Pemex under a new JIT
agreement with a three-year term and other terms similar to those described
above. As of December&nbsp;31, 2002, 60 Tamsa employees directly support Pemex&#146;s
drilling program.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales to Tamsa&#146;s domestic non-oil related customers are made directly to
such customers or through Tamsa&#146;s authorized distributors. The principal
Mexican end users other than Pemex (including drilling companies contracted by
Pemex) rely on Tamsa&#146;s products primarily for automotive, thermal, mechanical,
conduction and hydraulic uses. Non-oil related sales to these customers totaled
53,633 tons (or 7.8% of total sales volume) in 2002, 56,179 tons (or 7.7% of
total sales volume) in 2001 and 90,896 tons (or 13.4% of total sales volume) in
2000. The decrease in the percentage of non-oil related customers to total
sales in 2001 and 2002, compared to previous years, was primarily due to the
effect of the slowdown in the North American economies as well as to a
significant increase in imports from Eastern Europe at dumping prices. These
figures reflect the direct relationship the North American market maintains
with the Mexican economy, which experienced a general slowdown in 2001 that
adversely affected the industrial and construction sectors. A significant
portion of Tamsa&#146;s non-oil related sales are
</FONT>
<P align="center"><FONT size="2">19</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P align="left"><FONT size="2">made in connection with significant projects to revamp Pemex&#146;s oil refineries,
including facilities in Cadereyta, Madero, Tula and Salamanca for which Tamsa
signed supply contracts. In total, Tamsa shipped approximately 23,000 tons for
Pemex refinery projects in 2000, 6,000 tons in 2001 and 1,650 tons in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the last several years, Tamsa continued to focus on improved delivery
times and customer service. Tamsa intensified its marketing efforts to non-oil
related customers, aimed at the development of new niches. In addition, Tamsa
re-staffed the regional sales and services offices to support its distribution
network and provide its customers with customized products and services. Tamsa
believes that its sales to non-oil related customers were aided by special
programs developed over the past few years to support its distribution network,
the re-commencement of operations at its cold-drawn mill and the know-how
provided by Dalmine in the mechanical pipe market. In order to take advantage
of potential growth opportunities in the automotive sector, Tamsa has signed
supply agreements with various auto-parts manufacturers. Despite lower sales of
these products as a consequence of the slowdown in the U.S. economy, in 2001
Tamsa invested approximately USD1.2&nbsp;million in a facility for the production of
automotive components, which began operations in late 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Export Market</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The export market accounted for 71.4% of Tamsa&#146;s total sales volume in
2002, compared to 72.8% in 2001. Tamsa exports to more than 60 countries
worldwide. The following table shows the market distribution of Tamsa&#146;s exports
as a percentage of total export sales volume for the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" valign="top" colspan="11"><FONT size="1"><B>(percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">North America</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Latin America</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Africa</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Europe</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Middle East</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Far East and Oceania</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s export sales are highly sensitive to the price of oil and gas and
the impact of fluctuations in those prices on the drilling activity of
international oil and gas companies. During 2000 and 2001, demand for Tamsa&#146;s
products increased due to a recovery in oil prices during those years from the
prices that prevailed in 1998 and 1999 and due to the consequent increase in
major oil and gas companies&#146; spending budgets and drilling programs. Average
rigs in operation worldwide rose to 2,231 in 2001 from 1,900 in 2000. Total
exports for 2001 amounted to 533,471 tons, an increase of 16% compared to 2000.
Total exports for 2002 amounted to 488,986 tons, a decrease of 8.3% compared
to 2001. This decrease was principally due to lower international drilling
activity in Latin America (mainly in Venezuela) Europe and Canada, partially
offset by higher sales in the Middle East and Africa due to increased drilling
activity in those regions. Average rigs in operation worldwide fell to
approximately 1,800 in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Venezuela, Tamsa, through its consolidated subsidiary Tavsa, has a
significant share of the market for OCTG products. Tamsa enjoys ongoing
business relationships with PDVSA and a number of private-sector operators in
the oil and gas sector. In 2001 and 2002, OPEC production quota cutbacks and
adverse political and economic developments led to a substantial decline in
exploration and production activity in the oil and gas sector. Additionally,
PDVSA decided to implement a significant reduction in its inventories of
seamless pipes. These factors led to a substantial decline in Tamsa&#146;s sales of
seamless pipes in 2002 compared to the previous year, and in January 2003
Tamsa&#146;s sales of seamless pipes to PDVSA effectively came to a halt following
politically motivated strike action involving the state-owned company. Sales
have, however, subsequently resumed and are slowly increasing. Sales in the
Venezuelan market are sensitive to the international price of oil and gas and
its impact on the drilling activity of participants in the Venezuelan oil and
gas sectors, as well as to general economic conditions in that country. Sales
in Venezuela are also affected by government actions and policies and their
consequences, including recent politically motivated strike actions at PDVSA,
agreements to vary domestic production pursuant to quotas established by OPEC,
measures relating to the taxation of oil and gas production activities and
other matters affecting the investment climate. See Item&nbsp;3.D. &#147;Risk
Factors&#151;Risks Relating to Mexico and Venezuela.&#148;
</FONT>
<P align="center"><FONT size="2">20</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa believes it has established a worldwide reputation for producing
high-quality, value-added pipe products. Tamsa&#146;s strategy in the export markets
has been to apply the service-oriented philosophy it developed with Pemex to
its international customers, providing them with a full range of value-added
products and services, establishing comprehensive supply agreements and working
closely with its international customers to develop tailor-made pipes to meet
their unique drilling needs. In the last several years, Tamsa continued to
increase its production of custom-made pipe products for domestic and
international customers. New products introduced included premium joints
developed specifically for major oil companies as well as new specialized line
pipe for applications such as offshore and sour corrosion service.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Trends in Oil and Gas Prices</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As discussed above, sales to oil and gas companies worldwide represent a
high percentage of Tamsa&#146;s total sales, and demand for seamless steel pipes
from the global oil and gas industry is a significant factor affecting the
general level of prices for our products. Downward pressures on oil and gas
prices in the international markets usually result in lower demand for our
seamless steel pipe products from our oil and gas customers and, in some
circumstances, upward pressures can result in higher demand from these
customers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Major oil and gas producing nations and companies frequently collaborate
to control the supply (and thus the price) of oil in the international markets.
A major vehicle for this collaboration is OPEC. Many of Tamsa&#146;s important
customers are state-owned companies in member countries of OPEC or otherwise
cooperate with OPEC in controlling the supply and price of oil.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In response to depressed oil prices in 1998, major oil-producing countries
began to cooperate closely and intensely to raise prices. In March 1998,
Mexico, Venezuela and Saudi Arabia, encouraged by proposals of other oil
producers to strengthen world oil markets, announced that they would reduce the
oil supply. A second reduction was agreed upon in June 1998. In March 1999,
OPEC and several non-OPEC oil producers ratified an agreement to cut crude oil
production by 2,104,000 barrels per day in the aggregate. Oil prices increased
significantly as a result of these production cuts. Subsequently, oil-consuming
nations began to pressure OPEC to raise production to ease the upward pressure
on oil prices. In April 2000, OPEC (excluding Iran) announced an increase in
production by 1,452,000 barrels per day. This was followed by additional
increases of 708,000 barrels per day in June 2000, 800,000 barrels per day in
September 2000 and 500,000 barrels per day in October 2000. In 2001, in
response to weakening price pressures, OPEC (excluding Iran) announced a
reduction in production of 1,500,000 barrels per day, effective February&nbsp;1,
2001; of 1,000,000 barrels per day, effective April&nbsp;1, 2001; of 1,000,000
barrels a day, effective September&nbsp;1, 2001; and of 1,500,000 barrels a day,
effective January&nbsp;1, 2002. More recently, in response to supply tightness
resulting from the threat of military action against Iraq and strike action in
Venezuela, OPEC announced an increase of 1,300,000 barrels per day, effective
January&nbsp;1, 2003, an increase of 1,500,000 barrels per day, effective February
1, 2003 and a further increase of 900,000 barrels per day, effective June&nbsp;1,
2003. Tamsa is unable to forecast the direction of international oil and gas
prices in the future, and the consequent impact on investment programs and
purchases, including pipe purchases, by our oil and gas customers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the second half of November 2001, production at Tavsa decreased due
to production cuts by OPEC members in order to stabilize oil prices. These cuts
in production continued during 2002, which precipitated a slowdown in
exploration and production activities in Venezuela and, consequently, a lower
demand for pipe products by PDVSA. In April 2002, there was a strike of the
managers at PDVSA and, in the beginning of December 2002, a broader strike at
PDVSA that lasted through the first half of January and that reduced oil and
gas production almost completely. Since the end of these strikes, oil
production has subsequently resumed, and PDVSA is now undergoing an
organizational restructuring. For discussion of the risks associated with these
strikes and other events in Venezuela, see Item&nbsp;3.D. &#147;Risk Factors&#151;Risks
Related to Mexico and Venezuela.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Competition</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Domestic Market</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is the only producer of seamless steel pipe in Mexico. Accordingly,
competition in the Mexican market is limited to imported products manufactured
by foreign companies.
</FONT>
<P align="center"><FONT size="2">21</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Competition in the Mexican market has been increasing in recent years, as
the Mexican government has entered into free trade agreements that reduce trade
barriers and gradually eliminate tariffs on steel imports from these countries,
including seamless steel pipes. In December 1992, Mexico became party to NAFTA,
which became effective in January 1994. Under NAFTA, duties on OCTG products
have been reduced from 15% in 1993 to their current level of 0%, since the
beginning of 2003. In 2000, Mexico signed a trade agreement with the EU, as a
result of which EU seamless steel pipe imports have been subject to a 7% duty
since 2002. This duty will be gradually eliminated by 2007.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the NAFTA and EU agreements, the Mexican government has
signed trade agreements with various countries such as Chile, Bolivia,
Nicaragua, Costa Rica and Uruguay. Mexico also participates with Colombia and
Venezuela in the Group of Three, or the G-3. Under the G-3 agreements, duties
on seamless steel pipes are being eliminated by means of a reduction of 1.08%
and 0.72% (depending on the product) per year over a ten-year period beginning
in 1995. Furthermore, under the agreement, there is an acceleration clause
allowing acceleration of the tariff reduction as deemed convenient upon
acceptance by two of the parties. Beginning July&nbsp;1, 2002, the import tariff for
the G-3 was set at 2.1% and 1.4% depending on the product. Presently, Mexican
products exported to Chile are not subject to any import tariff.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 1999, a new tariff of 18% became applicable to seamless
steel pipe from other countries with which Mexico does not have trade
agreements; this increased the previous tariff of 15%, which had been effective
since 1989. The tariff was temporarily increased for some steel products
(including seamless pipes) to 25% in September 2001 and again to 35% in March
2002, and remained at 35% until September 2002, at which point it was reduced
to 25%. The tariff is scheduled to be reduced to 18% in September 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;5, 1993, Tamsa formally requested that the Mexican <I>Secretar&#237;a
de Econom&#237;a</I>, or SECON (formerly SECOFI) initiate an antidumping investigation
into the importation of seamless steel commercial pipes from the United States.
On October&nbsp;11, 1995, SECON published a final determination, which continues to
apply, imposing a tariff of 82.4% on specified seamless steel cold-drawn pipes
from the United States. On May&nbsp;22, 2001, SECON published in the Official
Gazette a resolution revoking the antidumping duties against cold-drawn carbon
steel pipes produced in the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;11, 1999, Tamsa formally requested that SECON initiate an
antidumping investigation into the import of seamless steel line pipes from
Japan. This investigation led to the imposition of preliminary dumping duties
of 99.9% in November 1999, and to definitive duties in the same amount in
November 2000, that continue to apply to these products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa competes in the Venezuelan market as a domestic producer (through
Tavsa) and as a foreign supplier with imported products manufactured by
non-Venezuelan companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Venezuela applies tariffs ranging from 5% to 15% on steel imports,
including seamless steel pipe products, from countries with which it does not
have free trade agreements. In April 2002, the Venezuelan government increased
its standard tariff from 20% to 30%, for a temporary period of four months.
This tariff was subsequently extended on two occasions and is now scheduled to
expire in October 2003. No tariff applies to steel imports from member
countries of the Andean pact or from Chile, and imports from Mexico are subject
to a reduced tariff. As a result of an antidumping investigation, Venezuela
imposed antidumping duties of 87.0% on steel pipe imports from Japan in 1996.
The preliminary determination was confirmed in June 2000 and continues to
apply.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Export Market</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa competes in the export market as a Tenaris company. The export
market for seamless steel pipe products is highly competitive, with the primary
competitive factors being price, quality and service. Seamless steel pipe
products are produced in specialized mills using round steel billets and
ingots, which are produced almost exclusively for seamless steel pipe
applications. Steel companies that manufacture steel sheet and wire rods and
bars and other steel products but do not operate specialized seamless steel
mills are generally not competitors in the market for seamless steel pipe
products, although they often produce welded steel pipes or sell steel sheets
and plates used to produce welded steel pipe.
</FONT>
<P align="center"><FONT size="2">22</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production of seamless steel pipe products that meet the stringent
requirements of major oil and gas companies requires the development of
specialized skills and significant investments in manufacturing facilities. By
contrast, the seamless pipe products for standard applications can be produced
in most seamless pipe mills worldwide and sometimes compete with welded pipe
products for such applications. Welded pipe, however, is not generally
considered a satisfactory substitute for seamless steel pipe in high-pressure
or high-stress applications, which constitute a significant source of the
Tenaris companies&#146; business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa and the other Tenaris companies&#146; principal competitors in the
international seamless steel pipe market can be grouped by regions as described
below.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Japan</I>. Sumitomo Metal Industries Ltd. and Kawasaki Steel in the
aggregate enjoy a significant share of the international market,
having established strong positions in markets in the Far East and
the Middle East. They are internationally recognized for the high
quality of their products and for their supply of high-alloy grade
pipe products. In April 2001, Nippon Steel Corporation, in connection
with ongoing rationalization measures, withdrew from the export
market for seamless steel pipe products and shut down its seamless
steel pipe facility in Yawata, Japan. On September&nbsp;27, 2002, Kawasaki
Steel and NKK, Tenaris&#146;s partner in NKKTubes, consummated a business
combination through which they became subsidiaries of a newly-formed
holding company, known as JFE Holdings, Inc. JFE continues to operate
the former Kawasaki Steel seamless steel pipe business in competition
with NKKTubes.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Western Europe</I>. Vallourec &#038; Mannesman Tubes, or V&#038;M Tubes, a
Franco-German venture, has mills in Brazil, France, Germany and the
United States. V&#038;M Tubes has a strong presence in the European market
for seamless pipes for industrial use and a significant market share
in the international market with customers primarily in Europe, the
United States and the Middle East. V&#038;M Tubes is an important
competitor in the international OCTG market, particularly for
high-value premium joint products. In May 2002, V&#038;M Tubes purchased
the seamless tubes division of North Star Steel, a leading U.S.
producer of OCTG for the domestic market. Tubos Reunidos S.A. of
Spain and Voest Alpine AG of Austria each has a significant presence
in the European market for seamless steel pipes for industrial
applications while the latter also has a presence in the
international OCTG market with sales mostly directed to the United
States and the Commonwealth of Independent States, or CIS.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>United States</I>. U.S. steel producers, including US Steel
Corporation and North Star Steel, are largely focused on supplying
the U.S. market. Some of them, however, periodically enter the
international market in response to decreased domestic demand or
perceived opportunities in the export markets. As mentioned above, in
May 2002 V&#038;M Tubes purchased the seamless tubes division of North
Star Steel.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Eastern Europe, CIS and China</I>. Producers from these regions
compete in the &#147;commodity&#148; sector of the market and have been
increasing their participation in the international market for
standard products where quality and service are not the prime
consideration.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s competitive position in the export markets may be adversely
affected by protective measures adopted by countries where seamless steel pipe
consumers are located. For a description of protective measures applicable to
Tamsa&#146;s products in important export markets, see Item&nbsp;4.A. &#147;Information on the
Company&#151;Tamsa&#151;Litigation.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Capital Expenditure Program</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At Tamsa&#146;s Veracruz facility in Mexico, approximately USD144&nbsp;million was
invested in the capital expenditure program over the last three years with a
focus on automation, production, benchmarking, mill compliance and increased
capacity for value-added products. Tamsa completed improvements in the melt
shop and in the continuous casting process, which involved the installation of
a new vacuum degassing system, a new vibramold oscillator and touch-panel
control systems that monitor each phase of the production process throughout
the entire Veracruz facility. In addition, in the finishing areas, Tamsa
completed improvements for wall thickness assurance and threading and finishing
lines, and added a new hydraulic testing system and a new straightening
machine. Tamsa also expanded and modernized the heat treatment facilities,
raising capacity for heat-treated pipes
</FONT>
<P align="center"><FONT size="2">23</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P align="left"><FONT size="2">by 20% from 375,000 tons per year to 450,000 tons per year, by adding new
furnaces, a quenching head, a straightening machine, a finishing line and
additional floor space to the heat treatment area.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa completed the construction of a 12,000 square meter office complex
and made investments in its auto components facility, which has an annual
production capacity of five million parts. Tamsa continued to make investments
in its environmental compliance program, including investments in a
waste-monitoring system, as well as in an Enterprise Resource Program and the
SAP/R3 in the administration, financing and purchasing departments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditure projects planned for 2003 include enhancement of the
cold-rolling mill and coupling production facilities at the Veracruz facility.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures were Ps184,212 thousand in 2002, Ps851,186 thousand
in 2001 and Ps452,099 thousand in 2000. Maintenance and repair costs associated
with Tamsa&#146;s facilities and equipment amounted to Ps248,740 thousand in 2002,
Ps232,726 thousand in 2001 and Ps212,805 thousand in 2000. Tamsa has budgeted
capital expenditures of Ps277,406 thousand for 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investments in Other Companies</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa derives a portion of its profits and losses from its equity position
in various companies. The following table shows the percentage share of each
company&#146;s capital stock held by Tamsa and the value of each investment at the
dates indicated as well as the profit or loss generated by each investment for
the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>At or for the year ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>except percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Amazonia</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Percentage of Total Capital Stock Held</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.1</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity Value of Investment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">136,433</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">238,233</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">649,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Loss Derived from Investment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(39,906)</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(305,692)</FONT></TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(55,929</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Tavsa</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Percentage of Total Capital Stock Held</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">70.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">70.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">70.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity Value of Investment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">28,770</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">72,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">(Loss) Profit Derived from Investment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(95,728</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(41,594</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Sidtam Limited</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Percentage of Total Capital Stock Held</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">49.0</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity Value of Investment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">172,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">161,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">176,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit Derived from Investment</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><I>Other Investments</I></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Historical Cost of Investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">208,965</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">214,663</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">209,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Profit (Loss) Derived from Investments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,762</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes the allowance to reduce the value of Tamsa&#146;s investment in
Amazonia and the subordinated convertible debentures. See note 11 to
Tamsa&#146;s audited consolidated financial statements.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amazonia</I>. In January 1998, Amazonia purchased a 70.0% equity interest in
Sidor from the Venezuelan government, which retained the remaining 30%.
Tamsider held an initial 12.5% equity interest in Amazonia, which increased to
14.1% in March 2000 as a result of additional investments described below. As
of December&nbsp;31, 2002, Tamsider&#146;s equity interest in Amazonia remained at 14.1%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the 2003 restructuring of Sidor and Amazonia&#146;s debt
discussed below, Tamsider is in the process of purchasing a 24.4% equity interest in Ylopa. After the
consummation of the restructuring on June&nbsp;20, 2003, Tamsider capitalized in
Amazonia a convertible subordinated loan made to Amazonia in connection with
the 2000 restructuring described below and, as a result, increased its
participation in Amazonia to a 14.5% equity interest, and Ylopa held new debt
instruments of Amazonia convertible, at Ylopa&#146;s option at any time after June
20, 2005, into a 67.4% equity interest of Amazonia. In addition, the Venezuelan
government&#146;s ownership in Sidor increased to
</FONT>
<P align="center"><FONT size="2">24</FONT>
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<P align="left"><FONT size="2">40.3%, while Amazonia&#146;s beneficial ownership in Sidor decreased to 59.7%. As
part of the June 2003 restructuring, all the Amazonia shares, as well
as all the shares of Sidor held by Amazonia, were placed in
trust with Banesco Banco Universal, as trustee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sidor, located in the city of Guayana in southeast Venezuela, is the
largest integrated steel producer in Venezuela and the sixth largest integrated
steel producer in Latin America, with an installed capacity of more than 3.5
million tons of liquid steel per year. Sidor shipped 2.9&nbsp;million tons of steel
in 2001, and 3.2&nbsp;million tons in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sidor has experienced significant financial losses and other problems
since the acquisition by Amazonia in January 1998, despite a significant
reduction in Sidor&#146;s workforce and management&#146;s efforts to improve the
production process and reduce operating costs. In 1999, due to negative
conditions in the international steel market, a sustained and intensifying
domestic recession in Venezuela, deteriorating conditions in the credit
markets, an increase in the value of the Venezuelan currency relative to the
U.S. dollar and other adverse factors, Sidor and Amazonia incurred substantial
losses and were unable to make payments due under loan agreements with their
respective creditors. In 2000, these loan agreements were restructured. Despite
continued efforts by Sidor&#146;s management to improve technology and optimize
production levels, in late 2001 Sidor and Amazonia were again unable to make
payments due under the restructured loan agreements, following a continuation
and aggravation of the same negative factors described above accompanied by
increased competition from steel imports in Venezuela. As of December&nbsp;31, 2002,
Sidor had approximately USD1.58&nbsp;billion of indebtedness (secured in part by
fixed assets valued at USD827&nbsp;million as determined at the time Sidor&#146;s loans
were restructured in March 2000) and Amazonia had approximately USD313&nbsp;million
of indebtedness.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2000 Restructuring. </I>As a result of the adverse trends discussed above, in
connection with the restructuring concluded in 2000 Tamsider made additional
capital contributions to Amazonia, while recording significant losses in the
value of its investment. In addition to its initial capital contribution of
USD87.8&nbsp;million, Tamsider was required to make capital contributions to
Amazonia in the amount of USD36.1&nbsp;million (of which USD18.1&nbsp;million was an
additional capital contribution and USD18.0&nbsp;million took the form of a
convertible subordinated loan to Amazonia). The value of Tamsider&#146;s investments
(as recorded in our audited consolidated financial statements) has decreased
significantly since 1998, from Ps910,306 thousand as of December&nbsp;31, 1998, to
Ps422,140 thousand as of December&nbsp;31, 1999, Ps649,834 thousand as of December
31, 2000, Ps238,233 thousand as of December&nbsp;31, 2001 and Ps136,433 thousand as
of December&nbsp;31, 2002. Due to Sidor&#146;s financial situation, as described above,
at December&nbsp;31, 2001, Tamsider recorded a valuation allowance in the amount of
Ps154,688 thousand in order to reduce the value of its investment in Amazonia
and the subordinated convertible debentures.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expiration of Performance Bond. </I>The Sidor purchase agreement between
Amazonia and the Venezuelan government required the shareholders of Amazonia,
including Tamsider, to indemnify the government for breaches by Amazonia of the
Sidor purchase agreement up to a maximum amount of USD150&nbsp;million, for five
years from the acquisition. In connection with this indemnity, the shareholders
of Amazonia were required to maintain a performance bond (which Tamsa guaranteed
directly in proportion to its interest in Amazonia) for five years, beginning in 1998, in the amount of USD150&nbsp;million
during the first three years, USD125&nbsp;million in the fourth year and USD75
million in the fifth year. The guarantee expired in January 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2003 Restructuring. </I>On June&nbsp;20, 2003, Sidor, Amazonia and their creditors
(including the Venezuelan government) consummated a restructuring of the Sidor
and Amazonia debt. Under the terms of the restructuring:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Ylopa purchased all of Amazonia&#146;s bank debt and a portion of Sidor&#146;s bank debt for a total amount of USD133.5&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Sidor purchased a portion of its own bank debt for a total amount of USD37.9&nbsp;million;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">the remainder of Sidor&#146;s bank debt was refinanced and the lenders agreed
to the payment by Sidor of lower interest rates and a longer tenor;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Ylopa assigned to Amazonia all of the debt it purchased in exchange for
debt instruments of Amazonia convertible into a 67.4% equity interest in
Amazonia at Ylopa&#146;s option;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">25</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">the Venezuelan government capitalized half of the debt owed to it by
Sidor and consequently increased its equity ownership interest in Sidor to
40.3%;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">the remainder of the debt owed to the Venezuelan government was
refinanced;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">certain agreements entered to in connection with the 2000 restructuring
were terminated and the Amazonia shareholders, including
Tamsider, were released from:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the guarantees they had provided with respect to the principal and a
portion of the interest payable under the loan made to Sidor by the
Venezuelan government;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">their obligations under a certain put agreement that previously
required them to purchase up to USD25&nbsp;million in loans payable by
Amazonia to its private lenders, <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">their obligations under a letter to these lenders contemplating the
possibility of additional capital contributions of up to USD20&nbsp;million
in the event of extreme financial distress of Sidor, <I>and</I></FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">beginning in 2004, but in no event before the first USD11&nbsp;million of
Sidor&#146;s excess cash (determined in accordance with the restructuring
documents) has been applied to repay Sidor&#146;s bank debt, 30% of Sidor&#146;s
distributable excess cash for each year (determined in accordance with the
restructuring documents) will be applied to repay Sidor&#146;s restructured debt, and
any remaining distributable excess cash for such year will be paid as
follows:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">59.7% to Ylopa (until 2012 or such
earlier year in which Ylopa has received an aggregate amount of
USD324&nbsp;million) or Amazonia (after expiration of Ylopa&#146;s
right to receive Sidor&#146;s remaining distributable excess cash),
as the case may be, <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">40.3% to the Venezuelan government.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa, through Tamsider, participated in the 2003 restructuring by making
an aggregate cash contribution (mainly in the form of subordinated convertible
debt) of USD32.9&nbsp;million to Ylopa and by capitalizing in Amazonia convertible
debt previously held by Tamsa in the amount of USD18.0&nbsp;million plus accrued
interest. Tenaris&#146;s indirect participation in Amazonia increased from 14.1% to
14.5% and may further increase up to 21.2% if and when all of its subordinated
convertible debt is converted into equity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following completion of the restructuring between Sidor, Amazonia and
their creditors (including the Venezuelan government), Sidor had approximately
USD791.0&nbsp;million of indebtedness outstanding and Amazonia had no financial
indebtedness outstanding. Sidor&#146;s financial indebtedness was made up of three
tranches, one of USD350.5&nbsp;million to be repaid over 8&nbsp;years with one year of
grace, one of USD26.3&nbsp;million to be repaid over 12&nbsp;years with one year of grace
and the remaining tranche of USD368.6&nbsp;million, to be repaid over 15&nbsp;years with
one year of grace. In addition, Sidor&#146;s commercial indebtedness with certain
Venezuelan government-owned suppliers amounted to USD45.4&nbsp;million, to be repaid
over the next five years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After consummation of the 2003 restructuring, Tamsider continues to bear
the risk of further losses in the equity value of its investment in Amazonia as
well as losses in the equity value of its investment in Ylopa, but none of
Tamsa, Tamsider or Ylopa guarantees the restructured indebtedness of Sidor. The
restructuring agreements contemplate, however, certain continuing obligations
and restrictions, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pledges to the Sidor financial lenders of Sidor and Amazonia
shares, which will remain in effect for two years from the date of the
restructuring so long as no event of default has occurred and is
continuing under Sidor&#146;s refinanced loan agreements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">pledges to the Sidor financial lenders of any future debt of
Amazonia, which will remain in effect until such time as the pledges of
the Amazonia and Sidor shares referred to above are released;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">26</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">negative pledges not to create, incur or suffer to exist a lien
(other than certain permitted liens) over any of the equity or debt of
Amazonia held by, or owed to, the Amazonia shareholders; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">restrictions on the ability to institute or join a proceeding seeking
the liquidation, bankruptcy or reorganization of Amazonia or Sidor.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tavsa</I>. On October&nbsp;9, 1998, Tamsa and the Venezuelan government entered
into a joint venture agreement (<I>convenio de asociaci&#243;n estrat&#233;gica</I>), pursuant
to which Tamsa acquired 70% of Tavsa, a company formed to run the seamless pipe
business formerly part of Sidor, for an initial equity contribution of USD11.7
million. On June&nbsp;29, 2000, Tamsa made an additional cash contribution of USD4.4
million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The facilities of Tavsa are physically located within the Sidor compound
and its operations depend, to a significant extent, on services provided by
Sidor. Tamsa believes that Tavsa&#146;s proximity and access to low-cost materials
and energy, in the form of iron ore, electricity and natural gas, provide an
opportunity for it to become a low-cost producer of seamless steel pipes. In
addition, Tamsa believes that the Tenaris companies&#146; combined marketing,
manufacturing and distribution experience can be favorably applied to Tavsa&#146;s
operations. The acquisition of Tavsa was central to Tamsa&#146;s growth strategy as
it enabled Tamsa to become a local supplier in Venezuela, Tamsa&#146;s largest
export market and the biggest market for OCTG in Latin America. However, any
negative development in Sidor&#146;s operations or a change of control at Sidor
could adversely affect Tavsa&#146;s access to raw materials and, consequently,
negatively impact Tavsa&#146;s operations and financial results.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current facilities of Tavsa include a pilger mill and finishing line.
The Tavsa joint venture agreement provides for the acquisition and installation
of a new multi-stand pipe mill, or MPM. The agreement between Tamsa and the
Venezuelan government contemplates a two-stage modernization and expansion plan
for Tavsa:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The first phase included modernization of current
installations, which increased total capacity from 40,000 tons per
year to 65,000 tons per year as well as improved product quality. In
October 2000, the first phase was completed.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The second phase included the expansion, subject to the
achievement of certain conditions contained in the economic and
financial feasibility studies for the project and the installation
and startup of the MPM and heat treatment and finishing lines. At a
shareholders&#146; meeting held on April&nbsp;11, 2001, the joint venture
partners expressed their view that, due to economic and market
conditions, the second phase did not appear to be feasible, and
granted authority to senior management to cancel the expansion.
Tavsa and the Venezuelan government currently have no plans to go
forward with the second-phase expansion.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to bolster Tamsa&#146;s position in a market where a major state-owned
oil company and a large number of private operators co-exist, Tavsa is
emphasizing an expansion of the range and quality of its products and
broadening the range of services offered. For this purpose Tavsa invested over
USD1.8&nbsp;million in 2002, USD5.2&nbsp;million in 2001 and USD8.4&nbsp;million in 2000.
During 2001, production at the Tavsa facility reached more than 41,000 tons of
seamless steel pipe. In 2002, Tavsa completed its planned investments in its
new finishing line. This has allowed Tavsa to produce more value-added
products, and so diversify its customer base. During 2002, production at the
Tavsa facility declined to approximately 20,000 tons of seamless steel pipe, as
a result of economic and political events in Venezuela. See Item&nbsp;3.D. &#147;Risk
Factors&#151;Risks Relating to Mexico and Venezuela.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sidtam Limited</I>. In November 1997, Tamsa indirectly acquired a 49% interest
in Sidtam Limited, a company controlled by Siderca&#146;s subsidiary, Siderca
International ApS (formerly Siderca Denmark ApS). The purpose of Tamsa&#146;s
investment in Sidtam is to participate in different types of investment
projects including, among others, the purchase of shares of Tamsa&#146;s common
stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sale of CFF</I>. In October 2000, Tamsa sold its equity interest in CFF de
M&#233;xico, S.A. de C.V. On June&nbsp;4, 1996, Tamsa invested USD1.8&nbsp;million in CFF
Inmobiliaria S.A. de C.V., or CFF, representing a 30% interest in CFF&#146;s capital
stock. Tamsa originally intended for this investment and related supply
agreements with CFF to provide a reliable long-term supply of a portion of
Tamsa&#146;s requirements for low-cost shredded scrap. However, CFF has been unable
to supply scrap on a reasonably low-cost basis. Tamsa instituted arbitration
proceedings to
</FONT>
<P align="center"><FONT size="2">27</FONT>
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<P align="left"><FONT size="2">enforce its rights under the supply agreements. As a result of this proceeding
Tamsa obtained a total payment of USD750 thousand, which includes reimbursement
of its investment and legal fees.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Complejo Sider&#250;rgico de Guayana C.A</I>., <I>or Comsigua. </I>During 1995, Tamsa
entered into a shareholders&#146; agreement to acquire a 6.9% equity interest in
Comsigua, a joint venture project with several international companies led by
Kobe Steel Ltd., to design, construct and operate an industrial plant in
Venezuela for the processing of iron oxides into hot briquetted iron, or HBI.
The Comsigua shareholders&#146; agreement was subsequently amended on May&nbsp;24, 1996,
October&nbsp;10, 1996, March&nbsp;27, 1998 and February&nbsp;11, 1999. The plant has reached a
rated design capacity of one million tons per year and cost approximately
USD282.5&nbsp;million. The project has been financed with USD115&nbsp;million in equity,
USD156&nbsp;million in long-term loans provided by commercial banks with the
participation of the International Finance Corporation, or IFC, and the
remainder through subordinated loans by the sponsors. The plant became
operational in August 1998.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s participation in Comsigua&#146;s equity involves a total disbursement
of USD8.0&nbsp;million. Until the project&#146;s &#147;financial completion&#148; (as that term is
defined in the Comsigua shareholders&#146; agreement), the sponsors have agreed to
pay the costs of overruns or related financing shortfalls associated with the
construction and operation of Comsigua and to guarantee repayment of the
long-term loans referenced above in a manner proportional to their
participation in the project. In February and May 2002 and in January 2003,
Tamsa was required to pay, and accordingly paid, an aggregate of USD1.5
million, representing its share of a shortfall of USD14.7&nbsp;million payable by
Comsigua under the IFC loan and additional operating shortfalls of USD5.3
million. Pursuant to the guarantees made by the sponsors in connection with the
financing of the Comsigua project, Tamsa has pledged its shares of Comsigua.
The Comsigua lenders may foreclose on such shares if an event of default
occurs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comsigua&#146;s financial condition has been adversely affected by the
consistently weak international market conditions for HBI since Comsigua&#146;s
start-up in 1998 and, unless market conditions improve substantially, Tamsa may
be required to make additional proportional payments in respect of its
participation in the Comsigua joint venture.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the original equity investments, on December&nbsp;31, 2001
Comsigua&#146;s shareholders contributed USD128.4&nbsp;million through subordinated
loans, of which 66% was provided by the offtakers through the purchase of HBI
above market prices set forth in the offtake contracts. Tamsa&#146;s contribution
through this mechanism has been approximately USD12.6&nbsp;million. See &#147;&#151;Raw
Materials and Energy.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa and the other offtakers are exploring different schemes to share the
responsibilities proportionally among all the sponsors in accordance with their
participation in Comsigua. Nevertheless, it is not possible to predict the
outcome of this matter.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tamdel LLC. </I>Tamdel LLC was created on February&nbsp;9, 2001, and has since
received all investments previously held by Tamsider, with the exception of the
investment in Amazonia.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Riga. </I>On June&nbsp;20, 2001, Tamsa purchased 100% of the outstanding common
stock of Riga for USD6.5&nbsp;million. Riga is engaged in the manufacture of
fittings with a total annual capacity of 15,000 tons. Its manufacturing plant
has received the ISO 9002 certification. This acquisition is consistent with
Tamsa&#146;s strategy of offering a wide range of higher value-added products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Raw Materials and Energy</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa produces steel ingots and bars from a mix of direct reduced iron, or
DRI, pig iron, ferrous scrap and ferroalloys and uses the steel ingots and bars
to produce seamless steel pipe. Tamsa obtains its requirements for ferrous
scrap, pig iron, and ferroalloys in both the domestic and international markets
pursuant to short-term supply arrangements. In addition, as discussed below,
Comsigua has since its inception in 1998 met Tamsa&#146;s requirements for HBI. As
discussed above, Comsigua is a joint venture project in Venezuela to which
Tamsa is a party.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa obtains its supply of DRI and pig iron mainly from foreign
suppliers. During 2000, 2001 and 2002, the percentage of DRI and pig iron used
in the steel shop represented 22%, 21% and 22%, respectively, by weight,
</FONT>
<P align="center"><FONT size="2">28</FONT>
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<P align="left"><FONT size="2">of the total metal requirements, and the percentage of HBI was 15% in 2000, 17%
in 2001 and 18% in 2002. Tamsa obtained the rest of its metal requirements for
2000, 2001 and 2002 from the following principal sources (in percentage of
total metal required):
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">26%, 27% and 28%, respectively, from domestic market scrap mainly in
southeast Mexico and internal recycling, approximately 3% in 2000, 11% in
2001 and 13% in 2002 of which was provided by Tamsa&#146;s own &#147;scrap
collection yard&#148; located at Coatzacoalcos, Veracruz, which started
operations in June 1998; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">36% for each of 2000 and 2001 and 31% for 2002, from imported scrap
mainly from the east coast of the United States, Europe, Russia and
Ukraine and the remaining portion from local market sources.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">Reflecting the effects of a worldwide steel crisis in 2001, the average cost of
Tamsa&#146;s metallic raw materials experienced a 14% decrease in 2001, followed by
a gradual recovery that generated a 9% increase in raw material costs for 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s purchases of raw materials are made pursuant to primarily
short-term supply arrangements. However, to secure a long-term supply of DRI in
hot briquetted form, or HBI, Tamsa entered into an off-take contract with
Comsigua to purchase on a take-and-pay basis 75,000 tons of HBI annually for
twenty years beginning in April 1998 with an option to terminate the contract
at any time after the tenth year upon one year&#146;s notice. Pursuant to this
off-take contract, Tamsa would be required to purchase the HBI at a formula
price reflecting Comsigua&#146;s production costs during the first eight contract
years; thereafter, it would purchase the HBI at a slight discount to market
price. The agreements among the joint venture parties provide that, if during
the eight-year period the average market price is lower than the formula price
paid during such period, Tamsa would be entitled to a reimbursement of the
difference plus interest, payable after the project financing and other
specific credits are repaid. In addition, under the arrangements entered into
with Comsigua&#146;s other shareholders, as described hereunder, Tamsa has the
option to purchase on an annual basis up to a further 80,000 tons of HBI
produced by Comsigua at market prices. Under its off-take contract with
Comsigua, as a result of weak market prices for HBI, Tamsa has paid
higher-than-market prices for its HBI and has accumulated a credit that, at
December&nbsp;31, 2002, amounted to approximately USD12.6&nbsp;million. This credit,
however, is offset by a provision for an equal amount recorded as a result of
Comsigua&#146;s weak financial condition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with Tamsa&#146;s original 6.9% equity interest in the joint
venture company, Tamsa paid USD8.0&nbsp;million and agreed to cover its proportional
share (7.5%) of Comsigua&#146;s cash operating and debt service shortfalls. In
addition, Tamsa pledged its shares in Comsigua and provided a proportional
guarantee in support of the USD156&nbsp;million (USD88.5&nbsp;million outstanding as of
December&nbsp;31, 2002) project financing loan made by the International Finance
Corporation, or IFC, to Comsigua. In February and May 2002 and in January 2003,
Tamsa was required to pay, and accordingly paid, an aggregate of USD1.5
million, representing its share of a shortfall of USD14.7&nbsp;million payable by
Comsigua under the IFC loan and additional operating shortfalls of USD5.3
million. Comsigua&#146;s financial condition has been adversely affected by the
consistently weak international market conditions for HBI since its start-up in
1998 and, unless market conditions improve substantially, Tamsa may be required
to make additional proportional payments in respect of its participation in the
Comsigua joint venture and continue to pay higher-than-market prices for its
HBI pursuant to its off-take contract.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, on May&nbsp;24, 1996, Tamsa signed a twenty-year HBI repurchase
off-take contract with Kobe Steel Ltd. giving Tamsa an option to purchase at
market price up to 40,000 tons per year of the HBI which Kobe Steel Ltd. has
committed to purchase from Comsigua and a letter of intent dated May&nbsp;18, 1998
whereby Kobe Steel Ltd. undertakes to secure for Tamsa, directly or indirectly,
an additional 40,000 tons of HBI on the same economic and delivery conditions
as the HBI repurchase off-take contract, giving Tamsa the option to purchase a
total of up to 80,000 tons. Tamsa&#146;s rights and obligations under the HBI
repurchase off-take contract were subsequently assigned to Marubeni Corporation
and concurrently Marubeni and Tamsa entered into an HBI Basic Sales Contract
for a total of 80,000 tons, 40,000 of which are derived from of the assigned
HBI repurchase off-take contract and 40,000 from the letter of intent (with
Marubeni acting as the indirect supplier). In 2002, Comsigua supplied 46% and
Marubeni supplied 54% of Tamsa&#146;s total purchases of HBI.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa consumes large quantities of electric power, particularly in
operating the electric furnaces used to produce steel. This electric power is
furnished by the Mexican government-owned Federal Electric Power
</FONT>
<P align="center"><FONT size="2">29</FONT>
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<P align="left"><FONT size="2">Commission (<I>Comisi&#243;n Federal de Electricidad</I>). Tamsa&#146;s cost of electric power
in Mexico increased by approximately 4% in 2001 and 1.4% in 2002. This increase
is primarily due to higher electric power rates resulting from higher fuel
prices and the appreciation of the Mexican peso.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Tamsa purchases from Pemex, at prevailing international
prices, natural gas used for the furnaces that reheat steel ingots in the
pipemaking process. Natural gas costs increased approximately 21% in 2001, and
due to the hedging strategy described below, natural gas costs decreased 19% in
2002. Tamsa estimates that approximately 17% and 16% of its production costs
in 2001 and 2002, respectively, were spent on electricity, oxygen and natural
gas. Tamsa obtains all of its water requirements from wells at the plant sites.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;22, 2001, Tamsa signed a three-year agreement with Pemex for
the supply of 296,600&nbsp;million British Thermal Units, or BTUs, of natural gas
on a monthly basis from January&nbsp;1, 2001, to December&nbsp;31, 2003, at a fixed price
of USD4.00 per million BTUs. In order to cover a decrease in natural gas
prices, on March&nbsp;2, 2001, Tamsa entered into a forward contract with Enron
North America Corp., or Enron, with the option to sell up to 200,000&nbsp;million
BTUs per month of natural gas at a minimum base price of USD4.05 per million
BTUs from March 2002, through December 2003. As a result of Enron&#146;s bankruptcy
in late 2001, no reasonable prospect existed of exercising Tamsa&#146;s option under
this contract and, consequently, the premium paid to Enron of USD2.3&nbsp;million
for this put option was written off during the fourth quarter of 2001. In order
to reduce its exposure to above-market prices under the natural gas supply
agreement with Pemex, Tamsa entered into two option contracts with Citibank,
N.A., New York, or Citibank, and JPMorgan Chase Bank, or JPMorgan Chase in
March 2002 and April 2002. The two option contracts consist in to swap the
fixed price from US$4.00 per million BTUs established in the contract to the
market price, to sell 160,000&nbsp;million BTUs of natural gas monthly for each
contract, at a strike price of US$4.00 per million BTUs when market prices of
natural gas are not lower than US$2.00 and not higher than US$4.0 per million
BTUs, for the period from May&nbsp;1, 2002 to February&nbsp;28, 2003; likewise, for the
period from March&nbsp;1, to December&nbsp;31, 2003, the strike price is US$4.00 per
million BTUs when market prices of natural gas are not lower than US$2.25 and
not higher than US$4.00 per million BTUs. Likewise, the Company is obligated to
sell natural gas at US$4.00 when market prices are higher than US$4.00 for the
period from May&nbsp;1, 2002 to December&nbsp;31, 2003. Additionally, the Company is
obligated to buy 320,000&nbsp;million BTUs of natural gas monthly at a base price of
US$2.765 per million BTUs, for the period from January&nbsp;1, 2004 to December&nbsp;31,
2005.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Employees</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, Tamsa and its consolidated subsidiaries had 2,664
employees, including temporary workers, of whom approximately 1,650 were
production, quality assurance and maintenance personnel. Approximately 1,280
employees are represented by a local affiliate of the Mexican Confederation of
Workers, or MCW, the principal labor union in Mexico, with which Tamsa has had
collective bargaining agreements since 1953.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wages and benefits for unionized employees are fixed by contracts covering
a one-year period beginning May 1 of each year. Negotiations with the MCW in
2001, 2002 and 2003 resulted in wage increases of 10%, 6% and 4.8%,
respectively. On December&nbsp;31, 2002, Tamsa determined a statutory profit sharing
liability of Ps138,583 thousand for fiscal year 2002 that was paid in May 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa believes that it enjoys satisfactory relations with its employees
and the MCW in Mexico. Our ability to adapt to changing market conditions in
1998 and 1999 was made possible by the implementation of temporary shutdowns,
which allowed for the adjustment of production levels to market demand while
maintaining efficiency and operating margins. The technical suspensions, which
are contemplated by Mexican labor law, were endorsed by the MCW.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Product Quality Standards</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s seamless steel pipes are manufactured in accordance with the
specifications of the American Petroleum Institute and the American Society for
Testing and Materials. The products must also satisfy the proprietary standards
of Tamsa as well as the requirements of customers. Tamsa maintains an extensive
quality control program to ensure that its products continue to satisfy
proprietary and industry standards and are competitive from a product quality
standpoint with products offered by its competitors. In May 1994, Tamsa
received ISO 9001 certification from Lloyd&#146;s Register Quality Assurance
Limited, a requirement for selling to the major oil companies,
</FONT>
<P align="center"><FONT size="2">30</FONT>
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<P align="left"><FONT size="2">which have rigorous quality standards. In October 1994, Tamsa was one of the
first companies to obtain the newest version of the ISO 9001 certification. The
ISO 9001 quality management system assures that the product complies with
customer requirements from the acquisition of raw material to the delivery of
the final product. ISO 9001 is designed to ensure the reliability of both the
product and the processes associated with the manufacturing operation. In 2000,
this certification was renewed for an additional three-year period ending in
May 2003. Moreover, on October&nbsp;30, 1996, Tamsa&#146;s cold-drawn mill received the
ISO 9001 certification from Lloyd&#146;s Register Quality Assurance Limited. In
1998, this mill received the ISO 9002/QS 9000 certification for mechanical and
automotive industry related pipes that was renewed in 1999. In March 2003 Tamsa
was audited by the same certification company in accordance with the new
requirements of ISO 9001:2000 version with the result that our cold-drawn mill
will be certified in accordance with this new ISO standard.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa continues to train personnel and use advanced equipment in its
ongoing effort to improve quality. It has also introduced statistical controls
at various stages of the production process. In addition to Tamsa&#146;s own
inspection systems, a representative of the buyer often verifies the quality of
the finished products at Tamsa&#146;s facilities before shipment. Accordingly,
claims other than those for damage incurred during shipping are rare. Rejection
rates upon customer inspection at no time exceeded 0.13% during 2001 or 0.11%
during 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa continues to invest in new technology to improve process control and
products quality, and at the same time important activity is performed in
product development and research to improve performance of existing products
and to develop tailor made products for specific customer needs. Tamsa&#146;s
facility is a leading mill where are manufactured products with very stringent
requirements for deep and ultra deep water applications mainly for the Gulf of
M&#233;xico - USA.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Research and Development</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development, or R&#038;D, of new products and processes to meet
the increasingly stringent requirements of their customers is an important
aspect of the Tenaris companies&#146; business. Tamsa&#146;s R&#038;D activities are
coordinated through the Tenaris companies by Siderca, which coordinates and
allocates R&#038;D activities among the Tenaris companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Tenaris companies allocate R&#038;D activities among themselves in order to
achieve greater efficiencies and better access to each member&#146;s particular
strengths. Tamsa is responsible for the development of line pipe products,
while Siderca retains responsibility for the development of OCTG products and
Dalmine for the development of mechanical pipe products. The costs of R&#038;D are
allocated among the three companies in accordance with the cost contribution
agreement among them. See Item&nbsp;4.B. &#147;Information on the
Company&#151;Tenaris&#151;Arrangements Underlying Tenaris.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;R&#038;D activities are carried out primarily at Tamsa&#146;s plant in Veracruz, at
research facilities located in Campana, operated by the <I>Fundaci&#243;n para el
Desarrollo Tecnol&#243;gico </I>and at the research facilities of the Centro Sviluppo
Materiali S.p.A. in Rome.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product development and research currently being undertaken by the Tenaris companies includes development of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">proprietary premium joint products;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">high collapse deep water line pipe;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">high strength mechanical tubing; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">internal metallic coating of tubing by plasma powder welding.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to R&#038;D aimed at new products, the Tenaris companies
continuously study opportunities to optimize their manufacturing processes.
Recent projects in this area include ongoing studies for the addition of
electromagnetic stirring to continuous casting with the goal of improving
product quality and range.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa spent Ps57,376 thousand for R&#038;D in 2002, compared to Ps17,782
thousand in 2001 and Ps23,778 thousand in 2000.
</FONT>
<P align="center"><FONT size="2">31</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Environmental</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is subject to a wide range of city, state and federal laws,
regulations, permits and decrees in Mexico concerning, among other things,
human health, discharges to the air and water and the handling and disposal of
solid and hazardous wastes. Compliance with environmental laws and regulations
is a significant factor in Tamsa&#146;s business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa has not been fined for any environmental violation in the last five
years, and is not aware of any current material legal or administrative
proceedings pending against it with respect to environmental matters which
could have an adverse material impact on its financial condition or results of
operations. Tamsa has not been required or requested, nor is it aware of any
obligation, to conduct remedial activities at any of its sites or facilities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1991, Tamsa initiated a series of studies regarding the effects of its
industrial operations on the environment. In early 1992, Tamsa began projects
to implement the recommendations of these studies and to maintain compliance
with the latest laws and regulations of the <I>Secretar&#237;a de Medio Ambiente y
Recursos Naturales</I>, the Mexican environmental regulatory agency more commonly
known as the SEMARNAT (formerly <I>Secretar&#237;a del Medio Ambiente, Recursos
Naturales y Pesca</I>, or SEMARNAP), regarding air, water and soil pollution
control. In 1994, Tamsa requested a voluntary review of its facilities by the
SEMARNAT. In 1995, Tamsa entered into an agreement with the SEMARNAT pursuant
to which it agreed to conduct periodic internal audits and undertake a number
of environmental improvements. The review concluded that Tamsa was in
compliance with all but two defined environmental targets. Tamsa, in
cooperation with the SEMARNAT, is working towards meeting the two outstanding
targets, which relate to levels of dust generated by Tamsa&#146;s manufacturing
activities in Veracruz and soil conditions at Tamsa&#146;s waste management site in
Villa Rica. In an effort to meet environmental targets regarding dust levels,
under a proposal approved by the SEMARNAT, Tamsa completed construction of a
dust storage facility in December 2001. The facility is currently operational.
Tamsa is currently working with the SEMARNAT in order to define the activities
permissible at the site in Villa Rica.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s consolidated subsidiary, Tavsa, has manufacturing operations in
Venezuela that are subject to Venezuelan environmental regulations. Tamsa is
not aware of any current material legal or administrative proceedings pending
against Tamsa or Tamsa&#146;s subsidiary with respect to environmental matters which
could have an adverse material impact on Tamsa&#146;s financial condition or results
of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Insurance</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa carries property, accident, fire, third party liability, product
liability and other insurance (such as vehicle insurance) in amounts that are
customary in the steel products industry. In certain cases, insurers have the
option to replace damaged or destroyed plant and equipment rather than to pay
Tamsa the insured amount. Tamsa does not carry loss-of-profit or business
interruption insurance.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Litigation</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>OCTG Antidumping Proceedings</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;20, 1995, the U.S. Commerce Department issued a final
determination that producers of OCTG products in seven countries, including
Tamsa, had engaged in &#147;dumping&#148; in the United States. The &#147;antidumping&#148;
proceeding was filed in June 1994 by eight U.S. steel manufacturers against
producers of OCTG products in Argentina, Austria, Italy, Japan, Korea, Mexico
and Spain. Under the antidumping determination, importers of OCTG into the
United States from Mexico and four other countries were required to post cash
deposits at the anti-dumping margins established by the Commerce Department. In
the case of Mexico, a margin of 23.8% was established.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;26, 1995, Tamsa requested a NAFTA Panel review of the antidumping
margins, and the Panel issued its decision on July&nbsp;31, 1996. While the Panel
agreed with Tamsa that the Commerce Department made certain errors that
artificially inflated the dumping margin, the Panel upheld other aspects of the
decision. As a result, imports of Tamsa&#146;s OCTG continued to be subject to
antidumping duty deposits but at a new margin of 21.7%.
</FONT>
<P align="center"><FONT size="2">32</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 1997, Tamsa requested that the U.S. Department of Commerce
conduct an administrative review of the antidumping margin applicable to its
OCTG exports to the United States. The final resolution of that review resulted
in a determination of no dumping, published March&nbsp;11, 1999, applicable to Tamsa
OCTG exports entering the United States from July&nbsp;31, 1996 to August&nbsp;1, 1997.
This determination became applicable as the new deposit requirement for Tamsa&#146;s
exports to the United States beginning August&nbsp;1, 1997.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 1998, Tamsa entered the process of a second formal
administrative review of the case for the period August&nbsp;1, 1997 to July&nbsp;31,
1998. The final resolution of this second review resulted in a finding of no
dumping which was published on January&nbsp;5, 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 1999, Tamsa entered into a third formal administrative review of
the case for the period from August&nbsp;1, 1998 to July&nbsp;31, 1999. The final
resolution of this third review resulted in a zero tariff and was published on
March&nbsp;21, 2001. This was the third consecutive review that resulted in a
finding of no dumping. However, the U.S. Department of Commerce in the same
review rejected Tamsa&#146;s request that the U.S. government revoke the antidumping
order.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2000, the U.S. government initiated a &#147;sunset review&#148; to determine
whether the antidumping measures applied against Tamsa&#146;s OCTG should be
revoked, or whether they should continue for an additional five years. After
decisions by two government agencies, the U.S. Department of Commerce on July
25, 2001 issued a final decision to continue the antidumping measures against
Tamsa&#146;s exports of OCTG casing and tubing, but to revoke the antidumping
measure applicable to Tamsa&#146;s OCTG drill pipe.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa has several pending appeals challenging the U.S. government&#146;s
decision to continue the antidumping measures on Tamsa&#146;s OCTG. Nonetheless, the
effect of the imposition of the antidumping duties described above is
essentially to close the U.S. market for Tamsa&#146;s OCTG products.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Line Pipe Antidumping Proceedings</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;20, 2000, the U.S. Department of Commerce announced that its final
analysis of Tamsa&#146;s sales of the large diameter standard, line, and pressure
(SL&#038;P) pipe to the United States revealed a dumping margin of 19.6%.
Subsequently, on July&nbsp;13, 2000, the United States International Trade
Commission, or ITC, announced its final decision that Tamsa&#146;s U.S. sales of
this product to the United States are causing material injury to the U.S.
industry. The ITC decision cleared the way for the U.S. Department of Commerce
to issue its final antidumping order in August 2000, which imposed an
antidumping duty cash deposit requirement of 15.1%, a level reflecting the
correction of calculation errors of the original U.S. Department of Commerce
decision previously mentioned. The cash deposit requirement affects principally
Tamsa&#146;s large diameter line and pressure pipe (greater than 4 1/2 inches up
to and including 16 inches in outside diameter) entering the United States,
except for line pipe used in deep water applications (water depth of 1,500 feet
or more) and rated for specified yield strength of not less than 60,000 PSI,
which is excluded from the antidumping order.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first quarter of 1999, Tamsa&#146;s shipments of large diameter
seamless SL&#038;P pipe to the U.S. accounted for an estimated 1.3% of the total
U.S. market for these products and represented 1.6% of Tamsa&#146;s total pipe sales
during that period. In spite of petitioners&#146; claims that the U.S. market is
being flooded with dumped imports of seamless steel pipe, Tamsa&#146;s shipments to
the U.S. market of the pipes referenced in the petition have declined
continuously since the last quarter of 1998.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the imposition of the antidumping margins described above,
Tamsa has essentially stopped exporting the covered SL&#038;P pipe to the United
States, except for those products excluded from the order.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 2001, the United States initiated a proceeding known as a 201
Investigation, to impose measures that would safeguard the U.S. steel industry
from increasing imports of several different steel products. Seamless tubular
products of the type produced by Tamsa were determined not to be causing or
threatening serious injury to the U.S. industry, and therefore were excluded
from the relief ultimately granted to the U.S. industry. All steel products
from Canada and Mexico were excluded for the additional reason that the special
requirements of the NAFTA Agreement had not been satisfied in the case.
</FONT>
<P align="center"><FONT size="2">33</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 2002, the Canadian government initiated a similar safeguard
investigation against certain steel products, including certain seamless pipe.
The Canadian government subsequently excluded from the proceeding all Mexican
imports under the special NAFTA provisions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;20, 2002, the government of the People&#146;s Republic of China
initiated a similar safeguard investigation against certain steel products
imports including OCTG and line pipe used for oil and gas pipelines.
Provisional measures were imposed for six months. On November&nbsp;20, 2002, this
investigation was concluded and seamless pipes were excluded from the safeguard
measures.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;19, 2002, Tamsa (through SECON) requested the initiation of an
antidumping investigation and the application of antidumping duties on imports
from Russia and Romania of line pipe with a diameter smaller than 18 inches.
The Mexican government initiated the investigation on October&nbsp;18, 2002. Tamsa
expects that a preliminary determination will be made in the next several
months.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Legal Proceedings</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is also involved in certain legal proceedings incidental to the
normal conduct of its business, for which it has made provisions in accordance
with its corporate policy and the rules of the Mexican Stock Exchange as
approved by the securities regulatory authority in Mexico. Tamsa believes such
provisions are adequate. Tamsa does not believe that liabilities relating to
such proceedings are likely to be, individually or in the aggregate, material
to its audited consolidated financial position.
</FONT>
<P align="center"><FONT size="2">34</FONT>
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<P align="left"><FONT size="2"><B>B. Tenaris</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>General</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tenaris began with the formation of Siderca by San Faust&#237;n&#146;s predecessor
in Argentina in 1948. Siat S.A.I.C., or Siat, an Argentine welded steel pipe
manufacturer, was acquired in 1986. Tenaris grew organically in Argentina and
then, in the early 1990s, began to evolve beyond its initial base in Argentina
into a global business through a series of strategic investments. These
investments included the acquisition, directly or indirectly, of controlling or
substantial interests in:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Tamsa, the sole Mexican producer of seamless steel pipe products (June 1993);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Dalmine, a leading Italian producer of seamless steel pipe products (February 1996);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Tavsa, the sole Venezuelan producer of seamless steel pipe products (October 1998);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Confab, the leading Brazilian producer of welded steel pipe products (August 1999);</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">NKKTubes, a leading Japanese producer of seamless steel pipe
products and source of advanced seamless steel pipe manufacturing
technology (August 2000); <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">AlgomaTubes, the sole Canadian producer of seamless steel pipe
products (October 2000).</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Tenaris, through Tenaris Global Services, has developed a
global network of pipe distribution and service facilities with a direct
presence in most major oil and gas markets.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 2002, Tenaris became a publicly listed company after
completing an exchange offer for the outstanding shares and ADSs of its three
main operating subsidiaries, Tamsa, Siderca and Dalmine, as described in Item
4. &#147;Information on the Company&#151;Tamsa&#151;Introduction.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Below is a simplified diagram of Tenaris&#146;s corporate structure, as of May
30, 2003:
</FONT>
<P align="center"><FONT size="2"><IMG src="y87729y8772900.gif" alt="(DIAGRAM OF TENARIS&#146;S CORPORATE STRUCTURE)">
</FONT>

<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The remainder of Confab is owned by the public. As of May&nbsp;30, 2003,
Siderca held 99.22% of Confab&#146;s voting stock.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As of May&nbsp;30, 2003, the remainder of NKKTubes was beneficially owned by
JFE Holdings Inc.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">As of May&nbsp;30, 2003, the remainder of Tavsa was owned by the Republic of
Venezuela through the Corporaci&#243;n Venezolana de Guayana.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">35</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Tenaris&#146;s Business Strategy</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tenaris provides tubular products and associated services to its customers
around the world through global business units serving specific market segments
and local business units serving the local markets where it has production
facilities. These global business units include:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Tenaris Oilfield Services, responding to the tubular needs of
oil and gas companies in their drilling activities;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Tenaris Pipeline Services, responding to the tubular needs of
oil and gas and other energy companies in their activities of
transporting fluids and gases;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Tenaris Process and Power Plant Services, responding to the
tubular needs of refineries, petrochemical companies and energy
generating plants for construction and maintenance purposes; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Tenaris Industrial and Automotive Services, responding to the
tubular needs of automobile and other industrial manufacturers.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tenaris&#146;s business strategy is to continue expanding its operations
internationally and further consolidate its position as a leading supplier of
high-quality tubular products and services worldwide to the oil and gas, energy
and mechanical industries by:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">completing the integration of the operations of its
subsidiaries to provide customers a complete range of products
worldwide and to maximize operational flexibility and synergies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">developing a comprehensive range of value-added services
designed to enable customers to reduce working capital and inventory
requirements while integrating Tenaris&#146;s production activities with
the customer supply chain; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">continuing to pursue strategic acquisition opportunities.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Completing the integration of the operations of its subsidiaries</I>. Tenaris
has taken and continues to take steps to integrate the operations of its
subsidiaries in order to reinforce its strong position in the international
seamless steel pipe market and its leading presence in the domestic markets of
such subsidiaries, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the reorganization of the commercial activities of its
subsidiaries under global and local customer-focused business units;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the common use of the Tenaris brand, launched in May 2001, with
which Tenaris is positioning itself as an integrated supplier of
high-value products and industry-leading services;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the sharing of operational technology and coordination of Tenaris&#146;s research and development activities; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the reorganization of Tenaris&#146;s procurement, information technology, or IT, and premium joint licensing activities.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tenaris&#146;s strategy is based on the idea that, by aligning the interests of
all shareholders through its exchange offer for Tamsa, Siderca and Dalmine,
which closed in December 2002, Tenaris can pursue further integration of its
operations and thereby expects to continue to increase flexibility and
synergies across six seamless and two welded pipe mills and their common
commercial network organized under Tenaris Global Services.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Developing value-added services</I>. Tenaris continues to develop its
capabilities to supply value-added services to its customers worldwide, in
order to enable its customers to reduce costs and concentrate on their core
businesses, and in order to enable Tenaris to differentiate itself from its
competition, further strengthen Tenaris&#146;s
</FONT>
<P align="center"><FONT size="2">36</FONT>
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<P align="left"><FONT size="2">relationship with its customers worldwide through long-term agreements and to
capture more of the value in its supply chain. These value-added services
include:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">working with its customers to anticipate their needs and develop customized products for particular applications;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">providing comprehensive pipe management services, including JIT delivery and stocking programs; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">developing integrated supply chain management services through
alliances with specialist service providers and extensive use of
information technology.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Pursuing strategic acquisition opportunities</I>. Tenaris has grown in the
past through strategic acquisitions. Future selective strategic acquisitions
may provide Tenaris with a means to expand its operations, enhance its global
competitive position and capitalize on potential operational synergies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Joint Policy Regarding Allocation of Sales Orders</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Tenaris companies have agreed to adopt a uniform, voluntary policy
governing the allocation of sales orders among themselves. The purpose of this
policy is to facilitate the most efficient and profitable allocation of sales
orders among themselves by taking advantage of each company&#146;s manufacturing and
distribution capabilities, while at the same time ensuring equitable treatment
of the three companies. The principal features of this policy are as follows:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sales orders involving products or product specifications that
are manufactured by only one of the three companies will be allocated
to that company;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sales orders for delivery within one of the companies&#146;
respective local markets will be allocated to that company if it
manufactures the products requested by the customer. Tamsa&#146;s local
market consists of Mexico, Siderca&#146;s local market consists of
Argentina and Dalmine&#146;s local market consists of the member countries
of the EU plus Switzerland and Norway (except sales of OCTG and line
pipe products destined for the North Sea area); <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">sales orders for delivery outside the three companies&#146; local
markets involving products that are manufactured by more than one of
them will be allocated based on the recommendation of a central mill
load coordinator, who is appointed by mutual agreement among the
three companies. This recommendation will be based on several
considerations, including the customer&#146;s desired delivery schedule
and logistical and service needs, the optimal utilization of each
company&#146;s manufacturing facilities and the maximization of profits
for the three companies. Each company will have the right to reject a
sales order allocated to it and to appeal the allocation of that
sales order to another company.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To ensure transparency under this uniform policy, all requests for
quotation received by any of the three companies or by Tenaris Global Services
relating to their products are entered by the relevant business unit into a
centralized internal bidding system, which can be accessed by each of them. The
business unit offers the customer a single quotation without identifying the
company to whom the sales order will be allocated (unless the customer requires
otherwise). At the same time, each of the three companies has agreed to use
commercially reasonable efforts to satisfy the requirements imposed on
suppliers by their customers, thereby qualifying themselves to make sales to
those customers on an equal basis.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Arrangements Underlying Tenaris</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to implement specific actions, the Tenaris companies have entered
into various agreements and arrangements among themselves and other companies
of Tenaris Global Services.
</FONT>
<P align="center"><FONT size="2">37</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Marketing Agreements</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of Tamsa, Siderca and Dalmine and certain of their subsidiaries are
parties to export agency agreements each appointing a Tenaris Global Services
company as its non-exclusive agent for the sale of all of its products in all
countries except Argentina, Mexico and Italy and, in the case of Dalmine,
excluding also the other member countries of the EU and certain other
countries. In addition, some of the Tenaris companies have entered into
agreements with each other in respect of sales in their home countries. The
purpose of these arrangements is to maximize the commercial penetration of the
Tenaris companies in their export markets and take maximum advantage of each
company&#146;s manufacturing and distribution capabilities in its respective
domestic market. A description of these marketing agreements follows.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Business Opportunities Agreement</I>. This agreement governs the
creation and activities of organized joint business units. These
units combine in single management structures planning and marketing
activities that will focus on specific product lines, client types
and territorial coverage (global, regional and local). Tamsa, Siderca
and Dalmine finalized this arrangement with the signing of the
&#147;Business Opportunities Agreement&#148; on March&nbsp;30, 2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Siderca, Tamsa and Dalmine export agency agreements</I>. Pursuant
to these agreements, restated as of October&nbsp;4, 2000, September&nbsp;29,
2000 and September&nbsp;27, 2000, respectively, and assigned to a Tenaris
Global Services company effective December&nbsp;17, 2002, each of Tamsa,
Siderca and Dalmine appointed a Tenaris Global Services company as
its non-exclusive agent for the sale of all of its products in all
countries except Mexico, Argentina and Italy and, in the case of
Dalmine, excluding also the other member countries of the EU.
Tenaris Global Services is entitled to a commission equal to 3% of
the FOB value of their sales of Siderca&#146;s, Tamsa&#146;s and Dalmine&#146;s
products, and to be reimbursed by Tamsa, Siderca and Dalmine, as the
case may be, for a portion of the total general expenses incurred by
Tenaris Global Services and for special sales costs. Siderca&#146;s and
Tamsa&#146;s agreements expire on September&nbsp;30, 2003, and Dalmine&#146;s on
October&nbsp;1, 2003, and all of them are automatically renewable for
successive three-year terms unless, in each case, one party notifies
the other in advance of its intention not to renew the agreement.
Amounts accrued under these agreements (and their predecessor
agreements) totaled, in the case of Tamsa, USD10.1&nbsp;million in 2000,
USD12.7&nbsp;million in 2001 and USD17.6&nbsp;million in 2002.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>NKKTubes export agency agreement. </I>Pursuant to this agreement,
dated May&nbsp;24, 2000, NKKTubes has appointed a Tenaris Global Services
company as its non-exclusive agent for the sale of its products in
all countries outside Japan. The Tenaris Global Services company
purchases NKKTubes&#146; products for resale to third parties at priced
agreed upon on a case-by-case basis. The agreement has a term of
fifteen years.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Confab and Siat export agency agreements</I>. Confab and Siat
appointed a Tenaris Global Services company as their non-exclusive
agent for the sale of all of their products in all countries except
Brazil, in the case of Confab, and Argentina, Brazil, Italy and
Mexico, in the case of Siat. Tenaris Global Services is entitled to a
commission equal to 5% of the FOB value of its sales of Confab&#146;s and
Siat&#146;s products. The agreements expire on January&nbsp;1, 2004 and
September&nbsp;30, 2004, and are automatically renewable for successive
one-year and three-year terms, respectively.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Reciprocal export agency agreement between Tamsa and Siderca
relating to sales in Mexico and Argentina</I>. Pursuant to this
agreement, dated December&nbsp;23, 1993, Tamsa has granted Siderca the
non-exclusive right to market and sell Tamsa&#146;s products in Argentina,
and Siderca has granted Tamsa the non-exclusive right to market and
sell Siderca&#146;s products in Mexico. This agreement provides for Tamsa
and Siderca to purchase each other&#146;s products for resale in their
domestic markets at prices which permit them to earn the equivalent
of a 7.5% commission on the actual price charged to third-party
customers.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Reciprocal export agency agreement between Tamsa, Siderca and
Dalmine</I>. Pursuant to this agreement, dated March&nbsp;29, 1996, Tamsa and
Siderca have granted to Dalmine, and Dalmine has granted to Tamsa and
Siderca, the non-exclusive right to market and sell their respective
products through their respective local commercial networks. This
agreement provides that Dalmine will purchase the products of Tamsa
and Siderca, and Tamsa and Siderca will purchase the products of
Dalmine, at third-party export prices. The agreement additionally
provides for Dalmine&#146;s distributors</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">38</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to purchase Tamsa&#146;s and Siderca&#146;s products for resale at prices which
would earn them the equivalent of a commission on sales varying between
3% and 15% depending on the nature of the services rendered by Dalmine&#146;s
distributors.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Other agreements. </I>Tamsa, Siderca and Dalmine have entered into
numerous agreements with member companies of Tenaris Global Services
in various countries around the world pursuant to which one or more
of them agrees to sell, and one or more Tenaris Global Services
companies agrees to buy, seamless steel pipe products for resale
under stocking programs (and other similar programs) to oil and gas
companies or other buyers or end users which operate in their
territories (as defined in each agreement). The selling party under
these agreements generally agrees to assume any and all risks of the
operation. To this end, under specified circumstances (e.g., failure
to consummate resale, product rejection, customer delay), the selling
party would be required to repurchase the pipes sold to the reseller.
Effective as of December&nbsp;17, 2002, all these contracts were assigned
to Tenaris Global Services or its subsidiaries.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreements to Share Costs and Know-How</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa, Siderca and Dalmine have entered into agreements among themselves
to share costs and know-how and provide each other with technical assistance. A
description of these agreements follows.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Industrial and Technical Integration and Exchange Agreement
(Contrato de Intercambio y Complementaci&#243;n Industrial)</I>. Pursuant to
this agreement, dated August 1996, Tamsa and Siderca have agreed to
exchange technical and operational assistance and technology in the
areas of manufacturing and supply and in other areas affecting
manufacturing operations. Fees are payable for transfers of
technology and other services provided under the agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Cost Contribution Agreement</I>. Pursuant to this agreement, dated
May&nbsp;11, 1999, Tamsa, Dalmine and Siderca have agreed to share the
cost of various activities whose costs and benefits can be shared
among the three companies and for which the three companies have not
established special purpose companies (in areas such as R&#038;D,
marketing and communications, human resources management, information
systems and general management issues) in order to avoid duplicative
efforts and expenses. The agreement establishes the bases to carry
out these activities, such as guidelines for approval and execution,
rules for usage of resources and the percentage of sharing of costs
among the parties. Management of the three companies will decide on a
case-by-case basis which activities will be included as part of this
agreement. The agreement has no fixed term.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreements Relating to NKK&#146;s Technology</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the agreements relating to Siderca&#146;s purchase, on May&nbsp;24, 2000, of a
51% shareholding in NKKTubes, NKK agreed to license to Tenaris its
manufacturing technology, patents and trademarks for manufacturing steel (for
use in the manufacturing of seamless steel pipe) and seamless steel pipe. NKK
also agreed to license its manufacturing technology, patents and trademarks for
making premium connections to Tenaris. Amounts accrued under these agreements
were Japanese yen 174.6&nbsp;million in 2002, Japanese yen 112.2&nbsp;million and USD0.8
million in 2001 and Japanese yen 548.6&nbsp;million and USD0.1&nbsp;million in 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2002, Tenaris acquired NKK&#146;s manufacturing technology, patents
and trademarks for making premium connections for USD1.9&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with NKK&#146;s and Kawasaki Steel&#146;s business combination,
effective on September&nbsp;27, 2002, NKK&#146;s 49% interest in NKKTubes was transferred
to a subsidiary of JFE. In addition, Siderca and NKK signed on September&nbsp;25,
2002 an agreement that amends certain provisions of the various agreements
relating to the creation and governance of NKKTubes. On April&nbsp;1, 2003, the
licensing agreements relating to NKK&#146;s technology were terminated. Under the
terms of the termination agreement, Tenaris will not have access to NKK&#146;s
technology and know-how in the future but will continue to use the technology
and know-how already licensed to it. In addition, the termination of the
licensing agreements would not affect Tenaris&#146;s rights to the NKK range of
premium connections, which Tenaris acquired in 2002. For a discussion of NKK
and Kawasaki Steel&#146;s business combination, see Item&nbsp;4.A. &#147;Information on the
Company&#151;Tamsa&#151;Competition.&#148;
</FONT>
<P align="center"><FONT size="2">39</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reorganization of Premium Joint Technology and Licensing Activities</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2000, Tamsa, Siderca and Dalmine agreed to reorganize their
premium joint technology and licensing activities under an existing special
purpose company and each of them invested approximately USD0.5&nbsp;million in the
capital stock of Tenaris Connections A.G., or Tenaris Connections, a company
owned in equal shares by Tamsa, Siderca and Dalmine. All of the Tenaris
companies&#146; research, development, licensing, patent maintenance activities
relating to premium joint technologies owned by, or licensed to, the Tenaris
companies and the corresponding technical information, know-how, certain
trademarks, commercial names, and licenses of the Antares, SEC and Atlas
Bradford premium joint technologies are concentrated in Tenaris Connections and
its subsidiary, Tenaris Connections B.V. Antares and SEC premium joint
technologies are proprietary to the Tenaris companies. Atlas Bradford premium
joint technology was licensed to Tenaris Connections by Grant Prideco Inc. in
June 1998. Tenaris Connections has granted sublicenses to each of Tamsa,
Dalmine and Siderca for the premium joint technologies for which it has
licensing rights, including NKK&#146;s premium joint technology. Except for certain
domestic market sales, royalty payments under these sublicenses are
standardized at 6% of the net export selling price.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reorganization of Information Technology and Procurement Activities</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa, Siderca and Dalmine have established a special purpose company to
develop an e-procurement portal and a second special purpose company to develop
new IT systems. These IT systems are intended to integrate the commercial
activities of the Tenaris companies and enable them to offer value-added
services, differentiating them from their competitors and facilitating customer
retention. Subsequently, it was determined that additional synergies could be
gained from extending the scope and benefits of these special purpose companies
to Siderar S.A.I.C.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Specialized Procurement Company</I>. Tamsa, Siderca, Dalmine and
Siderar invested USD9.5&nbsp;million (divided into four equal shares) to
develop a specialized procurement company with an internet portal,
known as Exiros, through which they have centralized their
procurement activities. It is also intended to improve the supply of
products associated with the sale of the Tenaris companies&#146; pipes.
The portal began operating in March 2001, and is owned by Lomond
Holdings B.V., a Netherlands company, whose shares are held in equal
parts by Tamsa, Siderca, Dalmine and Siderar. In August 2001, Tamsa
entered into an agreement appointing Exiros M&#233;xico as its
non-exclusive purchase agent, subject to Tamsa&#146;s right to reject any
purchase order. Fees payable to Exiros M&#233;xico under this agreement
will be determined on a cost-plus basis and will be revised annually.
Tamsa has delegated all of its procurement activities to Exiros
M&#233;xico under this arrangement and has transferred 30 of its employees
to Exiros M&#233;xico to assist with these activities. Tenaris is in the
process of acquiring from Siderar the remaining 25% in Lomond
Holdings for a total of USD304 thousand.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>Development of New IT Systems</I>. Tamsa, Siderca, Dalmine and
Siderar have established a new IT company, Information Systems and
Technologies N.V., a Netherlands company, whose shares are held by
Siderca (25%), Tamsa (25%), Dalmine (25%) and Siderar (25%). The
purpose of this company is to develop IT systems and hardware for use
by the Tenaris companies, the Techint commercial network, Siderar and
Sidor. These systems will be used to enhance the management of the
commercial activities of the Tenaris companies and their customer
service capabilities worldwide.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><I>License and free use of Tenaris Brand &#151; Brand Registration,
Licensing and Ownership Agreement. </I>Pursuant to this agreement,
executed on September&nbsp;10, 2001 by Tamsa, Tenaris Connections granted
to Tamsa, Siderca and Dalmine a royalty-free license to use the
Tenaris trademark in accordance with certain guidelines defined
therein.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">40</FONT>
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<!-- link2 "Item&nbsp;5. Operating and Financial Review and Prospects" -->
<DIV align="left"><A NAME="005"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;5. </B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Operating and Financial Review and Prospects</B>
</FONT>

<P align="left"><FONT size="2"><B>General</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is the sole producer and supplier in Mexico of various types of
seamless steel pipe. Tamsa&#146;s principal finished products are seamless steel
casing and tubing, seamless steel line pipe and various other mechanical and
structural seamless pipes for different uses. Tamsa has an annual installed
capacity of 780,000 tons of finished products, and exports more than 70% of its
production to over 60 countries worldwide.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand for Tamsa&#146;s products depends primarily upon the type and level of
domestic and international oil and gas drilling activity, which in turn is
substantially influenced by the level of oil prices and by the political and
economic developments in countries with high drilling activity. Historically,
Pemex has been Tamsa&#146;s largest customer by a significant margin. Sales to Pemex
fluctuate in response to changes in Pemex&#146;s investment program, which
historically decreases when oil prices experience a significant fall. Any
increase in drilling activity as a result of larger investment programs does
not necessarily result in increased demand for pipe.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Faced with declining sales to Pemex during the 1980s, Tamsa aggressively
pursued opportunities in export markets. In order to be competitive in these
markets in terms of price and quality, Tamsa increased its emphasis on
efficiency and quality assurance. The growth of Tamsa&#146;s exports has made its
revenues less dependent on conditions within Mexico. In addition, while the
ratio of export revenues to total revenues is lower than the ratio of export
volumes to total volumes, exports, which are typically invoiced in dollars,
have increased Tamsa&#146;s dollar revenue base and reduced the exchange rate risk
associated with dollar denominated liabilities and incurring dollar denominated
expenses. However, exports to Venezuela, one of Tamsa&#146;s main export markets, as
well as sales in Venezuela by Tavsa, began to suffer in the last quarter of
2001 and continue to suffer to date, due to recent adverse political and
economic developments in that country.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a more complete description of Tamsa&#146;s business and market position
and of the competitive and other factors that could affect Tamsa&#146;s financial
condition and results of operation, see Item&nbsp;4.A. &#147;Information on the
Company&#151;Tamsa.&#148;
</FONT>
<P align="left"><FONT size="2"><B>Operating Results</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion should be read in conjunction with Tamsa&#146;s
audited consolidated financial statements and the notes thereto included in
this annual report. Tamsa prepares its financial statements in conformity with
generally accepted accounting principles in Mexico, commonly referred to as
&#147;Mexican GAAP.&#148; Mexican GAAP differs in some important respects from U.S. GAAP.
See note 12 to Tamsa&#146;s audited consolidated financial statements included in
this annual report for a description of the principal differences between
Mexican GAAP and U.S. GAAP as they relate to Tamsa and for a reconciliation of
net income and total shareholders&#146; equity for the periods and at the dates
indicated. Mexican GAAP require that these consolidated financial statements
recognize certain effects of inflation in accordance with Bulletin B-10 and its
amendments. Unless otherwise noted, all data in the audited consolidated
financial statements and the financial information derived therefrom included
in this discussion and all other Tamsa financial data included throughout this
annual report and relating to the dates or periods covered by the financial
statements have been restated in constant Mexican pesos as of December&nbsp;31,
2002. From January&nbsp;1, 2002 to December&nbsp;31, 2002, the rate of inflation (based
on the Mexican Consumer Price Index) was 5.7%. See &#147;Accounting Principles.&#148;
</FONT>
<P align="center"><FONT size="2">41</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth, for the periods indicated, selected financial
data from Tamsa&#146;s income statements.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>except share and per share amounts)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,728,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">Ps 6,899,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,463,007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating cost and expenses:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of products sold</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,145,970</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,067,468</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(4,231,637</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling, general and administrative expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,191,082</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,288,774</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1,175,100</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total operating cost and expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,337,052</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,356,242</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5,406,737</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,391,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,542,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,056,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Comprehensive financing cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(165,924</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(42,106</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(88,544</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other expenses &#150; net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(13,115</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(26,834</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(9,879</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income before taxes, employees&#146; statutory profit
sharing and equity in associated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,212,184</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,473,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">957,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax, asset tax and employees&#146; statutory profit
sharing</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(60,114</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(592,710</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(483,743</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in loss of associated companies<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(16,047</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(290,930</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(52,608</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of change in accounting
principle<SUP>(2)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(11,567</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,136,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">578,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">421,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Weighted average number of shares
outstanding<SUP>(3)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earnings per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>U.S. GAAP</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,860,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,905,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,173,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,534,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,496,643</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">924,017</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,381,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">734,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">500,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Earnings per share</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Mainly corresponding to Tamsa&#146;s equity participation in Amazonia. See note 11 to Tamsa&#146;s audited consolidated financial statements.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Corresponds to the net effect at the beginning of the year from changes in the accounting principles, as a result of the adoption of Statement C-2, effective January&nbsp;1,
2001, which establishes the accounting treatment for derivatives and financial instruments.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Amounts for 2002, 2001, 2000, 1999 and 1998 exclude 3,650,000 shares which were held in treasury in 2002 and held in 2001 and 2000 by a wholly-owned subsidiary of Tamsa.
On July&nbsp;10, 2001, each outstanding share of Tamsa&#146;s common stock was split into five shares; concurrently, the ADR ratio was modified from one ADR for each share of common
stock to one ADR for five shares of common stock. For comparative purposes, the number of shares shown for prior years has been adjusted to reflect the split retroactively.
See note 5 to Tamsa&#146;s audited consolidated financial statements.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">42</FONT>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth Tamsa&#146;s operating and other costs and
expenses as a percentage of net sales for the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(percentage of net sales)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating cost and expenses:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cost of products sold</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(62</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(59</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(66</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Selling, general and administrative expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(18</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(19</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(18</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total operating cost and expenses</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(80</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(78</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(84</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Operating profit</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Comprehensive financing cost</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(2</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other expenses &#151; net</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income before taxes, employees&#146; statutory profit
sharing and equity in associated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Income tax, asset tax and employees&#146; statutory
profit sharing and deferred income tax</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(8</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(7</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity in loss of associated companies</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(5</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(1</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cumulative effect of change in accounting principle</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Net income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows Tamsa&#146;s total sales volume by product and market
for the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(tons)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Domestic pipe sales (Mexico)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">154,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">138,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">167,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export sales and Tavsa</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">510,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">575,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">498,696</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other products and Riga</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">685,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">732,945</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">679,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the geographic distribution of Tamsa&#146;s exports
as a percentage of total export sales volume for the periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(percentages)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">North America</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Latin America</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Africa</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Europe</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Middle East</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Far East and Oceania</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">43</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below shows Tamsa&#146;s net sales by market and product for the
periods indicated.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Domestic pipe sales (Mexico)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">2,066,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,944,758</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">2,320,882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Export pipe sales and Tavsa</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,375,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,645,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,919,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other products and Riga</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">286,535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">308,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">222,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total sales</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,728,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,899,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">6,463,007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Year Ended December&nbsp;31, 2002 Compared to Year Ended December&nbsp;31, 2001</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales
volume</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total sales volume in 2002 decreased 6.5% to 685,248 tons, from 732,945
tons in 2001. This decrease was mainly due to an 8.3% reduction in export sales
volume, a 49.1% drop in Tavsa&#146;s sales volume and a 4.5% decrease in the sales
volume from the non-oil domestic market, partially offset by a 22.8% increase
in the domestic petroleum market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Domestic sales volume to oil-related customers totaled 101,364 tons in
2002, compared to 82,546 tons in 2001. This growth in sales during 2002 was due
to higher demand from Pemex in both the Northern and Southern regions of
Mexico. Demand from the Northern region, which is related to Pemex&#146;s strategic
natural gas program, remained firm during the year due to Pemex&#146;s needs to
maintain its gas production quota in order to satisfy domestic demand. Demand
from the Southern region increased mainly as a result of higher exploration and
production spending in the region. Domestic sales volume to non-oil related
customers totaled 53,633 tons in 2002, compared to 56,179 tons during 2001.
This decrease was due to the contraction of industrial production in the
Mexican economy throughout most of the year, coupled with a slow recovery in
the U.S. economy, affecting the automotive and industrial sectors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Export sales volume in 2002 totaled 488,986 tons, compared to a record
533,471 tons in 2001. This 8.3% decrease was due to lower international
drilling activity in Latin America&#151;mainly in Venezuela, Europe and Canada,
partially offset by higher activity in the Middle East and Africa resulting in
increased sales to those regions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tavsa&#146;s sales volume totaled 21,188 tons in 2002, compared to 41,658 tons
in 2001. This 49.1% decrease was the result of lower demand by PDVSA and
reduced exploration and production activities in the oil sector in Venezuela as
a result of adverse economic and political conditions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Riga&#146;s sales volume totaled 8,164 tons in 2002, compared to 6,189 tons in
2001. This 31.9% increase was attributable to Tamsa&#146;s acquisition of Riga on
June&nbsp;20, 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of steel bars decreased 7.7% to 11,913 tons during 2002,
compared to 12,902 tons in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net
sales</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales during 2002 were Ps6,728,275 thousand, compared to Ps6,899,027
thousand in 2001. This 2.5% decrease in net sales was attributable to lower
sales volume, mainly in the export market, at Tavsa and in the non-oil domestic
market, partially offset by higher sales in the domestic petroleum market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost
of products sold</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold, expressed as a percentage of net sales, was 61.6%
in 2002, compared to 59.0% in 2001. This increase in costs was mainly due to
higher depreciation expenses at Tamsa and Tavsa, higher raw material prices,
energy costs and a higher provision for obsolete inventories. Some cost items
denominated in U.S. dollars also impacted the cost in peso terms due to the
depreciation of the peso.
</FONT>
<P align="center"><FONT size="2">44</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling,
general and administrative expenses</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses, or SG&#038;A, in 2002, as a
percentage of net sales, were 17.7%, compared to 18.7% in 2001. In absolute
terms, SG&#038;A decreased 7.6% from Ps1,288,744 thousand in 2001 to Ps1,191,082
thousand in 2002. Selling expenses in 2002 remained stable when compared to
those incurred in 2001, representing 11.1% in 2002 and 11.0% in 2001. General
and administrative expenses in 2002 decreased to 6.6% of net sales from 7.7% in
2001, mainly due to a reduction in personnel and general expenses.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Comprehensive
financing cost</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive financing cost during 2002 was Ps165,924 thousand, compared
to Ps42,106 thousand in 2001. This increase was primarily due to an exchange
related loss of Ps178,965 thousand in 2002, compared to an exchange related
gain of Ps14,841 thousand in 2001, mainly derived from the 85% devaluation of
the Venezuelan bolivar, as Tavsa&#146;s debt is denominated in U.S. dollars, as well
as to the 12.8% depreciation of the Mexican peso during the year. The increase
in comprehensive financing cost was partially offset by a monetary gain of
Ps59,340 thousand in 2002, compared to Ps24,225 thousand in 2001, and by lower
net interest expenses in 2002 of Ps46,299 thousand, compared to Ps81,172
thousand in 2001, due to lower interest rates in 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
expenses &#151; net</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other expenses totaled Ps13,115 thousand in 2002, compared to Ps26,834
thousand in 2001. This decrease in expenses was attributable to an increase in
net income in 2002 due to a higher volume of transactions in which Tamsa traded
products to or from other Tenaris companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income
tax, asset tax and employees&#146; statutory profit sharing</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax, asset tax and employee statutory profit sharing provisions
totaled Ps307,052 thousand during 2002, compared to Ps586,794 thousand in 2001.
Income tax for 2002 includes Ps355,620 thousand corresponding to a tax
recovery, which resulted primarily from a favorable court judgment against the
Ministry of Finance for tax inequality obtained in May 2002. Additionally,
Tamsa recorded a net deferred tax credit of Ps246,938 thousand in 2002,
resulting mainly from a change in tax rates from 35% to 32% to compute deferred
income tax, given that the income tax rate will be reduced by 1% annually from
year 2003 until it becomes into a rate of 32% in year 2005, compared to a net
deferred tax charge of Ps5,916 thousand in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Equity
in loss of associated companies</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses from associated companies totaled Ps16,047 thousand in 2002,
compared to Ps290,930 thousand in 2001. Tamsa&#146;s losses from associated
companies are mainly attributable to its 14.1% equity participation in Amazonia
through its subsidiary Tamsider. The decrease in Tamsa&#146;s losses from associated
companies in 2002 was mainly the result of a reduced loss at Amazonia
(resulting in equity in Amazonia&#146;s loss of Ps39,906 thousand in 2002, compared
to Ps305,692 thousand in 2001) primarily due to lower losses at Sidor. The net
loss in Amazonia during 2002 included a credit of Ps77,894 thousand, due to a
monetary gain derived from the application of Statement B-15, compared to a
credit of Ps41,752 thousand in 2001. Additionally, in 2002 Tamsa&#146;s loss in
Amazonia was partially offset by a gain of Ps23,859 thousand in other
associated companies. See Item&nbsp;4.A. &#147;Information on the
Company&#151;Tamsa&#151;Investments in Other Companies&#148; and note 11 to Tamsa&#146;s audited
consolidated financial statements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net
income</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income during 2002 totaled Ps1,136,023 thousand, compared to Ps578,638
thousand in 2001. This increase of 96.3% is mainly due to lower net income tax
and lower losses from associated companies, which more than offset a lower
operating profit and a higher comprehensive financing cost. Net income
corresponding to majority shareholders during 2002 totaled Ps1,177,049,
compared to Ps574,947 in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tavsa&#146;s net losses for 2002 were Ps136,754 thousand, compared to a net
gain of Ps12,294 thousand for 2001, due to lower sales, lower absorption of
fixed and semi-fixed costs and to an exchange related loss resulting
</FONT>
<P align="center"><FONT size="2">45</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">from the impact of the devaluation of the Venezuelan bolivar on Tavsa&#146;s
U.S. dollar-denominated debt. Minority interest associated with these results
represented a loss of Ps41,026 thousand in 2002, compared to a gain of Ps3,691
thousand in 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Year Ended December&nbsp;31, 2001 Compared to Year Ended December&nbsp;31, 2000</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales
volume</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume in 2001 increased 7.8% to 732,945 tons from 679,950 tons in
2000. This increase was mainly due to higher export sales volume, a recovery in
domestic sales to oil related customers, and an increase in sales by Tavsa,
partially offset by a significant decline in domestic sales to non-oil related
customers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Domestic sales volume to oil-related customers totaled 82,546 tons in
2001, compared to 76,172 tons in 2000. This increase of 8.4% in sales was
mainly due to the resumption of normal operations by Pemex in late June 2001
following the delayed approval of its budget and the national strategic gas
program. Sales to non-oil related domestic customers decreased by 38.2%,
amounting to 56,179 tons in 2001, from 90,896 tons in 2000. This decrease was
mainly due to the effect of the slowdown in the Mexican and U.S. economies on
the automotive, mechanical and industrial sectors in Mexico as well as the
impact of imports from Eastern Europe.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Export sales volume in 2001 totaled 533,471 tons&#151;a record for Tamsa
compared to 459,791 tons in 2000. This increase of 16.0% was mainly due to
sustained demand from export oil and gas customers reflecting strong investment
in exploration and production activities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tavsa&#146;s sales volume totaled 41,658 tons in 2001, compared to 38,905 tons
in 2000, representing a 7.1% increase. This increase in sales volume was mainly
due to an increase in production capacity upon the completion of the first
stage of the modernization program in October 2000, partially offset by a
production stoppage resulting from a strike at Sidor in May 2001 and a decrease
in drilling activity following a reduction in Venezuela&#146;s OPEC-mandated oil
production quota.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning in the third quarter of 2001, sales by Riga were consolidated
into Tamsa&#146;s results. Riga&#146;s sales volume during the second half of 2001
totaled 6,189 tons of welded pipe fittings.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales volume of steel bars decreased 9.1% to 12,902 tons during 2001,
compared to 14,186 tons in 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net
sales</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales during 2001 were Ps6,899,027 thousand, representing an increase
of 6.7%, compared to sales of Ps6,463,007 thousand in 2000, mainly due to
higher export sales, higher domestic sales of OCTG, and increased sales by
Tavsa. This increase in demand was due to high oil prices during the first nine
months of 2001. However, the increase in net sales was partially offset by
lower sales volume in the non-oil domestic market and by the effect of restated
2000 Mexican peso figures converted into Mexican pesos with purchasing power as
of December&nbsp;31, 2002. Net sales in U.S. dollar terms increased by 15.2%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost
of products sold</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold, expressed as a percentage of net sales, decreased
to 59.0% in 2001, from 65.5% in 2000. This significant reduction in costs is
explained by lower raw material prices, higher absorption of fixed and
semi-fixed costs, greater operating efficiencies, better production yields and
lower costs at Tavsa, partially offset by a maintenance stoppage at Tamsa in
October 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling,
general and administrative expenses</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SG&#038;A during 2001 were Ps1,288,774 thousand, compared to Ps1,175,100
thousand in 2000. As a percentage of net sales, SG&#038;A expenses were 18.7% for
2001, remaining practically at the same level of 18.2% for 2000, despite being
9.7% higher in absolute terms. Selling expenses, which relate primarily to
export activities and are inherently variable, remained stable as a percentage
of net sales. General and administrative expenses increased
</FONT>
<P align="center"><FONT size="2">46</FONT>
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<P align="left"><FONT size="2">during 2001 compared to 2000 as a result of Tamsa&#146;s share under its cost
sharing agreement with Siderca and Dalmine of expenses relating to e-business
and IT initiatives.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Comprehensive
financing cost</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive financing cost during 2001 was Ps42,106 thousand, compared
to a cost of Ps88,544 thousand in 2000. This figure reflects an exchange
related gain of Ps14,841 thousand in 2001 resulting from the peso appreciation
of 4.5% during the year, compared to an exchange related loss of Ps36,961
thousand during 2000. Tamsa&#146;s comprehensive financing cost during 2001
consisted primarily of net interest expenses of Ps81,172 thousand, which
included a provision of Ps13,692 thousand (or 50% of accrued interest) in
respect of Amazonia&#146;s convertible debentures, compared to Ps76,393 thousand
registered in 2000. Monetary gain in 2001 was Ps24,225 thousand compared to a
monetary gain of Ps24,810 thousand during 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
expenses &#151; net</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2001, other expenses totaled Ps26,834 thousand, compared to Ps9,879
thousand in 2000. Other expenses in 2001 include the amortization of Tavsa&#146;s
and Riga&#146;s goodwill, and expenses related to the acquisition of Riga.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income
tax, asset tax and employees&#146; statutory profit sharing</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2001, income tax, asset tax and profit sharing provisions totaled
Ps586,794 thousand, compared to Ps307,458 thousand in 2000. This increase
reflected significantly lower tax arising from the utilization of tax loss
carry forwards and an asset tax credit during 2001 that totaled Ps56,757
thousand, compared to Ps192,411 thousand in 2000. Additionally, during 2001, a
net deferred tax charge was registered for Ps5,916 thousand, compared to a
charge of Ps176,285 thousand in 2000 that resulted from the application of
Statement D-4 (Deferred income taxes) effective January&nbsp;1, 2000.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Equity
in loss of associated companies</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses from associated companies equaled Ps290,930 thousand during 2001
compared to a loss of Ps52,608 thousand during 2000. This result was mainly due
to Tamsa&#146;s share, through Tamsider&#146;s investment in Amazonia, in the losses
recorded by Sidor. During the year ended December&nbsp;31, 2001, Tamsa recognized a
gain on net monetary position corresponding to Amazonia of Ps41,572 thousand,
compared to Ps90,557 thousand during 2000, which is included in the equity in
loss of associated companies in accordance with Statement B-15 issued by the
MIPA. See Item&nbsp;4.A. &#147;Information on the Company&#151;Tamsa&#151;Investments in Other
Companies&#148; and note 11 to Tamsa&#146;s audited consolidated financial statements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa recorded an interest adjustment of Ps11,567 thousand, accrued from
the convertible debentures of Amazonia, which were registered in the first
quarter of 2001. This is a result of the adoption of Statement C-2 effective
January&nbsp;1, 2001, which establishes the accounting treatment for derivatives and
financial instruments. This adjustment is shown on Tamsa&#146;s statements of
earnings as a net effect at the beginning of the year due to changes in the
accounting principles.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net
income</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s net income during 2001 totaled Ps578,638 thousand, compared to
Ps421,496 thousand in 2000. This increase of 37.3% stems mainly from higher net
sales, lower cost of products sold and lower comprehensive financing cost and
reflects the impact of the allowance for the investments in Amazonia and its
losses incurred during the year as discussed.
</FONT>
<P align="center"><FONT size="2">47</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2"><B>Liquidity and Capital Resources</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="11"><FONT size="1"><B>For the year ended December 31,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="11"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="11"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash provided by operations after extraordinary items</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,280,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,209,529</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,019,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash used in investment activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(205,515</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(903,792</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(856,750</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash used in financing activities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(274,471</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(48,671</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">(131,091</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Increase in cash and cash equivalents</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">800,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">257,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at the beginning of year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">588,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">331,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">299,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Cash and cash equivalents at the end of year</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,388,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">588,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">331,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Year Ended December&nbsp;31, 2002 Compared to Year Ended December&nbsp;31, 2001</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s cash balances at December&nbsp;31, 2002 increased to Ps1,388,689
thousand from Ps588,632 thousand at December&nbsp;31, 2001. Of this amount,
Ps1,280,043 thousand was provided by operations after extraordinary items and
the net proceeds from additional long-term financing of Ps6,187 thousand. Tamsa
used these funds in the following activities: capital expenditures of Ps184,212
thousand, contribution to associated companies in the amount of Ps21,303
thousand and a dividend payment of Ps280,658 thousand.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net working capital, calculated as the excess of current assets over
current liabilities, was Ps3,167,509 thousand compared to Ps2,712,465 thousand,
as a result of an increase in cash and cash equivalents, accounts and notes
receivable, partially offset by a decrease in inventories, higher current
liabilities (which include a portion of long-term debt) and trade accounts and
notes payable. We believe that the net working capital is sufficient to meet
our liquidity needs for the present and the foreseeable future.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;5, 2003, a new exchange control regime became effective in
Venezuela. These exchange controls limit Tavsa&#146;s ability to make purchases in
foreign currency and to distribute profits to Tamsa. These exchange controls
have not yet had a material impact on our ability to meet our cash obligations,
and are currently not expected to have such an impact. There can be no
assurance when, if at all, the Venezuelan government will lift these controls
or otherwise take future action to allow for greater flexibility in the
repatriation of capital. For more information, see Item&nbsp;3.D. &#147;Risk
Factors&#151;Risks Relating to Mexico and Venezuela.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Year Ended December&nbsp;31, 2001 Compared to Year Ended December&nbsp;31, 2000</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s cash balances at December&nbsp;31, 2001 increased to Ps588,632 thousand
from Ps331,566 thousand at December&nbsp;31, 2000. Of this amount, Ps1,209,529
thousand was provided by operations after extraordinary items and the net
proceeds from additional long-term financing of Ps263,434 thousand. Tamsa used
the funds in the following activities: capital expenditures of Ps851,186
thousand, acquisition of Riga of Ps52,606 thousand, and a dividend payment of
Ps312,105 thousand, increased by Ps263,434 from additional financing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net working capital, calculated as the excess of current assets over
current liabilities, was Ps2,712,465 at December&nbsp;31, 2001, compared to
Ps2,523,247 at December&nbsp;31, 2000. The principal reasons for this variation were
a considerable increase in cash and cash equivalents, inventories as well as
decrease in current liabilities due to lower short-term debt and trade accounts
and notes payable, partially offset by a decrease accounts and notes
receivable, prepaid expenses and recoverable taxes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Financings</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s financial debt was Ps1,723,219 thousand (USD167.1&nbsp;million) as of
December&nbsp;31, 2002, compared to Ps1,608,970 thousand (USD166.5&nbsp;million) as of
December&nbsp;31, 2001. Financial debt, net of cash and cash equivalents, at
year-end decreased to Ps334,530 thousand (USD32.4&nbsp;million) in 2002, compared to
Ps1,020,338 thousand (USD105.6&nbsp;million) in 2001. The deferred tax liability as
of December&nbsp;31, 2002 equaled Ps2,171,121 thousand.
</FONT>
<P align="center"><FONT size="2">48</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities increased from Ps4,949,637 thousand as of December&nbsp;31,
2001 to Ps5,368,728 thousand as of December&nbsp;31, 2002 mainly due to an increase
in trade accounts and notes payable, other accounts payable, accrued interest
and unsecured loans from financial institutions to Tavsa.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2002, Tamsa had USD111.0&nbsp;million of short-term credit
lines (export-import financing and unsecured loans) with Mexican and foreign
financial institutions, of which USD36.9&nbsp;million were short-term loans to Tavsa
and guarantees. Short-term debt as of December&nbsp;31, 2002 was comprised of: (i)
USD21.6&nbsp;million of outstanding short-term loans to Tavsa, guaranteed by Tamsa,
with a maturity of 270&nbsp;days at an average annual interest rate of 3.5%; (ii)
USD78.0&nbsp;million of the portion of a long-term syndicated loan; and (iii)&nbsp;USD1.3
million of long-term debt of Riga. As of December&nbsp;31, 2001, USD25.6&nbsp;million of
short-term loans to Tavsa guaranteed by Tamsa were outstanding, with maturities
between 139 and 194&nbsp;days at an average annual interest rate of 3.98%.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;14, 2001, Tamsa subscribed a new 30-month unsecured syndicated
loan for USD130.0&nbsp;million with various financial institutions for the repayment
of a USD100.0&nbsp;million loan and for general corporate purposes. This new
syndicated loan, provides for payments of USD26.0&nbsp;million in June 2003 and
USD52.0&nbsp;million each in December 2003 and June 2004, and bears interest at
LIBOR plus 1.125&nbsp;percentage points for the first two years, and at LIBOR plus
1.25&nbsp;percentage points for the last six months.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt as of December&nbsp;31, 2002 was USD66.3&nbsp;million, corresponding
to the portion of a USD130.0&nbsp;million long-term syndicated loan to Tamsa.
Additionally, this debt is also comprised of USD15.5&nbsp;million debt, of which
USD5.0&nbsp;million corresponds to Riga, are guaranteed by Tamsa, bearing an annual
interest of 3.05%, with maturity in June 2006 and with semi-annual installments
of USD625 thousand commencing on June 2003; and USD10.5&nbsp;million debt
corresponding to Tavsa, guaranteed by Tamsa, bearing an annual interest of
3.29%, with maturity in May 2004.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no scheduled repayments on any long-term loan during 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 1991, Tamsa established a U.S. and Euro commercial paper
program for up to USD50.0&nbsp;million, with maturities of up to 360&nbsp;days. In August
1992, Tamsa increased the program to USD75.0&nbsp;million. As of December&nbsp;31, 2002,
this program had been terminated.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa does not have any limitations on investments in fixed assets or in
other companies. Dividend payments and repurchase of shares are permitted if
there are no events of default under the syndicated loan agreement and if such
payments or repurchases of shares do not otherwise result in an event of
default under the syndicated loan agreement. Tamsa is required to comply with
certain financial ratios related to working capital, debt to EBITDA levels and
debt service. At December&nbsp;31, 2002, Tamsa was in compliance with all financial
and other covenants.
</FONT>
<P align="left"><FONT size="2"><B>Contractual Obligations and Commercial Commitments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes Tamsa&#146;s contractual obligations at December
31, 2002 and the effect such obligations are expected to have on its liquidity
and cash flow in future periods:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>Payments Due by Period</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="19"><FONT size="1"><B>as of December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="19"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Less than 1</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1-3</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>4-5</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>After 5</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Contractual Obligations</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>year</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>years</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>years</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>years</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="19"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Short-Term Debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,040,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,040,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Long-Term Debt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">683,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">683,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Contractual Cash Obligations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,723,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,040,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">683,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">49</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Amount of Commitment</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>Expiration Per Period</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="15"><FONT size="1"><B>as of December 31, 2002</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Total</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="15"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amounts</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Less than 1</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1-3</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>4-5</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>After 5</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Other Commitments</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Committed</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>year</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>years</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>years</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>years</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="19"><FONT size="1"><B>(thousands of constant December 31, 2002 Mexican pesos)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Guarantees<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,086,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,069,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">17,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other Commercial Commitments<SUP>(2)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">531,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">242,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">192,199</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">96,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="2" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="2" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="2" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="2" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="2" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total Commitments</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,618,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">1,312,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">209,227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">Ps</FONT></TD>
    <TD align="right"><FONT size="2">96,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">See Item&nbsp;4.A. &#147;Information on the Company&#150;&#150;Tamsa&#150;&#150;Investments in Other
Companies&#150;&#150;Amazonia and Comsigua&#148;.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents Tamsa&#146;s off-balance sheet commitments under its contract with
Comsigua to purchase HBI and its contract with Pemex for the supply of
natural gas. For a description of these arrangements, see Item&nbsp;4.B
&#147;Information on the Company&#151;Tamsa&#151;Raw Materials and Energy&#148;.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Critical Accounting Policies and Estimates</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s operating and financial review and prospects are based on Tamsa&#146;s
audited consolidated financial statements, which have been prepared in
accordance with Mexican GAAP. The use of Mexican GAAP as opposed to U.S. GAAP
has an impact on Tamsa&#146;s critical accounting policies and estimates. The
application of U.S. GAAP would have affected the determination of consolidated
net income for the periods ended December&nbsp;31, 2001, and December&nbsp;31, 2002, and
the determination of consolidated shareholders&#146; equity and consolidated
financial position as of December&nbsp;31, 2001 and December&nbsp;31, 2002. Note 12 to
the audited consolidated financial statements provides a reconciliation to U.S.
GAAP of Tamsa&#146;s results of operations, shareholders&#146; equity and certain other
selected financial data.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of these financial statements requires Tamsa to make
certain estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, Tamsa evaluates its estimates, including
those related to bad debts, valuation of long-lived and intangible assets,
long-term investments reserve for obsolescence, income taxes, deferred income
taxes and environmental contingencies. Tamsa bases its estimates on historical
experience and on various other assumptions that it believes to be reasonable
under the circumstances. These estimates form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa believes the following critical accounting policies and estimates
affect its more significant judgments and estimates used in the preparation of
its audited consolidated financial statements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Allowance
for Doubtful Accounts.</I> Tamsa evaluates the collectibility of
its accounts receivable based on a combination of factors. In circumstances
where Tamsa is aware of a specific customer&#146;s inability to meet its financial
obligations to it (e.g., bankruptcy filings, substantial down-grading of credit
scores), Tamsa records a specific reserve for bad debts against outstanding
amounts to reduce the net recognized receivable to the amount it reasonably
believes will be collected. For all other customers, Tamsa performs ongoing
credit evaluations based upon its analysis of historical bad debts, customer
concentrations, customer credit worthiness, current economic trends and changes
in customer payment terms, as determined by its review of their current credit
information.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While, based on Tamsa&#146;s experience, losses due to credit failures have
been within expectations and the provisions established, if circumstances
change (i.e., higher than expected defaults or an unexpected material adverse
change in a major customer&#146;s ability to meet its financial obligation to
Tamsa), management&#146;s estimates of the recoverability of amounts due to it could
be reduced by a material amount. In this case, Tamsa&#146;s results of operations,
financial condition and net worth would be materially and adversely affected.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Inventory
Obsolescence Reserve.</I> Tamsa&#146;s management also creates provisions
for obsolete or unmarketable inventory equal to the difference between the cost
of inventory and the estimated market value based upon inventory turnover
levels and assumptions about future demand and market conditions. If actual
future demand or market conditions are less favorable than those projected by
management, additional inventory write-downs may be required.
</FONT>
<P align="center"><FONT size="2">50</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While, based on Tamsa&#146;s experience, losses due to obsolescence and scrap
of inventory have been within expectations and the provisions established, if
circumstances change (i.e., significant changes in the technology used in the
mills), management&#146;s estimates of the recoverability of these inventories could
be reduced by a material amount. In this case, Tamsa&#146;s results of operations,
financial condition and net worth would be further materially and adversely
affected.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impairment
of Long-Term Investments.</I> Tamsa holds minority interests in
non-publicly traded companies (whose value is difficult to determine) having
operations in areas related to its main activity. Tamsa records an investment
impairment charge when it believes an investment has experienced a decline in
value that is other than temporary. Future adverse changes in market conditions
or poor operating results of these investments could result in losses or an
inability to recover the carrying value of the investments that may not be
reflected in an investment&#146;s current carrying value, thereby possibly requiring
an impairment charge in the future. As a consequence of certain adverse
economic and operating factors experienced by Amazonia, Tamsa recorded an
allowance of Ps154,688 thousand as of December&nbsp;31, 2001, to account for
potential losses in the value of its investment and subordinated convertible
debentures in Amazonia, which was applied against equity in Amazonia&#146;s 2002
results.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Accounting
for Income Taxes.</I> As part of the process of preparing its
consolidated financial statements, Tamsa is required to estimate its income
taxes in each of the jurisdictions in which it operates. This process involves
estimations of Tamsa&#146;s actual current tax exposure together with assessing
temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and
liabilities, which are included within Tamsa&#146;s consolidated balance sheet.
Tamsa must then assess the likelihood that its deferred tax assets will be
recovered from future taxable income and to the extent it believes that
recovery is not likely, it must establish a valuation allowance. To the extent
Tamsa establishes a valuation allowance or increases this allowance in a
period, Tamsa must include an expense within the tax provision in the statement
of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant management judgment is required in determining a provision for
income taxes, deferred tax assets and liabilities and any valuation allowance
recorded against net deferred tax assets. Tamsa has recorded a valuation
allowance of Ps61,497 thousand as of December&nbsp;31, 2001, and Ps77,188 thousand
as of December&nbsp;31, 2002 due to uncertainties related to its ability to utilize
certain deferred tax assets, primarily consisting of tax losses of Tavsa
carried forward, before they expire. The valuation allowance is based on
estimates of taxable income and the period over which deferred tax assets will
be recoverable. In the event that actual results differ from these estimates or
Tamsa adjusts these estimates in future periods, Tamsa may need to establish an
additional valuation allowance which could impact its financial position and
results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Provision
for Environmental Contingencies.</I> The risk of incurring
environmental liability is inherent to Tamsa&#146;s industry. Management
periodically evaluates Tamsa&#146;s environmental risks associated with its
manufacturing activities and recognizes provisions to cover possible
environmental contingencies. Tamsa recorded a liability for environmental
contingencies amounting to Ps84,721 thousand as of December&nbsp;31, 2001, and
Ps97,650 thousand as of December&nbsp;31, 2002, which will be mainly used to confine
the scrap derived from its steel manufacturing process. Tamsa does not foresee
that compliance with the requirements imposed by applicable environmental
legislation will impair its competitive capability or result in any material
additional capital expenditures or operating or maintenance costs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed.</I>
Long-lived assets and intangibles are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less the cost
to sell.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to SFAS No.&nbsp;144, Accounting for the Impairment or Disposal of
Long-Lived Assets, we periodically evaluate long-lived assets, including
property, plant and equipment and definite lived intangible assets whenever
events or changes in conditions may indicate that the carrying value may not be
recoverable. Factors that management considers important that could initiate an
impairment review include the following:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">significant operating losses;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">51</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">significant declines in demand for a product whereby an
asset is only able to produce that product;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">assets that are idled; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">assets that are likely to be divested.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The impairment review requires management to estimate future undiscounted
cash flows associated with an asset or group of assets and sum the estimated
future cash flows. If the future undiscounted cash flows is less than the
carrying amount of the asset, then we must estimate the fair value of the
asset. If the fair value of the asset exceeds the carrying value then the
difference will be written-off. Estimating future cash flows requires
management to make judgments regarding future economic conditions, product
demand and pricing.
</FONT>
<P align="left"><FONT size="2"><B>Net Income and Total Shareholders&#146; Equity Information on a U.S. GAAP Basis</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s audited consolidated financial statements have been prepared in
accordance with Mexican GAAP, which, as applied to Tamsa, differ in certain
respects from U.S. GAAP.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s net income under U.S. GAAP was Ps1,381,633 thousand in 2002,
Ps734,766 thousand in 2001 and Ps500,536 thousand in 2000, respectively. The
principal differences between Mexican GAAP and U.S. GAAP that affected Tamsa&#146;s
results of operations were due to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">the basis of Tamsa&#146;s investments in Amazonia and Tavsa;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">deferred employees&#146; statutory profit sharing;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">adjustments to the annual depreciation of foreign machinery and equipment;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">revenue recognition;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">purchase accounting, which had an effect on the accounting for the acquisition of Tavsa;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">deferred income tax;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">the minority interest effect of
the adjustments; <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">capitalization of interest.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For additional information regarding the reconciliation of consolidated
net income and shareholders&#146; equity and the analysis of changes in
shareholders&#146; equity, see note 12 to Tamsa&#146;s audited consolidated financial
statements.
</FONT>
<P align="left"><FONT size="2"><B>Recent Events</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;31, 2003, Tenaris announced that it intends to cause the
delisting of Tamsa from the Mexican Stock Exchange and the American Stock
Exchange, the termination of Tamsa&#146;s ADR facility and, if and when appropriate,
the termination of Tamsa&#146;s registration with the SEC. Following its delisting
from the Mexican Stock Exchange, Tamsa will no longer be required to have
independent directors and is expected not to have any independent directors in
the future. Tenaris also announced that, subject to the approvals of the U.S.
and Mexican securities regulators, it intends to propose an exchange of its
shares and ADSs for any Tamsa shares and ADSs not held by Tenaris or its
affiliates in accordance with Mexican and U.S. laws. Tenaris stated that it did
not expect to obtain the requisite approvals, and consequently be in a position
to propose any exchange of shares and ADSs, prior to June 2003. On April&nbsp;30,
2003, Tamsa&#146;s shareholders&#146; meeting gave the requisite approvals to effect such
exchange.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;30, 2003, Tamsa&#146;s shareholders&#146; meeting approved a proposal for
the payment of a dividend of USD0.08748 per share or USD0.4374 per ADR (each
ADR representing five shares) and the creation of a reserve for future
dividends in the amount of USD70&nbsp;million and delegated to Tamsa&#146;s board of
directors the power to declare and pay any dividends against this reserve,
unless otherwise resolved by a subsequent shareholders&#146; meeting. No assurances
are given as to if or when such dividends will be declared or paid.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Tamsa&#146;s shareholders&#146; meeting on April&nbsp;30, 2003 approved the
reduction of Tamsa&#146;s capital stock by 3,650,000 shares and an amendment of
Tamsa&#146;s By-Laws to allow Tamsa to guarantee obligations of other companies
controlled by Tenaris.
</FONT>
<P align="center"><FONT size="2">52</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s shareholders&#146; meeting on April&nbsp;30, 2003 also approved the
delisting of Tamsa&#146;s shares from the Mexican Stock Exchange, the termination of
Tamsa&#146;s ADR facility and termination of the registration of Tamsa&#146;s securities
with the SEC, in each case as soon as practicable in accordance with applicable
law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;30, 2003, the holders of Tamsa&#146;s ADSs were notified that the
deposit agreement relating to Tamsa&#146;s ADSs had been amended to provide that
each holder of Tamsa ADSs that are outstanding on the expiration date of any
exchange offer by Tenaris or any of its affiliates who has not tendered such
Tamsa ADSs pursuant to such exchange offer will be deemed to have instructed
the depositary to tender the underlying Tamsa shares into such exchange offer
in exchange for the appropriate amount of consideration, and the Tamsa
depositary will do so unless instructed otherwise by Tamsa. The amendment to
the Tamsa deposit agreement will go into effect on June&nbsp;30, 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;10, 2003, Roberto Rocca, the chairman of the board of directors of
Tenaris, our controlling shareholder, and the honorary chairman of San Faust&#237;n
N.V., Tenaris&#146;s controlling shareholder, passed away. Until June&nbsp;10, 2003, San
Faust&#237;n was ultimately controlled by Mr.&nbsp;Rocca, either directly or through
Rocca &#038; Partners. Following Mr.&nbsp;Rocca&#146;s death, San Faust&#237;n is controlled by
Rocca &#038; Partners.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;23, 2003, Tamsa announced that Amazonia and Sidor reached an
agreement with their financial creditors and the Venezuelan government relating
to the restructuring of Sidor&#146;s and Amazonia&#146;s financial debt. Under the terms
of the agreements, Sidor&#146;s and Amazonia&#146;s aggregate financial debt was reduced
from USD1,883&nbsp;million to USD791&nbsp;million, certain shareholders of Amazonia
contributed USD133.5&nbsp;million in cash to Ylopa, for the acquisition and
capitalization of Sidor&#146;s and Amazonia&#146;s financial debt, the government of
Venezuela increased its participation in Sidor from 30% to 40.3% and all the
guarantees provided by the shareholders of Amazonia with respect to loans made
to Sidor were released and replaced with a security on the fixed assets of
Sidor which, together with the pledges on the shares of Amazonia and the shares
that Amazonia holds in Sidor, were placed in trust for the benefit of Sidor&#146;s
financial creditors and the Venezuelan government. In addition, a portion of
Sidor&#146;s excess cash (determined in accordance with an agreed-upon formula) will
be applied to repay Sidor&#146;s financial debt and the remainder will be
distributed to the Venezuelan government and Ylopa.
</FONT>
<P align="center"><FONT size="2">53</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "Item&nbsp;6. Directors, Senior Management and Employees" -->
<DIV align="left"><A NAME="006"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors, Senior Management and Employees</B>
</FONT>

<P align="left"><FONT size="2"><B>A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors and Senior Management</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Board
of Directors</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management of our business is vested in a board of directors. Our by-laws
provide that the board of directors will consist of the number of directors
elected by the annual ordinary shareholders&#146; meeting, provided that such number
may not be less than five or more than 20 (of whom one-fourth must be
independent directors as defined under Mexican law). Our by-laws further
provide that an equivalent number of alternate directors be appointed. In the
absence of the principal directors, alternate directors will attend meetings of
the board of directors. Under Mexican law, the board of directors must meet at
least once every three months and may be convened at any time by the chairman
of the board, any of the statutory auditors or one-fourth of the directors. A
majority of the board of directors constitutes a quorum. Resolutions are taken
by the vote of a majority of the members present at the meeting. In the case of
a tie, the chairman or the person replacing him at a particular meeting is
entitled to cast the deciding vote. Board resolutions may also be taken outside
a meeting as long as they are unanimous and are later confirmed in writing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors and alternate directors are appointed at the annual ordinary
shareholders&#146; meeting to serve yearly renewable terms, as decided by the
shareholders. In the event the board is comprised of more than three directors,
shareholders representing at least 10% of the capital stock of listed companies
(such as Tamsa) may appoint at least one of those directors. Our current board
of directors is comprised of 8 directors and 8 alternate directors, each of
whom was appointed at the annual ordinary shareholders&#146; meeting held on April
30, 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets out our current directors and alternate
directors, their respective positions on the board of directors, their
principal occupation, their years of service as a board member and their years
of birth.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Years as a</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Director or</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Alternate</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Year of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Principal Occupation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Director</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Birth</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Paolo Rocca<SUP>(1)</SUP></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Chairman
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Chief Executive Officer of Tamsa,<BR>
Tenaris and the Techint group
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1952</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Adalberto Cortesi<SUP>(1)</SUP></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Vice Chairman
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Vice Chairman of the Board
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1930</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Guillermo F. Vogel</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Vice Chairman
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Vice Chairman of the Board
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">19</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1950</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Carlos Abedrop</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Private Investor
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">22</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1920</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Vincenzo Crapanzano</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Executive Vice President and<BR>
Managing Director of Tamsa
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1952</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Roberto Einaudi</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Chairman Emeritus of Techint Group
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">51</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1906</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Gianfelice Rocca<SUP>(1)</SUP></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Chairman of the
board of directors of San Faust&#237;n
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">20</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1948</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Luis Alberto Aziz</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Partner in S.A.I.
Consultores S.C.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">6</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1966</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Cecilia Bilesio</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Assistant to the Chairman of the<BR>
Board of Directors and Corporate<BR>
Affairs
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1954</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Emilio Paul&#243;n</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Private Investor
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">22</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1928</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Gerardo Varela</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Chief Financial Officer of Tamsa
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">4</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1947</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Alejandro Cervantes Riba</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Private Investor
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1938</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Roberto Altamura</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Managing Director of Techint S.A.<BR>
de C.V.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1949</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Fernando Mantilla</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Secretary of San Faust&#237;n
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1948</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Javier P&#233;rez Rocha</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Senior Partner of a Law Firm
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">15</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1941</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Hernando Sabau Garc&#237;a</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Alternate Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">Partner in S.A.I.
Consultores S.C.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">1953</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Paolo Rocca and Gianfelice Rocca are brothers and are the nephews of
Adalberto Cortesi and the sons of Roberto Rocca.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">54</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F&#233;lix Todd Pi&#241;ero is the Secretary of the Board of Directors and Francisco
Jos&#233; Mu&#241;oz Jim&#233;nez is the Assistant Secretary of the Board of Directors.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under amendments to the Mexican Securities Market Law, the board of
directors&#146; approval is required for related party transactions not in the
ordinary course of business, purchases and sales of 10% or more of Tamsa&#146;s
total assets, the granting of guarantees in an amount exceeding 30% of Tamsa&#146;s
total assets, and all other transactions involving an amount greater than 1% of
Tamsa&#146;s total assets.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law, members of the board of directors shall have the duties
and responsibilities inherent to their position and those imposed upon them by
the terms of the company&#146;s by-laws. Our directors are jointly liable to us for
the absence of shareholder capital contributions, any breach of applicable law
or our by-laws in regards to the payment of dividends, transactions that
require specific board approval as described above, the absence of mandatory
accounting, control, information and recording systems and the lack of
implementation of shareholder resolutions.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Causes of action against directors may be initiated by us upon resolution
of our shareholders&#146; meeting or by 15% of our shareholders, as long as, in the
latter case, such enforcement is for the total amount for which the directors
are liable, and the promoting shareholders did not vote not to proceed against
the directors. A director will not be liable notwithstanding his presence at
the meeting where the respective resolution was passed if the director opposed
the relevant resolution.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any director whose interests may in any way be in conflict with the
interests of Tamsa must make such situation known to the remaining directors
and abstain from voting in any matter related to such transaction. There are
no service contracts between any director and Tamsa or any of its subsidiaries
that provide for benefits upon termination of employment; Tamsa&#146;s directors,
however, may be entitled to certain benefits under Mexican law upon termination
of employment.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with recent amendments to the Mexican Securities Market Law,
the board of directors must constitute an audit committee comprised of members
of the board of directors, the chairman and majority of which must be
independent directors. The statutory auditors must attend as guests, with the
right to express their opinion but without the right to vote. The audit
committee is required to issue a report to be submitted to the general
shareholders&#146; meeting.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;10, 2002, an Audit Committee was created in accordance with the
Mexican Securities Law. The Audit Committee is comprised of three members of
the Board of Directors (Luis Alberto Aziz as Chairman, Emilio Paulon and Gerardo
Varela), the majority of which, including the chairman, are independent
Directors. The statutory auditors must attend as guests, with the right to
express their opinion but without the right to vote. The Audit Committee is
required to issue a report to be submitted to the general shareholders&#146;
meeting.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee&#146;s duties
include, among others, to assist the board of directors in the
fulfillment of its oversight responsibilities with respect to the
financial statements, the system of internal controls, the accounting
policies and procedures and the audit process. In addition, the Audit
Committee will perform other duties entrusted to it by the board of
directors, particularly with respect to relations with the
independent auditors.
</font>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Statutory
Auditors</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our by-laws require the appointment of at least one statutory auditor and
one alternate statutory auditor. According to Mexican law, shareholders
representing at least 10% of the capital stock of listed companies (such as
Tamsa) may appoint one of those statutory auditors.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary responsibilities of the statutory auditors are to monitor the
performance of our board of directors and our management and report to the
shareholders at the annual ordinary shareholders&#146; meeting regarding the
accuracy and reasonableness of the board of directors&#146; annual report. The
statutory auditors are also authorized to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">call ordinary or extraordinary shareholder meetings;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">attend all shareholder, board of directors or audit committee meetings; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">generally monitor our affairs.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">55</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is currently one statutory auditor and one alternate statutory
auditor, each of whom was appointed at our annual ordinary shareholders&#146;
meeting held on April&nbsp;30, 2003. The following table sets out the current
statutory auditors, the position currently held by each of them and the years
of service as statutory and alternate statutory auditors.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Years as
a Member or Alternate</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Position</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Member</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Enrique Osorno Heinze</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Statutory Auditor</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Juan Manuel C&#225;rdenas L&#243;pez</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center"><FONT size="2">Alternate Statutory Auditor</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Senior
Management</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive officers, their respective positions and their years of
service with us are as follows:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Years as an Executive Officer</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Cecilia Bilesio</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Assistant to the Chairman<BR>
of the Board of Directors<BR>
and Corporate Affairs
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">7</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Vincenzo Crapanzano</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Executive Vice President and<BR>
Managing Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Sergio de la Maza</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Domestic Sales Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Marcelo de Virgiliis</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Export Sales Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&#151;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Claudio Gugliuzza</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Administrative Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">4</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Gustavo Kehr</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Director of Operations
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">4</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">H&#233;ctor Quintanilla</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Quality Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Julio Eduardo Stulich</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Logistics Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">F&#233;lix Todd Pi&#241;ero</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Legal Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Gerardo Varela</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Chief Financial Officer
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top"><FONT size="2">Roberto Vilate</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
Technical Director
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cecilia
Bilesio.</B> Ms.&nbsp;Bilesio currently serves as Assistant to the
Chairman of the Board of Directors and Corporate Affairs of Tamsa. From 1984 to
1986, Ms.&nbsp;Bilesio worked for Techint Inc. in New York where she was in charge
of negotiating financings for Siderca&#146;s plant expansion project. From 1986 to
1996, Ms.&nbsp;Bilesio managed her own firm dedicated to the export business between
Mexico and the United States. In 1996, she assumed her current position with
Tamsa. Ms.&nbsp;Bilesio was born on September&nbsp;12, 1954.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Vincenzo
Crapanzano.</B> Mr.&nbsp;Crapanzano currently serves as Director,
Executive Vice President and Managing Director of Tamsa. Prior to joining
Tamsa, he held various positions at Grupo Falck from 1979 to 1989. When Dalmine
acquired Grupo Falck in 1990, he was appointed managing director of the cold
drawn tubes division. He assumed his current position with Tamsa in 2000. Mr.
Crapanzano was born on September&nbsp;12, 1952.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Sergio
de la Maza.</B> Mr. de la Maza currently serves as Domestic Sales
Director of Tamsa. He first joined Tamsa in 1980. From 1983 to 1988, Mr. de la
Maza worked for Dalmine. He then became manager of Tamsa&#146;s new pipe factory and
later served as Manufacturing Manager and Quality Director of Tamsa.
Subsequently, he was named Manufacturing Director of Siderca. In 2001, he
assumed his current position with Tamsa. Mr. de la Maza was born on June&nbsp;16,
1956.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Marcelo
de Virgiliis.</B> Mr. de Virgiliis currently serves as Director of
Tenaris Line Pipe Services Global Business. He began his career with the
Tenaris companies in 1983, when he joined the financial planning division of
Propulsora Sider&#250;rgica (now Siderar). In 1986, he was assigned to the
commercial department of Siat. He held various positions at Siat and
ultimately, in 1999, was appointed General Manager of Siat. In 2003, he
assumed his current position in Tamsa. Mr. de Virgiliis was born on July&nbsp;20,
1959.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Claudio
Gugliuzza.</B> Mr.&nbsp;Gugliuzza currently serves as Administrative
Director of Tamsa. He joined Siderca in 1988 as operative auditor. In 1994,
he joined Tamsa in the internal audit department and later became responsible
for financial planning and commercial planning. In 1999, he was named
Administrative Manager and in 2001, Administrative Director of Tamsa. Mr.
Gugliuzza was born on April&nbsp;25, 1966.
</FONT>
<P align="center"><FONT size="2">56</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Gustavo Kehr.</B> Mr.&nbsp;Kehr currently serves as Director of Operations of
Tamsa. He started his career with the Tenaris companies in 1980. In 1981, he
joined Siderca as process engineer and later worked as a member of the team in
charge of starting up the rolling mill operations. In 1993, he became rolling
mill manager. In 1999, he joined Tamsa as pipe factory manager and in 2000, he
assumed his current responsibilities. Mr.&nbsp;Kehr was born on February&nbsp;11, 1957.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>H&#233;ctor
Quintanilla.</B> Mr.&nbsp;Quintanilla currently serves as Quality Director
of Tamsa. He joined Tamsa in 1983 as head of quality control of melt shop,
sponge iron and round bar rolling mill. He served as product engineering
manager from 1994 until 2000, when he assumed his current responsibilities.
Mr.&nbsp;Quintanilla was born on December&nbsp;12, 1955.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Julio
Eduardo Stulich.</B> Mr.&nbsp;Stulich currently serves as Logistics Director
of Tamsa. He began his career with the Tenaris companies in 1989, when he
joined the production division of seamless steel pipes at Siderca. He held
various positions at Siderca and ultimately was appointed head of planning and
production programming. In 1999, he left Siderca and joined Tamsa. Mr.
Stulich was born on May&nbsp;25, 1959.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>F&#233;lix
Todd Pi&#241;ero.</B> Mr.&nbsp;Todd currently serves as Secretary of the Board
and Legal Director of Tamsa. He joined Tamsa in 1993 as internal legal
counsel. Prior to joining Tamsa, he was legal counsel for Union Carbide
Mexicana, S.A. de C.V. (from 1988 to 1993) and Colgate Palmolive, S.A. de C.V.
(from 1985 to 1988). Mr.&nbsp;Todd was born on November&nbsp;15, 1957.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Gerardo Varela. </B>Mr.&nbsp;Varela currently serves as Alternate Director and
Chief Financial Officer of Tamsa. Prior to joining Tamsa in 1992, Mr.&nbsp;Varela
was Chief Financial Officer of Grupo Aluminio from 1982 to 1992. Mr.&nbsp;Varela
also worked at Eastman Kodak Company in Rochester, New York from 1980 to 1982
and at Kodak Mexicana from 1969 to 1980 in the corporate finance and planning
department where he held the position of Chief Financial Officer. Between 1963
and 1969, Mr.&nbsp;Varela worked at Bancomer in the internal control and auditing
department. Mr.&nbsp;Varela received a M.S. in Systems and Planning from
Universidad Iberoamericana in 1980, and an M.B.A. from Syracuse University in
1975. Mr.&nbsp;Varela is a certified public accountant with the B.A. degree from
the National Autonomous University of Mexico. Mr.&nbsp;Varela was born on September
25, 1947.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Roberto
Vilate.</B> Mr.&nbsp;Vilate currently serves as Technical Director
of Tamsa. He was first employed with the Tenaris companies in 1969. From 1978
to 1982, Mr.&nbsp;Vilate worked as an independent consultant for the Argentine
Nuclear Plan in Bariloche, Argentina. He rejoined the Tenaris companies in 1982
and in 1998 was assigned to the technical division of Siderca, Siat, Tamsa and
Tavsa. In 2000, he assumed his current position with Tamsa. Mr.&nbsp;Vilate was born
on September&nbsp;10, 1940.
</FONT>
<P align="left"><FONT size="2"><B>B.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Compensation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The compensation of the directors and statutory auditors is determined at
the annual ordinary shareholders&#146; meeting.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For fiscal year 2002, the aggregate compensation of all our directors,
alternate directors, statutory and alternate statutory auditors and executive
officers paid or accrued in such year for services in all capacities was
approximately Ps63.5&nbsp;million.
</FONT>
<P align="left"><FONT size="2"><B>C.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Board Practices</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;6.A. &#147;Directors, Senior Management and Employees&#151;Directors and
Senior Management.&#148;
</FONT>
<P align="left"><FONT size="2"><B>D.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Employees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;4. &#147;Information on the Company&#151;Tamsa&#151;Employees.&#148;
</FONT>
<P align="left"><FONT size="2"><B>E.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Share Ownership</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of May&nbsp;30, 2003, none of our directors, alternate directors, statutory
and alternate statutory auditors or executive officers owned any shares in
Tamsa.
</FONT>

<P align="center"><FONT size="2">57</FONT>




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<!-- link2 "Item&nbsp;7. Major Shareholders and Related Party Transactions." -->
<DIV align="left"><A NAME="007"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;7.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Major Shareholders and Related Party Transactions.</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Major Shareholders</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the current beneficial ownership of our shares,
as of May&nbsp;30, 2003, by (a)&nbsp;our principal shareholders (persons or entities that
own beneficially 5% or more of our shares), (b)&nbsp;our directors, alternate
directors, members and alternate member of the supervisory council and
executive officers as a group and (c)&nbsp;non-affiliated public shareholders.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Identity of Person or Group</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2">&nbsp;</TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Tenaris S.A.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">320,414,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">94.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Directors, alternate directors, members and
alternate member of the supervisory council and
executive officers, as a group</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Public</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18,869,897</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of
June&nbsp;17, 2003, 3,698,211 ADSs were registered in the name of
1,483 holders resident in the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of
October&nbsp;18, 2002, Tenaris held, directly or indirectly through
Siderca,
approximately 50.77% of Tamsa&#146;s outstanding capital stock. On November&nbsp;11,
2002, Tenaris launched an exchange offer for all the remaining outstanding
shares and ADSs of Tamsa. After consummation of that exchange offer on December
17, 2002, Tenaris held, directly or indirectly, 94.50% of Tamsa&#146;s outstanding
capital stock. On April&nbsp;30, 2003, Tamsa cancelled 3,650,000 shares of Tamsa
held by its subsidiary Tamsider and, as a result, Tenaris&#146;s ownership of
Tamsa&#146;s outstanding capital stock was reduced to 94.44%, which includes 44.3%
of Tamsa&#146;s outstanding capital stock held indirectly through its subsidiaries.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of May&nbsp;30, 2003, San Faust&#237;n N.V., a Netherlands Antilles corporation,
beneficially owned 61.2% of Tenaris&#146;s outstanding voting stock. Until June&nbsp;10,
2003, San Faust&#237;n was ultimately controlled by Roberto Rocca, either directly
or through Rocca &#038; Partners. Following Mr.&nbsp;Rocca&#146;s death on June&nbsp;10, 2003, San
Faust&#237;n is controlled by Rocca &#038; Partners.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is not aware of any person, other than Siderca, Tenaris, San Faust&#237;n
or Rocca &#038; Partners, who beneficially owns more than 5% of Tamsa&#146;s capital
stock as of the date of this annual report. None of the shares owned by Tenaris
possesses extraordinary voting or other characteristics.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>B.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Related Party Transactions</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the related party transactions that arise from the
operation of the Tenaris companies (see Item&nbsp;4.B. &#147;Information on the
Company&#151;Tenaris&#148;) we are not party to other material related party agreements.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>C.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Interest of Experts and Counsel</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P align="center"><FONT size="2">58</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "Item&nbsp;8. Financial Information" -->
<DIV align="left"><A NAME="008"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;8.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Financial Information</B>
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Financial Statements</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;17 for Tamsa&#146;s audited consolidated financial statements.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>B.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Legal Proceedings</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;4.A. &#147;Information on the Company&#151;Tamsa&#151;Litigation.&#148;
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>C.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Dividend Policy</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa does not have a formal policy governing the amount and payment of
dividends. The amount and payment of dividends are determined by majority vote
of the shareholders of Tamsa, generally, but not necessarily, on the
recommendation of Tamsa&#146;s board of directors. Since our controlling shareholder
beneficially owned 94.44% of the capital stock of Tamsa as of May&nbsp;30, 2003, it
effectively has and will continue to effectively have the discretion to
determine the amount and payment of future dividends. The payment of future
dividends will also depend on Tamsa&#146;s earnings, financial condition and other
factors, including the requirements of Mexican law. All shares of Tamsa&#146;s
capital stock rank <I>pari passu </I>with respect to the payment of dividends.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa declared and paid dividends of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">fiscal year 2000: USD30&nbsp;million (or USD0.4374 per share at
the exchange rate of Ps9.7025 per dollar). This amount was paid on
May&nbsp;31, 2001 in cash.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">fiscal year 2001: USD30&nbsp;million (or USD0.08748 per share,
after the stock split, at the exchange rate of Ps9.1182 per dollar).
This amount was paid on May&nbsp;31, 2002 in cash.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">fiscal year 2002: USD29.7&nbsp;million (or USD0.08748 per share,
at the exchange rate of Ps11.0584 per dollar). This amount was paid
on May&nbsp;15, 2003 in cash.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, on April&nbsp;30, 2003, Tamsa&#146;s shareholders&#146; meeting approved the
creation of a reserve for future dividends in the amount of USD70&nbsp;million and
delegated to Tamsa&#146;s board of directors the power to declare and pay any
dividends against this reserve, unless otherwise resolved by a subsequent
shareholders&#146; meeting. No assurances are given as to if or when such dividends
will be declared or paid.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors submits the consolidated financial statements of
Tamsa for the preceding fiscal year, together with reports thereon by the
statutory auditor, to the annual ordinary shareholders&#146; meeting for approval.
Holders of Tamsa&#146;s ADSs are entitled to vote at any shareholders&#146; meeting that
may resolve on the payment of dividends, except that if Tamsa does not provide
the depositary with the necessary voting materials on a timely basis, such
holders of ADSs might not be able to exercise their voting rights. Tamsa has
never failed to provide voting materials on a timely basis. On or before April
30 of each fiscal year, an ordinary shareholders&#146; meeting must be held to
approve the consolidated financial statements and determine the allocation of
Tamsa&#146;s net income for the preceding fiscal year. Under Mexican law, the
shareholders are required to allocate not less than 5% of net income per year
to the legal reserve until the amount of the reserve equals 20% of Tamsa&#146;s
subscribed capital stock. If the legal reserve is subsequently reduced,
dividends may not be paid until the legal reserve has been restored to its
former level. The legal reserve is not available for distribution. At December
31, 2002, Tamsa&#146;s legal reserve represented 8.64% of Tamsa&#146;s subscribed capital
stock, as adjusted. Under Tamsa&#146;s by-laws, after the allocation to the legal
reserve has been made, amounts may be segregated to fund additional reserves as
determined by the shareholders&#146; meeting. The remainder of the retained earnings
for the year may be distributed as dividends on capital stock or retained as a
voluntary reserve, contingency reserve or other account, or any combination
thereof, all as determined by the shareholders at the ordinary shareholders&#146;
meeting. On April&nbsp;30, 2003, Tamsa&#146;s shareholders&#146; meeting approved an increase
of the legal reserve by USD58.9&nbsp;million.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Owners of Tamsa&#146;s ADSs are entitled to receive any dividends payable in
respect of the underlying shares. Cash dividends are paid to the ADS depositary
in U.S. dollars, directly or through a designated paying agent.
</FONT>
<P align="center"><FONT size="2">59</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "Item&nbsp;9. The Offer and Listing" -->
<DIV align="left"><A NAME="009"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;9. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>The Offer and Listing</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our shares are listed on the Mexican Stock Exchange and our ADSs are
listed on the AMEX.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Mexican Stock Exchange</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although Tamsa&#146;s shares continue to be listed on the Mexican Stock
Exchange, following the announcement of the results of the exchange offer by
Tenaris, described in Item&nbsp;4. &#147;Information on the Company&#151;Tamsa&#151;Introduction&#148;
and &#147;Information on the Company&#151;Tenaris&#151;General,&#148; there have been no
transactions with respect to Tamsa&#146;s shares on the Mexican Stock Exchange.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set forth in the following table are reported high and low trade prices
(in nominal Mexican pesos per share) of our shares on the Mexican Stock
Exchange for the stated periods. For comparative purposes, the amounts shown
below have been adjusted retroactively to reflect the stock split that occurred
in July 2001.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="57%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2003</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2002</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter<SUP>(1)</SUP></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2001</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2000</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">32.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>1999</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">20.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>1998</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">34.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">31.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">23.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">24.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per Share</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Last Six Months<SUP>(1)</SUP></B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">18.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Following the announcement, on December&nbsp;16, 2002, of the results of the
exchange offer by Tenaris, described in Item&nbsp;4. &#147;Information on the
Company&#151;Tamsa&#151;Introduction&#148; and &#147;Information on the
Company&#151;Tenaris&#151;General,&#148; there have been no transactions with respect to
Tamsa&#146;s shares on the Mexican Stock Exchange.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">60</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;13, 2002, the last full trading day on which Tamsa&#146;s shares
were traded on the Mexican Stock Exchange, the closing sales price for our
shares was Ps16.50. As of May&nbsp;30, 2003, there were 339,284,120 issued and
outstanding shares of common stock of Tamsa, including 18,513,280 shares
deposited with Banco Nacional de M&#233;xico, S.A., Instituci&#243;n de Banca M&#250;ltiple,
Grupo Financiero Banamex Accival, or Banamex, as agent for JPMorgan Chase Bank,
formerly known as Morgan Guaranty Trust Company of New York (the &#147;Depositary&#148;),
as depositary under the Deposit Agreement dated January&nbsp;1, 1964 as amended and
restated as of June&nbsp;1, 1991, October&nbsp;15, 1991, July&nbsp;1, 1993 and September&nbsp;12,
1996 and amended as of July&nbsp;9, 2001 and May&nbsp;28, 2003 (the &#147;Deposit Agreement&#148;),
among Tamsa, the Depositary and all holders from time to time of Tamsa&#146;s ADSs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;31, 2003, Tenaris announced that it intends to cause the
delisting of Tamsa from the Mexican Stock Exchange and the American Stock
Exchange, the termination of Tamsa&#146;s ADR facility and, if and when appropriate,
the termination of Tamsa&#146;s registration with the SEC. Following its delisting
from the Mexican Stock Exchange, Tamsa will no longer be required to have
independent directors and is expected not to have any independent directors in
the future. Tenaris also announced that, subject to the approvals of the U.S.
and Mexican securities regulators, it intends to effect an exchange of its
shares and ADSs for any Tamsa shares and ADSs not held by Tenaris or its
affiliates in accordance with Mexican and U.S. laws. Tenaris stated that it did
not expect to obtain the requisite approvals, and consequently be in a position
to propose any exchange of shares and ADSs, prior to June 2003. On April&nbsp;30,
2003, Tamsa&#146;s shareholders&#146; meeting gave the requisite approvals to effect such
exchange.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of May&nbsp;30, 2003, 320,414,223 shares of common stock (representing
94.44% of the total capital stock of Tamsa) had been registered with the
National Foreign Investment Registry maintained by the SECON as being owned by
Tenaris or by its direct or indirect subsidiaries.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is a 49.0% shareholder of Sidtam, a limited liability company
organized under the laws of the British Virgin Islands. Siderca holds the
remaining 51.0% of the capital stock of Sidtam. The purpose of Tamsa&#146;s
investment in Sidtam is to participate in different types of investment
projects including, among others, the purchase of shares of Tamsa. Tamsa&#146;s
board of directors has authorized a capital contribution to Sidtam in an amount
sufficient for Tamsa to participate proportionately in the purchase by Sidtam
of two million shares of Tamsa&#146;s capital stock. As of December&nbsp;31, 2002, Sidtam
held 9,700,000 shares of Tamsa.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;2, 2001, Tamsa&#146;s board of directors proposed a five-for-one stock
split. Tamsa&#146;s shareholders approved at the extraordinary shareholders&#146; meeting
held on April&nbsp;27, 2001 the five-for one stock split effective as of July&nbsp;10,
2001. As a result, holders received five shares for each share held by them.
Additionally, a modification of the ratio of ADSs to shares, from one ADS for
each share to one ADS for each five shares, was approved. The increase in the
number of shares issued and outstanding did not modify the capital stock. Tamsa
issued 342,934,120 shares in exchange for the then outstanding 68,586,824
shares. New shares issued as a result of the stock split have the same rights
as the shares then issued and outstanding.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;19, 2002, the board of directors of Tamsa recommended a proposal
for a dividend payment in the amount of USD30&nbsp;million or USD0.08748 per share
at the exchange rate of Ps9.1182 per dollar. Tamsa&#146;s shareholders approved the
dividend payment at the annual ordinary shareholders&#146; meeting held on April&nbsp;30,
2002. The record date for such dividend payment was May&nbsp;30, 2002.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;28, 2003, the board of directors of Tamsa recommended a
proposal for a dividend payment in the amount of USD29.7&nbsp;million, or USD0.08748
per share at the exchange rate of Ps11.0584 per dollar, for the creation of a
reserve for future dividends of USD70&nbsp;million, and a reduction of Tamsa&#146;s
capital stock by 3,650,000 shares, to be submitted for approval at the general
shareholders&#146; meeting to be held on April&nbsp;30, 2003. Tamsa&#146;s shareholders
approved these proposals at the annual ordinary shareholders&#146; meeting held on
April&nbsp;30, 2003. The record date for such dividend payment was May&nbsp;14, 2003, and
the dividend was paid on May&nbsp;15, 2003 in cash.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican Stock Exchange is the only stock exchange in Mexico. It is
organized as a corporation whose shareholders are the only entities authorized
to trade in securities listed on the Exchange. Trading on the Mexican Stock
Exchange is conducted electronically from 8:30 A.M. to 3:00 P.M. each business
day.
</FONT>
<P align="center"><FONT size="2">61</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Mexican Stock Exchange is one of Latin America&#146;s largest
securities exchanges in terms of market capitalization, it remains relatively
small and illiquid compared to major world markets, and, therefore, subject to
greater volatility. Investors in the Mexican Securities Market are mostly
individuals, mutual and pension funds and companies.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>B.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>American Stock Exchange</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of May&nbsp;30, 2003, a total of 3,702,656 ADSs were registered of record.
This represents a decline from the 25,066,719 ADSs that were registered of
record as of May&nbsp;30, 2002. This decline was primarily due to the consummation
on December&nbsp;17, 2002 of the exchange offer by Tenaris described in Item&nbsp;4.
&#147;Information on the Company&#151;Tamsa&#151;Introduction&#148; and &#147;Information on the
Company&#151;Tenaris&#151;General.&#148; JPMorgan Chase Bank, formerly known as Morgan
Guaranty Trust Company of New York, acts as depositary for issuing ADRs
evidencing the ADSs. Fluctuations between the Mexican peso and the U.S. dollar
will affect the U.S. dollar equivalent of the price of the shares on the
Mexican Stock Exchange and the price of the ADSs on the AMEX. On June&nbsp;24, 2003,
the closing sales price of our ADSs on the AMEX was USD13.10.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per ADS</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="7"><FONT size="1"><B>(in U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2003</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2002</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2001</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2000</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>1999</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">14.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>1998</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">21.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">19.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="55%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Price per ADS</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>Last Six Months</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">December 2002</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">January 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">February 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">March 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">April 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">May 2003</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">62</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Item&nbsp;10. Additional Information" -->
<DIV align="left"><A NAME="010"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;10. </B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Additional Information</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the rights of the holders of our shares.
These rights are set out in our <I>estatutos sociales </I>(by-laws) or are provided
for by applicable Mexican law. This summary does not contain all information
that may be important to you. For more complete information, you should read
our by-laws, which are attached as an exhibit to this annual report.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>A.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Share Capital</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>B.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Memorandum and Articles of Association</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Shareholders&#146; Liability</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A shareholder&#146;s liability under Mexican law for losses of a company is
limited to the value of its shareholdings in the company. Shareholders of
Mexican companies are not liable for further capital calls.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Registration and Transfer</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s shares may only be held in book-entry form through an intermediary
participating in S.D. Indeval, S.A. de C.V. <I>Instituci&#243;n para el Dep&#243;sito de
Valores</I>, or Indeval. The Depositary through Banamex, which maintains an account
with Indeval, holds the shares underlying Tamsa&#146;s ADSs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Voting Rights</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Tamsa&#146;s by-laws, each share entitles the holder thereof to one vote
at any shareholders&#146; meeting.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attendance of at least 50% of the outstanding shares of common stock is
required to hold an ordinary shareholders&#146; meeting pursuant to a first call and
action may be taken by a majority of the shares present. If a quorum is not
available, a second meeting may be called at which action may be taken by a
majority of the shares present regardless of the number of shares present.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attendance of at least 75% of Tamsa&#146;s outstanding shares of common stock
is required to hold an extraordinary shareholders&#146; meeting pursuant to a first
call. If a quorum is not available, a meeting may be held pursuant to a second
call. The quorum for such second meeting is 50% of the outstanding shares of
common stock and action may be taken by a vote of not less than 50% of the
outstanding shares of common stock.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Tamsa&#146;s by-laws and in accordance with the Mexican Securities Market
Law, holders of 10% of Tamsa&#146;s outstanding capital stock may request that a
vote on any action be delayed on the grounds that the shareholders have not
received sufficient information on which to base their decision. Also, holders
of 20% of Tamsa&#146;s outstanding capital stock may have any shareholder action set
aside by filing a complaint with a court of law within fifteen days after the
close of the meeting at which such action was taken and showing that the
challenged action violates Mexican law or Tamsa&#146;s by-laws.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Shareholders&#146; Meetings</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General shareholders&#146; meetings may be ordinary meetings or extraordinary
meetings. Extraordinary general meetings are those called to consider certain
matters specified in Article&nbsp;182 of the Mexican General Corporate Law
including, principally, amendments of the by-laws, liquidation, merger and
transformation from one type of company to another. General meetings called to
consider all other matters are ordinary meetings. An annual ordinary general
meeting must be held each year to consider the approval of the consolidated
financial statements for the preceding fiscal year, allocate profits, if any,
from such preceding fiscal year, appoint directors and stockholders&#146; examiners
and determine their compensation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders&#146; meetings may be called by the board of directors or the
stockholders&#146; examiners and shall be called by the board or the stockholders&#146;
examiners at the written request of the holders of 10% of Tamsa&#146;s outstanding
capital stock. Notice of meetings must be published in the official gazette of
Tamsa&#146;s corporate domicile
</FONT>
<P align="center"><FONT size="2">63</FONT>
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<P align="left"><FONT size="2">or in a newspaper of general circulation in Tamsa&#146;s corporate domicile and
in a newspaper of general circulation in New York City at least fifteen days
prior to the meeting and, if deemed advisable by the board, in other Mexican
and foreign newspapers. Meetings must be held at Tamsa&#146;s corporate domicile. In
order to attend a meeting, shareholders must deposit their shares at Tamsa&#146;s
offices, corporate domicile, at Indeval or with a Mexican or foreign banking
institution as specified in the call itself. If so entitled to attend the
meeting, a shareholder may be represented by proxy.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividends</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;8.C. &#147;Financial Information&#151;Dividend Policy.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capital Increases and Reductions</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our capital stock may be increased by resolution of an extraordinary
shareholders&#146; meeting unless such increase is a consequence of the conversion
of previously issued convertible debentures. Capital increases require an
amendment of Tamsa&#146;s by-laws, and must be registered with the Public Registry
of Commerce. Increases in Tamsa&#146;s capital stock through a public offering of
shares requires approval from the <I>Comisi&#243;n Nacional Bancaria y de Valores</I>, or
Mexican National Banking and Securities Commission or CNBV. Reductions of
Tamsa&#146;s capital stock must be approved at an extraordinary shareholders&#146;
meeting and must be registered in the Public Registry of Commerce.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rights</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of common stock, including common stock held in the form of ADSs,
except in the case of the issuance of treasury shares to be held for exchange
of convertible securities, and except in the case of common stock issued in
connection with a public offering as described below, have pre-emptive rights
to subscribe for new shares of capital stock of the class they hold, in
proportion to the number of such shares held. Pre-emptive rights may be
exercised after publication in the official gazette of Tamsa&#146;s corporate
domicile of a notice of the proposed issuance of additional capital stock and
the period for exercise must be at least fifteen days. Under Mexican law,
pre-emptive rights cannot be represented by an instrument that is negotiable
separately from the corresponding share.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-emptive rights are provided to holders of common stock by the Mexican
Securities Market Law and the Mexican General Corporate Law and changes to such
rights could be effected only through changes to Mexican law.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Appraisal Rights</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever the shareholders approve a:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">change of corporate purposes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">change of nationality of the corporation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">transformation from one type of company to another; <I>or a</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">spin-off of the company,</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">any shareholder entitled to vote on such change who has voted against it may
withdraw from the company and receive the book value attributable to its
shares, provided the shareholder requests such action within fifteen days
following the adjournment of the meeting at which the change was approved.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liquidation</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon dissolution of Tamsa, liquidation of Tamsa&#146;s business will be carried
out by one or more liquidators appointed by the shareholders to wind up Tamsa&#146;s
affairs. In the event of liquidation, Tamsa&#146;s assets will be applied to satisfy
its debts and liabilities. Any remaining amounts will be distributed to Tamsa&#146;s
shareholders in proportion to their respective shareholdings.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Redemption and Repurchase</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s shares are subject to redemption in connection with a reduction in
capital by majority vote of shareholders at an extraordinary shareholders&#146;
meeting. Redeemed shares shall be determined by lottery. Any shares so redeemed
must be canceled. Tamsa may repurchase its shares through purchases on the
Mexican Stock Exchange in accordance with applicable provisions of Mexican law.
Tamsa may not exercise the corporate rights of shares it
</FONT>
<P align="center"><FONT size="2">64</FONT>
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<P align="left"><FONT size="2">has repurchased, which shall not be considered outstanding for purposes of
determining a quorum or for voting at shareholders&#146; meetings.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exclusive Jurisdiction</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s by-laws are governed by Mexican law and any action relating to
enforcement of Tamsa&#146;s by-laws or shareholder&#146;s rights thereunder is required
to be brought in a Mexican court.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Duration and Purpose</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Tamsa&#146;s by-laws, our duration is 90&nbsp;years counted as of April&nbsp;30,
1997. Tamsa&#146;s duration may be extended by shareholder approval at an
extraordinary shareholders&#146; meeting.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa&#146;s corporate purpose is the manufacture, purchase, sale and
distribution of steel, iron and any other kind of metal and metal-pipe,
especially seamless pipe; the participation, by itself or with third parties,
in industrial and commercial companies engaged in any activities similar,
related or supplementary activities to those mentioned above; the rendering of
technical and administrative services related to the corporate purpose, such as
services connected with the distribution and sale of pipes and the assistance
to users of pipes manufactured by Tamsa, as well as supplementary services,
with the petroleum industry or with other industries using seamless pipe and
support services to suppliers and clients, including financing, technical and
administrative assistance. Further description can be found in Article&nbsp;Two of
Tamsa&#146;s By-laws, an English translation of which is an exhibit to this annual
report.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conflict of Interest</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A shareholder that votes on a business transaction involving Tamsa in
which its interest conflicts with Tamsa&#146;s interest may be liable for damages,
but only if the transaction would not have been approved without its vote.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Foreign Investment Legislation</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Mexican law governing foreign investment in Mexico, the purchase of
shares of a Mexican corporation by an individual or legal entity domiciled
abroad or by a Mexican company with a majority of foreign capital constitutes
foreign investment. Currently, foreign investment in companies engaged in the
steel sector is not restricted, and no prior approval is required for foreign
investments. No prior approval is required in order to acquire or exercise any
right under Tamsa&#146;s shares or ADSs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by Mexican law, the by-laws of Tamsa provide that &#147;Foreign
individuals or corporations may participate in the capital stock of the
Company, with the limitations as regards proportion and with the obligations
set forth by the applicable laws. Any foreigner who at the time of
incorporation or at any ulterior time, acquires an interest or corporate
participation in the Company shall be considered, by that simple fact as
Mexican regarding one and the other, and it shall be understood that he agrees
not to invoke the protection of his Government under the penalty, in case of
not honoring his commitment, of forfeiting such interest or participation to
the benefit of the Mexican nation.&#148;
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>C.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Material Contracts</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a summary of any material contract entered into by Tamsa or any of its
consolidated subsidiaries outside of the ordinary course of business during the
last two years, see Item&nbsp;4.A. &#147;Information on the Company&#151;Tamsa &#147; and Item&nbsp;4.B.
&#147;Information on the Company&#151;Tenaris.&#148;
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>D.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Exchange Controls</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;3.E. &#147;Key Information&#151;Exchange Rates.&#148;
</FONT>
<P align="center"><FONT size="2">65</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>E.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Taxation</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mexican Tax Considerations</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividends</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid to holders with respect to the shares, including shares
represented by ADSs from retained earnings not previously taxed are subject to
a 51.52% tax payable by Tamsa. Dividends paid from previously taxed retained
earnings are not subject to any income tax payable by Tamsa. Since January&nbsp;1,
2002, the dividends paid to shareholders of Tamsa have not been subject to a
withholding tax.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain or loss on the sale or other disposition of ADSs, whether or not held
by Mexican residents, will not be subject to Mexican tax. Deposits of shares in
exchange for ADSs and withdrawals of common stock in exchange for ADSs will not
give rise to Mexican tax or transfer duties.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain or loss on the sale of shares will not be subject to any Mexican tax
if the transaction is carried out through the Mexican Stock Exchange or the
AMEX. Gain or loss on sales or other dispositions of common stock made in other
circumstances would be subject to a 34% Mexican tax, regardless of the
nationality or residence of the transferor. As a result of modifications to the
Income Tax Law, approved on January&nbsp;1, 2002, the current tax rate of 35% will
be decreased by 1% annually beginning in 2003 until it reaches a rate of 32% in
2005.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no Mexican inheritance, gift or succession taxes applicable to
the ownership, transfer or disposition of ADSs or shares. There are no Mexican
stamp, issue, registration or similar taxes or duties payable by holders of
ADSs or shares.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deposits and withdrawals of shares in exchange for ADSs will not be
subject to Mexican federal withholding tax.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Convention Between the Government of the United States of America and
the Government of Mexico for the Avoidance of Double Taxation with Respect to
Taxes on Income and the Prevention of Fraud or Fiscal Evasion and a Protocol
thereto (the &#147;Treaty&#148;) initially came into force on January&nbsp;1, 1994. The United
States and Mexico have also entered into an agreement that covers the exchange
of information with respect to tax matters. Under the Treaty, a holder that is
eligible to claim the benefits of the Treaty will be exempt from Mexican tax on
gains realized on a sale or other disposition of shares in a transaction that
is not carried out through the Mexican Stock Exchange or other securities
markets approved by the Mexican <I>Secretar&#237;a de Hacienda y Cr&#233;dito P&#250;blico </I>or
Ministry of Finance and Public Credit, so long as the holder did not own,
directly or indirectly, 25% or more of common stock within the 12-month period
preceding such sale or other disposition.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>United States Tax Considerations</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion describes the material United States federal
income tax consequences of the ownership of shares or ADSs. It applies to you
only if you are a United States Holder, as defined below, and you hold your
shares or ADSs as capital assets for tax purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section does not apply to you if you are a member of a special class
of holders subject to special rules, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a dealer in securities,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a trader in securities that elects to use a mark-to-market
method of accounting for your securities holdings,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a tax-exempt organization,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a life insurance company,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a person liable for alternative minimum tax,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a person that actually or constructively owns 10% or more of the voting stock of Tamsa,</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">66</FONT>



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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction, <I>or</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a person whose functional currency is not the U.S. dollar.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section is based on the Internal Revenue Code of 1986, as amended,
its legislative history, existing and proposed regulations and published
rulings and court decisions, all as currently in effect, as well as the Treaty.
These laws are subject to change, possibly on a retroactive basis.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, this section is based in part upon the representations of the
Depositary and the assumption that each obligation in the Deposit Agreement and
any related agreement will be performed in accordance with its terms.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this discussion, you are a United States Holder if you are
a beneficial owner of shares or ADSs and you are
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a citizen or resident of the United States,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a domestic corporation,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an estate whose income is subject to United States federal income tax regardless of its source, <I>or</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a trust if a United States court can exercise primary
supervision over the trust&#146;s administration and one or more United
States persons are authorized to control all substantial decisions
of the trust.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;United States Holders are urged to consult their own tax advisors
regarding the United States federal, state and local and other tax consequences
of owning and disposing of shares or ADSs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, and taking into account the earlier assumptions, for United
States federal income tax purposes, if you hold ADRs evidencing ADSs, you will
be treated as the owner of the shares represented by those ADRs. Exchanges of
shares for ADRs, and ADRs for shares, generally will not be subject to United
States federal income tax.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxation of Dividends</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the United States federal income tax laws, if you are a United
States Holder, the gross amount of any dividend paid by Tamsa out of its
current or accumulated earnings and profits (as determined for United States
federal income tax purposes) is subject to United States federal taxation. If
you are a noncorporate U.S. holder, dividends paid to you in taxable years
beginning after December&nbsp;31, 2002 and before January&nbsp;2, 2009 that constitute
qualified dividend income will be taxable to you at a maximum tax rate of 15%
provided that you hold the shares or ADSs for more than 60&nbsp;days during the
120-day period beginning 60&nbsp;days before the ex-dividend date and meet other
holding period requirements. Dividends we pay with respect to the shares or
ADSs generally will be qualified dividend income. The dividend is taxable to
you when you, in the case of shares, or the Depositary, in the case of ADSs,
receive the dividend, actually or constructively. The dividend will not be
eligible for the dividends-received deduction generally allowed to United
States corporations in respect of dividends received from other United States
corporations. The amount of the dividend distribution that you must include in
your income as a United States Holder will be the U.S. dollar value of the
Mexican peso payments made, determined at the spot Mexican peso/U.S. dollar
rate on the date the dividend distribution is includible in your income,
regardless of whether the payment is in fact converted into U.S. dollars.
Generally, any gain or loss resulting from currency exchange fluctuations
during the period from the date you include the dividend payment in income to
the date you convert the payment into U.S. dollars will be treated as ordinary
income or loss and will not be eligible for the special tax rate applicable to
qualified dividend income. The gain or loss generally will be income or loss
from sources within the United States for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated earnings and
profits, as determined for United States federal income tax purposes, will be
treated as a non-taxable return of capital to the extent of your basis in your
shares or ADSs and thereafter as capital gain.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends will be income from sources outside the United States, but
generally will be &#147;passive income&#148; or &#147;financial services income&#148; which is
treated separately from other types of income for purposes of computing the
foreign tax credit allowable to you.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions of additional shares to you with respect to shares that are
made as part of a pro rata distribution to all shareholders of Tamsa generally
will not be subject to United States federal income tax.
</FONT>
<P align="center"><FONT size="2">67</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxation of Capital Gains</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are a United States Holder and you sell or otherwise dispose of
your shares or ADSs, you will recognize capital gain or loss for United States
federal income tax purposes equal to the difference between the U.S. dollar
value of the amount that you realize and your tax basis, determined in U.S.
dollars, in your shares or ADSs. Capital gain of a noncorporate U.S. holder
that is recognized on or after May&nbsp;6, 2003 and before January&nbsp;1, 2009 is
generally taxed at a maximum rate of 15% where the property is held for more
than one year. The gain or loss will generally be income or loss from sources
within the United States for foreign tax credit limitation purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>PFIC Considerations</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa does not believe that it will be treated as a passive foreign
investment company, or a &#147;PFIC&#148;, for United States federal income tax purposes,
and this discussion so assumes, but that is a factual determination made
annually and therefore may be subject to change. If Tamsa were to be treated as
a PFIC, a United States Holder could be subject to certain adverse tax
consequences.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>F.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Dividends and Paying Agents</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>G.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Statement by Experts</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>H.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Documents on Display</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is subject to the informational requirements of the CNBV and the
Mexican Stock Exchange and files reports and other information relating to its
business, financial condition and other matters with the CNBV and the Mexican
Stock Exchange. You may read such reports, statements and other information,
including Tamsa&#146;s publicly-filed consolidated financial statements, at the
public reference facilities of the National Banking and Securities Commission
and Mexican Stock Exchange maintained in Mexico City. Tamsa is required to file
annual and special reports and other information with the SEC. You may read and
copy any documents filed by Tamsa at the SEC&#146;s public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Tamsa&#146;s
filings with the SEC are also available to the public at the offices of the
AMEX, 86 Trinity Place, New York, New York 10006.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JPMorgan Chase Bank acts as depositary for Tamsa&#146;s ADSs. During the time
there continue to be Tamsa ADSs deposited with the Depositary, Tamsa will
furnish the Depositary with:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">its annual reports, <I>and</I></FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">summaries of all notices of general meetings of shareholders
and other reports and communications that are made generally
available to shareholders of Tamsa.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Depositary will, as provided in the deposit agreement, arrange for the
mailing of summaries in English of such reports and communications to all
record holders of the ADSs of Tamsa. Any record holder of ADSs may read such
reports, notices, or summaries thereof, and communications at the Depositary&#146;s
office. The depositary&#146;s office is located at 1 Chase Manhattan Plaza, New
York, NY 10081.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever a reference is made in this annual report to a contract or other
document of Tamsa, please be aware that such reference is not necessarily
complete and that you should refer to the exhibits that are a part of the
annual report for a copy of the contract or other document. You may review a
copy of the annual report at the SEC&#146;s public reference room in Washington,
D.C.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><B>I.</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2"><B>Subsidiary Information</B></FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P align="center"><FONT size="2">68</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link2 "Item&nbsp;11. Quantitative and Qualitative Disclosure About Market Risk" -->
<DIV align="left"><A NAME="011"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;11.</B>&nbsp;&nbsp;&nbsp;&nbsp; <B>Quantitative and Qualitative Disclosure About Market Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion concerning Tamsa&#146;s risk management activities
includes forward contracts and other derivatives that involve risks and
uncertainties. Actual results could differ due to the nature of these financial
transactions. The analysis shown below presents the hypothetical loss/earnings
on the fair value of the financial instruments and derivative instruments which
were held by Tamsa at December&nbsp;31, 2002 and are sensitive to changes in
interest rates, foreign exchange rates and market prices. Such loss/earnings
are presented using December&nbsp;31, 2002 constant Mexican pesos and actual amounts
could differ as a result of Mexican GAAP restatement provisions. None of these
instruments are held for trading purposes. In the ordinary course of business,
Tamsa also faces risks with respect to financial instruments that are either
non-financial or non-quantifiable, such risks principally include country risk
and credit risk and are not presented in the following analysis. The risk
analysis does set forth the sensitivity of Tamsa&#146;s financial instruments to
selected changes in interest rates, foreign exchange rates or quoted market
prices.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Rate Sensitivity</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa generally does not undertake any specific actions to cover its
exposure to interest rate risk and at December&nbsp;31, 2002 was not a party to any
interest rate risk management transactions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information about Tamsa&#146;s debt obligations as
of December&nbsp;31, 2002, which included fixed and variable interest rate. The
variable portion of some of these debt obligations was LIBOR and established
fixed spreads. Fair values from the majority of Tamsa&#146;s long-term debt
obligations are based on quotes from dealers.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Favorable</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Favorable</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(Unfavorable)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(Unfavorable)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>effect in fair</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>effect in fair</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Carrying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value Mexican</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value U.S.</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value (millions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Fair value</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>pesos (millions</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>dollars</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of Mexican</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Mexican</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>of Mexican</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(millions of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Financial instrument</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>pesos)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>pesos)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>pesos)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>U.S. dollars)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Unsecured loans from
foreign financial institutions (fixed rate)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,040.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,040.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">1.44/(1.44)</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" nowrap><FONT size="2">0.14/(0.14)</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other long-term liabilities</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">683.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">683.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">66.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.94/(0.94)</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.09/(0.09)</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An increase/decrease in LIBOR of 10% would represent an increase/decrease
in the interest cost of approximately USD0.2&nbsp;million per year.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2002, Tamsa&#146;s temporary investment portfolio consisted
primarily of fixed short-term deposits. Given the short-term nature of such
instruments, an increase in interest rates would not significantly decrease the
market value of such securities. This sensitivity analysis does not consider
the monetary gain or loss, if any, which would be recognized under Mexican GAAP
as a result of the expected net monetary position of Tamsa in 2002 and future
effects of inflation. At December&nbsp;31, 2002, Tamsa had a net monetary liability
position. See notes 1 and 2 to Tamsa&#146;s audited consolidated financial
statements included in this annual report. As discussed in note 10 to Tamsa&#146;s
audited consolidated financial statements, at December&nbsp;31, 2002, Tamsa was not
party to any interest swap arrangements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Foreign Exchange Rate Risk</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa continuously monitors its economic exposure to changes in foreign
exchange rates. At December&nbsp;31, 2002, Tamsa&#146;s net monetary asset position in
U.S. dollars and subject to foreign currency exchange rate fluctuations
amounted to USD68,448 thousand (Ps705,870 thousand). The exposure amount is
determined based on the monetary position of Tamsa and its Mexican subsidiaries
and primarily reflects U.S. dollar-denominated debt, reduced by Tamsa&#146;s cash
and cash equivalents and other U.S. dollar denominated assets (mainly
receivables). See note 2 to Tamsa&#146;s audited consolidated financial statements
included in this annual report. The aggregate hypothetical loss on an annual
basis that would result from a hypothetical appreciation of 10.0% in the U.S.
dollar to Mexican peso exchange rate is estimated to be Ps70,578 thousand.
</FONT>
<P align="center"><FONT size="2">69</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tamsa is subject to risk from changes in foreign exchange rates, in
particular in regards to its sales in Canadian dollars, which as of December
31, 2002, amounted to approximately 31&nbsp;million Canadian dollars.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to hedge the exchange rate exposures on receivables denominated
in Euros maturing in January and March, 2003, on December&nbsp;10 and 13, 2002,
Tamsa entered into two forward contracts to sell EUR8,973 thousand and EUR2,000
thousand at a fixed exchange rate of USD1.003 and USD1.0194 per Euro,
respectively, with maturities at January&nbsp;31 and March&nbsp;27, 2003, respectively.
At December&nbsp;31, 2002, Tamsa recorded a loss provision of USD418 thousand;
however, at the maturity of these forward contracts Tamsa will realize an
exchange gain of USD174 thousand.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Commodity Derivative Instruments</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;22, 2001, Tamsa entered into a three-year agreement with Pemex
to receive approximately 296,600&nbsp;million BTUs of natural gas, on a monthly
basis, for the period from January&nbsp;1, 2001 to December&nbsp;31, 2003, at a fixed
price of USD4.00 dollars per million BTUs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to cover a decrease in natural gas prices, on March&nbsp;2, 2001,
Tamsa entered into a forward contract with Enron with the option to sell up to
200,000&nbsp;million BTUs per month of natural gas at a minimum base price of
USD4.05 per million BTUs from March 2002, through December 2003. As a result of
Enron&#146;s bankruptcy in late 2001, no reasonable prospect exists of exercising
Tamsa&#146;s option under this contract and, consequently, the premium paid to Enron
of USD2.3&nbsp;million for this put option was written off during the fourth quarter
of 2001.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to reduce its exposure to above-market prices under the natural
gas supply agreement with Pemex, Tamsa entered into agreements with Citibank
and JPMorgan Chase in March 2002 and April 2002. The economic effect of the
agreements with Citibank and JPMorgan Chase is to permit Tamsa to purchase
320,000&nbsp;million BTUs per month at market prices instead of at the USD4.00 per
million BTUs rate charged by Pemex, resulting in a more favorable price to
Tamsa for natural gas so long as the market price remains below USD4.00. Under
the agreements, Tamsa must continue to make its purchases of natural gas at
market prices even if the market price rises above USD4.00 per million BTUs,
thereby exposing Tamsa to the risk in the future of rising market prices.
Also, under the agreements, Tamsa must continue to make purchases at the
USD4.00 per million BTUs rate if the market price of natural gas falls to
USD2.00 per million BTUs or lower (during the period from May&nbsp;1, 2002, to
February&nbsp;28, 2003) or to USD2.25 per million BTUs or lower (during the period
from March&nbsp;1, 2003, to December&nbsp;31, 2003). In addition, under each of the
agreements with Citibank and JPMorgan Chase, Tamsa is required to purchase
160,000&nbsp;million BTUs of natural gas per month from January&nbsp;1, 2004, to December
31, 2005, at a price of USD2.765 per million BTUs. At December&nbsp;31, 2002, the
fair value of these instruments was a liability of Ps29,567 thousand, which was
charged to income of the year as a part of cost of products sold.
</FONT>
<!-- link2 "Item&nbsp;12. Description of Securities Other Than Equity Securities" -->
<DIV align="left"><A NAME="012"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;12.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Description of Securities Other Than Equity Securities</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P align="center"><FONT size="2">70</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "PART II" -->
<DIV align="left"><A NAME="013"></A></DIV>
<P align="left"><FONT size="2"><B>PART II</B>
</FONT>

<!-- link2 "Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies" -->
<DIV align="left"><A NAME="014"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;13.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Defaults, Dividend Arrearages and Delinquencies</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<!-- link2 "Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds" -->
<DIV align="left"><A NAME="015"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;14.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Material Modifications to the Rights of Security Holders and Use
of Proceeds</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;30, 2003, the holders of Tamsa&#146;s ADSs were notified that the
deposit agreement relating to Tamsa&#146;s ADSs had been amended to provide that
each holder of Tamsa ADSs that are outstanding on the expiration date of any
exchange offer by Tenaris or any of its affiliates who has not tendered such
Tamsa ADSs pursuant to such exchange offer will be deemed to have instructed
the depositary to tender the underlying Tamsa shares into such exchange offer
in exchange for the appropriate amount of consideration, and the Tamsa
depositary will do so unless instructed otherwise by Tamsa. The amendment to
the Tamsa deposit agreement will go into effect on June&nbsp;30, 2003.
</FONT>
<!-- link2 "Item&nbsp;15. Controls and Procedures" -->
<DIV align="left"><A NAME="016"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;15.</B>&nbsp;&nbsp;&nbsp;&nbsp; <B>Controls and Procedures</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the supervision and with the participation of the Company&#146;s
management, including the Company&#146;s Chief Executive Officer and Chief Financial
Officer, the Company has evaluated the effectiveness of the design and
operation of the Company&#146;s disclosure controls and procedures (as defined in
Rules&nbsp;13a-14 and 15d-14 under the Securities Exchange Act of 1934) within 90
days of the filing date of this Annual Report. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that these
disclosure controls and procedures are effective.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no significant changes in the Company&#146;s internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their most recent evaluation.
</FONT>
<!-- link2 "Item&nbsp;16A. Audit Committee Financial Expert" -->
<DIV align="left"><A NAME="017"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;16A.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Audit Committee Financial Expert</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<!-- link2 "Item&nbsp;16B. Code of Ethics" -->
<DIV align="left"><A NAME="018"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;16B.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Code of Ethics</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<!-- link2 "Item&nbsp;16C. Principal Accountant Fees and Services" -->
<DIV align="left"><A NAME="019"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;16C.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Principal Accountant Fees and Services</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</FONT>
<P align="center"><FONT size="2">71</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "PART III" -->
<DIV align="left"><A NAME="020"></A></DIV>
<P align="left"><FONT size="2"><B>PART III</B>
</FONT>

<!-- link2 "Item&nbsp;17. Financial Statements" -->
<DIV align="left"><A NAME="021"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;17.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Financial Statements</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have responded to Item&nbsp;18 in lieu of responding to this Item.
</FONT>
<!-- link2 "Item&nbsp;18. Financial Statements" -->
<DIV align="left"><A NAME="022"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;18.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Financial Statements</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See pages F-1 through F-40 of this annual report.
</FONT>
<!-- link2 "Item&nbsp;19. Exhibits" -->
<DIV align="left"><A NAME="023"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;19.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Exhibits</B>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By-laws of Tamsa, as amended as of April&nbsp;30, 2003.*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Deposit Agreement dated as of January&nbsp;1, 1964, as amended and
restated as of June&nbsp;1, 1991, October&nbsp;15, 1991, July&nbsp;1, 1993 and
September&nbsp;12, 1996, and amended as of July&nbsp;9, 2001, between
Tamsa, JPMorgan Chase Bank, formerly known as Morgan Guaranty
Trust Company of New York, as depositary, and the holders of
American Depositary Receipts (such agreement is incorporated
herein by reference to the Registration Statement on Form&nbsp;F-6
relating to the ADSs (File Nos. 33-41380, 33-35558 and
333-13702) filed with the SEC on July&nbsp;9, 2001).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amendment, dated as of May&nbsp;28, 2003, to the Deposit Agreement
dated as of January&nbsp;1, 1964, as amended and restated as of June
1, 1991, October&nbsp;15, 1991, July&nbsp;1, 1993 and September&nbsp;12, 1996,
and amended as of July&nbsp;9, 2001, between Tamsa, JPMorgan Chase
Bank, formerly known as Morgan Guaranty Trust Company of New
York, as depositary, and the holders of American Depositary
Receipts (such agreement is incorporated herein by reference to
the Registration Statement on Form&nbsp;F-6 relating to the ADSs
(File Nos. 33-41380, 33-35558 and 333-13702) filed with the SEC
on May&nbsp;28, 2003).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Atlas Bradford Technology Sublicense Agreement, dated May&nbsp;24,
2002, between Tenaris Connections B.V. and Tamsa.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Tenaris Premium Connections Technology License Agreement, dated
July&nbsp;10, 2002, between Tenaris Connections B.V. and Tamsa, and
Addendum thereto, dated November&nbsp;10, 2002.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Service Agreement dated as of August&nbsp;30, 2001, between Tamsa and
Exiros M&#233;xico, S.A. de C.V. (such agreement is incorporated
herein by reference to Tamsa&#146;s annual report on Form&nbsp;20-F for
the fiscal year 2001).*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Export Agency Agreement, dated as of
October&nbsp;4, 2000 between Tamsa and Techint Engineering L.L.C.
(such agreement is incorporated herein by reference to Tamsa&#146;s
annual report on Form&nbsp;20-F for the fiscal year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Assignment Agreement, dated October&nbsp;15, 2002, between Techint
Engineering LLC and Tenaris Global Services LLC relating to the
assignment of export agency agreements (such agreement is
incorporated herein by reference to the Registration Statement
on Form&nbsp;F-4 by Tenaris S.A., File No.&nbsp;333-99769)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
NKK-Premium Connections Technology and Trademark Sublicense
Agreement, dated as of October&nbsp;2, 2000, between DST Connection
Systems BV and Tamsa (such agreement is incorporated herein by
reference to Tamsa&#146;s annual report on Form&nbsp;20-F for the fiscal
year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Business Opportunities Agreement dated as of March&nbsp;30, 2001
between Tamsa, Siderca and Dalmine (such agreement is
incorporated herein by reference to Tamsa&#146;s annual report on
Form&nbsp;20-F for the fiscal year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Just-In-Time Agreement dated as of March&nbsp;23, 2001 between Tamsa
and Pemex Exploraci&#243;n y Producci&#243;n (such agreement is
incorporated herein by reference to Tamsa&#146;s annual report on
Form&nbsp;20-F for the fiscal year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2">8.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
List of Tamsa subsidiaries.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">English translation.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">72</FONT>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>INDEX TO FINANCIAL STATEMENTS</B>
</FONT>

<P align="left"><FONT size="2"><B>Consolidated Financial Statements</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Page</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Report of independent accountants</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Consolidated financial statements:</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Balance sheets</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statements of income</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statements of changes in shareholders&#146; equity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statements of changes in financial position</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Notes to financial statements</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">F-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Statutory Auditor&#146;s Report</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="2">F-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">F-1</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">REPORT OF INDEPENDENT ACCOUNTANTS
</FONT>

<P align="left"><FONT size="2">February&nbsp;21, 2003
</FONT>
<P align="left"><FONT size="2">To the Shareholders of<BR>
Tubos de Acero de M&#233;xico, S. A.
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We have audited the accompanying consolidated balance sheets of Tubos de
Acero de M&#233;xico, S. A. and subsidiaries at December&nbsp;31, 2002 and 2001, and
the related consolidated statements of income, of changes in shareholders&#146;
equity and of changes in financial position for the three years ended
December&nbsp;31, 2002, 2001, and 2000, all expressed in constant Mexican pesos
of December&nbsp;31, 2002 purchasing power. These financial statements are the
responsibility of the company&#146;s management. Our responsibility is to
express an opinion on these financial statements based on our audits.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">We conducted our audits in accordance with auditing standards generally
accepted in Mexico and in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and that they were prepared in accordance with generally
accepted accounting principles. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In our opinion, the aforementioned consolidated financial statements
present fairly, in all material respects, the consolidated financial
position of Tubos de Acero de M&#233;xico, S. A. and subsidiaries at December
31, 2002 and 2001, and the results of their operations and the changes in
their shareholders&#146; equity and in their financial position for the three
years ended December&nbsp;31, 2002, 2001 and 2000 in conformity with accounting
principles generally accepted in Mexico.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">F-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Accounting principles generally accepted in Mexico vary in certain
important respects from accounting principles generally accepted in the
United States of America (US GAAP). The application of the latter would
have affected the determination of consolidated net income expressed in
Mexican pesos of December&nbsp;31, 2002 purchasing power for the years ended
December&nbsp;31, 2002, 2001 and 2000, and the determination of consolidated
shareholders&#146; equity and consolidated financial position, also expressed
in Mexican pesos of December&nbsp;31, 2002 purchasing power, at December&nbsp;31,
2002, 2001 and 2000, to the extent summarized in Note 12 to the
consolidated financial statements.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">PricewaterhouseCoopers
</FONT>
<P align="left"><FONT size="2">/s/ Bernardo Ismael Gonz&#225;lez Vidrio
</FONT>
<P align="left"><FONT size="2">Bernardo Ismael Gonz&#225;lez Vidrio
</FONT>


<P align="center"><FONT size="2">F-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>

<DIV align="center">
<B><FONT size="2">(Note&nbsp;1)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>

<DIV align="center">
<B><FONT size="2">Thousands of Mexican pesos of</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2002 purchasing
power</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="10" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT ASSETS:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents (Note&nbsp;8a.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,388,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps588,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts and notes receivable&nbsp;&#151; Net
    (Note&nbsp;8b.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,582,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,767,614</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories&nbsp;&#151; Net (Note&nbsp;8c.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,488,968</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,528,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and recoverable taxes
    (Note&nbsp;8d.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,509,924</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,954,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INVESTMENTS IN ASSOCIATED COMPANIES&nbsp;&#151;
    Net (Note&nbsp;11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">517,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">614,351</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">PROPERTY, PLANT AND EQUIPMENT&nbsp;&#151; Net
    (Note&nbsp;3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,280,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,928,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER ASSETS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps14,320,112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps12,578,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="10" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND SHAREHOLDERS&#146;
    EQUITY</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT LIABILITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable to financial institutions,
    including current portion of long-term debt (Note&nbsp;4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,040,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps247,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade accounts and notes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">881,936</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">652,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accounts payable and accrued expenses
    (Note&nbsp;8e.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">420,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">341,991</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,342,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,241,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LONG-TERM DEBT (Note&nbsp;4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">683,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,361,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER LIABILITIES AND DEFERRED CREDITS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">171,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">192,001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">DEFERRED INCOME TAX (Note&nbsp;6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,171,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,154,157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total non-current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,026,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,707,743</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,368,728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,949,637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SHAREHOLDERS&#146; EQUITY (Note&nbsp;5):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,694,466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,694,466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,993,640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,993,640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,950,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,053,830</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Initial effect of deferred income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,389,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,389,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative translation adjustment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(898,224</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(833,676</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative loss from holding non-monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22,386,592</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22,919,670</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity of majority shareholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,963,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,598,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in consolidated subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,330</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shareholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,951,384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,628,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CONTINGENCIES AND COMMITMENT (Notes 9 and 10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and shareholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps14,320,112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps12,578,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying twelve notes are an integral
part of these consolidated financial statements.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="y87729vogel.gif" alt="-s- Guillermo Vogel H."></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <IMG src="y87729cg.gif" alt="-s- Claudio Gugliuzza V."></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Guillermo Vogel H.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Claudio Gugliuzza V.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice Chairman of the Board
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Administrative Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF INCOME</FONT></B>

<DIV align="center">
<B><FONT size="2">(Note&nbsp;7)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Thousands of Mexican pesos&nbsp;&#151; except
income</FONT></B>

<DIV align="center">
<B><FONT size="2">per share&nbsp;&#151; of December&nbsp;31,
2002 purchasing power</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps6,728,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps6,899,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps6,463,007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of products sold
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,145,970</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,067,468</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,231,637</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,191,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,288,774</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,175,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,391,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,542,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,056,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comprehensive financing cost (Note 1a.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(165,924</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42,106</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88,544</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other expenses&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26,834</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,879</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before the following items
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,212,184</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,473,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">957,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax, asset tax and employees&#146;
    statutory profit sharing (Note 6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(60,114</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(592,710</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(483,743</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before equity in associated companies and
    other items
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,152,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">881,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">474,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity in loss of associated companies
    (Note&nbsp;11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,047</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(290,930</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(52,608</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before the following item
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,136,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">590,205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">421,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of change in accounting
    principle (Note 1q.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,136,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps578,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps421,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income corresponding to majority shareholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,177,049</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps574,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps439,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in (loss)&nbsp;income of
    consolidated subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41,026</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,823</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,136,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps578,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps421,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income per share in Mexican pesos (Note 1o.):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income per share before the following item
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps3.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1.74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of change in accounting
    principle
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.03</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps3.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying twelve notes are an integral
part of these consolidated financial statements.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="y87729vogel.gif" alt="-s- Guillermo Vogel H."></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <IMG src="y87729cg.gif" alt="-s- Claudio Gugliuzza V."></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Guillermo Vogel H.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Claudio Gugliuzza V.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice Chairman of the Board
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Administrative Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS&#146; EQUITY</FONT></B>

<DIV align="center">
<B><FONT size="2">(Note&nbsp;5)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Thousands of Mexican pesos of</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2002 purchasing
power</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="16%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Initial</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative loss</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Minority</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Additional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">effect of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">from holding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Equity of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">interest in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Capital</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">paid-in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Retained</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">deferred</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">translation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">non-monetary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">majority</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">consolidated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">shareholders&#146;</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">capital</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">income tax</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">adjustment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">assets</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">shareholders</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">subsidiary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">equity</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balances at January&nbsp;1, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps10,694,466</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps6,993,640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps15,671,845</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(Ps572,053</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(Ps22,125,692</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps10,662,206</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps30,996</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps10,693,202</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Dividends paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(320,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(320,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(320,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Comprehensive loss (Note&nbsp;1r.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">439,319</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(Ps2,389,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(149,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(486,255</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,586,300</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">46</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,586,254</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balances at December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,694,466</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,993,640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">15,790,988</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,389,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(721,620</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(22,611,947</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,755,730</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">31,042</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,786,772</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Dividends paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(312,105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(312,105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(312,105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Comprehensive income (Note&nbsp;1r.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">574,947</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(112,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(307,723</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">155,168</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,189</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">153,979</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balances at December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,694,466</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,993,640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,053,830</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,389,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(833,676</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(22,919,670</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,598,793</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">29,853</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,628,646</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Dividends paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(280,658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(280,658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(280,658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Comprehensive income (Note&nbsp;1r.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,177,049</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(64,548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">533,078</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,645,579</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(42,183</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,603,396</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balances at December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps10,694,466</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps6,993,640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps16,950,221</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(Ps2,389,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(Ps898,224</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(Ps22,386,592</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps8,963,714</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(Ps12,330</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">Ps8,951,384</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying twelve notes are an integral
part of these consolidated financial statements.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="y87729vogel.gif" alt="-s- Guillermo Vogel H."></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <IMG src="y87729cg.gif" alt="-s- Claudio Gugliuzza V."></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Guillermo Vogel H.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Claudio Gugliuzza V.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice Chairman of the Board
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Administrative Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CHANGES IN
FINANCIAL POSITION</FONT></B>

<DIV align="center">
<B><FONT size="2">Thousands of Mexican pesos of</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">December 31, 2002 purchasing power</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by operations:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before cumulative effect of change in
    accounting principle
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,136,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps590,205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps421,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net income to resources
    provided by operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">501,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">433,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">417,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(246,938</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">176,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity in loss of associated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exchange loss (gain)&nbsp;which did not require
    resources
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,876</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Increase) decrease in accounts receivable, notes
    receivable, prepaid expenses and recoverable taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(702,823</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">422,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(423,204</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Decrease (increase)&nbsp;in inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(199,577</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase (decrease)&nbsp;in trade accounts and
    other accounts payable and accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(340,569</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">347,085</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">630,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">598,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by operations before the
    following item
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,280,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,221,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,019,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of change in accounting
    principle
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,280,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,209,529</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,019,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in investing activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in interest in associated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,303</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(52,606</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(404,651</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of property, plant and
    equipment&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(184,212</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(851,186</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(452,099</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(205,515</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(903,792</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(856,750</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in financing activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net increase (decrease)&nbsp;in short-term notes
    payable to banks
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">776,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(106,226</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(867,259</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Decrease) increase in long-term debt&nbsp;&#151;
    Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(769,829</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">369,660</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,056,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(280,658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(312,105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(320,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(274,471</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,671</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(131,091</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">800,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">257,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">588,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">331,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,388,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps588,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps331,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<FONT size="2">The accompanying twelve notes are an integral
part of these consolidated financial statements.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="y87729vogel.gif" alt="-s- Guillermo Vogel H."></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <IMG src="y87729cg.gif" alt="-s- Claudio Gugliuzza V."></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Guillermo Vogel H.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Claudio Gugliuzza V.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice Chairman of the Board
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Administrative Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">(Amounts in thousands of Mexican pesos (Ps) of
December&nbsp;31, 2002 purchasing power and</FONT></B>

<DIV align="center">
<B><FONT size="2">thousands of US dollars, euros and Japanese
yen, except for exchange rates)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Note 1&nbsp;&#151; Main Activity and Summary
of Significant Accounting Policies:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tubos de Acero de M&#233;xico, S. A. (Tamsa or
the Company) was formed in 1952 and consists of a group of
companies that manufacture and sell seamless steel pipe,
primarily for use in the petroleum industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tamsa is a subsidiary of Tenaris, S. A.
(Tenaris), a Luxembourg corporation, created in 2001 to hold
investments in the steel pipe manufacturing and distribution
businesses. Tenaris is a leading global manufacturer and
supplier of seamless steel pipe products and associated services
to the oil and gas, energy and other industries (see Note 5).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002 and at
February&nbsp;21, 2003, date of issuance of the consolidated
financial statements, Tenaris and its subsidiaries had an
ownership interest in Tamsa of 94.5%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying consolidated financial
statements are expressed in thousands of Mexican pesos of
December&nbsp;31, 2002 purchasing power and have been prepared
applying accounting principles generally accepted in Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The significant accounting policies, including
the concepts, methods and criteria related to the recognition of
the effects of inflation on the financial information, are
summarized below:
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>a.&nbsp;&nbsp;Recognition
of the effects of inflation in the consolidated financial
statements</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recognizes the effects of inflation
in its consolidated financial statements in accordance with
accounting principles generally accepted in Mexico. As a result
of the recognition of the effects of inflation in the
consolidated financial statements, the following concepts are
included.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The gain (loss)&nbsp;from holding non-monetary
assets mainly represents the change in the basis of restatement
of non-monetary assets (primarily property, plant and equipment)
vis-a-vis the rate of inflation as measured by the National
Consumer Price Index (NCPI&nbsp;&#151; see Note 1f.).
Additionally, this item includes the effect of the restatement
of inventories and cost of products sold at replacement cost as
required by Statement B-10 issued by the Mexican Institute of
Public Accountants (MIPA). This gain (loss)&nbsp;is included
directly in shareholders&#146; equity as a component of
comprehensive income (loss)&nbsp;of the year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gain on net monetary position represents the
purchasing power gain from holding monetary items, measured by
the NCPI, in Mexican pesos of December&nbsp;31, 2002 purchasing
power. This item is included in comprehensive financing cost in
the accompanying consolidated statements of income, as shown
below:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on net monetary position
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps59,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps24,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps24,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest and financing expense&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46,299</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(81,172</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(76,393</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign exchange (loss)&nbsp;gain&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(178,965</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(36,961</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comprehensive financing cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps165,924</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps42,106</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps88,544</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inflation rates in Mexico and Venezuela for the
reported periods were as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.7%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.4%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Venezuela
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.2%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.3%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.8%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>b.&nbsp;&nbsp;Principles
of consolidation and valuation of investments in associated
companies</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying consolidated financial
statements include the financial statements of Tamsa and its
wholly-owned subsidiaries, which are shown below:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Company</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Main activity</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inmobiliaria Tamsa, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Leasing of real estate
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tamsider, S.A. de C.V. (Tamsider)<BR>
    and subsidiaries, including Tavsa&nbsp;&#151; Tubos<BR>
    de Acero de Venezuela, S. A. (Tavsa)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Promotion and organization and of steel-related
    companies
    </FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tamtrade, S.A. de C.V. (Tamtrade)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sale of seamless steel pipe
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Empresas Riga, S.A. de C.V. (Riga)<BR>
    (acquired on June&nbsp;20, 2001)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Manufacture of welded connectors made of seamless
    steel pipe
    </FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Socover, S.A. de C.V. (acquired on
    October&nbsp;1, 2001 and merged with Tamtrade on January&nbsp;1,
    2003)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sale of seamless steel pipe
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Corporaci&#243;n Tamsa, S.A. (liquidated on
    August&nbsp;1, 2002)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sale of seamless steel pipe
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Balances and transactions between Tamsa and its
subsidiaries were eliminated in consolidation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investments in associated companies in which
Tamsa owns 10% or more of the common stock are accounted for by
the equity method of accounting. Investments representing less
than 10% of the investee&#146;s equity are carried at
acquisition cost, restated using the NCPI.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;Cash
and cash equivalents</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash and cash equivalents comprise cash and
highly liquid short-term securities with an initial maturity of
less than three months. Highly liquid short-term securities are
carried at fair market value (see Note 8a.).
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;&nbsp;Inventories</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inventories are stated at their estimated net
replacement cost, which is not in excess of their net realizable
value (see Note 8c.). The cost of products sold reflects their
estimated replacement cost at the time of sale.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In conformity with industry practices,
manufacturing tools, spare parts and supplies are included under
current assets, even though they may not be consumed within one
year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on inventory turnover levels, the Company
increased its allowance for obsolescence, debiting the cost of
products sold by Ps15,466 in 2002 and Ps2,045 in 2000. In 2001
it was not necessary to increase this allowance.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.&nbsp;&nbsp;Maintenance
expenses of production capacity</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ordinary maintenance expenses are expensed as
cost of products sold in the period in which they are incurred.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Special maintenance expenses incurred to maintain
the production capacity of the industrial facilities are
recorded as deferred expenses when incurred and amortized over a
period of 12 to 24&nbsp;months, which corresponds to the period
in which the benefits of the maintenance are expected to be
realized (see Note&nbsp;8d.).
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.&nbsp;&nbsp;Property,
plant and equipment</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company follows the following policies in
respect of property, plant and equipment:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Property and domestically-sourced machinery and
    equipment are restated by applying factors derived from the NCPI
    to their carrying value as determined at December&nbsp;31, 1996,
    or to their acquisition cost if purchased after that date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Imported machinery and equipment are restated by
    applying inflation factors of the country of origin to the
    acquisition cost (expressed in the original currency), and
    subsequently translated at the period-end exchange rate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the foregoing valuation methods,
the Company recorded a gain from holding non-monetary assets of
Ps636,326 in 2002 and a loss from holding non-monetary assets of
Ps288,380 in 2001 and Ps624,849 in 2000, which are included as a
component of comprehensive income (loss)&nbsp;of the year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation is calculated by the straight-line
method, based on the useful lives of the assets as determined by
the Company (see Note&nbsp;3).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fully depreciated assets are retained in property
and accumulated depreciation accounts until they are removed
from service. In the case of disposals, assets and related
depreciation are removed from the accounts and the net amount,
less proceeds from disposal, is charged or credited to income.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.&nbsp;&nbsp;Licenses
and computer software costs</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Licenses and costs related to the development of
software for internal use are capitalized and amortized on a
straight-line basis over three years.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.&nbsp;&nbsp;Goodwill</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Goodwill is restated by applying inflation
factors derived from the NCPI to the acquisition cost and is
amortized by the straight-line method over a period that in
Management&#146;s opinion approximates the period in which the
acquired subsidiaries will benefit the Company. At
December&nbsp;31, 2002, goodwill recorded in previous years had
been wholly amortized.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;Long-lived
assets</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company periodically evaluates the carrying
value of long-lived assets to be held and used, including
intangible assets, when events and circumstances warrant such a
review. The carrying value of a long-lived asset is considered
impaired when the anticipated undiscounted cash flow from such
an asset is less than its carrying value. In that event, a loss
is recognized based on the amount by which the carrying value
exceeds the fair market value of the long-lived asset. Fair
market value is determined primarily using the anticipated cash
flows discounted at a rate commensurate with the risk involved.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.&nbsp;&nbsp;Seniority
premiums</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Seniority premiums to which employees are
entitled upon termination of employment, for any cause, after
15&nbsp;years of service, in accordance with the Federal Labor
Law, are recognized as expenses as these premiums accrue, based
on actuarial calculations, in conformity with Statement D-3,
&#147;Labor Liabilities&#148; issued by the MIPA. The Company
has established a trust fund and a provision for this purpose.
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following is a summary of the relevant
significant data related to these benefits:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Actuarially determined projected benefit
    obligation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps13,527</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps12,004</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps9,787</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Liability reserve to cover the plan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net assets of the trust
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unamortized prior service cost and assumption
    variations and experience adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,094</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,416</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net projected benefit obligation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps&#151;&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps&#151;&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps&#151;&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="13"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated benefit obligation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps11,762</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps10,439</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps8,525</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Liability reserve to cover the plan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net assets of the trust
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated net asset
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,334</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net projected benefit obligation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional liability
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Return on plan assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(132</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(96</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(79</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of transition assets and assumption
    variations and experience adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">183</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cost for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,062</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following actuarial assumptions were used to
determine the present value of accumulated obligations for
seniority premiums (excluding inflation effects):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Discount rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.50%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.50%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.50%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Salary increase rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.00%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.00%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.00%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Return on plan assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.00%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.50%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.00%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other benefits based on length of service to
which employees may be entitled in the event of dismissal or
death, in accordance with the Federal Labor Law, are charged to
income when they become payable.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k.&nbsp;&nbsp;Foreign
currency balances and transactions</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Transactions in foreign currencies are recorded
at the exchange rates prevailing on the dates they are entered
into. Balances denominated in foreign currencies are translated
at period-end exchange rates. Exchange differences arising from
fluctuations in rates between the date of the transaction and
the date of settlement, or the balance sheet date, are charged
or credited to income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements of foreign subsidiaries
and associated companies classified as foreign entities are
restated using the NCPI of the country in which the entity
operates and subsequently translated into Mexican pesos at the
exchange rate of the year-end.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements of foreign subsidiaries
classified as integrated foreign operations are translated as
follows: a) monetary assets and liabilities at the exchange rate
on the date of the financial
</FONT>

<P align="center"><FONT size="2">F-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">statements; b) non-monetary items at the
historical exchange rate; c) income statement items at the
average monthly exchange rate; and d) the translation gain or
loss is recorded as a component of comprehensive financing cost.
Mexican peso financial statements are restated at the
Company&#146;s balance sheet date by applying the provisions of
Statement B-10.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l.&nbsp;&nbsp;Revenue
recognition</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recognizes its revenue in accordance
with international commercial terms (incoterms), pursuant to
which delivery of products to customers finishes at different
points, ranging from Tamsa&#146;s to the customer&#146;s site.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m.&nbsp;&nbsp;Debt
costs</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Costs related to syndicated loans are amortized
over the term of the related debt.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n.&nbsp;&nbsp;Income
tax, asset tax and employees&#146; statutory profit
sharing</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income tax and employees&#146; statutory profit
sharing are charged to income of the period in which they are
incurred. Asset tax is recorded as an advance payment of income
tax, at its estimated recoverable value at the date of the
financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred income tax is recognized by the
comprehensive assets and liabilities method. This method
consists of calculating deferred income tax by applying the
respective income tax rate to the temporary differences between
the accounting and tax values of assets and liabilities at the
financial statements date.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o.&nbsp;&nbsp;Net
income per share</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net income per share is computed by dividing
consolidated net income by the weighted average number of shares
outstanding during the periods, taking into consideration the
split mentioned in Note 5 (339,284,120 in 2002, 2001 and 2000).
This weighted average number of shares outstanding excludes
3,650,000 shares in treasury in 2002 and owned by Tamsider in
2001 and 2000. As of December&nbsp;31, 2002, 2001 and 2000, no
dilutive instruments were outstanding (see Note 5).
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;p.&nbsp;&nbsp;Insurance</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with industry practices, the
Company is insured for catastrophic casualty and certain
property and business interruption exposures. Additionally, the
Company is insured for third party liability as well as for
risks required to be covered by law or contract. Costs of
insurance are recorded as prepaid expenses and amortized by the
straight-line method over the term of the contracts. Costs
resulting from noninsured losses are charged to income upon
occurrence.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;q.&nbsp;&nbsp;Derivative
financial instruments</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company occasionally enters into various
derivative instruments to hedge its exchange rate exposures,
mainly from balances in United States dollars ($), euros
(EUR)&nbsp;and Japanese yens (JPY). Additionally, the Company
enters into forward contracts to hedge the change in market
prices related to raw material (aluminum)&nbsp;and fuel (natural
gas), used in its operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Derivative financial instruments are valued at
their fair value at the valuation date. Financial assets and
liabilities derived from these financial instruments are
accounted for in the balance sheet. Variations in the fair value
of the financial instruments from one period to another are
charged to income of the period. The cost of these contracts is
amortized over their term, and is charged to interest expense
(see Note 10).
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Contracts to hedge the variations in market
prices of natural gas do not exceed the production requirements
of the period. Accrued gains or losses are charged to cost of
products sold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cumulative effect at the adoption date of the
fair market value (January&nbsp;1, 2001) amounted to Ps11,567,
net of taxes, and is shown as cumulative effect of change in
accounting principle in 2001, in accordance with Statement A-7
&#147;Comparability&#148; issued by the MIPA.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;r.&nbsp;&nbsp;Comprehensive
income (loss)</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The items that integrate earned surplus
(deficit)&nbsp;capital during the year are shown in the
statement of changes in shareholders&#146; equity under the
concept of comprehensive income (loss). Comprehensive income
(loss)&nbsp;is shown below:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Majority shareholders:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,177,049</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps574,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps439,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Initial effect of deferred income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,389,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative translation adjustment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(64,548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(149,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss)&nbsp;from holding non-monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&#151;&nbsp;Net of deferred income tax (see
    Note&nbsp;6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">533,078</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(307,723</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(486,255</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comprehensive income (loss)&nbsp;of majority
    shareholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,645,579</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,586,300</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority shareholders:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41,026</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,823</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative translation adjustment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,230</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss)&nbsp;from holding non-monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&#151;&nbsp;Net of deferred income tax (see
    Note&nbsp;6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,073</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,712</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comprehensive (loss)&nbsp;income of minority
    shareholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42,183</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,189</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,603,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps153,979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps2,586,254</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;s.&nbsp;&nbsp;New
accounting standards</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2001, the MIPA issued revised
Statement C-9, &#147;Liabilities, Provisions, Contingent Assets
and Liabilities and Commitments&#148;, which supersedes the
original Statements C-9 and C-12, both from 1974, and Circulars
46, 47 and 48. The provisions of this new Statement are
effective for years commencing on or after January&nbsp;1, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The objective of revised Statement C-9 is to
establish rules for valuation and disclosure of liabilities and
provisions, to determine particular rules for valuation and
disclosure of contingent assets and liabilities, and to provide
rules for disclosure of commitments acquired by an entity as a
part of its normal activities. Management considers that the
adoption of revised Statement C-9 will not have a material
effect on the consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2002, the MIPA issued revised
Statement C-8, &#147;Intangible Assets&#148;, which supersedes
the current Statement C-8, effective since 1976. The provisions
of this new Statement are effective for years commencing on or
after January&nbsp;1, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The significant provisions of revised Statement
C-8 are: (i)&nbsp;it establishes rules and criteria for
accounting for research and development costs; (ii)
pre-operating costs identified with research and development
activities are charged to expenses; and (iii)&nbsp;valuation
rules are based on a logical sequence of the assets&#146; useful
life, considering initial recognition and valuation of the
intangible asset, recognition of
</FONT>

<P align="center"><FONT size="2">F-13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">an expense, additional payments and valuation
after the initial recognition. Management considers that the
adoption of revised Statement C-8 will not have a material
effect on the consolidated financial statements.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;2&nbsp;&#151;&nbsp;Position in
Foreign Currencies:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had assets and liabilities
denominated in foreign currencies, mainly US dollars, as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Assets:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,483</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other current assets (mainly receivables)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets of foreign subsidiaries
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">334,147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Liabilities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable to banks<SUP>(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Liabilities of foreign subsidiaries
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,821</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt<SUP>(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,973</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">265,699</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net asset (liability)&nbsp;position
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">($</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39,952</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes $21,600 in 2002 and $25,600 in 2001 of
    notes payable by Tavsa.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes $10,500 in 2002 and&nbsp;$5,900
    in&nbsp;2001 of notes payable by Tavsa.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the above monetary assets and liabilities
were translated at the exchange rates of Ps10.3125 and Ps9.1423
per US dollar at December&nbsp;31, 2002 and 2001, respectively.
Assets and liabilities from Tavsa were translated into
Venezuelan bolivars (Bs) at the exchange rates of Bs1,400.50 and
Bs758.00 per US dollar at December&nbsp;31, 2002 and 2001,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of February&nbsp;21, 2003, date of issuance of
the consolidated financial statements, exchange rates were
Ps10.84 and Bs1,600.00 per US dollar.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had non-monetary assets purchased in
foreign currencies, or for which replacement values were mainly
determinable in foreign currencies, as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">571,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">566,305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investments in associated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62,123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following represents a summary of foreign
currency transactions carried out by the Company:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">452,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">473,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory purchases
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(147,968</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(164,165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(129,662</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,580</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,778</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,840</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58,721</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(59,619</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(45,941</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Financing costs&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,967</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,022</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note&nbsp;3&nbsp;&#151; Property, Plant and
Equipment:</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Remaining estimated years</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">of useful life</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Land
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps434,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps437,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,502,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,263,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Machinery and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,665,717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,171,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19 and 11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20 and 12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,167,857</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,435,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,341,527</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,077,623</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,826,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,357,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Construction in progress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,019,921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,133,030</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,280,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps7,928,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation expense for the years ended
December&nbsp;31, 2002, 2001 and 2000 amounted to Ps446,403,
Ps396,290 and Ps386,896, respectively.
</FONT>

<P align="left">
<B><FONT size="2">Note 4&nbsp;&#151;&nbsp;Debt
Obligations:</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;Short-term
debt</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notes payable to financial institutions with
maturity within one year, and other short-term debt, were as
follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unsecured loans from financial institutions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps222,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps247,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term unsecured loans
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term syndicated loans
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">804,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,040,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps247,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2001 Mexican peso amounts were originally
translated using the corresponding exchange rate and are
restated in thousands of Mexican pesos of December&nbsp;31, 2002
purchasing power.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The average annual interest rate on short-term
debt for the years ended December&nbsp;31, 2002 and 2001 were
3.61% and 5.77%, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Short-term debt at December&nbsp;31, 2002,
comprised $21,600 of loans to Tavsa guaranteed by Tamsa, bearing
interest at 3.5% annually, $78,000 of the first two installments
of the long-term syndicated loan and $1,250 of the first two
installments of the long-term debt of Riga.
</FONT>

<P align="center"><FONT size="2">F-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001 short-term debt
comprised $25,600 of loans to Tavsa, guaranteed by Tamsa,
bearing interest at 3.98% annually.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest rates include the effect of a Mexican
withholding tax of 4.9% and a Venezuelan withholding tax of
4.95%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002 the Company had
approved lines of credit amounting to $111,000, of which $36,900
had been utilized for short-term loans to Tavsa and guarantees.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;Long-term
debt</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-term debt was payable in US dollars and is
analyzed as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Syndicated loan payable to foreign and Mexican
    financial institutions in three semi-annual installments from
    June 2003 to June 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,340,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,256,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unsecured loans from financial institutions to
    subsidiary companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(817,266</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(79,250</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps683,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,361,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The average annual interest rates paid on
long-term debt for the years ended December&nbsp;31, 2002 and
2001, were 3.19% and 6.91%, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;14, 2001 Tamsa entered into a
new syndicated loan in the amount of $130,000, with a term of
two and a half years. This new loan provides for payments of
$26,000 in June 2003 and $52,000 each in December 2003 and June
2004, and bears interest at LIBOR plus 1.125&nbsp;percentage
points for the first two years, and at LIBOR plus
1.25&nbsp;percentage points for the last six months. This loan
was utilized to prepay on December&nbsp;14, 2001 the syndicated
loan of $100,000, with original maturity on May&nbsp;23, 2002
and to cover working capital needs and for other general
corporate purposes of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The annual interest rate on long-term syndicated
loan, for the years ended December&nbsp;31, 2002 and 2001, was
2.67% and 3.14%, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The long-term debt as of December&nbsp;31, 2002
was $15,500 corresponding to debt of Riga in the amount of
$5,000, guaranteed by Tamsa, bearing interest at 3.05% annually,
with maturity in June, 2006 and with semi-annual installments of
$625 commencing on June, 2003; and debt of Tavsa in the amount
of $10,500, guaranteed by Tamsa, bearing interest at 3.29%
annually, with maturity in May, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The long-term debt of $10,900, as of
December&nbsp;31, 2001, comprises debt of Tavsa in the amount of
$5,900, guaranteed by Corporaci&#243;n Tamsa, S. A., bearing
interest at 10.5% annually, and debt of Riga in the amount of
$5,000, as mentioned above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest rates include the effect of a Mexican
withholding tax of 4.9% for Tamsa and Riga and a Venezuelan
withholding tax of 4.95% for Tavsa.
</FONT>

<P align="center"><FONT size="2">F-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the existing terms of the above loan
agreements, payments over the next four years are expected to be
as follows:
</FONT>

<CENTER>
<TABLE width="50%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="82%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year ending</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;Covenants</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The most significant covenants under the current
syndicated loan agreement are as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="1%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Maintenance of minimum working capital ratios;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Maintenance of maximum levels of total
    indebtedness; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Compliance with debt service ratios.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002, and February&nbsp;21,
2003, date of issuance of the consolidated financial statements,
the Company was in compliance with the above-mentioned covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The new syndicated loan is guaranteed by two of
the Company&#146;s subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">Note 5&nbsp;&#151; Shareholders&#146;
Equity:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;11, 2002, Tenaris made a public
offer to exchange Tamsa&#146;s ordinary shares and American
Depositary Shares (ADS), listed on the Mexican Stock Exchange
(BMV)&nbsp;and the American Stock Exchange (Amex), respectively,
for ordinary shares and ADS of Tenaris. The public exchange
offer ended on December&nbsp;13, 2002, as a result, Tenaris
owns, directly or indirectly, 94.5% of Tamsa&#146;s outstanding
shares, with the remaining 5.5% (shares or ADS) of Tamsa&#146;s
shares held by other investors. In accordance with Mexican Law,
Tenaris has the right, and might be required by the Mexican
National Banking and Securities Commission, to make a new public
exchange offer to retire the remaining Tamsa shares from the BMV
and the Amex.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the April&nbsp;27, 2001 ordinary meeting, the
Company&#146;s stockholders approved a five-to-one split of
Tamsa&#146;s shares effective July&nbsp;10, 2001. Also, the
conversion factor of the American Depositary Receipts
(ADR)&nbsp;was modified, from one ADR to one share, to one ADR
to five shares, so that the value of the ADR traded in the
American Stock Exchange in New York would not be changed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The objective of the split was to reduce the
relative price of Tamsa&#146;s shares and, therefore, to
increase their trading volume in Mexico. For comparative
purposes, the amounts of prior years related to number of shares
have been adjusted to reflect the split retroactively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All outstanding shares have been subscribed and
paid in full and carry the same rights and obligations.
</FONT>

<P align="center"><FONT size="2">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002, the authorized capital
stock consisted of 342,934,120 (68,586,824 before the split)
common nominative shares with no par value. The number of
authorized and outstanding shares at December&nbsp;31, 2002,
2001 and 2000 was as follows:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Authorized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">In treasury<SUP>(1)</SUP></FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">Single</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">342,934,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,650,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Shares held in treasury in 2002 and owned by
    Tamsider, a subsidiary of the Company, in 2001 and 2000.These
    shares were eliminated in consolidation.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the December&nbsp;16, 2002 ordinary Tamsider
shareholders&#146; meeting, a reduction of variable capital
stock in the amount of Ps60,225 was approved, which was effected
by the transfer of a certificate held by Tamsider for 3,650,000
shares of Tamsa.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the April&nbsp;30, 2002 ordinary
shareholders&#146; meeting, dividends amounting to Ps283,671
(Ps273,546 nominal, equivalent to $0.0875 dollars per share and
to $0.4374 dollars per ADR at the exchange rate of Ps9.1182 per
dollar) were declared, payable on May&nbsp;31 of that year.
Dividend payments were not subject to withholding tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the April&nbsp;27, 2001 ordinary
shareholders&#146; meeting, dividends amounting to Ps312,105
(Ps291,075 nominal, equivalent to $0.0875 dollars per share and
to $0.4374 dollars per ADR at the exchange rate of Ps9.7025 per
dollar) were declared, payable on May&nbsp;30 of that year. The
payment of these dividends was subject to a 7.6925% income tax
withholding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The capital stock balance at December&nbsp;31,
2002 and 2001, expressed in of thousands of Mexican pesos of
December&nbsp;31, 2002 purchasing power, comprised the following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Contributions in historical pesos
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,195,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative inflation adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,499,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amounts as reported in the consolidated balance
    sheet
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps10,694,466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2002, the Company and its
subsidiaries had retained earnings amounting to Ps923,475
appropriated to legal reserves.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends paid from previously taxed retained
earnings (which amounted to Ps1,368,189 at December&nbsp;31,
2002) are not subject to any income tax payable by the Company.
Dividends paid from retained earnings not previously taxed are
subject to a 51.52% tax payable by the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Capital reductions are accorded the same tax
treatment as dividends for any amount exceeding the value of the
cash contributions, adjusted for inflation, plus previously
taxed earnings and reinvested previously taxed earnings, in
accordance with the provisions of the Income Tax Law. Such
inflation-indexed contributions amounted to Ps14,655,487 at
December&nbsp;31, 2002.
</FONT>

<P align="left">
<B><FONT size="2">Note 6&nbsp;&#151; Income Tax, Asset Tax and
Employees&#146; Statutory Profit Sharing:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and its subsidiaries do not file a
consolidated income tax return.
</FONT>

<P align="center"><FONT size="2">F-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The provisions for income tax, asset tax and
employees&#146; statutory profit sharing charged to income were
as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax currently payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps517,162</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps477,259</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps193,609</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,927</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,925</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Employees&#146; statutory profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(142,583</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(105,610</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(113,849</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(662,672</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(586,794</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(307,458</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">246,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,916</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(176,285</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax benefit (see last paragraph of this Note)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps60,114</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps592,710</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps483,743</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following is a reconciliation of financial
reporting income before income tax and taxable income.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated income before taxes, employees&#146;
    statutory profit sharing, equity in associated companies and
    other items
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,212,184</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,473,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps957,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Permanent differences:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net monetary loss for tax purposes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(98,942</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(78,074</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(122,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on net monetary position
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(59,340</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,810</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Timing differences:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and other items
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">501,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">433,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">417,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and accelerated depreciation of
    fixed asset acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(216,645</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(147,151</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(206,096</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Excess of cost of sales over inventory purchases
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deduction of inventory purchases in excess of
    cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(99,728</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47,634</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other items
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">203,360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(63,825</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Combined net taxable income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,599,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,494,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,077,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current year tax losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,957</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Taxable income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,604,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,494,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,077,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax rate (%)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">561,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377,252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restatement for inflation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,768</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">577,746</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">534,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">386,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recovery of asset tax, amortization of prior
    years&#146; tax losses and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(60,584</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56,757</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(192,411</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps517,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps477,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps193,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The main temporary differences of Tamsa and its
Mexican subsidiaries for which deferred income tax is recognized
are analyzed as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">At December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,172,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps951,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Properties, plant and equipment&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,048,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,586,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provisions and allowances
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(405,032)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(243,645)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax loss carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(77,720)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(69,095)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,738,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,225,294</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax rate (average rate in 2002)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,180,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,178,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset tax carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,277)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,696)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance of Riga
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,832</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,171,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,154,157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred income tax of the year was determined as
follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">At December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax at the end of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,180,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,178,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax at the beginning of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,178,853)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,331,971)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Application to the loss from holding non-monetary
    assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(248,651)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps246,938)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps5,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of modifications to the Income Tax
Law approved on January&nbsp;1, 2002, the current income tax
rate of 35% will be reduced by 1% annually beginning in 2003
until it reaches a rate of 32% in 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002, deferred income tax
was calculated applying the income tax rate that will be
effective on the date of reversal of the temporary differences;
consequently, deferred income tax payable was reduced by
Ps156,716. This benefit is included in the provision for income
tax of the year 2002, as a part of deferred income tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002, the Company and its
subsidiaries had an aggregate Ps77,720 of accumulated tax
losses, which can be applied against profits subject to income
tax arising in subsequent years, as shown below:
</FONT>

<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">origin</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">expiration</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1998
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps37,064</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2010</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps77,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The foregoing tax loss carryforwards were
restated as of December&nbsp;31, 2002 in accordance with the
provisions of the Income Tax Law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">According to the Mexican tax Law, the Company
must pay annually the higher of income or asset tax, which is
determined based on the average value of assets, less certain
liabilities established by Law.
</FONT>

<P align="center"><FONT size="2">F-20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Asset tax payments, when higher than income tax,
are refundable and may be carried forward for ten years and
credited against future income tax to the extent it exceeds
future asset tax. The Company has the right to recover the asset
tax paid through 2002 in the aggregate amount of Ps15,277, as
shown below.
</FONT>

<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">origin</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">expiration</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1993
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1994
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1995
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1996
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1997
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1998
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2010</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">923</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps15,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The asset tax amounts were restated in accordance
with the provisions of the Asset Tax Law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, 2001 and 2000, the Company recorded
provisions of Ps142,583, Ps105,610 and Ps113,849 (Ps138,583,
Ps97,804 and Ps74,245 nominal amounts), respectively,
corresponding to employees&#146; statutory profit sharing, which
were charged to income of those years.
</FONT>

<P align="left">
<FONT size="2">Tax benefit:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, Tamsa received a favorable decision
in the injunction case brought by Tamsa against the Ministry of
Finance regarding tax inequality. This decision increased
recoverable income tax loss carryforwards of prior years, the
main effect of which was a benefit of Ps355,620 (Ps338,740
nominal), which is included in the provision for income tax,
asset tax and employees&#146; statutory sharing in the statement
of income for the year ended December&nbsp;31, 2002.
</FONT>

<P align="left">
<B><FONT size="2">Note 7&nbsp;&#151; Balances and Transactions
with Related Parties:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had the following balances with
related parties:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts and notes receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,162,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps877,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advance payments for construction in progress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts and notes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(335,007</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(185,933</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(44</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-21
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Transactions with related parties are summarized
as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Revenues</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales of pipe
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,656,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,894,687</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,614,283</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Rent and services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68,906</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,966</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest earned
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of raw materials and pipe
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps565,654</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps220,763</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps366,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of manufacturing equipment, tools and
    spare parts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,052</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brokerage service commissions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,589</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">166,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Technical assistance and industrial support
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Royalties
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investment in fixed assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,351</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plant maintenance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">254,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">183,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,483</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company maintains several operating
agreements with related parties derived from their strategic
alliance.
</FONT>

<P align="left">
<B><FONT size="2">Note 8&nbsp;&#151; Other
Information:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following are details of certain amounts included
in the consolidated balance sheets.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>a.&nbsp;&nbsp;Cash
and cash equivalents:</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company places its investments with
high-credit-quality financial institutions. At December&nbsp;31,
2002 and 2001, the Company had cash deposits amounting to
Ps4,125 and Ps62,616, respectively, the use of which is
restricted to guarantees granted in support of loans to
subsidiaries and to cover bid and performance bonds related to
export operations.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;Accounts
and notes receivable:</FONT></I></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,245,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">775,337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Officers and employees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,892</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recoverable income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Related parties
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,162,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">877,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">218,778</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,651,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,829,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(68,499</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(62,275</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,582,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,767,614</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The majority of the Company&#146;s trade accounts
receivable are derived from sales to affiliated companies, which
make sales to unaffiliated companies that operate in the oil
exploration and production industry. The Company performs
ongoing credit evaluations of its customers&#146; financial
condition, requires collateral whenever deemed necessary, and
maintains allowances for potential credit losses.
</FONT>

<P align="center"><FONT size="2">F-22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>c.&nbsp;&nbsp;Inventories:</I></FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Raw materials
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">345,856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">362,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Finished and in-process goods
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">662,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">779,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Supplies and spare parts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">737,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">621,179</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,745,984</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,762,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for obsolescence
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(257,016</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(234,007</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,488,968</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,528,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>d.&nbsp;&nbsp;Prepaid
expenses and recoverable taxes:</I></FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other prepaid taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Debt issuance expenses and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,808</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred special maintenance expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>e.&nbsp;&nbsp;Other
accounts payable and accrued expenses:</I></FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Employees&#146; statutory profit sharing payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,816</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other taxes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest and commissions payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,804</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Related parties
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,909</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">420,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">341,991</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note 9&nbsp;&#151; Information About Segments
and Foreign Operations:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tamsa operates primarily in one industry segment,
the production and sale of seamless steel pipe used mainly in
oil exploration and production. The Company generates sales from
two geographic areas: Mexico and Venezuela. Sales from Venezuela
are generated through Tavsa.
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net sales to individual foreign markets that
exceeded 10% of consolidated net sales are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Net sales:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,253,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,140,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,502,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">United States
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">369,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365,331</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">264,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nigeria
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">518,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210,130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Canada
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">317,029</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">414,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">447,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Venezuela
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">387,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,287,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,167,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Egypt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,909</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,746,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,306,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,958,886</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps6,728,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps6,899,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps6,463,007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales to companies serving the Mexican oil
industry were approximately 15% and 11% of net sales in the
years ended December&nbsp;31, 2002 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following is a detail of additional disclosures
required by International Accounting Standard 14, &#147;Segment
Reporting&#148;, regarding geographic areas in which the Company
operates:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">As of and for the year ended December 31, 2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexico</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Venezuela</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance sheet:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps13,639,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps507,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps173,565</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps14,320,112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,956,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">412,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,368,728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income statement:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and other non-cash expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(481,147</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,160</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(501,307</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other information:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity in income (loss)&nbsp;of associated
    companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,859</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,906</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,047</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">184,212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has been involved in the following
events regarding its foreign commercial activities:
</FONT>

<P align="left">
<FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 1995 the
US Department of Commerce (DOC)&nbsp;established compensatory
quotas of 23.79% applicable to the Oil Country Tubular Goods
(OCTG) exports, which was reduced to 21.79% in July 1996. During
the five years in which the antidumping order was applicable,
there were three administrative reviews in which no dumping
margin was found. In August 2000, Tamsa started a sunset review
process on this case. On March 9 and June&nbsp;15, 2001, the
final resolutions of the US International Trade Commission were
issued, respectively, ratifying the continuation of the
antidumping order. Tamsa appealed these decisions, which it
considered as unjustified, before a North American Free Trade
Agreement (NAFTA)&nbsp;panel; also, the Mexican government is
preparing an appeal to the World Trade Organization.
</FONT>

<P align="left">
<FONT size="2">b.&nbsp;&nbsp;&nbsp;On June&nbsp;30, 1999, the
DOC filed an antidumping complaint against manufacturers of
conduction seamless steel pipes of high and standard pressure
from Japan, Romania, South Africa, Mexico and the Czech
Republic. In July 2000, the final resolution on antidumping was
issued, resulting in the imposition of a margin of 15.05%. The
American industry agreed that line pipes installed in water
deeper than 1,500 feet (458 meters) would not be subject to
antidumping restrictions, since American steel manufacturers
cannot produce these types of pipes.
</FONT>

<P align="left">
<FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;In March 1999, Tamsa
(through the Mexican Ministry of Commerce and Industry,
currently the Ministry of Economics) requested the initiation of
an antidumping investigation and the application of
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">dumping margins on seamless steel pipe imports
from Japan. The request refers to seamless steel line pipe with
a diameter of 16 inches or less. In November 2000, the final
resolution was issued establishing compensatory quotas of 99.9%,
excluding pipe with a diameter smaller than 4 inches.
</FONT>

<P align="left">
<FONT size="2">d.&nbsp;&nbsp;&nbsp;In July 2002, Tamsa (through
the Ministry of Economics) requested the initiation of an
antidumping investigation and the application of dumping margins
on conduction steel pipe, for non-oil use with a diameter
smaller than 18 inches, imported from Russia and Romania. On
October&nbsp;18, 2002, the initiation of the investigation was
published. The Company is currently responding to the complaints
made by the importers and the manufacturers. The Mexican
authorities have 130 business days (ending on April&nbsp;18,
2003) from the initiation of the investigation, to issue a
preliminary resolution, in which compensatory quotas would be
established, if the investigation is continued.
</FONT>

<P align="left">
<FONT size="2">e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Mexican steel
industry requested the Ministry of Economics to increase duties
on certain steel products from those countries that did not have
trade agreements with Mexico, in order to protect itself against
imports from those countries that cannot sell their products in
the US and divert them to Mexico as an alternative market. On
September&nbsp;5, 2001, the Official Gazette published a decree
in which the duties on 41 tariffs were modified, including all
non-oil related seamless tubular products, as well as welded
steel fittings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;15, 2002, duties for these products
were subject to an increase, from 25% to 35%; this increase was
motivated by the significant increase in imports from Eastern
Europe. On September&nbsp;24, 2002, the Mexican Government
reduced these duties to 25%, which will be effective until
September 2003.
</FONT>

<P align="left">
<B><FONT size="2">Note 10&nbsp;&#151; Fair Value of Financial
Instruments and Other Investments and Commitment:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following methods and assumptions were used
by the Company in estimating the fair value of its financial
instruments:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash and cash equivalents, short-term investments
and accounts and notes receivable&nbsp;&#151; The carrying
amounts approximate their fair market value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Short-term notes payable to banks&nbsp;&#151; The
carrying amounts of the Company&#146;s borrowings under its
short-term credit agreements approximate their fair value. These
liabilities are presented in the consolidated balance sheets at
their face value. The interest payable on these liabilities is
included in other accounts payable and accrued expenses and the
carrying amounts of these liabilities also approximate their
fair market values.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Derivative financial instruments&nbsp;&#151; The
Company enters into forward contracts in foreign currencies,
metals and energy sources.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To hedge the decrease in natural gas market
price, on March&nbsp;2, 2001, the Company entered into an
agreement with ENRON North America Corp. (ENRON)&nbsp;for a put
option to sell 200,000&nbsp;million British Thermal Units
(BTU)&nbsp;of natural gas monthly, with a strike price of $4.05
dollars per million BTU from March&nbsp;1, 2002 to
December&nbsp;31, 2003. However, as a result of ENRON&#146;s
bankruptcy, there is no reasonable prospect of exercising the
Company&#146;s option under this contract, consequently the
premium of $2,290 paid to ENRON was written off in the last
quarter of 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to cover its exposure from the contract
signed with Petr&#243;leos Mexicanos (PEMEX), mentioned below,
and to swap the fixed price from $4 dollars per million BTU
established in the contract to the market price, during March 27
and April&nbsp;5, 2002, the Company entered into two option
contracts with Citibank, N. A., New York and JP Morgan Chase
Bank to sell 160,000&nbsp;million BTU of natural gas monthly for
each contract, at a strike price of $4 dollars per million BTU
when market prices of natural
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">gas are not lower than $2 dollars and not higher
than $4 dollars per million BTU, for the period from May&nbsp;1,
2002 to February&nbsp;28, 2003; likewise, for the period from
March&nbsp;1, to December&nbsp;31, 2003, the strike price is $4
dollars per million BTU when market prices of natural gas are
not lower than $2.25 dollars and not higher than $4 dollars per
million BTU. Likewise, the Company is obligated to sell natural
gas at $4 dollars when market prices are higher than $4 dollars
for the period from May&nbsp;1, 2002 to December&nbsp;31, 2003.
Additionally, the Company is obligated to buy 320,000 million
BTU of natural gas monthly at a base price of $2.765 dollars per
million BTU, for the period from January&nbsp;1, 2004 to
December&nbsp;31, 2005. At December&nbsp;31, 2002, the fair
value of these instruments was a liability of Ps29,567, which
was charged to income of the year as a part of cost of products
sold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to hedge the exchange rate exposures on
receivables denominated in euros maturing in January and March,
2003, on December&nbsp;10 and 13, 2002, the Company entered into
two forward contracts to sell EUR8,973 and EUR2,000 at a fixed
exchange rate of $1.003 and $1.0194 per EUR, respectively, with
maturities at January&nbsp;31 and March&nbsp;27, 2003,
respectively. At December&nbsp;31, 2002, the Company recorded a
loss provision of $418; however, at the maturity of these
forward contracts the Company will realize an exchange gain of
$174.
</FONT>

<P align="left">
<B><FONT size="2">Commitment:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;22, 2001, the Company entered
into a three-year agreement with PEMEX to receive approximately
296,600&nbsp;million BTUs of natural gas, on a monthly basis,
for the period from January&nbsp;1, 2001 to December&nbsp;31,
2003, at a fixed price of $4.0 dollars per million BTU.
</FONT>

<P align="left">
<B><FONT size="2">Note 11&nbsp;&#151; Investments in Associated
Companies:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investments in associated companies are as
follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">inflation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">equity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investments at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">translation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">December 31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% equity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">cost</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">losses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">31, 2002</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Consorcio Siderurgia Amazonia, Ltd.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps895,726</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps1,021,239</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps47,118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps78,395</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Convertible debentures of Amazonia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214,828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Sidtam, Ltd.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Complejo Sider&#250;rgico de Guayana, C.A
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,092</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,026</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,387,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps985,791</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps116,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps517,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">inflation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">equity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investments at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">translation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">December 31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% equity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">cost</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">losses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">31, 2001</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Consorcio Siderurgia Amazonia, Ltd.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps895,726</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps836,381</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps122,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps181,876</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Convertible debentures of Amazonia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,274</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">201,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Valuation allowance for investment in
    Amazonia and convertible debentures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(137,134</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,818</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(144,952</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Sidtam, Ltd.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,260</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Complejo Sider&#250;rgico de Guayana, C.A
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Goodwill in shares of TAVSA&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,662</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Goodwill in shares of RIGA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,027</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">-&nbsp;Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,179</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,945</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,279,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps824,791</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps160,118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps614,351</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Consorcio
Siderurgia Amazonia, Ltd.</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;27, 1998, Consorcio Siderurgia
Amazonia, Ltd. (Amazonia), of which Tamsa owned 12.5% through
its wholly-owned subsidiary Tamsider LLC, acquired 70% of CVG
Sider&#250;rgica del Orinoco, C. A. (Sidor), a Venezuelan
company, for $1,202,000. The purchase price was subsequently
reduced by $150,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The share purchase agreement contains certain
covenants for Amazonia and its shareholders, for a period of
five years, that should be guaranteed by Amazonia&#146;s
shareholders to the Fondo de Inversiones de Venezuela (currently
The Venezuelan Bank of Economic and Social Development) and
Corporacion Venezolana de Guayana (CVG)&nbsp;for up to $150,000.
Covenants include the obligations to continue with Sidor&#146;s
operations, to supply the requirements of the Venezuelan market,
to make certain capital investments and to manage the labor
force, as well as the obligation to maintain majority ownership
of Sidor. This guarantee would be reduced to $125,000 in 2001
and to $75,000 in 2002, if there were no execution of the
guarantee in the immediately preceding year. At
December&nbsp;31, 2002, Tamsa&#146;s maximum guarantee was
$9,375; this guarantee expired in January 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, the stockholders of Amazonia
entered into an agreement under which it and its stockholders
were jointly liable to the Venezuelan government for certain
debt of Sidor amounting to $602,800. This guarantee was limited
only to any interest due and unpaid during the years ended
December&nbsp;31, 1998 and 1999; however, from the third year
onwards it also covered any principal amounts due and unpaid.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;23, 2000, Amazonia and Sidor
completed the agreements with their creditors to restructure
their respective debts. The restructuring agreement with the
creditors of Amazonia and of Sidor required additional
contributions of $300,000 by the stockholders of Sidor, of which
$210,000 were provided indirectly by the stockholders of
Amazonia through the subscription of subordinated convertible
debt and through capital contributions, and the Company was
granted a two-year grace period before commencing repayments of
its restructured liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tamsa&#146;s participation, via Tamsider LLC, was
$36,144, which included capital and interest due on prior loans
to Sidor of $18,866. A portion of the funds, $18,137, was
contributed as capital stock,
</FONT>

<P align="center"><FONT size="2">F-27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">increasing Tamsider LLC&#146;s equity in Amazonia
from 12.5% to 14.1%, and the remainder as subscription of
convertible debentures of subordinated debt of $18,007 issued by
Amazonia. Tamsider LLC&#146;s participation included the portion
corresponding to Sider&#250;rgica Venezolana Sivensa, S. A., a
stockholder of Amazonia, which was not in a position to
contribute additional funds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the restructuring, Amazonia had
debt of approximately $245,000 (excluding the subordinated
convertible debt detailed later in this Note) and Sidor&#146;s
debt was approximately $1,200,000. Additionally, Sidor agreed to
assign a part of its fixed assets to a trust designating its
creditors as beneficiaries for up to $827,000. As of
December&nbsp;31, 2002, Amazonia and Sidor had debt of
approximately $313,000 and $1,580,000, respectively. Tamsider
LLC&#146;s shares in Amazonia continue to be pledged to
Amazonia&#146;s creditors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a consequence of the worldwide steel industry
crisis, the slow-down in the financial markets, the adverse
economic and political situation in Venezuela and other adverse
factors, at December&nbsp;31, 2002, Sidor was in default on
certain contractual obligations under the restructuring
agreement with its creditors and The Venezuelan Investment Fund,
such as: (i)&nbsp;payment of interest due on December&nbsp;18,
2001, (ii)&nbsp;the deposit of payments of interest, in reserve
accounts, on certain debts as stated in the restructuring
agreements, and (iii) meeting certain financial ratios. As a
result of this default, Sidor&#146;s debt may be accelerated at
the option of its creditors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amazonia and Sidor have initiated in December
2001 negotiations with their creditors and The Venezuelan
Investment Fund to restructure their debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tamsa accounts for its equity in the losses of
Amazonia, through its subsidiary, by translating Amazonia&#146;s
financial statements expressed in US dollars at the balance
sheet exchange rate. Additionally, Tamsa recognized a gain on
net monetary position corresponding to Amazonia of Ps77,894 and
Ps41,572 during 2002 and 2001, respectively, which is included
in the equity in loss of associated companies in accordance with
Statement B-15 issued by the MIPA.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to Sidor&#146;s financial situation, as a
result of the events mentioned above, at December&nbsp;31, 2001,
Tamsider LLC recorded a valuation allowance of Ps154,688
($15,000) to reduce the value of its investment in Amazonia and
the subordinated convertible debentures, which was applied
against the equity in the result of Amazonia of the year 2002.
Tamsa&#146;s initial investment, made through Tamsider LLC, of
$87,800 and its additional capital contribution of $18,137 have
been reduced to Ps136,433 ($13,230) at December&nbsp;31, 2002,
due to the recognition of Amazonia&#146;s losses using the
equity method of accounting. Assets of Tamsider LLC comprise
Amazonia&#146;s shares and the subordinated convertible
debentures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002, Tamsider LLC had a
maximum exposure of $98,799 corresponding to guarantees covering
Sidor&#146;s debt with The Venezuelan Bank of Economic and
Social Development (formerly The Venezuelan Investment Fund).
</FONT>

<P align="left">
<B><FONT size="2">Note 12&nbsp;&#151; Reconciliation Between
Mexican (Mexican GAAP) and United States (US GAAP) Generally
Accepted Accounting Principles:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s consolidated financial
statements are prepared in accordance with Mexican GAAP, which
differ in certain respects from US GAAP. The Mexican GAAP
consolidated financial statements include the effects of
inflation as provided for under Statement B-10,
&#147;Recognition of the Effects of Inflation on Financial
Information&#148;. The application of this statement represents
a comprehensive measure of the effects of price level changes in
the Mexican economy, which for many years was hyperinflationary,
and is considered to result in a more meaningful presentation
than historical cost-based financial reporting for both Mexican
and U.S. accounting purposes.
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Therefore, the following reconciliations to US
GAAP do not include the reversal of such inflationary effects,
except for the valuation of machinery and equipment of foreign
origin since 1997, as explained later in this Note.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The main accounting differences between Mexican
GAAP and US GAAP are itemized in the reconciliations below (net
of any price-level gain or loss), to show their effects on net
income and shareholders&#146; equity. Significant US GAAP
disclosure requirements that do not represent quantifiable
accounting differences are itemized and explained following the
reconciliations.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reconciliation
of consolidated net income</I></FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Year ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">See</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sub-Note</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income corresponding to majority shareholders
    under Mexican GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,177,049</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps574,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps439,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation of machinery and equipment of
    foreign origin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(a</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,248</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(31,085</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(b</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,682</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,709</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,948</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred employees&#146; statutory profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(b</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,084</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue recognition
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(c</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,965</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28,893</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(101,169</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase accounting differences affecting
    Company&#146;s investment in Amazonia, associated company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(e</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,631</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,704</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase accounting and pre-operating expense
    differences affecting the acquisition of TAVSA,
    subsidiary&nbsp;&#151; Net of amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(e</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest effect of adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,575</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,812</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,243</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest capitalized in construction in progress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(g</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income under US GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,381,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps734,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps500,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average number of shares outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,284,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic earnings per share computed under
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">US GAAP (in Mexican pesos)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps4.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reconciliation
of comprehensive net income</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Statement of Financial Accounting Standards
No.&nbsp;130, &#147;Reporting Comprehensive Income&#148;
(SFAS&nbsp;130), establishes rules for the reporting of
comprehensive income and its components. Comprehensive income
consists of net income, translation adjustments related to
foreign subsidiaries and loss from holding non-monetary assets.
The following table summarizes the components of comprehensive
income:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income under US&nbsp;GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,381,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps734,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps500,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative translation adjustment related to
    foreign subsidiaries
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(64,548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(149,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss)&nbsp;from holding non-monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(178,380</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(121,016</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comprehensive net income under US GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,462,494</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">444,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">229,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative comprehensive loss at the beginning of
    the year under US GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,659,708</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,104,038</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,333,991</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative comprehensive loss at the end of the
    year under US&nbsp;GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps6,197,214</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps7,659,708</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps8,104,038</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reconciliation
of shareholders&#146; equity</I></FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">At December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">See</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sub-</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Note</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shareholders&#146; equity under Mexican GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,963,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps7,598,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps7,755,730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restatement of machinery and equipment of foreign
    origin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(a</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,537,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,174,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,885,915</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated depreciation of machinery and
    equipment of foreign origin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(a</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(68,109</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(119,231</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(101,982</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(b</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(819,261</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,059,238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(972,911</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred employees&#146; statutory profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(b</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(863,317</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(873,707</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(856,624</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue recognition
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(c</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(38,098</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(130,063</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(101,169</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase accounting differences affecting
    Company&#146;s investment in Amazonia, associated company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(e</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(109,631</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase accounting and pre-operating expense
    differences affecting the acquisition of Tavsa,
    subsidiary&nbsp;&#151; Net of accumulated amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(e</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41,917</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(61,293</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest effect of adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest capitalized in construction in progress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(g</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101,387</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shareholders&#146; equity under US GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps9,844,732</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,662,896</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,530,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Analysis of
changes in shareholders&#146; equity under US GAAP</I></FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,662,896</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,530,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,620,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income under US GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,381,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">734,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss)&nbsp;from holding non-monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(178,380</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(121,016</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Translation adjustment of foreign subsidiaries
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(64,548</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(149,567</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(280,658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(312,105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(320,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at year end
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps9,844,732</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,662,896</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,530,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Significant differences between Mexican GAAP
and US GAAP</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>a.&nbsp;&nbsp;Restatement
of machinery and equipment of foreign origin</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with the Fifth Amendment to
Statement B-10, commencing in 1997 the Company elected to use
inflationary factors of the country of origin applied to the
acquisition costs expressed in the currency of origin, converted
to Mexican pesos at the year-end exchange rates. Under US GAAP,
this methodology does not comply with Rule&nbsp;3-20 of the
Securities and Exchange Commission (SEC)&#146;s
Regulation&nbsp;S-X for presenting price level adjusted
financial statements, and consequently, the Company has
determined the effects of the machinery and equipment of foreign
origin.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The difference between the machinery and
equipment of foreign origin restatement determined in accordance
with the Fifth Amendment to Statement B-10 compared to the
restatement using the NCPI would have resulted in a higher value
of these assets of Ps2,469,860 (net of accumulated depreciation
of Ps68,109) at December&nbsp;31, 2002, and Ps3,055,066 (net of
accumulated depreciation of Ps119,231) at December&nbsp;31, 2001.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>b.&nbsp;&nbsp;Deferred
income tax and employees&#146; statutory profit
sharing</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company follows the provisions of revised
Statement D-4, &#147;Accounting Treatment of Income Tax, Asset
Tax, and Employees Profit Sharing&#148;. The provisions of
Statement D-4 require the full asset and liability method,
requiring the recognition of the deferred tax effects of all
temporary differences between accounting and tax values of
assets and liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under US GAAP, the Company follows Statement of
Financial Accounting Standards (SFAS)&nbsp;No.&nbsp;109,
&#147;Accounting for Income Taxes&#148; (SFAS 109) to account
its deferred income tax and profit sharing. The provisions of
SFAS 109 require deferred income tax and profit sharing to be
recognized for all temporary differences including the benefits
from utilizing tax loss carryforwards and asset tax credits in
the year in which the loss or credits arise (subject to a
valuation allowance in respect of any tax benefits not expected
to be realized). The subsequent realization of these benefits
does not affect income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The temporary differences under SFAS 109 are
determined based on the difference between the indexed tax-basis
amount of the asset or liability and the related restated amount
reported in the financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The deferred income tax expense or benefit is
calculated as the difference between: a) the deferred tax assets
and liabilities at the end of the current period determined as
indicated above, and b) the deferred tax assets and liabilities
reported at the end of the prior period remeasured to units of
current general purchasing power at the end of the current
period. The deferred employees&#146; statutory profit sharing
expense or benefit is calculated similarly.
</FONT>

<P align="center"><FONT size="2">F-31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The significant components of income tax expense
under US GAAP were as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps161,542</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps477,259</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps193,609</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">238,256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72,336</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(410,466</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(265,945</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current employees&#146; statutory profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(142,583</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(105,610</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(113,849</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred employees&#146; statutory profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,084</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total employees&#146; statutory profit sharing *
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(132,193</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(122,694</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(92,472</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,927</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,925</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total income tax, employees&#146; statutory
    profit sharing and asset tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps58,406</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps537,085</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(Ps358,417</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Under US GAAP employees&#146; statutory profit
    sharing is classified as a component of operating expenses.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The income tax and profit sharing effects of
significant items comprising the Company&#146;s net deferred
income tax and profit sharing assets and liabilities under US
GAAP are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Deferred income tax liabilities</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Current:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps536,369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps489,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">546,592</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">492,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,773,451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,043,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,320,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,536,291</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Deferred income tax assets</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Current:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset tax carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,970</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(27,956</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax loss carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(78,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54,319</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provisions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(99,206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(50,743</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue recognition
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,953</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(45,522</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(204,643</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(178,540</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Noncurrent:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(202,206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(205,853</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(406,849</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(384,393</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Valuation allowance for deferred income tax of
    Tavsa</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Net deferred income tax liability under US
    GAAP</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,990,382</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,213,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Net deferred income tax liability under
    Mexican GAAP</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,171,121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,154,157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">US GAAP adjustment</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps819,261</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,059,238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Deferred employees&#146; statutory profit
    sharing liability</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Current:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps130,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps139,733</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,654</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Noncurrent:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">803,215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">813,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">936,331</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">954,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Deferred employees&#146; statutory profit
    sharing liability</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Current:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue recognition
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,810</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,006</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provisions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,940</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,904</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,750</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,910</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Noncurrent:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56,264</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58,817</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(73,014</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(80,727</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Net deferred employees&#146; profit sharing
    liability under US GAAP</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps863,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps873,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>c.&nbsp;&nbsp;Revenue
recognition</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, the SEC issued SAB
No.&nbsp;101, &#147;Revenue recognition in Financial
Statements&#148; which summarizes the SEC staff&#146;s
interpretation of US GAAP related to revenue recognition and
classification.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In late 1998, the Company initiated a stocking
program that provides just-in-time inventory services to its
customers around the world. Under Mexican GAAP, revenues are
recognized when materials are shipped to affiliated companies
that deliver the materials to the customers when requested.
Payments are subsequently made to the Company once the customers
have paid the affiliated companies for the materials supplied
under the terms of the agreements. Based on the guidance
provided in SAB 101, revenue would not be recognized until the
materials have been delivered to the customers and, accordingly,
the Company has retroactively adjusted its revenues and costs of
sales for materials that had not been delivered to its customers
as of December&nbsp;31, 2002, 2001 and 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of prior years has been reported as a
cumulative effect of change in accounting principle at
December&nbsp;31, 2000. Provided below is a summary of the
revenues and costs of sales which would be deferred as of
December 31, 2002, 2001 and 2000 under US GAAP.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps150,884</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps282,746</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps289,054</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of goods sold
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">152,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">187,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps38,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps130,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps101,169</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>d.&nbsp;&nbsp;Use
of estimates</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. Actual
results could differ from those estimates.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>e.&nbsp;&nbsp;Accounting
for workforce reduction programs and pre-operating
expenses</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As explained in Note 11, the Company invested in
two companies in Venezuela in 1998 in connection with the
privatization of companies in the Venezuelan steel industry. As
part of these investments, the Company and its partners
developed business plans which contemplated workforce reductions
in both companies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the Company&#146;s plans to reduce
the workforces in these companies, the liabilities associated
with the reductions were accrued by Sidor and Tavsa as of the
date of the acquisitions, which resulted in additional goodwill
under Mexican GAAP. During the last quarter of 2001, due to the
adverse financial condition of Sidor, the Company wrote off the
remaining balance. For US GAAP purposes, however, due to the
voluntary nature of the workforce reduction programs, as
required by Venezuelan labor laws and the terms of the
privatization agreements, the costs associated with these
programs would be considered as an expense of the period in
which the employees accepted the termination offers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to the start-up nature of the operations at
Tavsa the Company deferred certain start-up costs. At
December&nbsp;31, 2002, the Company had amortized all deferred
pre-operating expenses. At December&nbsp;31, 2001 and 2000,
deferred pre-operating expenses amounted to Ps41,917 and
Ps61,293 (Ps29,342 and Ps42,905 net of minority interest),
respectively. Under US GAAP start-up costs are expensed as
incurred.
</FONT>

<P align="center"><FONT size="2">F-34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>f.&nbsp;&nbsp;Additional
information about termination benefits</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additional disclosures required by SFAS 132,
&#147;Employers&#146; Disclosures about Pensions and Other
Postretirement Benefits-an amendment of FASB Statements
No.&nbsp;87, 88 and 106&#148; are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in benefit obligation:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefit obligation at the beginning of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps12,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps9,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Actuarial losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefits paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,071</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inflation effects
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(263</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net liability position at the end of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps13,527</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps12,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in plan assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fair value of plan assets at the beginning of the
    year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Actual return on plan assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inflation effects
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(118</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(61</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fair value of plan assets at the end of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps2,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>g.&nbsp;&nbsp;Capitalization
of interest</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, interest can be capitalized
on loans identified with construction projects.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under US GAAP, interest is capitalized based upon
total interest incurred in relation to additions to construction
in progress. During 2002, 2001 and 2000, the Company would have
capitalized Ps38,032, Ps40,174 and Ps47,199, respectively, of
interest under US GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The adjustment for capitalized interest is
presented net of the effects of inflation and its corresponding
depreciation on a straight-line basis. Depreciation of
capitalized interest amounted to Ps7,585 in 2002, Ps13,034 in
2001 and Ps3,990 in 2000.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>h.&nbsp;&nbsp;Equity
method of accounting for Amazonia</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under US GAAP, a company normally uses the equity
method when it owns more than 20% but less than a controlling
interest in an investee, provided that it can demonstrate that
it has the ability to exercise significant influence over the
investee&#146;s operating and financial policies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2002 and 2001, Tamsa had a
14.1% interest in Amazonia; however, it has elected to account
for this investment using the equity method since Tamsa forms
part of the Techint Group, which had a combined interest of
39.5% in Amazonia at December&nbsp;31, 2002 and 2001.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>i.&nbsp;&nbsp;Statement
of cash flows</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under US GAAP, a statement of cash flows is
prepared based on the provisions of SFAS 95, &#147;Statement of
Cash Flows&#148;. This statement does not provide specific
guidance for the preparation of cash flows statements for
price-level-adjusted financial statements. Cash flows from
operating, investing and financing activities in the following
statement of cash flows have been adjusted for the effects of
inflation
</FONT>

<P align="center"><FONT size="2">F-35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">on monetary items. The effects of exchange rate
changes and inflationary effects on cash have also been
segregated from other cash flow activities.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by operations:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income under US GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,381,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps734,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps500,536</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net income to resources
    provided by operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Monetary gain
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(59,340</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,810</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28,451</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,583</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">487,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">448,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity in loss of associated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,047</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">181,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,906</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes and employees&#146;
    statutory profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(248,646</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(49,709</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exchange loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Increase) decrease in accounts and notes
    receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(995,203</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(870,298</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Decrease (increase)&nbsp;in inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(199,577</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Increase) decrease in prepaid expenses and
    recoverable taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(36,181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,623</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase (decrease)&nbsp;in trade accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">333,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(237,493</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">315,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase (decrease)&nbsp;in other accounts
    payable and accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,067</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">152,906</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">492,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377,475</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,392,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,227,550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">878,011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in investing activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of associated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,740</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(52,606</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,667</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of convertible subordinate debentures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(185,566</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of property, plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(222,244</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(878,326</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(495,305</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(224,984</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(930,932</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(705,538</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in financing activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in short-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">399,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">633,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,006,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Decrease in short-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(340,195</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(742,955</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,873,673</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,342,410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,047,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repayments of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(53,892</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(969,490</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(280,658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(312,105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(320,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used in financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(274,781</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,678</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(139,165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net increase in cash and equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">892,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247,940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of exchange rate changes and inflationary
    effects on cash and equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(61,192</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at beginning of year
    (nominal figures)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">556,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">300,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps1,388,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps588,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps331,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Supplemental cash flow information:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest paid net of interest capitalized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps50,712</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps101,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps143,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax and asset tax paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps280,167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps370,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps318,132</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other non-cash activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investment in associated companies through the
    capitalization of accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps18,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps8,266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps194,418</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.&nbsp;&nbsp;Recently
issued accounting pronouncements</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No.&nbsp;141, &#147;Business
Combinations&#148; (SFAS 141) which supersedes APB Opinion
No.&nbsp;16, &#147;Business Combinations&#148; and amends or
supersedes a number of related interpretations of APB 16. The
statement is effective for all business combinations initiated
after June&nbsp;30, 2001 and for all business combinations
accounted for by the purchase method that are completed after
June&nbsp;30, 2001. SFAS 141 addresses financial accounting and
reporting for business combinations, eliminates the
pooling-of-interests method of accounting for business
combinations, and prescribes the initial recognition and
measurement of goodwill and other intangible assets, accounting
for negative goodwill and the required disclosures in respect of
business combinations. The adoption of SFAS 141 did not have a
material effect on the consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also in July 2001, the FASB issued SFAS
No.&nbsp;142, &#147;Goodwill and Other Intangible Assets&#148;
(SFAS 142), which supersedes APB Opinion No.&nbsp;17,
&#147;Intangible Assets&#148;. SFAS 142 addresses how intangible
assets that are acquired individually or with a group of other
assets (but not those acquired in a business acquisition) should
be accounted for in financial statements upon their acquisition.
SFAS 142 also addresses how goodwill and other intangible assets
should be accounted for after they have been initially
recognized in the financial statements. The provisions of SFAS
142 are required to be applied starting with fiscal years
beginning after December&nbsp;15, 2001. SFAS 142 is required to
be applied at the beginning of an entity&#146;s fiscal year and
to be applied to all goodwill and other intangible assets
recognized in its financial statements at that date. The
adoption of SFAS 142 did not have a material effect on the
consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, the FASB issued SFAS No.&nbsp;143,
&#147;Accounting for Asset Retirement Obligations&#148; (SFAS
143). SFAS 143 requires the recognition of a liability for the
legal obligations associated with the retirement of a tangible
long-lived asset that results from the acquisition, construction
and/or normal operation of the asset. The liability is
recognized at fair value in the period in which it is incurred
if a reasonable estimate of fair value can be made. A
corresponding asset retirement cost is added to the carrying
value of the long-lived asset and is depreciated to expense
using a systematic and rational method over its useful life.
SFAS 143 is effective for fiscal years beginning after
June&nbsp;15, 2002. Upon initial adoption, a liability is
recognized for existing asset retirement obligations and the
associated asset retirement cost is capitalized as an increase
to the carrying value of the asset. The recognized liability and
asset are adjusted for cumulative accretion and accumulated
depreciation, respectively, from the time period when the asset
retirement obligation would have originally been recognized had
this statement been in effect to the date of initial adoption.
The cumulative effect of initial adoption of SFAS 143 is
recorded as a change in accounting principle. Management is
currently evaluating the impact that the adoption of SFAS 143
will have on the consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001, the FASB issued SFAS
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets&#148; (SFAS 144). SFAS 144 supersedes SFAS No.
121, &#147;Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of&#148; and the
accounting and reporting provisions of APB Opinion No.&nbsp;30,
&#147;Reporting the Results of Operations&nbsp;&#151; Reporting
the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions&#148;. SFAS 144 retains the fundamental provisions
of SFAS 121 for recognition and measurement of the impairment of
long-lived assets to be held and used, but resolves a number of
implementation issues and establishes a single accounting model
for assets to be disposed of. SFAS 144 also retains the
requirements to report discontinued operations separately from
continuing operations and extends that reporting to a component
of an entity that either has been disposed of by sale,
abandonment or distribution to owners or is classified as held
for sale. The provisions of SFAS 144 are effective for financial
statements issued for fiscal years beginning after
December&nbsp;15, 2001 and their interim periods.
</FONT>

<P align="center"><FONT size="2">F-37
</FONT>

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<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">The provisions of SFAS 144 for long-lived assets
to be disposed of by sale or otherwise are effective for
disposal activities initiated after the effective date of SFAS
144 or after its initial application. The adoption of SFAS 144
did not have a material effect on the consolidated financial
statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2002, the FASB issued SFAS No.&nbsp;145,
&#147;Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS
13, and Technical Corrections as of April 2002.&#148; SFAS 145
rescinds SFAS No.&nbsp;4, &#147;Reporting Gains and Losses from
Extinguishment of Debt,&#148; SFAS No.&nbsp;44, &#147;Accounting
for Intangible Assets of Motor Carriers,&#148; and SFAS 64,
&#147;Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements.&#148; As a result, gains and losses from
extinguishment of debt will no longer be classified as
extraordinary items unless they meet the criteria of unusual or
infrequent as described in Accounting Principles Boards Opinion
30, &#147;Reporting the Results of Operations&nbsp;&#151;
Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions.&#148; In addition, SFAS 145 amends SFAS
No.&nbsp;13, &#147;Accounting for Leases,&#148; to eliminate an
inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease
modifications that have economic effects that are similar to
sale-leaseback transactions. SFAS 145 also amends other existing
authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability
under changed conditions. SFAS 145 is effective for fiscal years
beginning after May&nbsp;15, 2002. Management is currently
evaluating the impact that the adoption of SFAS 145 will have on
the consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2002, the FASB issued SFAS No.&nbsp;146,
&#147;Accounting for Costs Associated with Exit or Disposal
Activities&#148; (&#147;SFAS 146&#148;). The issuance of SFAS
146 nullifies the former guidance provided by the Emerging
Issues Task Force (&#147;EITF&#148;) Issue No.&nbsp;94-3,
&#147;Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)&#148; (&#147;EITF
94-3&#148;). SFAS 146 requires the recognition of a liability
for costs associated with exit or disposal activity when the
liability is incurred, rather than on the date commitment to an
exit or disposal plan. SFAS 146 is effective for liabilities,
related to exit or disposal activities, which are incurred after
December&nbsp;31, 2002, while earlier application is encouraged.
Management is currently evaluating the impact that the adoption
of SFAS 146 will have on the consolidated financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2002 the FASB issued SFAS No.&nbsp;147
&#147;Acquisitions of Certain Financial Institutions&#148; (SFAS
147), an amendment of SFAS No.&nbsp;72 and 144 and FASB
Interpretation No.&nbsp;9. SFAS 147 provides guidance for
(1)&nbsp;the accounting and reporting for the acquisition of all
or part of a financial institution, excluding those transactions
between two or more mutual enterprises and (2)&nbsp;accounting
for the impairment or disposal of long-term customer
relationship intangible assets of financial institutions,
including the long-term customer-relationship intangibles of
mutual enterprises. The provisions of SFAS 147 regarding the
method of accounting to be used for acquisitions of financial
institutions are effective for acquisitions for which the date
of the acquisition is on or after October&nbsp;1, 2002. The
guidance for the impairment or disposal of long-term customer
relationship intangible assets of financial institutions,
including mutual enterprises, is effective on October&nbsp;1,
2002. The Company management believes that the adoption of SFAS
147 will not have a material impact on the consolidated
financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2002, the FASB issued SFAS
No.&nbsp;148, &#147;Accounting for Stock-Based
Compensation&nbsp;&#151; Transition and Disclosure&nbsp;&#151;
an amendment of FAS 123&#148; (SFAS 148). As the title of the
standard implies, it is fairly limited in its scope, however it
will have implications for all entities that issue stock-based
compensation to their employees. The standard is intended to
encourage the adoption of the accounting provisions of SFAS 123.
It is also intended to address constituent concerns about the
so-called &#147;ramp-up effect&#148; on net income that resulted
from the application of the transition guidance originally
required by SFAS 123. The transition and annual disclosure
provisions of SFAS 148 are effective for fiscal years ending
after December&nbsp;15, 2002. Early application is permitted,
provided that the entity has not yet issued its
</FONT>

<P align="center"><FONT size="2">F-38
</FONT>

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<DIV align="center">
<B><FONT size="2">TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(a subsidiary of Tenaris, S. A.)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December 31, 2002, 2001 AND 2000</FONT></B>
</DIV>

<P align="left">
<FONT size="2">fiscal 2002 financial statements. The new interim
disclosure provisions are effective for the first interim period
beginning after December&nbsp;15, 2002. The Company management
believes that the adoption of SFAS 148 will not have a material
impact on the consolidated financial statements.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="y87729vogel.gif" alt="-s- Guillermo Vogel H."></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <IMG src="y87729cg.gif" alt="-s- Claudio Gugliuzza V."></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Guillermo Vogel H.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Claudio Gugliuzza
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vice Chairman of the Board
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Administrative Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-39
</FONT>

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<DIV align="left">
<IMG src="y87729osorno1.gif" alt="(ENRIQUE OSORNO HEINZE LETTERHEAD)">
</DIV>

<P align="left">
<U><FONT size="2">STATUTORY AUDITOR&#146;S REPORT</FONT></U>

<P align="left">
<FONT size="2">February&nbsp;21, 2003
</FONT>

<P align="left">
<FONT size="2">To the General Meeting of Shareholders of Tubos
de Acero de M&#233;xico, S.A.
</FONT>

<P align="left">
<FONT size="2">In my capacity as Statutory Auditor and in
accordance with the Article&nbsp;166 of the General Corporations
Law and with the company&#146;s by laws, I submit my report upon
the correctness, sufficiency and fairness of the financial
information that the Board of Directors has presented to your
attention in relation with the Company&#146;s operations for the
year ended December&nbsp;31, 2002.
</FONT>

<P align="left">
<FONT size="2">I attended the stockholders&#146; meetings and
the meetings of the Board of Directors to which I have been
called, and obtained from Management the information on
operations, documentation and records that I considered it
necessary to examine. My review has been performed in accordance
with auditing standards generally accepted in Mexico.
</FONT>

<P align="left">
<FONT size="2">In my opinion, the accounting and reporting
policies and criteria followed by the Company and applied by
Management in preparing the financial information presented to
this Meeting are appropriate and adequate and have been applied
on a basis consistent with that of the previous year; therefore,
such information correctly, fairly and adequately presents the
financial position of Tubos de Acero de M&#233;xico, S. A. and
subsidiaries at December&nbsp;31, 2002 and the results of its
operations, the changes in its stockholders&#146; equity and the
changes in its financial position for the year then ended, in
conformity with accounting principles generally accepted in
Mexico.
</FONT>

<P align="left">
<IMG src="y87729firosing.gif" alt="(-s- Enrique Osorno Heinze)">

<P align="center"><FONT size="2">F-40
</FONT>
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<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="024"></A></DIV>
<P align="center"><FONT size="2"><B>SIGNATURES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant hereby certifies that it meets all the requirements for
filing on Form&nbsp;20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">June&nbsp;27, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="5" valign="top" align="left"><FONT size="2">TUBOS DE ACERO DE MEXICO, S.A.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">/s/ Gerardo Varela<BR>
<HR align="left" size="1" width="90%" noshade></FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Gerardo Varela</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">/s/ Cecilia Bilesio<BR>
<HR align="left" size="1" width="90%" noshade></FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Cecilia Bilesio</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">Assistant to Chairman of the Board of Directors</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">and Corporate Affairs</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>CERTIFICATIONS</B>
</FONT>

<P align="center"><FONT size="2"><B>Certification of Chief Executive Officer</B>
</FONT>

<P align="left"><FONT size="2">I, Paolo Rocca, certify that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">I have reviewed this annual report on Form&nbsp;20-F of Tubos de Acero de
M&#233;xico, S.A.;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and
have:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures as of a date within 90&nbsp;days prior to the filing date of
this annual report (the &#147;Evaluation Date&#148;); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to
record, process, summarize and report financial data and have
identified for the registrant&#146;s auditors any material weaknesses in
internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s
internal controls; and</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">6.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="85%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: June&nbsp;27, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/ Paolo Rocca<BR>
<HR align="left" size="1" width="50%" noshade></FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Paolo Rocca</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="center"><FONT size="2"><B>Certification of Chief Financial Officer</B>
</FONT>

<P align="left"><FONT size="2">I, Gerardo Varela, certify that:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">I have reviewed this annual report on Form&nbsp;20-F of Tubos de Acero de
M&#233;xico, S.A.;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">3.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">4.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and
have:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures as of a date within 90&nbsp;days prior to the filing date of
this annual report (the &#147;Evaluation Date&#148;); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">5.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to
record, process, summarize and report financial data and have
identified for the registrant&#146;s auditors any material weaknesses in
internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s
internal controls; and</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">6.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: June&nbsp;27, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/ Gerardo Varela<BR>
<HR align="left" size="1" width="50%" noshade></FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Gerardo Varela</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Financial Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "EXHIBIT INDEX" -->
<DIV align="left"><A NAME="025"></A></DIV>

<P align="center"><FONT size="2"><B>EXHIBIT INDEX</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
1.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By-laws of Tamsa, as amended as of April&nbsp;30, 2003.*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2.1</FONT></TD>

    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Deposit Agreement dated as of January&nbsp;1, 1964, as amended and
restated as of June&nbsp;1, 1991, October&nbsp;15, 1991, July&nbsp;1, 1993 and
September&nbsp;12, 1996, and amended as of July&nbsp;9, 2001, between
Tamsa, JPMorgan Chase Bank, formerly known as Morgan Guaranty
Trust Company of New York, as depositary, and the holders of
American Depositary Receipts (such agreement is incorporated
herein by reference to the Registration Statement on Form&nbsp;F-6
relating to the ADSs (File Nos. 33-41380, 33-35558 and
333-13702) filed with the SEC on July&nbsp;9, 2001).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
2.2</FONT></TD>

    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Amendment, dated as of May&nbsp;28, 2003, to the Deposit Agreement
dated as of January&nbsp;1, 1964, as amended and restated as of June
1, 1991, October&nbsp;15, 1991, July&nbsp;1, 1993 and September&nbsp;12, 1996,
and amended as of July&nbsp;9, 2001, between Tamsa, JPMorgan Chase
Bank, formerly known as Morgan Guaranty Trust Company of New
York, as depositary, and the holders of American Depositary
Receipts (such agreement is incorporated herein by reference to
the Registration Statement on Form&nbsp;F-6 relating to the ADSs
(File Nos. 33-41380, 33-35558 and 333-13702) filed with the SEC
on May&nbsp;28, 2003).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Atlas Bradford Technology Sublicense Agreement, dated May&nbsp;24,
2002, between Tenaris Connections B.V. and Tamsa.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Tenaris Premium Connections Technology License Agreement, dated
July&nbsp;10, 2002, between Tenaris Connections B.V. and Tamsa, and
Addendum thereto, dated November&nbsp;10, 2002.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Service Agreement dated as of August&nbsp;30, 2001, between Tamsa and
Exiros M&#233;xico, S.A. de C.V. (such agreement is incorporated
herein by reference to Tamsa&#146;s annual report on Form&nbsp;20-F for
the fiscal year 2001).*</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.4</FONT></TD>

    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Amended and Restated Export Agency Agreement, dated as of
October&nbsp;4, 2000 between Tamsa and Techint Engineering L.L.C.
(such agreement is incorporated herein by reference to Tamsa&#146;s
annual report on Form&nbsp;20-F for the fiscal year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Assignment Agreement, dated October&nbsp;15, 2002, between Techint
Engineering LLC and Tenaris Global Services LLC relating to the
assignment of export agency agreements (such agreement is
incorporated herein by reference to the Registration Statement
on Form&nbsp;F-4 by Tenaris S.A., File No.&nbsp;333-99769)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.6</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">NKK-Premium Connections Technology and Trademark Sublicense
Agreement, dated as of October&nbsp;2, 2000, between DST Connection
Systems BV and Tamsa (such agreement is incorporated herein by
reference to Tamsa&#146;s annual report on Form&nbsp;20-F for the fiscal
year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Business Opportunities Agreement dated as of March&nbsp;30, 2001
between Tamsa, Siderca and Dalmine (such agreement is
incorporated herein by reference to Tamsa&#146;s annual report on
Form&nbsp;20-F for the fiscal year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Just-In-Time Agreement dated as of March&nbsp;23, 2001 between Tamsa
and Pemex Exploraci&#243;n y Producci&#243;n (such agreement is
incorporated herein by reference to Tamsa&#146;s annual report on
Form&nbsp;20-F for the fiscal year 2000).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
8.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>

    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">List of Tamsa subsidiaries.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">*&nbsp;English translation.
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>



</BODY>
</HTML>
[{"type": "20-F", "sequence": "1", "filename": "y87729e20vf.htm", "description": "FORM 20-F", "secsgml_size_bytes": 1391623}]
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FORM 20-F
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
o
Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
or
x
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2002
or
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from      to
Commission file number: 1-4870
TUBOS DE ACERO DE MEXICO, S.A.
(Exact name of registrant as specified in its charter)
Tubes of Steel of Mexico, S.A.
United Mexican States
(Translation of registrant's name into English)
(Jurisdiction of incorporation or organization)
Edificio Parque Reforma
Campos Elíseos 400-17 Piso
Col. Chapultepec Polanco
11560 México, D.F., México
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange On Which Registered
American Depositary Shares
American Stock Exchange
Common Stock (no par value)
American Stock Exchange*
*     Common stock of Tubos de Acero de México, S.A. is not listed for trading but
only in connection with the registration of American Depositary Shares which
are evidenced by American Depositary Receipts.
Securities registered or to be registered pursuant to Section 12(g) of the
Act:
None
Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual report.
342,934,120 shares of common stock (no par value)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark which financial statement item the registrant has
elected to follow.
Item 17
o
Item 18
x
Please send copies of notices and communications from the Securities and Exchange Commission to:
Ann B. Fisher, Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
(212) 558-4000
TABLE OF CONTENTS
PART I
Item 1.Identity of Directors, Senior Management and Advisers
Item 2.Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on the Company
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions.
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosure About Market Risk
Item 12. Description of Securities Other Than Equity Securities
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
PART III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
SIGNATURES
EXHIBIT INDEX
BY-LAWS OF TAMSA
ATLAS BRADFORD TECHNOLOGY SUBLICENSE AGREEMENT
TENARIS PREMIUM CONNECTIONS TECHNOLOGY LICENSE AGM
LIST OF TAMSA SUBSIDIARIES
Table of Contents
TABLE OF CONTENTS
PART I
1
Item 1.
Identity of Directors, Senior Management and Advisers
1
Item 2.
Offer Statistics and Expected Timetable
1
Item 3.
Key Information
2
Item 4.
Information on the Company
15
Item 5.
Operating and Financial Review and Prospects
41
Item 6.
Directors, Senior Management and Employees
54
Item 7.
Major Shareholders and Related Party Transactions
58
Item 8.
Financial Information
59
Item 9.
The Offer and Listing
60
Item 10.
Additional Information
63
Item 11.
Quantitative and Qualitative Disclosure About Market Risk
69
Item 12.
Description of Securities Other Than Equity Securities
70
PART II
71
Item 13.
Defaults, Dividend Arrearages and Delinquencies
71
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
71
Item 15.
Controls and Procedures
71
Item 16A
Audit Committee Financial Expert
71
Item 16B
Code of Ethics
71
Item 16C
Principal Accountant Fees and Services
71
PART III
72
Item 17.
Financial Statements
72
Item 18.
Financial Statements
72
Item 19.
Exhibits
72
i
Table of Contents
Definition of Certain Terms
In this annual report, unless otherwise specified or the context otherwise
requires:
•
"we," "us," "our" and "Tamsa" each refers to Tubos de Acero
de México, S.A., a Mexican corporation, and its consolidated
subsidiaries.
•
"Tenaris" refers to Tenaris S.A., a Luxembourg corporation, and its consolidated subsidiaries.
•
"Siderca" refers to Siderca S.A.I.C., an Argentine corporation, and its consolidated subsidiaries.
•
"Dalmine" refers to Dalmine S.p.A., an Italian corporation, and its consolidated subsidiaries.
•
"the Tenaris companies" collectively refers to Siderca,
Dalmine and Tamsa and their respective subsidiaries.
•
"Tenaris Global Services" refers to Tenaris Global Services S.A., a Uruguayan corporation.
•
"Tavsa" refers to Tubos de Acero de Venezuela, S.A., a Venezuelan corporation.
•
"shares" refers to ordinary shares representing common stock of Tamsa with no par value.
•
"tons" refers to metric tons.
•
one "billion" refers to one thousand million, or 1,000,000,000.
Certain figures contained in this annual report have been rounded.
Accordingly, these figures may not always sum to the total provided.
Currencies
In this annual report, unless otherwise specified or the context otherwise requires:
•
"dollars," "U.S. dollars" or "USD" each refers to the United States dollar.
•
"Mexican pesos" or "Ps" each refers to the Mexican peso.
Tamsa publishes its financial statements in Mexican pesos. This annual
report contains translations of some Mexican peso amounts into U.S. dollars.
These amounts are provided solely for your convenience. Unless otherwise
indicated, translations of Mexican peso amounts into U.S. dollars were made at
the rate of Ps10.3125 = USD1.00, which was the exchange rate published by Banco
de México in the
Diario Oficial de la Federación
, or the Official Gazette, on
December 31, 2002. We do not represent that Mexican pesos could be converted
into U.S. dollars at that rate or any other rate. See Item 3.E. "Key
Information — Exchange Rates" for additional information regarding the
exchange rate between the Mexican peso and the U.S. dollar.
On June 24, 2003, the noon buying rate published by the Federal Reserve
Bank of New York for the Mexican peso was Ps10.53 = USD1.00.
Accounting Principles
Tamsa prepares its financial statements in conformity with generally
accepted accounting principles in Mexico, commonly referred to as "Mexican
GAAP." Mexican GAAP differs in significant respects from U.S. GAAP. See note 12
to the audited consolidated financial statements of Tamsa included in this
annual report for a description of the principal differences between Mexican
GAAP and U.S. GAAP as they relate to Tamsa and for a reconciliation of net
income and total shareholders' equity for the years and at the dates indicated.
The financial statements of Tamsa included in this annual report were
prepared giving effect to Bulletin B-10 "Recognition of Effect of Inflation on
Financial Information," as amended, and Bulletin B-12, "Statements of Changes
in Financial Position," issued by the Mexican Institute of Public Accountants,
or the MIPA, each of which became effective in 1990, and Bulletin B-15,
"Foreign Currency Transactions and Translation of Financial Statements of
Foreign Operations," also issued by the MIPA and adopted by Tamsa in 1998.
Generally, Bulletin B-10 provides for the recognition of the effects of
inflation by requiring Mexican companies to restate inventories and fixed
assets at current replacement cost, to restate all other nonmonetary assets and
nonmonetary liabilities as well as the components of shareholders' equity using
the Mexican Consumer Price Index and to record
ii
Table of Contents
gains or losses in purchasing power from holding monetary liabilities or assets.
The Third Amendment to Bulletin B-10 requires restatement of all financial
statements to constant Mexican pesos as of the date of the most recent balance
sheet presented. The Fifth Amendment to Bulletin B-10 was issued effective
January 1, 1997 by the MIPA. Under the Fifth Amendment, Mexican companies are
no longer permitted to restate fixed assets at current replacement cost, but
are instead required to restate them using the Mexican Consumer Price Index or
inflation factors of the country of origin in the case of imported assets.
Bulletin B-12 specifies the appropriate presentation of the statement of
changes in financial position when the financial statements have been restated
in constant Mexican pesos in accordance with Bulletin B-10. Bulletin B-12
identifies the sources and applications of resources representing differences
between beginning and ending financial statement balances in constant Mexican
pesos. Bulletin B-15 prescribes the methodology for foreign currency
transactions and the recognition of inflation in the financial information of
foreign subsidiaries. Accordingly, unless otherwise noted, all data in the
financial statements and the financial information derived therefrom included
elsewhere in this annual report and all other Tamsa financial data included
throughout this annual report have been restated in constant Mexican pesos as
of December 31, 2002.
No Internet Site Is Part of This Annual Report
Tamsa maintains an Internet site at www.tamsa.com.mx. Information
contained in or otherwise accessible through this website is not a part of this
annual report. All references in this annual report to this Internet site are
inactive textual references to this URL, or "uniform resource locator," and are
for your informational reference only.
Forward-Looking Statements
This annual report contains certain statements that we consider to be
"forward-looking statements" as defined in, and subject to the safe harbor
provisions of, the U.S. Private Securities Litigation Act of 1995. The
statements appear throughout this annual report and are subject to risks and
uncertainties. These statements include information regarding:
•
management strategy;
•
capital spending;
•
development and growth of the seamless steel pipe and oil and gas industries;
•
trends and other prospective data, including trends regarding
the levels of oil and gas drilling worldwide; and
•
general economic conditions in Mexico, Venezuela and other
countries in which Tamsa operates and makes sales.
Sections of this annual report that by their nature contain
forward-looking statements include Item 3. "Key Information," Item 4.
"Information on the Company," Item 5. "Operating and Financial Review and
Prospects" and Item 11. "Quantitative and Qualitative Disclosure About Market
Risk."
Forward-looking statements also may be identified by the use of words such
as "believes," "expects," "anticipates," "projects," "intends," "should,"
"seeks," "estimates," "probability," "risk," "target," "goal," "objective,"
"future" or similar expressions or variations of such expressions.
The forward-looking statements contained in this annual report speak only
as of the date of this document, and we do not undertake to update any
forward-looking statement to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.
iii
Table of Contents
PART I
Item 1.
Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2.
Offer Statistics and Expected Timetable
Not applicable.
1
Table of Contents
Item 3.
Key Information
A.
Selected Financial Data
The selected historical consolidated financial data of Tamsa have been
derived from its audited consolidated financial statements, which are prepared
in accordance with Mexican GAAP (unless otherwise indicated) for each of the
periods and at the dates indicated. The consolidated financial statements have
been audited by PricewaterhouseCoopers, independent accountants in Mexico.
Tamsa's audited consolidated financial statements are prepared in accordance
with Mexican GAAP, which differ in certain significant respects from U.S. GAAP.
See note 12 to Tamsa's audited consolidated financial statements, which
provides a description of the principal differences between Mexican GAAP and
U.S. GAAP as they relate to Tamsa's financial statements and a reconciliation
to U.S. GAAP of net income and total shareholders' equity for the periods and
at the dates indicated therein. The selected historical consolidated financial
data of Tamsa are stated in constant Mexican pesos as of December 31, 2002.
For a discussion of the currencies used in this annual report, exchange rates
and accounting principles affecting the financial information contained in this
annual report, see "Currencies", Item 3.E. "Key Information — Exchange Rates"
and "Accounting Principles."
Selected consolidated income statement data
For the year ended December 31,
2002
2001
2000
1999
1998
(thousands of constant December 31, 2002 Mexican pesos, except share and per share amounts)
Mexican GAAP
Net sales
Ps
6,728,275
Ps
6,899,027
Ps
6,463,007
Ps
5,103,316
Ps
8,269,197
Operating cost and expenses
(5,337,052
)
(5,356,242
)
(5,406,737
)
(4,542,881
)
(5,863,429
)
Operating profit
1,391,223
1,542,785
1,056,270
560,435
2,405,768
Comprehensive
financing cost
(165,924
)
(42,106
)
(88,544
)
(146,049
)
(489,759
)
Gain on sale of subsidiary
(1)
—
—
—
—
527,451
Equity in loss of associated
companies
(2)
(16,047
)
(290,930
)
(52,608
)
(379,135
)
(233,420
)
Income (loss) before the
following items
1,136,023
590,205
421,496
(358,046
)
1,393,860
Extraordinary item
(3)
—
—
—
265,175
564,126
Cumulative effect of change
in accounting principle
(4)
—
(11,567
)
—
—
—
Net income (loss) for the year
Ps
1,136,023
Ps
578,638
Ps
421,496
Ps
(92,871
)
Ps
1,957,987
Weighted average number of
shares outstanding
(5)
339,284,120
339,284,120
339,284,120
339,409,820
345,467,065
Net earnings (loss) per share
before the following items
Ps
3.35
Ps
1.74
Ps
1.24
Ps
(1.05
)
Ps
4.04
Extraordinary item
—
—
—
0.78
1.63
Cumulative effect of change
in accounting principle
—
(0.03
)
—
—
—
Earnings (loss) per share
Ps
3.35
Ps
1.71
Ps
1.24
Ps
(0.27
)
Ps
5.67
U.S. GAAP
Net sales
Ps
6,860,137
Ps
6,905,335
Ps
6,173,953
Ps
5,103,316
Ps
8,269,197
Operating income
1,534,310
1,496,643
924,017
515,353
2,357,172
Net income (loss)
1,381,633
734,766
500,536
(34,395
)
2,542,071
Earnings (loss) per share
4.07
2.17
1.48
(0.10
)
7.36
(1)
Income from the sale of TF de México, S.A. de C.V., a subsidiary of
Tamsa.
(2)
Mainly corresponding to Tamsa's equity participation in the
Consorcio
Siderurgia Amazonia
, or Amazonia. See note 11 to Tamsa's audited
consolidated financial statements.
(3)
Mainly a tax benefit from the utilization of tax losses incurred in
previous years.
(4)
Corresponds to the net effect at the beginning of the year from changes
in accounting principles as a result of the adoption of Statement C-2,
effective January 1, 2001, which establishes the accounting treatment for
derivatives and financial instruments.
2
Table of Contents
(5)
Amounts for 2002, 2001, 2000, 1999 and 1998 exclude 3,650,000 shares
which were held in treasury in 2002 and held in 2001, 2000, 1999 and 1998
by a wholly-owned subsidiary of Tamsa. During 1998, 1,001,790 shares held
in treasury were cancelled. Tamsa purchased 10,100,000 shares which were
canceled on April 28, 1999. On July 10, 2001, each outstanding share of
Tamsa's common stock was split into five shares; concurrently, the
American Depositary Receipt, or ADR, ratio was modified from one ADR for
each share of common stock to one ADR for five shares of common stock. For
comparative purposes, the number of shares shown for prior years has been
adjusted to reflect the split retroactively. See note 5 to Tamsa's audited
consolidated financial statements.
Selected consolidated balance sheet data
At December 31,
2002
2001
2000
1999
1998
(thousands of constant December 31, 2002 Mexican pesos, except share and per share amounts)
Mexican GAAP
Current assets
Ps
5,509,924
Ps
3,954,359
Ps
4,010,881
Ps
3,979,045
Ps
5,384,512
Investments in associated
companies
517,697
614,351
1,035,358
830,872
1,371,577
Property, plant and equipment
8,280,347
7,928,131
7,757,946
8,317,591
9,568,059
Other assets
12,144
81,442
—
—
—
Total assets
Ps
14,320,112
Ps
12,578,283
Ps
12,804,185
Ps
13,127,508
Ps
16,324,148
Current liabilities
Ps
2,342,415
Ps
1,241,894
Ps
1,487,634
Ps
2,268,066
Ps
2,653,414
Long-term debt
683,203
1,361,585
1,056,344
—
666,158
Other liabilities
(1)
2,343,110
2,346,158
2,473,436
166,243
181,696
Total liabilities
Ps
5,368,728
Ps
4,949,637
Ps
5,017,414
Ps
2,434,309
Ps
3,501,268
Equity of majority shareholders
Ps
8,963,714
Ps
7,598,793
Ps
7,755,729
Ps
10,662,204
Ps
12,753,670
Minority interest in
consolidated subsidiaries
(12,330
)
29,853
31,042
30,996
69,210
Total shareholders' equity
Ps
8,951,384
Ps
7,628,646
Ps
7,786,771
Ps
10,693,199
Ps
12,822,880
Weighted average number of
shares outstanding
(2)
339,284,120
339,284,120
339,284,120
339,409,820
345,467,065
Total shareholders' equity per
share
Ps
26.38
Ps
22.48
Ps
22.95
Ps
31.51
Ps
37.12
U.S. GAAP
Total assets
Ps
16,883,708
Ps
15,562,756
Ps
15,390,273
Ps
15,144,612
Ps
17,055,917
Net assets
9,832,402
8,692,748
8,561,711
8,651,888
9,466,347
Total shareholders' equity
9,844,732
8,662,896
8,530,671
8,620,892
9,397,137
Total shareholders' equity per
share
29.02
25.53
25.14
25.40
27.20
(1)
Includes a deferred tax liability of Ps2,171,121 in 2002, Ps2,154,157 in
2001 and Ps2,306,472 in 2000 resulting from the adoption of Statement D-4
(deferred income tax) under Mexican GAAP effective January 1, 2000.
(2)
Amounts for 2002, 2001, 2000, 1999 and 1998 exclude 3,650,000 shares
which were held in treasury in 2002 and held in 2001, 2000, 1999 and 1998
by a wholly-owned subsidiary of Tamsa. During 1998, 1,001,790 shares held
in treasury were cancelled. Tamsa purchased 10,100,000 shares which were
canceled on April 28, 1999. On July 10, 2001, each outstanding share of
Tamsa's common stock was split into five shares; concurrently, the ADR
ratio was modified from one ADR for each share of common stock to one ADR
for five shares of common stock. For comparative purposes, the number of
shares shown for prior years has been adjusted to reflect the split
retroactively. See note 5 to Tamsa's audited consolidated financial
statements.
B.
Capitalization and Indebtedness
Not applicable.
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
3
Table of Contents
D.
Risk Factors
You should carefully consider the following risks, together with the other
information contained in this annual report, before making an investment
decision. Any of these risks could have a material adverse effect on Tamsa's
business, financial condition and results of operations, which could in turn
adversely affect the price of Tamsa's shares and American Depositary Shares, or
ADSs.
Risks Relating to the Seamless Steel Pipe Industry
Sales and revenues may fall as a result of downturns in the international
price of oil and other circumstances affecting the oil and gas industry.
The oil and gas industry is the largest consumer of seamless steel pipe
products worldwide. This industry has historically been volatile, and downturns
in the oil and gas markets adversely affect the demand for seamless steel pipe
products.
Demand for these products depends primarily upon the number of oil and
natural gas wells being drilled, completed and reworked, and the depth and
drilling conditions of these wells. The level of these activities depends
primarily on current and expected future prices of oil and natural gas. Several
factors, such as the supply and demand for oil and natural gas and general
economic conditions, affect these prices. When the price of oil and gas falls,
oil and gas companies generally reduce spending on production and exploration
activities and, accordingly, make fewer purchases of seamless steel pipe
products.
Other circumstances may also affect drilling activity and, as a result,
cause pipe consumption to decline. For example, in 2002, although oil prices
remained at levels which, under typical circumstances, would have been expected
to result in sustained levels of investment in oil and gas drilling, oil and
gas exploration and production activity were affected by increased uncertainty
over the future level of oil prices as a result of the prospects of military
action against Iraq and production cutbacks established by the Organization of
Petroleum Exporting Countries, or OPEC. As a result, Tamsa's sales volume of
seamless steel pipes for 2002 decreased 6.5% compared to the previous year.
In the future, sales and revenues may again fall as a result of downturns
in the international price of oil and other circumstances affecting the oil and
gas industry.
Adverse economic or political conditions in the countries where we operate
or sell our products may decrease our sales and revenues.
We are exposed to adverse economic and political conditions in the
countries where we operate or sell our products. The economies of these
countries are in different stages of socioeconomic development. Like other
companies with significant international operations, Tamsa is exposed to risks
from changes in foreign currency exchange rates, interest rates, inflation,
governmental spending, social instability and other political, economic or
social developments in the countries in which it operates. Risks associated
with foreign political, economic or social developments also may adversely
affect Tamsa's sales volume or revenues from exports and, as a result, its
financial condition and results of operations. For example, continuing adverse
political and economic developments in Venezuela have already had an adverse
impact on Tamsa's sales in that country. For additional information on risks
relating to Tamsa's operations in Venezuela, see " — Risks Relating to Mexico
and Venezuela."
Sales and revenues may fall as a result of fluctuations in industry
inventory levels.
Inventory levels of seamless steel pipe in the oil and gas industry can
vary significantly from period to period. These fluctuations can affect the
demand for our products, as customers draw from existing inventory during
periods of low investments in drilling and other activities and accumulate
inventory during periods of high investments. Even if the prices of oil and gas
rise or remain stable, oil and gas companies may not purchase additional
seamless steel pipe products or maintain their current purchasing volume.
4
Table of Contents
Competition in the global market for seamless steel pipe products may
cause us to lose market share in particular markets and hurt our sales and
revenues.
The global market for the seamless steel pipe products is highly
competitive, with the primary competitive factors being price, quality and
service. Aside from the Tenaris companies, there are approximately four major
exporters of premium-quality seamless steel pipe products worldwide. In
addition, a large number of producers manufacture and export generally lower
quality seamless steel pipes. Competition from these lower end producers,
particularly those from Russia, China and the Ukraine, have, at times,
adversely affected Tamsa and the other Tenaris companies because they have
offered products at significantly lower prices. In addition, these producers
are improving the range and quality of pipes, thereby increasing their ability
to compete with us. Tamsa and the other Tenaris companies may not continue to
be able to compete effectively against existing or potential producers and
preserve their current shares of the relevant geographic or product markets. In
addition, if import restrictions are imposed upon our competitors in our
domestic markets, they may increase their marketing efforts in other countries
where Tamsa and the other Tenaris companies sell their products and thus
increase the competitive pressure on the Tenaris companies in such markets.
Furthermore, because two of the Tenaris companies' four major competitors are
Japanese companies, any decline in the value of the Japanese yen relative to
the U.S. dollar could make those Japanese companies more competitive.
Mexico is removing barriers to imported products, which will lead to
increased competition and may hurt our sales and revenues.
As part of the increasing globalization of major economic markets, some
countries are lifting quotas and other restrictions on imports, including
imports of seamless steel pipe products, and are forming trade blocs. Mexico is
party to the North American Free Trade Agreement, or NAFTA. In addition, Mexico
is party to bilateral and multilateral trade agreements (for example, Mexico's
trade agreement with the EU) that remove barriers to the import of foreign
products. As import barriers have fallen, the domestic markets in Mexico for
seamless steel pipe products have become more competitive. Tamsa may not be
able to maintain its share of its domestic market as foreign producers take
advantage of recent trade liberalization and the expected elimination of
remaining barriers to foreign trade in Tamsa's domestic markets. Furthermore,
while trade liberalization may also provide Tamsa with greater access to
foreign markets, increases in sales to those foreign markets may not adequately
offset any loss in domestic sales arising from increased foreign competition.
As a result of antidumping and countervailing duty proceedings and other
import restrictions, we may not be allowed to sell our products in important
geographic markets such as the United States.
U.S. producers have filed antidumping and countervailing duty actions
against us and other producers in several instances in the past, leading to
significant penalties, including the imposition of antidumping and
countervailing duties. Products manufactured by Tamsa have been and continue to
be subject to such duties in the United States. Antidumping or countervailing
duty proceedings or any resulting penalties or any other form of import
restriction may impede Tamsa's access to one or more important export markets
for its products and in the future additional markets could be closed to Tamsa
as a result of similar proceedings. The U.S. market is effectively closed to
some of Tamsa's principal products, limiting its current business and potential
growth in that market.
Further consolidation among oil and gas companies may force us to reduce
our prices and hurt our profits.
A large percentage of our sales are directed to international oil and gas
companies. Recently, oil and gas companies throughout the world have
experienced a high level of consolidation which has reduced the number of
companies dedicated to providing these services. To the extent this
consolidation trend continues, the surviving companies may enjoy significant
bargaining power that could affect the prices of our products and services.
Fluctuations in the cost of raw materials and energy may hurt our profits.
The manufacturing of seamless steel pipe products requires substantial
amounts of raw materials and energy from domestic and foreign suppliers. The
availability and price of a significant portion of the raw materials and energy
required by Tamsa are subject to market conditions and government regulation
affecting supply and demand that can affect their continuity and cost of
production. Increased costs of production may not be recoverable through
increased product prices and could adversely affect our profitability.
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Our inability to reduce some of our costs in response to lower sales
volume may hurt our profits.
Like other manufacturers of steel-related products, we have fixed and
semi-fixed costs that cannot adjust rapidly to fluctuations in the demand for
our products. Our fixed and semi-fixed costs (excluding depreciation and
amortization) represented approximately 16% of total costs in 2002 and 15% in
2001. If demand for our products falls significantly, these costs may adversely
affect our profitability.
Potential environmental, product liability and other claims may create
significant liabilities for us that would hurt our net worth.
Tamsa's oil and gas casing, tubing and line pipe products are sold
primarily for use in oil and gas drilling and transportation activities, which
are subject to inherent risks, including well failures, line pipe leaks and
fires, that could result in death, personal injury, property damage,
environmental pollution or loss of production. Any of these hazards and risks
can result in the loss of hydrocarbons, environmental liabilities, personal
injury claims and property damage. Correspondingly, defects in Tamsa's products
could result in death, personal injury, property damage, environmental
pollution or damage to equipment and facilities. Tamsa warrants its oilfield
products and the Tenaris companies products it sells or distributes in
accordance with customer specifications. Actual or claimed defects in its
products may give rise to claims against Tamsa for losses and expose Tamsa to
claims for damages. Tamsa's insurance coverage may not be adequate or available
to protect it in the event of a claim or its coverage may be canceled or
otherwise terminated.
Risks Relating to Our Business
Our controlling shareholder can take actions that do not reflect the will
or best interest of our other shareholders.
As of May 30, 2003, Tenaris, directly or indirectly, beneficially owned
94.44% of Tamsa's outstanding voting stock. As a result, Tenaris is effectively
able to elect all the members of the board of directors of Tamsa and has the
effective power to determine the outcome of any actions requiring shareholder
approval, including, subject to the requirements of Mexican law, the payment of
dividends by Tamsa. As of May 30, 2003, San Faustín N.V. beneficially owned
61.2% of Tenaris's outstanding voting stock. Until June 10, 2003, San Faustín
was ultimately controlled by Roberto Rocca, either directly or through Rocca &
Partners S.A., a British Virgin Islands corporation. Following Mr. Rocca's
death on June 10, 2003, San Faustín is controlled by Rocca & Partners. See
Item 6. "Directors, Senior Management and Employees" and Item 7. "Major
Shareholders and Related Party Transactions."
Recent and future acquisitions and strategic partnerships may disrupt our
operations and hurt our profits.
In recent years, we have acquired interests in various companies, such as
Consorcio Siderurgia Amazonia Ltd
., or Amazonia (which holds an interest in
Siderúrgica del Orinoco, C.A., or Sidor), Tavsa and
Empresas Riga S.A. de C.V.
,
or Riga, and engaged in strategic partnerships. Our profits have been adversely
affected by our investment in Amazonia, and the value of our investment has
declined. Risks associated with an investment in Sidor through Amazonia are
discussed further below. With respect to all of our investments and strategic
partnerships, in the future we may not be successful in our plans regarding
their operation, or they could be affected by developments affecting our
partners. For example, any negative development in the operations of Sidor, or
a change of control at Sidor could adversely affect Tavsa's access to raw
materials and, consequently, negatively impact Tavsa's operations and financial
results. For a description of Sidor see Item 4.A. "Information on the Company
— Tamsa — Investments in Other Companies." We will continue to actively
consider other strategic acquisitions and partnerships from time to time. We
must necessarily base any assessment of potential acquisitions and partnerships
on assumptions with respect to operations, profitability and other matters that
may subsequently prove to be incorrect. Our acquisition and partnership
activities may not perform in accordance with our expectations and could
adversely affect our operations and profitability.
Our related party transactions with Tenaris Global Services and other
related parties may not always be on terms as favorable as those that could be
obtained from unaffiliated third parties.
Tamsa obtains from Tenaris Global Services and other related parties an
important number of services that are significant to our business, including
marketing and sales services. We will likely continue to obtain those services
from Tenaris Global Services and other related parties. If we could no longer
rely on Tenaris Global
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Services and other related parties to provide these services, we may not
be able to obtain services of similar quality without delay or additional
expense. These transactions and agreements are made in the ordinary course of
business, and we believe that these transactions and agreements are made on
terms no less favorable than those we could obtain from unaffiliated third
parties. We will continue to engage in related party transactions in the future
and we intend that these transactions be on terms as favorable as
those that could be obtained from unaffiliated third parties but no assurance can be given in this respect. See
Item 4.B. "Information on the Company — Tenaris" and Item 7. "Major
Shareholders and Related Party Transactions."
The cost of complying with environmental regulations and paying unforeseen
environmental liabilities may increase our operating costs or hurt our net
worth.
We are subject to a wide range of state and federal laws, regulations,
permits and decrees in Mexico relating to the protection of human health and
the environment including regulations concerning water pollution, air
pollution, noise pollution and hazardous substance discharges. State and
federal authorities in Mexico have been moving toward more stringent
enforcement of these laws. This trend is likely to continue and may be
influenced by the environmental agreement entered into by Mexico, the United
States and Canada in connection with NAFTA. We estimate that we will incur
expenditures aggregating approximately USD1.5 million in 2003, to satisfy
existing Mexican environmental requirements. In addition, our consolidated
subsidiary, Tavsa, has manufacturing operations in Venezuela and is subject to
environmental and health regulations in Venezuela, and will continue to incur
expenditures to comply with those regulations. These expenditures may not be
sufficient to enable us and them to comply with applicable requirements in the
future. Future changes in laws and technology and the enforcement of existing
laws could require further significant expenditures. In addition, unforeseen
expenditures necessary to remain in compliance with future environmental laws
and regulations, including site or other remediation costs, or unforeseen
environmental liabilities, could have a material adverse effect on our
financial condition and results of operations.
Any decline in purchases by our largest customer may hurt our sales and
revenues in the future.
Tamsa enjoys a strong relationship with Petróleos Mexicanos, or Pemex, one
of the world's largest crude oil and condensates producers. Pemex has been
Tamsa's single largest customer. Sales to Pemex, including drilling companies
contracted by Pemex, as a percentage of Tamsa's total sales volume, amounted to
14.8% in 2002. The volume of sales to Pemex has fluctuated historically and may
continue to fluctuate in the future in response to diverse factors, such as
changes in the amounts budgeted by Pemex for exploration and production and
changes in drilling activity by Pemex or the drilling companies contracted by
Pemex, as they may not maintain their current volume of purchases of Tamsa's
products. The loss of Pemex as a customer or a reduction in the volume of sales
to Pemex (or drilling companies contracted by Pemex) would have a material
adverse effect on Tamsa's results of operations.
We may continue to lose the value of our investment in Sidor, which would have a negative impact
on our net worth.
In January 1998, an international consortium of companies, Amazonia,
purchased a 70.0% equity interest in Sidor from the Venezuelan government,
which retained the remaining 30.0%. Tamsider, a wholly-owned subsidiary of
Tamsa, held an initial 12.5% equity interest in Amazonia, which increased to
14.1% in March 2000 as a result of additional investments described below. As
of December 31, 2002, Tamsider's equity interest in Amazonia remained at 14.1%.
In connection with the 2003 restructuring of Sidor and Amazonia's debt
discussed below, Tamsider is in the process of purchasing a 24.4% equity interest in Ylopa Serviços
de Consultadoria Lda., or Ylopa, a newly created company. After the
consummation of the restructuring on June 20, 2003, Tamsider capitalized in
Amazonia a convertible subordinated loan made to Amazonia in connection with
the 2000 restructuring described below and, as a result, increased its
participation in Amazonia to a 14.5% equity interest, and Ylopa held new debt
instruments of Amazonia convertible, at Ylopa's option at any time after June
20, 2005, into a 67.4% equity interest of Amazonia. In addition, the Venezuelan
government's ownership in Sidor increased to 40.3%, while Amazonia's beneficial
ownership in Sidor decreased to 59.7%. As part of the June 2003 restructuring,
all the Amazonia shares, as well as all the shares of Sidor held by
Amazonia were placed in trust with Banesco Banco Universal,
C.A., as trustee.
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Sidor has experienced significant financial losses and other problems
since the acquisition by Amazonia in January 1998, despite a significant
reduction in Sidor's workforce and management's efforts to improve the
production process and reduce operating costs. In 1999, due to negative
conditions in the international steel market, a sustained and intensifying
domestic recession in Venezuela, deteriorating conditions in the credit
markets, an increase in the value of the Venezuelan currency relative to the
U.S. dollar and other adverse factors, Sidor and Amazonia incurred substantial
losses and were unable to make payments due under loan agreements with their
respective creditors. In 2000, these loan agreements were restructured. Despite
continued efforts by Sidor's management to improve technology and optimize
production levels, in late 2001 Sidor and Amazonia were again unable to make
payments due under the restructured loan agreements, following a continuation
and aggravation of the same negative factors described above accompanied by
increased competition from steel imports in Venezuela. As of December 31, 2002,
Sidor had approximately USD1.58 billion of indebtedness (secured in part by
fixed assets valued at USD827 million as determined at the time Sidor's loans
were restructured in March 2000) and Amazonia had approximately USD313 million
of indebtedness.
2000 Restructuring
. As a result of the adverse trends discussed above, in
connection with the restructuring concluded in 2000 Tamsider made additional
capital contributions to Amazonia, while recording significant losses in the
value of its investment. In addition to its initial capital contribution of
USD87.8 million, Tamsider was required to make capital contributions to
Amazonia in the amount of USD36.1 million (of which USD18.1 million was an
additional capital contribution and USD18.0 million took the form of a
convertible subordinated loan to Amazonia). The value of Tamsider's investments
(as recorded in our audited consolidated financial statements) has decreased
significantly since 1998, from Ps910,306 thousand as of December 31, 1998, to
Ps422,140 thousand as of December 31, 1999, Ps649,834 thousand as of December
31, 2000, Ps238,233 thousand as of December 31, 2001 and Ps136,433 thousand as
of December 31, 2002. Due to Sidor's financial situation, as described above,
at December 31, 2001, Tamsider recorded a valuation allowance in the amount of
Ps154,688 thousand in order to reduce the value of its investment in Amazonia
and the subordinated convertible debentures.
Expiration of Performance Bond
. The Sidor purchase agreement between
Amazonia and the Venezuelan government required the shareholders of Amazonia,
including Tamsider, to indemnify the government for breaches by Amazonia of the
Sidor purchase agreement up to a maximum amount of USD150 million, for five
years from the acquisition. In connection with this indemnity, the shareholders
of Amazonia were required to maintain a performance bond (which Tamsa guaranteed
directly in proportion to its interest in Amazonia) for five years, beginning in 1998, in the amount of USD150 million
during the first three years, USD125 million in the fourth year and USD75
million in the fifth year. The guarantee expired in January 2003.
2003 Restructuring
. On June 20, 2003, Sidor, Amazonia and their creditors
(including the Venezuelan government) consummated a restructuring of the Sidor
and Amazonia debt. Under the terms of the restructuring:
•
Ylopa purchased all of Amazonia's bank debt and a portion of Sidor's bank
debt for a total amount of USD133.5 million;
•
Sidor purchased a portion of its own bank debt for a total amount of
USD37.9 million;
•
the remainder of Sidor's bank debt was refinanced and the lenders agreed
to the payment by Sidor of lower interest rates and a longer tenor;
•
Ylopa assigned to Amazonia all of the debt it purchased in exchange for
debt instruments of Amazonia convertible into a 67.4% equity interest in
Amazonia at Ylopa's option;
•
the Venezuelan government capitalized half of the debt owed to it by
Sidor and consequently increased its equity ownership interest in Sidor to
40.3%;
•
the remainder of the debt owed to the Venezuelan government was
refinanced;
•
certain agreements entered to in connection with the 2000 restructuring
were terminated and the Amazonia shareholders, including
Tamsider, were released from:
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•
the guarantees they had provided with respect to the principal and
a portion of the interest payable under the loan made to Sidor by the
Venezuelan government;
•
their obligations under a certain put agreement that previously
required them to purchase up to USD25 million in loans payable by
Amazonia to its private lenders,
and
•
their obligations under a letter to these lenders contemplating the
possibility of additional capital contributions of up to USD20 million
in the event of extreme financial distress of Sidor,
and
•
beginning in 2004, but in no event before the first USD11 million of
Sidor's excess cash (determined in accordance with the restructuring
documents) has been applied to repay Sidor's bank debt, 30% of Sidor's
distributable excess cash for each year (determined in accordance with the
restructuring documents) will be applied to repay Sidor's restructured debt, and
any remaining distributable excess cash for such year will be paid as
follows:
•
59.7% to Ylopa (until 2012 or such
earlier year in which Ylopa has received an aggregate amount of
USD324 million) or Amazonia (after expiration of Ylopa's
right to receive Sidor's remaining distributable excess cash),
as the case may be,
and
•
40.3% to the Venezuelan government.
Tamsa, through Tamsider, participated in the 2003 restructuring by making an
aggregate cash contribution (mainly in the form of subordinated convertible
debt) of USD32.9 million to Ylopa and by capitalizing in Amazonia convertible
debt previously held by Tamsa in the amount of USD18.0 million plus accrued
interest. Tenaris's indirect participation in Amazonia increased from 14.1% to
14.5% and may further increase up to 21.2% if and when all of its subordinated
convertible debt is converted into equity.
Following completion of the restructuring between Sidor, Amazonia and their
creditors (including the Venezuelan government), Sidor had approximately
USD791.0 million of indebtedness outstanding and Amazonia had no financial
indebtedness outstanding. Sidor's financial indebtedness was made up of three
tranches, one of USD350.5 million to be repaid over 8 years with one year of
grace, one of USD26.3 million to be repaid over 12 years with one year of grace
and the remaining tranche of USD368.6 million, to be repaid over 15 years with
one year of grace. In addition, Sidor's commercial indebtedness with certain
Venezuelan government-owned suppliers amounted to USD45.4 million, to be repaid
over the next five years.
After consummation of the 2003 restructuring, Tamsider continues to bear the
risk of further losses in the equity value of its investment in Amazonia as
well as losses in the equity value of its investment in Ylopa, but none of
Tamsa, Tamsider or Ylopa guarantees the restructured indebtedness of Sidor. The
restructuring agreements contemplate, however, certain continuing obligations
and restrictions, including:
•
pledges to the Sidor financial lenders of Sidor and Amazonia shares,
which will remain in effect for two years from the date of the
restructuring so long as no event of default has occurred and is
continuing under Sidor's refinanced loan agreements;
•
pledges to the Sidor financial lenders of any future debt of Amazonia,
which will remain in effect until such time as the pledges of the Amazonia
and Sidor shares referred to above are released;
•
negative pledges not to create, incur or suffer to exist a lien (other
than certain permitted liens) over any of the equity or debt of Amazonia
held by, or owed to, the Amazonia shareholders;
and
•
restrictions on the ability to institute or join a proceeding seeking the
liquidation, bankruptcy or reorganization of Amazonia or Sidor.
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Risks Relating to Mexico and Venezuela
Negative economic, political and regulatory developments in Mexico may
hurt our domestic sales volume and disrupt our manufacturing process, thereby
adversely affecting our results of operations and financial condition.
Most of our manufacturing operations and assets are located in Mexico and
a substantial portion of our sales are made in Mexico. Tamsa's business may be
affected by economic, political and regulatory developments in Mexico. The
discussion of recent developments in Mexico that follows was mainly derived
from information recently filed by the Mexican government and Pemex with the
U.S. Securities and Exchange Commission, or SEC.
•
Economic situation
. Beginning in December 1994, and continuing through
1995, Mexico experienced an economic crisis characterized by exchange
rate instability, a devaluation of the Mexican peso, high inflation, high
domestic interest rates, economic contraction, a reduction of
international capital flows, reduced consumer purchasing power and high
unemployment. In response to the economic crisis, the Mexican government
implemented broad economic reform programs which improved economic
conditions in 1996 and 1997. However, a combination of factors led to a
reduction of Mexico's economic growth in 1998, including the economic
crises in Asia, Russia, Brazil and other emerging markets that began in
late 1997.
In 1999, GDP grew by 3.6% and in 2000, by 6.6%. During 2001, the Mexican
economy experienced a slowdown, which was mainly due to a decline in global
and domestic consumption. GDP decreased by 0.3% in 2001 and increased by
0.9% in 2002. The Mexican government currently estimates that GDP will
increase by 3.0% in 2003. A deterioration in Mexico's economic conditions
may adversely affect Tamsa's business, results of operations, financial
condition, liquidity or prospects.
•
Impact of significant inflation and interest rates
. The annual rate of
inflation in Mexico, as measured by changes in the Consumer Price Index,
was 9.0% during 2000, 4.4% in 2001 and 5.7% in 2002. Banco de México
currently estimates that the annual rate of inflation for 2003, as
measured by changes in the Consumer Price Index, will be 4.3%, which is
above the official target established for the year of 4.2%. Interest
rates on 28-day Mexican treasury bills, or
Cetes
, averaged 15.27% in
2000, 11.26% in 2001 and 7.08% in 2002, and closed on June 24, 2003 at
5.11%.
If inflation in Mexico is not maintained within the government's
projections, the Mexican economy and, consequently, Tamsa's financial
condition and results of operations may be adversely affected.
•
Price controls
. Seamless steel pipe products, like most products in
Mexico, historically were subject to price controls imposed by the
Mexican government. Although seamless steel pipe prices were officially
decontrolled in September 1989, the Mexican government maintained other
price restrictions until August 1990 as an inflation reduction measure.
In 1995, as part of its response to the Mexican economic crisis, the
Mexican government sought to minimize inflation by promoting the gradual
implementation of domestic price increases. Currently, domestic steel
pipe prices are not regulated; if any price control regulations were
reimposed in the future, Tamsa's sales revenues might be adversely
affected.
•
Government control of the economy
. The Mexican government has
exercised, and continues to exercise, significant influence over the
Mexican economy. Mexican government actions concerning the economy may
have adverse effects on private sector entities in general and on Tamsa
in particular. Further, the Mexican government exercises significant
influence over Pemex and its budget for exploration, which largely
determines the volume of Pemex's purchase of seamless steel pipe products
from Tamsa. Economic plans of the Mexican government in the past have
not, in many respects, fully achieved their objectives, and these and
other economic plans of the Mexican government may not achieve their
stated goals. Similarly, it is not possible to determine what effect
those plans or their implementation will have on the Mexican economy or
on Tamsa's financial condition or results of operations.
•
Political events
. Mexican political events may also affect Tamsa's
financial condition and results of operations and the performance of
securities issued by Mexican companies. The Mexican political environment
is in a period of change. In July 2000, Vicente Fox, a member of the
National Action Party (
Partido Acción Nacional
, or PAN), the oldest
opposition party in the country, won the Presidential election. He took
office on December 1, 2000, ending 71 years of rule by the Institutional
Revolutionary Party (
Partido Revolucionario Institucional
, or PRI). In
addition, parties opposed to the PRI increased their representation in
the Mexican Congress, and, as a result, the PRI lost its congressional
majority. Currently, no
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party has a working majority in either house of the Mexican Congress, which
has made governability and the passage of legislation more difficult. The
next major federal election will be held in July 2003, when all seats in
the Chamber of Deputies will be at stake. The Senate will maintain its
current composition until 2006. If neither the PAN (which currently holds
206 of the 500 seats), nor the PRI (which currently holds 211 of the 500
seats) gains a working majority in the Chamber of Deputies, problems of
gridlock will persist in both houses of the Mexican Congress.
Negative economic, political and regulatory developments in Venezuela may
hurt Tavsa's sales volume in Venezuela and disrupt Tavsa's manufacturing
process, thereby adversely affecting our results of operations and financial
condition.
The manufacturing operations and assets of Tavsa, a consolidated
subsidiary of Tamsa, are located in Venezuela, and virtually all of Tavsa's
sales are made in Venezuela. Tamsa also makes sales directly into Venezuela.
Tavsa's and Tamsa's results of operations and financial condition have been and
may continue to be affected by economic and political events in Venezuela. The
discussion of recent developments below in "Political Events" and "Impact of
Exchange Controls" was mainly derived from information recently filed by
Petróleos de Venezuela, S.A., or PDVSA, or its affiliates with the SEC or from
other public sources.
•
Political Events.
Venezuela has had continuous democratically elected
governments since 1958, but has from time to time experienced, and is
currently experiencing, social tension and civil unrest. In 1992, two
attempts were made to overthrow the government (including one by current
President Hugo Chávez) which were quickly suppressed by military forces.
President Chávez, who was elected in December 1998 and took office in
February 1999, was himself subject to a governmental coup that lasted
three days, and which ended with his reinstatement as president on April
14, 2002. President Chávez has implemented significant political
changes, including convening a national constituent assembly which wrote
a new Venezuelan constitution (approved by public referendum in December
1999) and enacting a number of laws by presidential decree, pursuant to
an Enabling Law passed by the Venezuelan Congress in November 2000.
Together, these laws may affect present and future private and foreign
investment and could jeopardize property rights.
The discontent in Venezuela with these new laws, as well as with management
of economic policy and international relations and the increasingly
confrontational attitude of the President against diverse social sectors,
have developed into massive public protests that have raised the level of
political instability. These protest actions include several large-scale
strikes, including a national strike on December 10, 2001 which paralyzed
essentially all commercial activity on that day, a general strike in early
April 2002, and a nation-wide work stoppage that began on December 2, 2002
and that lasted through the first half of January 2003.
The general strike in April 2002 was initially led by managers of PDVSA,
the Venezuelan state-owned petroleum company and an important customer of
Tavsa, who did not support the President's new appointments to PDVSA's
board of directors. The work stoppage that began in December 2002
disrupted most commercial and economic activity in Venezuela, including the
operations of PDVSA and private-sector operators in the oil and gas sector,
stopped oil and gas production by PDVSA almost completely, and,
consequently, reduced PDVSA's demand for pipe products. The work stoppage
that began in December 2002 also led to an employee termination process, an
organizational restructuring of PDVSA and a governmental declaration of
force majeure, which temporarily released PDVSA and its clients from
contractual obligations. In addition, PDVSA's production of crude oil and
gas was severely affected by these events and is likely to continue to be
so affected.
These protest actions have had a direct impact on Tavsa's business.
Largely as a result of these disruptions, Tavsa's production of seamless steel
pipe decreased from 41,412 tons in 2001 to 20,327 tons in 2002, a reduction of
49.1%, and Tamsa's net sales in Venezuela (including sales through Tavsa)
decreased from Ps1,287,787 thousand to Ps387,400, a reduction of approximately
70%. There can be no assurance that the economic and political uncertainty in
Venezuela will not persist, or that PDVSA's oil production will reach a
sustained recovery.
•
Impact of Exchange Controls
. The Venezuelan government has imposed in
the past, and currently has in place, foreign currency exchange controls
that limit the availability of foreign currency and set the rates at
which Venezuelan currency can be exchanged for U.S. dollars. On June 27,
1994, the Venezuelan government established certain foreign currency
exchange controls and soon thereafter set an official Bolivar/U.S. dollar
exchange rate. These controls were lifted on April 22, 1996. More
recently, on February
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5, 2003 a new exchange control regime became effective in Venezuela,
providing for the creation of a government entity in charge of issuing the
necessary currency exchange regulations. The current regime, among other
matters, provides for the centralization in the Central Bank of Venezuela
of the sale and purchase of foreign currency, sets a specific exchange rate
for the purchase and sale of foreign currency, establishes a mandatory sale
to the Central Bank of such foreign currency and establishes requirements
for the registration of private indebtedness. Additional regulations are in
process of being issued. In addition to this, the current exchange
controls have caused a temporary freeze of import and export activities in
Venezuela while regulations applicable to importers and exporters are
issued.
The current exchange controls limit Tavsa's ability to make purchases in
foreign currency and to distribute profits to Tamsa. There can be no assurance
when, if at all, the Venezuelan government will lift these controls or
otherwise take future action to allow for greater flexibility in the
repatriation of capital. Furthermore, these exchange controls could also lead
to an overvaluation of the Bolivar, thereby adversely affecting the Venezuelan
economy. Such developments could adversely affect Tamsa's financial condition
and results of operations.
Risks Relating to Our Shares and ADSs
The trading price of our shares and ADSs may suffer as a result of lower
liquidity in the Mexican equity market.
Prices in publicly-traded Mexico equity securities have been more volatile
than in many other markets. Total capitalization increased from USD106.8
billion as of December 31, 1996, to USD126.6 billion as of December 31, 2001,
and decreased to USD104.7 billion as of December 31, 2002. The average daily
trading volume of shares included in the principal equity index on the Mexican
Stock Exchange decreased from USD144.6 million in 1996 to USD137.8 million in
1999, increased to USD165.1 million in 2000 and decreased to USD150.9 million
in 2001 and USD105.9 million in 2002, due to the fluctuation in capital inflows
in 1999, 2000, 2001 and 2002. Reduced liquidity in the Mexican Stock Exchange
may increase the volatility of the trading price of our shares and ADSs, and
may impair your ability to readily buy or sell our shares and ADSs in desired
amounts and at satisfactory prices.
The trading price of our shares and ADSs may suffer as a result of lower
liquidity due to a lower number of outstanding shares and ADSs as a result of
past and proposed acquisitions by Tenaris, our controlling shareholder.
The market for our shares and ADSs may become less liquid as a result of
decreases in the number of outstanding shares and ADSs not beneficially owned,
directly or indirectly, by Tenaris, and as a result of the possible delisting
of our shares from the Mexican Stock Exchange and our ADSs from the American
Stock Exchange. The amount of our outstanding capital stock held by the public
was reduced in connection with the consummation of an exchange offer by Tenaris
on December 17, 2002. As a result of that exchange offer, Tenaris held
directly, or indirectly, 94.50% of Tamsa's outstanding capital stock, an
increase from the 50.77% of Tamsa's outstanding capital stock held directly or
indirectly by Tenaris prior to that exchange offer. On April 30, 2003, Tamsa
cancelled 3,650,000 shares of Tamsa held by its subsidiary Tamsider and, as a
result, Tenaris's ownership of Tamsa's outstanding capital stock was reduced to
94.44%. On March 31, 2003, Tenaris announced that it intends to cause, among
other things, the delisting of Tamsa from the Mexican Stock Exchange and the
American Stock Exchange. Following its delisting from the Mexican Stock
Exchange, Tamsa will no longer be required to have independent directors and is
expected not to have any independent directors in the future. Tenaris also
announced that, subject to the approvals of the U.S. and Mexican securities
regulators, it intends to effect an exchange of Tenaris's shares and ADSs for
any Tamsa shares and ADSs not held by Tenaris or its affiliates in accordance
with Mexican and U.S. laws. On April 30, 2003, Tamsa's shareholders' meeting
gave the requisite approvals to effect such exchange. For more information,
see Item 7 "Major Shareholders and Related Party Transactions" and Item 5
"Operating and Financial Review and Prospects — Recent Events." The liquidity
of our shares and ADSs will be further reduced (and the trading price will
suffer) if this proposed exchange offer is consummated and if our shares or
ADSs are delisted from the Mexican Stock Exchange or the American Stock
Exchange.
The trading price of our shares and ADSs may suffer as a result of
developments in other emerging markets.
The Mexican financial and securities markets are, to varying degrees,
influenced by economic and market conditions in other emerging market
countries. Although economic conditions are different in each country, investor
12
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reaction to developments in one country can have significant effects on
the securities of issuers with assets or operations in other emerging markets,
including Argentina, Brazil, Mexico and Venezuela. In late October 1997, prices
of Latin American debt securities and equity securities dropped substantially,
precipitated by a sharp drop in value of Asian markets. Similarly, in the
second half of 1998, prices of Latin American securities were adversely
affected by the economic crises in Russia and in Brazil. Various markets in
Latin America, notably Argentina and Venezuela, are currently experiencing
severe political and economic crises, which adversely affect the prices of
securities of Latin American issuers or issuers with significant Latin American
operations.
In deciding whether to purchase, hold or sell our shares or ADSs, you may
not be able to access as much information about us as you would in the case of
a U.S. company.
A principal objective of the securities laws of Mexico, like those of the
United States, is to promote the full and fair disclosure of all material
information. There may, however, be less publicly available information about
Mexican issuers of securities than is regularly published by or about U.S.
issuers and the available information may be in Spanish. Also, the accounting
standards used in Mexico, in accordance with which Tamsa's audited consolidated
financial statements are prepared, differ in certain material respects from the
accounting standards used in the United States. For a description of the
principal differences between Mexican GAAP and U.S. GAAP as they relate to
Tamsa, see note 12 to our audited consolidated financial statements included in
this annual report and a reconciliation to U.S. GAAP of net income and
shareholders' equity for the periods. Further, Mexican regulations governing
the securities of Mexican companies may not be as extensive as those in effect
in the United States, and Mexican law and regulations in respect of corporate
governance matters might not be as protective of minority shareholders as state
corporations laws in the United States.
Holders of our ADSs may encounter difficulties in the exercise of dividend
and voting rights.
You may encounter difficulties in the exercise of some of your rights as a
shareholder if you hold ADSs rather than common shares. For example if we pay a
dividend, the depositary may not be able to obtain the currency necessary to
distribute the dividend in U.S. dollars. Further, if we make a distribution in
the form of securities and you have the right to acquire a portion of them, the
depositary is allowed, in its discretion, to sell on your behalf that right to
acquire those securities and instead distribute the net proceeds to you. Also,
under some circumstances, such as our failure to provide the depositary with
voting materials on a timely basis, you may not be able to vote by giving
instructions to the depositary on how to vote for you. See Item 8.C. "Financial
Information — Dividend Policy."
Holders of our ADSs in the United States may not be able to exercise
preemptive or accretion rights.
Mexican corporate law and Tamsa's by-laws require Tamsa, in the event of a
capital increase, to offer rights to its existing shareholders to subscribe for
a number of shares of the same class sufficient to maintain the holders'
existing proportionate holdings of shares of that class. Shareholders who
exercise preemptive rights are also entitled to exercise additional rights,
known as accretion rights,
pro rata
to their respective subscriptions, with
respect to any unsubscribed shares of the class. Thereafter, to the extent any
shares of that class remain unsubscribed, shareholders of other classes may
exercise preemptive or accretion rights. Holders of ADSs in the United States
may not be able to exercise preemptive rights for shares underlying their ADSs
unless additional shares and ADSs are registered under the U.S. Securities Act
of 1933, as amended, or the Securities Act, with respect to those rights or an
exemption from the registration requirements of the Securities Act is
available. Tamsa intends to evaluate at the time of any rights offering the
costs and potential liabilities associated with the exercise by holders of ADSs
of the preemptive rights and accretion rights for common shares underlying
their ADSs and any other factors Tamsa considers appropriate at the time and
then to make a decision as to whether to register additional common shares and
ADSs. Tamsa may decide not to register any additional common shares or ADSs, in
which case the depositary would be required to sell the holders' rights and
distribute the proceeds thereof. Should the depositary not be permitted or
otherwise be unable to sell preemptive rights, the rights may be allowed to
lapse with no consideration to be received by the holders of the ADSs.
It may be difficult to enforce judgments against us in U.S. courts.
We are a corporation organized under the laws of Mexico, and most of our
assets are located in Mexico. Furthermore, most of our directors and officers
and some experts named in this annual report reside outside the United States.
As a result, investors may not be able to effect service of process within the
United States upon us or
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our directors or officers or some experts or to enforce against us or them
in U.S. courts judgments predicated upon the civil liability provisions of U.S.
federal securities law. There is doubt as to the enforceability in original
actions in Mexican courts of civil liabilities predicated solely upon U.S.
federal securities laws, and the enforceability in Mexican courts of judgments
entered by U.S. courts predicated upon the civil liability provisions of U.S.
federal securities law will be subject to compliance with procedural
requirements under Mexican law, including the condition that the judgment does
not violate Mexican public policy.
E.
Exchange Rates
The following tables show, for the periods indicated, information
concerning the exchange rate between the U.S. dollar and the Mexican peso. The
average rates presented in these tables were calculated by using the average of
the exchange rates on the last day of each month during the relevant period.
These rates are provided solely for your convenience. We do not represent that
Mexican pesos could be converted into U.S. dollars at these rates or at any
other rate.
The data provided in the following table is expressed in nominal Mexican
pesos per dollar and is based on noon buying rates published by the Federal
Reserve Bank of New York for the Mexican peso. On June 24, 2003, the exchange
rate between the Mexican peso and the U.S. dollar expressed in nominal Mexican
pesos per dollar was Ps10.53 = USD1.00.
Year ended December 31,
High
Low
Average
Period end
1998
10.63
8.04
9.25
9.90
1999
10.60
9.24
9.56
9.48
2000
10.09
9.18
9.47
9.62
2001
9.97
8.95
9.33
9.16
2002
10.43
9.00
9.67
10.43
Last Six Months
High
Low
December 2002
10.43
10.10
January 2003
10.98
10.32
February 2003
11.06
10.77
March 2003
11.24
10.66
April 2003
10.76
10.31
May 2003
10.42
10.11
Between November 1991 and December 1994, the Mexican Central Bank
maintained the exchange rate between the U.S. dollar and the Mexican peso
within a prescribed range through intervention in the foreign exchange market.
The Mexican Central Bank intervened in the foreign exchange market as the
exchange rate reached either the minimum or the maximum of the prescribed range
in order to reduce day-to-day fluctuations in the exchange rate. On December
20, 1994, the Mexican government modified the prescribed range within which the
Mexican peso was permitted to float by increasing the maximum Mexican peso
price of the U.S. dollar by Ps0.53, equivalent to an effective devaluation of
15.3%. On December 22, 1994, the Mexican government suspended intervention by
the Mexican Central Bank and allowed the Mexican peso to float freely against
the U.S. dollar. Factors that contributed to this decision included the size of
Mexico's current account deficit, a decline in the Mexican Central Bank's
foreign exchange reserves, rising interest rates for other currencies
(especially the U.S. dollar) and reduced confidence in the Mexican economy on
the part of investors due to political uncertainty associated with events in
the state of Chiapas and presidential and congressional elections in that year.
The value of the Mexican peso against the U.S. dollar rapidly declined by 42.9%
from December 19, 1994 to December 31, 1994. The Mexican government has since
allowed the Mexican peso to float freely against the U.S. dollar.
Historically, the Mexican economy has suffered balance of payment deficits
and shortages in foreign exchange reserves. While the Mexican government does
not currently restrict the ability of Mexican or foreign persons or entities to
convert Mexican pesos to U.S. dollars and the terms of the NAFTA, to which
Mexico is a signatory, generally prohibit exchange controls, no assurance can
be given that the Mexican government will not institute a restrictive exchange
control policy in the future.
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Item 4.
Information on the Company
A.
Tamsa
Introduction
Tamsa is the sole Mexican producer and a leading global producer of
seamless steel pipe products, including casing, tubing, line pipe and various
other mechanical and structural seamless pipes for different uses.
Tamsa was incorporated in 1952 for a period of 90 years as a corporation
(
Sociedad Anónima
) under the laws of Mexico and commenced operations in 1954 as
the sole producer and supplier in Mexico of various types of seamless steel
pipe. On April 30, 1997, the bylaws were amended to extend the duration of the
corporation for an additional 90 years. Tamsa's ordinary stock has been listed
on the Mexican Stock Exchange since 1953, and its ADSs have been listed on the
American Stock Exchange, or AMEX, since 1967. Until December 13, 2002, the
principal trading market for Tamsa's shares was the Mexican Stock Exchange.
Although Tamsa's shares continue to be listed on the Mexican Stock Exchange,
following the announcement of the results of the exchange offer by Tenaris,
described below, there have been no transactions with respect to the Tamsa
shares on the Mexican Stock Exchange. Its corporate offices are located at
Edificio Parque Reforma, Campos Elíseos 400, Piso 17, 11560 México, D.F.,
México, and its registered headquarters and principal industrial facility are
located at Km. 433.7 Carretera, México-Jalapa-Veracruz, Veracruz, México.
Tamsa's agent in the United States is Alfredo Berisso, whose office is located
at 420 Fifth Avenue, 18th Floor, New York, New York 10018.
In June 1993, Siderca acquired a substantial interest in Tamsa. Siderca
has increased its interest in Tamsa since this initial acquisition. Beginning
in 1996, Tamsa, Siderca and Dalmine formed a strategic alliance, known as DST,
in an effort to enhance the ability and competitiveness of each company in an
increasingly global industry. Subsequently, Siderca acquired controlling
interests in Confab Industrial, S.A., or Confab, NKKTUBES K.K., or NKKTubes,
and Algoma Tubes Inc., or AlgomaTubes, and Tamsa acquired a controlling
interest in Tavsa. With this expanded network of steel pipe manufacturing
facilities, Tamsa, Siderca and Dalmine extended the DST concept and unified
their commercial strategy by launching, in May 2001, the Tenaris brand.
Siderca's controlling shareholder then entered into various corporate
reorganization transactions which resulted in Tenaris S.A., a recently
incorporated Luxembourg company, as of October 18, 2002, holding, directly or
indirectly, approximately 50.77% of Tamsa's outstanding capital stock. On
November 11, 2002, Tenaris launched an exchange offer for all the outstanding
shares and ADSs of Tamsa that it did not already own. After consummation of
that exchange offer on December 17, 2002, Tenaris held, directly or indirectly,
94.50% of Tamsa's outstanding capital stock. On April 30, 2003, Tamsa
cancelled 3,650,000 shares of Tamsa held by its subsidiary Tamsider and, as a
result, Tenaris's ownership of Tamsa's outstanding capital stock was reduced to
94.44%.
On March 31, 2003, Tenaris announced that it intends to cause the
delisting of Tamsa from the Mexican Stock Exchange and the American Stock
Exchange, the termination of Tamsa's ADR facility and, if and when appropriate,
the termination of Tamsa's registration with the SEC. Following its delisting
from the Mexican Stock Exchange, Tamsa will no longer be required to have
independent directors and is expected not to have any independent directors in
the future. Tenaris also announced that, subject to the approvals of the U.S.
and Mexican securities regulators, it intends to effect an exchange of its
shares and ADSs for any Tamsa shares and ADSs not held by Tenaris or its
affiliates in accordance with Mexican and U.S. laws. Tenaris stated that it did
not expect to obtain the requisite approvals, and consequently be in a position
to propose any exchange of shares and ADSs, prior to June 2003. On April 30,
2003, Tamsa's shareholders' meeting gave the requisite approvals to effect such
exchange.
Products
Tamsa's principal finished products are oil country tubular goods, or
OCTG. It also produces seamless steel line pipe and various other mechanical
and structural seamless pipes for different uses. Tamsa manufactures most of
its products in a wide range of specifications, which vary in width, length,
thickness, finishings and grades.
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Seamless steel casing
. Seamless steel casing is used to sustain the walls
of oil and gas wells during and after drilling.
Seamless steel tubing
. Seamless steel tubing is used to extract crude oil
and natural gas after drilling has been completed.
Seamless steel line pipe
. Seamless steel line pipe is used to transport
crude oil and natural gas from wells to refineries, storage tanks and loading
and distribution centers.
Seamless steel mechanical and structural pipes
. Seamless steel mechanical
and structural pipes are used by the general industry for various applications,
including the transportation of other forms of gas and liquids under high
pressure.
Cold-drawn pipe
. The cold-drawing process permits the production of pipe
with the diameter and wall thickness required for use in boilers, superheaters,
condensers, heat exchangers, automobile production and several other industrial
applications.
Weldable pipe fittings.
Weldable pipe fittings are used to connect pipes
that transport water, vapor, petrochemicals, chemicals, natural gas and other
gases and liquids for various applications, including heating systems,
plumbing, air conditioning and irrigation.
The following table shows Tamsa's installed production capacity by product
at the dates indicated as well as actual production for the periods indicated.
At or for the year ended December 31,
2002
2001
2000
(thousands of tons)
Steel ingots and bars
Installed Capacity
(1)
850
850
850
Actual Production
743
779
735
Seamless steel pipe
Installed Capacity
(1)
780
780
780
Actual Production
638
669
597
(1)
Installed capacity may exceed effective capacity. The installed
capacities referred to in this table exceed Tamsa's estimates of its
effective production capacity under present conditions.
Production Process and Facilities
Veracruz Facility
Tamsa's integrated manufacturing facility is located near Pemex's major
exploration and drilling operations, about thirteen kilometers from the port of
Veracruz. Veracruz is located on the east coast of Mexico, approximately 400
kilometers from Mexico City. Tamsa owns substantially all of the properties at
its manufacturing plants and such plants are not subject to any encumbrances.
Situated on an area of 200 hectares, the plant includes a state-of-the-art
seamless pipe mill and has an installed annual production capacity of 780,000
tons of seamless steel pipes (with an outside diameter range of 2 to 20 inches)
and 850,000 tons of steel bars. The plant is served by two highways and a
railroad and is close to the port of Veracruz, allowing Tamsa to reduce
transportation costs and facilitate the shipment to export markets.
The Veracruz facility comprises:
•
a steel shop, including an electric arc furnace, refining
equipment, four-strand continuous caster and a cooling bed;
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•
a multi-stand pipe mill, including a continuous mandrel mill, rotary
furnace, direct piercing equipment and a cooling bed;
•
a pilger pipe mill, including a rotary furnace, direct piercing equipment, a reheating furnace and a cooling bed;
•
six finishing lines, including heat treatment facilities, upsetting machines and threading and inspection equipment;
•
a stretch reducing mill, including cutting saws and a cooling bed;
•
a cold-drawn mill;
and
•
automotive components production machinery.
Monterrey Facility
During 2001, Tamsa broadened its product range with the acquisition in
June 2001 of Riga. Riga is a Mexican company engaged in the manufacture of
weldable pipe fittings. The company was created in 1989, and its production
facility is located within a total surface of 120,000 square meters in the
municipality of Ciénega de Flores, Nuevo León, approximately 200 kilometers
south of Laredo, Texas. The plant, which is served by a major highway, has
received the ISO 9002 certification. Riga's products, which are certified by
Pemex and other key clients, complement Tamsa's existing line of pipe
accessories. Riga currently sells its products domestically and exports to
North America, South America and Europe.
Tavsa
Operations at Tavsa were restarted during the first quarter of 1999. Tamsa
began to consolidate Tavsa's results in the first quarter of 1999. Tavsa's
sales volume totaled 9,630 tons in 1999, 38,905 tons in 2000 and
41,658 tons in
2001. The increase in Tavsa's sales volume subsequent to 1999 reflects the
expansion of production capacity completed in the second half of 2000. Tavsa's
sales volume decreased to 21,188 tons in 2002, as a result of economic and
political events in Venezuela. For discussion, see "—Investments in Other
Companies—Tavsa" and Item 3.D "Risk Factors—Risks Relating to Mexico and
Venezuela."
Tavsa has a seamless steel pipe plant in Venezuela, located within the
Sidor manufacturing complex on the banks of the Orinoco river in the eastern
part of the country. Situated on an area of 38 hectares, the plant includes a
pilger mill and finishing line (including threading facilities) and produces
seamless pipe products with an outside diameter range of 6 to 16 inches. The
plant was operated as part of Sidor until shortly before it was privatized and
sold to Tamsa in 1998. After conclusion of a modernization program in 2000,
Tavsa reached an annual installed production capacity of 65,000 tons. Steel
bars used to produce seamless steel pipe in Venezuela are supplied by Sidor.
For discussion of risks associated with Sidor, see "—Investments in Other
Companies—Amazonia" and Item 3.D "Risk Factors—Risks Relating to Our Business."
The following table shows Tavsa's installed production capacity by product
at the dates indicated as well as actual production for the periods indicated.
At or for the year ended December 31,
2002
2001
2000
(thousands of tons)
Seamless steel pipe
Installed
Capacity
(1)
65
65
40
Actual Production
20
41
35
(1)
Installed capacity may exceed effective capacity. The installed
capacities referred to in this table exceed Tamsa's estimates of Tavsa's
effective production capacity under present conditions.
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The major operational units at Tamsa's facilities and corresponding
installed production capacity (in thousands of tons per year, except for
Tamsa's auto components facility, which is in millions of parts) as of December
31, 2002 and the year operations commenced are as follows:
Installed
Year
Production
Operations
Capacity
Commenced
Pilger Mill (Veracruz)
80
1954
Multi-Stand Pipe Mill (Veracruz)
700
1983
Steel Shop (Veracruz)
850
1986
Cold-Drawn Mill (Veracruz)
10
1963
Auto Components Facility (Veracruz)
5
2001
Weldable pipe fittings facility (Monterrey)
15
2001
(1)
Tavsa (Venezuela)
65
1999
(2)
(1)
Operations at Riga commenced in 1989. Tamsa acquired Riga in June 2001.
(2)
Operations at Tavsa commenced in 1997. Operations were restarted and
Tamsa began to consolidate Tavsa's results in the first quarter of 1999.
Warehouse Facilities and Sales Offices
Tamsa's warehouse facilities are located in Dos Bocas, in the State of
Tabasco, Poza Rica in the State of Veracruz and Reynosa in the State of
Tamaulipas. Additionally, Tamsa has sales and technical offices in Ciudad del
Carmen, in the State of Campeche, Villahermosa and Comalcalco in the State of
Tabasco, Monterrey in the State of Nuevo León and Guadalajara in the State of
Jalisco.
Sales and Marketing
The following table shows Tamsa's total sales volume by product and market
for the periods indicated.
For the year ended December 31,
2002
2001
2000
(tons)
Domestic pipe sales (Mexico)
154,997
138,725
167,068
Export sales and Tavsa
510,174
575,129
498,696
Other products and Riga
20,077
19,091
14,186
Total sales
685,248
732,945
679,950
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The following table shows Tamsa's total revenues by product and market for
the periods indicated.
For the year ended December 31,
2002
2001
2000
(thousands of constant December 31, 2002
Mexican pesos)
Domestic pipe sales (Mexico)
2,066,204
1,944,758
2,320,882
Export sales and Tavsa
4,375,536
4,645,969
3,919,316
Other products and Riga
286,535
308,300
222,809
Total sales
6,728,275
6,899,027
6,463,007
Domestic Market
The Mexican market accounted for 22.6% of Tamsa's total sales volume for
2002, 19.0% in 2001 and 24.6% in 2000.
Since 1954, Tamsa has enjoyed a long and mutually beneficial relationship
with Pemex, one of the world's largest crude oil and condensates producers.
Pemex is Tamsa's single largest customer in Mexico. Combined sales to Pemex and
drilling companies contracted by Pemex represented 14.8% of total sales volume
in 2002, compared to 11.3% in 2001 and 11.2% in 2000. Fluctuations in oil
prices have an important impact on Tamsa's domestic and export sales volume.
During 1994, Tamsa signed a just-in-time, or JIT, agreement with Pemex to
provide comprehensive inventory management services on a continuous basis. The
JIT agreement provides for just-in-time delivery of pipe from Tamsa to Pemex
within 72 hours. Under the JIT agreement, Tamsa is kept informed of Pemex's
drilling program and pipe requirements, and a team of engineers from Tamsa
works closely with Pemex to plan and design the well sites. In addition, Tamsa
is permitted to bring its engineers to Pemex drilling locations in order to
maintain adequately supplied warehouse inventories in its custom-designed
facilities in the towns of Dos Bocas, Reynosa and Poza Rica. Tamsa also
maintains technical representative offices in Villahermosa, Poza Rica, Reynosa
and Ciudad del Carmen where Pemex's main offices are located. Tamsa believes
that the JIT agreement minimizes Pemex's inventory operation and maintenance
costs while strengthening Tamsa's position as a first-line supplier.
During 1998, Tamsa and Pemex signed a three-year extension to the JIT
agreement. This extension expanded the JIT agreement to include additional
field services designed to assure product performance for Pemex. In addition to
threading and torque inspections, Tamsa technicians began offering pipe
inspections and re-certification of used pipe at the storage yards and
continued providing supervision services to Pemex's offshore drilling sites. On
March 23, 2001, Tamsa renewed its relationship with Pemex under a new JIT
agreement with a three-year term and other terms similar to those described
above. As of December 31, 2002, 60 Tamsa employees directly support Pemex's
drilling program.
Sales to Tamsa's domestic non-oil related customers are made directly to
such customers or through Tamsa's authorized distributors. The principal
Mexican end users other than Pemex (including drilling companies contracted by
Pemex) rely on Tamsa's products primarily for automotive, thermal, mechanical,
conduction and hydraulic uses. Non-oil related sales to these customers totaled
53,633 tons (or 7.8% of total sales volume) in 2002, 56,179 tons (or 7.7% of
total sales volume) in 2001 and 90,896 tons (or 13.4% of total sales volume) in
2000. The decrease in the percentage of non-oil related customers to total
sales in 2001 and 2002, compared to previous years, was primarily due to the
effect of the slowdown in the North American economies as well as to a
significant increase in imports from Eastern Europe at dumping prices. These
figures reflect the direct relationship the North American market maintains
with the Mexican economy, which experienced a general slowdown in 2001 that
adversely affected the industrial and construction sectors. A significant
portion of Tamsa's non-oil related sales are
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made in connection with significant projects to revamp Pemex's oil refineries,
including facilities in Cadereyta, Madero, Tula and Salamanca for which Tamsa
signed supply contracts. In total, Tamsa shipped approximately 23,000 tons for
Pemex refinery projects in 2000, 6,000 tons in 2001 and 1,650 tons in 2002.
In the last several years, Tamsa continued to focus on improved delivery
times and customer service. Tamsa intensified its marketing efforts to non-oil
related customers, aimed at the development of new niches. In addition, Tamsa
re-staffed the regional sales and services offices to support its distribution
network and provide its customers with customized products and services. Tamsa
believes that its sales to non-oil related customers were aided by special
programs developed over the past few years to support its distribution network,
the re-commencement of operations at its cold-drawn mill and the know-how
provided by Dalmine in the mechanical pipe market. In order to take advantage
of potential growth opportunities in the automotive sector, Tamsa has signed
supply agreements with various auto-parts manufacturers. Despite lower sales of
these products as a consequence of the slowdown in the U.S. economy, in 2001
Tamsa invested approximately USD1.2 million in a facility for the production of
automotive components, which began operations in late 2001.
Export Market
The export market accounted for 71.4% of Tamsa's total sales volume in
2002, compared to 72.8% in 2001. Tamsa exports to more than 60 countries
worldwide. The following table shows the market distribution of Tamsa's exports
as a percentage of total export sales volume for the periods indicated.
For the year ended December 31,
2002
2001
2000
(percentages)
North America
16
17
19
Latin America
11
30
34
Africa
19
10
12
Europe
11
9
6
Middle East
34
24
19
Far East and Oceania
9
10
10
Tamsa's export sales are highly sensitive to the price of oil and gas and
the impact of fluctuations in those prices on the drilling activity of
international oil and gas companies. During 2000 and 2001, demand for Tamsa's
products increased due to a recovery in oil prices during those years from the
prices that prevailed in 1998 and 1999 and due to the consequent increase in
major oil and gas companies' spending budgets and drilling programs. Average
rigs in operation worldwide rose to 2,231 in 2001 from 1,900 in 2000. Total
exports for 2001 amounted to 533,471 tons, an increase of 16% compared to 2000.
Total exports for 2002 amounted to 488,986 tons, a decrease of 8.3% compared
to 2001. This decrease was principally due to lower international drilling
activity in Latin America (mainly in Venezuela) Europe and Canada, partially
offset by higher sales in the Middle East and Africa due to increased drilling
activity in those regions. Average rigs in operation worldwide fell to
approximately 1,800 in 2002.
In Venezuela, Tamsa, through its consolidated subsidiary Tavsa, has a
significant share of the market for OCTG products. Tamsa enjoys ongoing
business relationships with PDVSA and a number of private-sector operators in
the oil and gas sector. In 2001 and 2002, OPEC production quota cutbacks and
adverse political and economic developments led to a substantial decline in
exploration and production activity in the oil and gas sector. Additionally,
PDVSA decided to implement a significant reduction in its inventories of
seamless pipes. These factors led to a substantial decline in Tamsa's sales of
seamless pipes in 2002 compared to the previous year, and in January 2003
Tamsa's sales of seamless pipes to PDVSA effectively came to a halt following
politically motivated strike action involving the state-owned company. Sales
have, however, subsequently resumed and are slowly increasing. Sales in the
Venezuelan market are sensitive to the international price of oil and gas and
its impact on the drilling activity of participants in the Venezuelan oil and
gas sectors, as well as to general economic conditions in that country. Sales
in Venezuela are also affected by government actions and policies and their
consequences, including recent politically motivated strike actions at PDVSA,
agreements to vary domestic production pursuant to quotas established by OPEC,
measures relating to the taxation of oil and gas production activities and
other matters affecting the investment climate. See Item 3.D. "Risk
Factors—Risks Relating to Mexico and Venezuela."
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Tamsa believes it has established a worldwide reputation for producing
high-quality, value-added pipe products. Tamsa's strategy in the export markets
has been to apply the service-oriented philosophy it developed with Pemex to
its international customers, providing them with a full range of value-added
products and services, establishing comprehensive supply agreements and working
closely with its international customers to develop tailor-made pipes to meet
their unique drilling needs. In the last several years, Tamsa continued to
increase its production of custom-made pipe products for domestic and
international customers. New products introduced included premium joints
developed specifically for major oil companies as well as new specialized line
pipe for applications such as offshore and sour corrosion service.
Trends in Oil and Gas Prices
As discussed above, sales to oil and gas companies worldwide represent a
high percentage of Tamsa's total sales, and demand for seamless steel pipes
from the global oil and gas industry is a significant factor affecting the
general level of prices for our products. Downward pressures on oil and gas
prices in the international markets usually result in lower demand for our
seamless steel pipe products from our oil and gas customers and, in some
circumstances, upward pressures can result in higher demand from these
customers.
Major oil and gas producing nations and companies frequently collaborate
to control the supply (and thus the price) of oil in the international markets.
A major vehicle for this collaboration is OPEC. Many of Tamsa's important
customers are state-owned companies in member countries of OPEC or otherwise
cooperate with OPEC in controlling the supply and price of oil.
In response to depressed oil prices in 1998, major oil-producing countries
began to cooperate closely and intensely to raise prices. In March 1998,
Mexico, Venezuela and Saudi Arabia, encouraged by proposals of other oil
producers to strengthen world oil markets, announced that they would reduce the
oil supply. A second reduction was agreed upon in June 1998. In March 1999,
OPEC and several non-OPEC oil producers ratified an agreement to cut crude oil
production by 2,104,000 barrels per day in the aggregate. Oil prices increased
significantly as a result of these production cuts. Subsequently, oil-consuming
nations began to pressure OPEC to raise production to ease the upward pressure
on oil prices. In April 2000, OPEC (excluding Iran) announced an increase in
production by 1,452,000 barrels per day. This was followed by additional
increases of 708,000 barrels per day in June 2000, 800,000 barrels per day in
September 2000 and 500,000 barrels per day in October 2000. In 2001, in
response to weakening price pressures, OPEC (excluding Iran) announced a
reduction in production of 1,500,000 barrels per day, effective February 1,
2001; of 1,000,000 barrels per day, effective April 1, 2001; of 1,000,000
barrels a day, effective September 1, 2001; and of 1,500,000 barrels a day,
effective January 1, 2002. More recently, in response to supply tightness
resulting from the threat of military action against Iraq and strike action in
Venezuela, OPEC announced an increase of 1,300,000 barrels per day, effective
January 1, 2003, an increase of 1,500,000 barrels per day, effective February
1, 2003 and a further increase of 900,000 barrels per day, effective June 1,
2003. Tamsa is unable to forecast the direction of international oil and gas
prices in the future, and the consequent impact on investment programs and
purchases, including pipe purchases, by our oil and gas customers.
During the second half of November 2001, production at Tavsa decreased due
to production cuts by OPEC members in order to stabilize oil prices. These cuts
in production continued during 2002, which precipitated a slowdown in
exploration and production activities in Venezuela and, consequently, a lower
demand for pipe products by PDVSA. In April 2002, there was a strike of the
managers at PDVSA and, in the beginning of December 2002, a broader strike at
PDVSA that lasted through the first half of January and that reduced oil and
gas production almost completely. Since the end of these strikes, oil
production has subsequently resumed, and PDVSA is now undergoing an
organizational restructuring. For discussion of the risks associated with these
strikes and other events in Venezuela, see Item 3.D. "Risk Factors—Risks
Related to Mexico and Venezuela."
Competition
Domestic Market
Tamsa is the only producer of seamless steel pipe in Mexico. Accordingly,
competition in the Mexican market is limited to imported products manufactured
by foreign companies.
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Competition in the Mexican market has been increasing in recent years, as
the Mexican government has entered into free trade agreements that reduce trade
barriers and gradually eliminate tariffs on steel imports from these countries,
including seamless steel pipes. In December 1992, Mexico became party to NAFTA,
which became effective in January 1994. Under NAFTA, duties on OCTG products
have been reduced from 15% in 1993 to their current level of 0%, since the
beginning of 2003. In 2000, Mexico signed a trade agreement with the EU, as a
result of which EU seamless steel pipe imports have been subject to a 7% duty
since 2002. This duty will be gradually eliminated by 2007.
In addition to the NAFTA and EU agreements, the Mexican government has
signed trade agreements with various countries such as Chile, Bolivia,
Nicaragua, Costa Rica and Uruguay. Mexico also participates with Colombia and
Venezuela in the Group of Three, or the G-3. Under the G-3 agreements, duties
on seamless steel pipes are being eliminated by means of a reduction of 1.08%
and 0.72% (depending on the product) per year over a ten-year period beginning
in 1995. Furthermore, under the agreement, there is an acceleration clause
allowing acceleration of the tariff reduction as deemed convenient upon
acceptance by two of the parties. Beginning July 1, 2002, the import tariff for
the G-3 was set at 2.1% and 1.4% depending on the product. Presently, Mexican
products exported to Chile are not subject to any import tariff.
On January 1, 1999, a new tariff of 18% became applicable to seamless
steel pipe from other countries with which Mexico does not have trade
agreements; this increased the previous tariff of 15%, which had been effective
since 1989. The tariff was temporarily increased for some steel products
(including seamless pipes) to 25% in September 2001 and again to 35% in March
2002, and remained at 35% until September 2002, at which point it was reduced
to 25%. The tariff is scheduled to be reduced to 18% in September 2003.
On October 5, 1993, Tamsa formally requested that the Mexican
Secretaría
de Economía
, or SECON (formerly SECOFI) initiate an antidumping investigation
into the importation of seamless steel commercial pipes from the United States.
On October 11, 1995, SECON published a final determination, which continues to
apply, imposing a tariff of 82.4% on specified seamless steel cold-drawn pipes
from the United States. On May 22, 2001, SECON published in the Official
Gazette a resolution revoking the antidumping duties against cold-drawn carbon
steel pipes produced in the United States.
On March 11, 1999, Tamsa formally requested that SECON initiate an
antidumping investigation into the import of seamless steel line pipes from
Japan. This investigation led to the imposition of preliminary dumping duties
of 99.9% in November 1999, and to definitive duties in the same amount in
November 2000, that continue to apply to these products.
Tamsa competes in the Venezuelan market as a domestic producer (through
Tavsa) and as a foreign supplier with imported products manufactured by
non-Venezuelan companies.
Venezuela applies tariffs ranging from 5% to 15% on steel imports,
including seamless steel pipe products, from countries with which it does not
have free trade agreements. In April 2002, the Venezuelan government increased
its standard tariff from 20% to 30%, for a temporary period of four months.
This tariff was subsequently extended on two occasions and is now scheduled to
expire in October 2003. No tariff applies to steel imports from member
countries of the Andean pact or from Chile, and imports from Mexico are subject
to a reduced tariff. As a result of an antidumping investigation, Venezuela
imposed antidumping duties of 87.0% on steel pipe imports from Japan in 1996.
The preliminary determination was confirmed in June 2000 and continues to
apply.
Export Market
Tamsa competes in the export market as a Tenaris company. The export
market for seamless steel pipe products is highly competitive, with the primary
competitive factors being price, quality and service. Seamless steel pipe
products are produced in specialized mills using round steel billets and
ingots, which are produced almost exclusively for seamless steel pipe
applications. Steel companies that manufacture steel sheet and wire rods and
bars and other steel products but do not operate specialized seamless steel
mills are generally not competitors in the market for seamless steel pipe
products, although they often produce welded steel pipes or sell steel sheets
and plates used to produce welded steel pipe.
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The production of seamless steel pipe products that meet the stringent
requirements of major oil and gas companies requires the development of
specialized skills and significant investments in manufacturing facilities. By
contrast, the seamless pipe products for standard applications can be produced
in most seamless pipe mills worldwide and sometimes compete with welded pipe
products for such applications. Welded pipe, however, is not generally
considered a satisfactory substitute for seamless steel pipe in high-pressure
or high-stress applications, which constitute a significant source of the
Tenaris companies' business.
Tamsa and the other Tenaris companies' principal competitors in the
international seamless steel pipe market can be grouped by regions as described
below.
•
Japan
. Sumitomo Metal Industries Ltd. and Kawasaki Steel in the
aggregate enjoy a significant share of the international market,
having established strong positions in markets in the Far East and
the Middle East. They are internationally recognized for the high
quality of their products and for their supply of high-alloy grade
pipe products. In April 2001, Nippon Steel Corporation, in connection
with ongoing rationalization measures, withdrew from the export
market for seamless steel pipe products and shut down its seamless
steel pipe facility in Yawata, Japan. On September 27, 2002, Kawasaki
Steel and NKK, Tenaris's partner in NKKTubes, consummated a business
combination through which they became subsidiaries of a newly-formed
holding company, known as JFE Holdings, Inc. JFE continues to operate
the former Kawasaki Steel seamless steel pipe business in competition
with NKKTubes.
•
Western Europe
. Vallourec & Mannesman Tubes, or V&M Tubes, a
Franco-German venture, has mills in Brazil, France, Germany and the
United States. V&M Tubes has a strong presence in the European market
for seamless pipes for industrial use and a significant market share
in the international market with customers primarily in Europe, the
United States and the Middle East. V&M Tubes is an important
competitor in the international OCTG market, particularly for
high-value premium joint products. In May 2002, V&M Tubes purchased
the seamless tubes division of North Star Steel, a leading U.S.
producer of OCTG for the domestic market. Tubos Reunidos S.A. of
Spain and Voest Alpine AG of Austria each has a significant presence
in the European market for seamless steel pipes for industrial
applications while the latter also has a presence in the
international OCTG market with sales mostly directed to the United
States and the Commonwealth of Independent States, or CIS.
•
United States
. U.S. steel producers, including US Steel
Corporation and North Star Steel, are largely focused on supplying
the U.S. market. Some of them, however, periodically enter the
international market in response to decreased domestic demand or
perceived opportunities in the export markets. As mentioned above, in
May 2002 V&M Tubes purchased the seamless tubes division of North
Star Steel.
•
Eastern Europe, CIS and China
. Producers from these regions
compete in the "commodity" sector of the market and have been
increasing their participation in the international market for
standard products where quality and service are not the prime
consideration.
Tamsa's competitive position in the export markets may be adversely
affected by protective measures adopted by countries where seamless steel pipe
consumers are located. For a description of protective measures applicable to
Tamsa's products in important export markets, see Item 4.A. "Information on the
Company—Tamsa—Litigation."
Capital Expenditure Program
At Tamsa's Veracruz facility in Mexico, approximately USD144 million was
invested in the capital expenditure program over the last three years with a
focus on automation, production, benchmarking, mill compliance and increased
capacity for value-added products. Tamsa completed improvements in the melt
shop and in the continuous casting process, which involved the installation of
a new vacuum degassing system, a new vibramold oscillator and touch-panel
control systems that monitor each phase of the production process throughout
the entire Veracruz facility. In addition, in the finishing areas, Tamsa
completed improvements for wall thickness assurance and threading and finishing
lines, and added a new hydraulic testing system and a new straightening
machine. Tamsa also expanded and modernized the heat treatment facilities,
raising capacity for heat-treated pipes
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by 20% from 375,000 tons per year to 450,000 tons per year, by adding new
furnaces, a quenching head, a straightening machine, a finishing line and
additional floor space to the heat treatment area.
Tamsa completed the construction of a 12,000 square meter office complex
and made investments in its auto components facility, which has an annual
production capacity of five million parts. Tamsa continued to make investments
in its environmental compliance program, including investments in a
waste-monitoring system, as well as in an Enterprise Resource Program and the
SAP/R3 in the administration, financing and purchasing departments.
Capital expenditure projects planned for 2003 include enhancement of the
cold-rolling mill and coupling production facilities at the Veracruz facility.
Capital expenditures were Ps184,212 thousand in 2002, Ps851,186 thousand
in 2001 and Ps452,099 thousand in 2000. Maintenance and repair costs associated
with Tamsa's facilities and equipment amounted to Ps248,740 thousand in 2002,
Ps232,726 thousand in 2001 and Ps212,805 thousand in 2000. Tamsa has budgeted
capital expenditures of Ps277,406 thousand for 2003.
Investments in Other Companies
Tamsa derives a portion of its profits and losses from its equity position
in various companies. The following table shows the percentage share of each
company's capital stock held by Tamsa and the value of each investment at the
dates indicated as well as the profit or loss generated by each investment for
the periods indicated.
At or for the year ended
December 31,
2002
2001
2000
(thousands of constant December 31, 2002 Mexican pesos,
except percentages)
Amazonia
Percentage of Total Capital Stock Held
14.1
%
14.1
%
14.1
%
Equity Value of Investment
136,433
*
238,233
*
649,834
Loss Derived from Investment
(39,906)
*
(305,692)
*
(55,929
)
Tavsa
Percentage of Total Capital Stock Held
70.0
%
70.0
%
70.0
%
Equity Value of Investment
28,770
69,657
72,430
(Loss) Profit Derived from Investment
(95,728
)
8,606
(41,594
)
Sidtam Limited
Percentage of Total Capital Stock Held
49.0
%
49.0
%
49.0
%
Equity Value of Investment
172,299
161,455
176,492
Profit Derived from Investment
—
—
—
Other Investments
Historical Cost of Investments
208,965
214,663
209,027
Profit (Loss) Derived from Investments
23,859
14,762
3,321
*
Includes the allowance to reduce the value of Tamsa's investment in
Amazonia and the subordinated convertible debentures. See note 11 to
Tamsa's audited consolidated financial statements.
Amazonia
. In January 1998, Amazonia purchased a 70.0% equity interest in
Sidor from the Venezuelan government, which retained the remaining 30%.
Tamsider held an initial 12.5% equity interest in Amazonia, which increased to
14.1% in March 2000 as a result of additional investments described below. As
of December 31, 2002, Tamsider's equity interest in Amazonia remained at 14.1%.
In connection with the 2003 restructuring of Sidor and Amazonia's debt
discussed below, Tamsider is in the process of purchasing a 24.4% equity interest in Ylopa. After the
consummation of the restructuring on June 20, 2003, Tamsider capitalized in
Amazonia a convertible subordinated loan made to Amazonia in connection with
the 2000 restructuring described below and, as a result, increased its
participation in Amazonia to a 14.5% equity interest, and Ylopa held new debt
instruments of Amazonia convertible, at Ylopa's option at any time after June
20, 2005, into a 67.4% equity interest of Amazonia. In addition, the Venezuelan
government's ownership in Sidor increased to
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40.3%, while Amazonia's beneficial ownership in Sidor decreased to 59.7%. As
part of the June 2003 restructuring, all the Amazonia shares, as well
as all the shares of Sidor held by Amazonia, were placed in
trust with Banesco Banco Universal, as trustee.
Sidor, located in the city of Guayana in southeast Venezuela, is the
largest integrated steel producer in Venezuela and the sixth largest integrated
steel producer in Latin America, with an installed capacity of more than 3.5
million tons of liquid steel per year. Sidor shipped 2.9 million tons of steel
in 2001, and 3.2 million tons in 2002.
Sidor has experienced significant financial losses and other problems
since the acquisition by Amazonia in January 1998, despite a significant
reduction in Sidor's workforce and management's efforts to improve the
production process and reduce operating costs. In 1999, due to negative
conditions in the international steel market, a sustained and intensifying
domestic recession in Venezuela, deteriorating conditions in the credit
markets, an increase in the value of the Venezuelan currency relative to the
U.S. dollar and other adverse factors, Sidor and Amazonia incurred substantial
losses and were unable to make payments due under loan agreements with their
respective creditors. In 2000, these loan agreements were restructured. Despite
continued efforts by Sidor's management to improve technology and optimize
production levels, in late 2001 Sidor and Amazonia were again unable to make
payments due under the restructured loan agreements, following a continuation
and aggravation of the same negative factors described above accompanied by
increased competition from steel imports in Venezuela. As of December 31, 2002,
Sidor had approximately USD1.58 billion of indebtedness (secured in part by
fixed assets valued at USD827 million as determined at the time Sidor's loans
were restructured in March 2000) and Amazonia had approximately USD313 million
of indebtedness.
2000 Restructuring.
As a result of the adverse trends discussed above, in
connection with the restructuring concluded in 2000 Tamsider made additional
capital contributions to Amazonia, while recording significant losses in the
value of its investment. In addition to its initial capital contribution of
USD87.8 million, Tamsider was required to make capital contributions to
Amazonia in the amount of USD36.1 million (of which USD18.1 million was an
additional capital contribution and USD18.0 million took the form of a
convertible subordinated loan to Amazonia). The value of Tamsider's investments
(as recorded in our audited consolidated financial statements) has decreased
significantly since 1998, from Ps910,306 thousand as of December 31, 1998, to
Ps422,140 thousand as of December 31, 1999, Ps649,834 thousand as of December
31, 2000, Ps238,233 thousand as of December 31, 2001 and Ps136,433 thousand as
of December 31, 2002. Due to Sidor's financial situation, as described above,
at December 31, 2001, Tamsider recorded a valuation allowance in the amount of
Ps154,688 thousand in order to reduce the value of its investment in Amazonia
and the subordinated convertible debentures.
Expiration of Performance Bond.
The Sidor purchase agreement between
Amazonia and the Venezuelan government required the shareholders of Amazonia,
including Tamsider, to indemnify the government for breaches by Amazonia of the
Sidor purchase agreement up to a maximum amount of USD150 million, for five
years from the acquisition. In connection with this indemnity, the shareholders
of Amazonia were required to maintain a performance bond (which Tamsa guaranteed
directly in proportion to its interest in Amazonia) for five years, beginning in 1998, in the amount of USD150 million
during the first three years, USD125 million in the fourth year and USD75
million in the fifth year. The guarantee expired in January 2003.
2003 Restructuring.
On June 20, 2003, Sidor, Amazonia and their creditors
(including the Venezuelan government) consummated a restructuring of the Sidor
and Amazonia debt. Under the terms of the restructuring:
•
Ylopa purchased all of Amazonia's bank debt and a portion of Sidor's bank debt for a total amount of USD133.5 million;
•
Sidor purchased a portion of its own bank debt for a total amount of USD37.9 million;
•
the remainder of Sidor's bank debt was refinanced and the lenders agreed
to the payment by Sidor of lower interest rates and a longer tenor;
•
Ylopa assigned to Amazonia all of the debt it purchased in exchange for
debt instruments of Amazonia convertible into a 67.4% equity interest in
Amazonia at Ylopa's option;
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Table of Contents
•
the Venezuelan government capitalized half of the debt owed to it by
Sidor and consequently increased its equity ownership interest in Sidor to
40.3%;
•
the remainder of the debt owed to the Venezuelan government was
refinanced;
•
certain agreements entered to in connection with the 2000 restructuring
were terminated and the Amazonia shareholders, including
Tamsider, were released from:
•
the guarantees they had provided with respect to the principal and a
portion of the interest payable under the loan made to Sidor by the
Venezuelan government;
•
their obligations under a certain put agreement that previously
required them to purchase up to USD25 million in loans payable by
Amazonia to its private lenders,
and
•
their obligations under a letter to these lenders contemplating the
possibility of additional capital contributions of up to USD20 million
in the event of extreme financial distress of Sidor,
and
•
beginning in 2004, but in no event before the first USD11 million of
Sidor's excess cash (determined in accordance with the restructuring
documents) has been applied to repay Sidor's bank debt, 30% of Sidor's
distributable excess cash for each year (determined in accordance with the
restructuring documents) will be applied to repay Sidor's restructured debt, and
any remaining distributable excess cash for such year will be paid as
follows:
•
59.7% to Ylopa (until 2012 or such
earlier year in which Ylopa has received an aggregate amount of
USD324 million) or Amazonia (after expiration of Ylopa's
right to receive Sidor's remaining distributable excess cash),
as the case may be,
and
•
40.3% to the Venezuelan government.
Tamsa, through Tamsider, participated in the 2003 restructuring by making
an aggregate cash contribution (mainly in the form of subordinated convertible
debt) of USD32.9 million to Ylopa and by capitalizing in Amazonia convertible
debt previously held by Tamsa in the amount of USD18.0 million plus accrued
interest. Tenaris's indirect participation in Amazonia increased from 14.1% to
14.5% and may further increase up to 21.2% if and when all of its subordinated
convertible debt is converted into equity.
Following completion of the restructuring between Sidor, Amazonia and
their creditors (including the Venezuelan government), Sidor had approximately
USD791.0 million of indebtedness outstanding and Amazonia had no financial
indebtedness outstanding. Sidor's financial indebtedness was made up of three
tranches, one of USD350.5 million to be repaid over 8 years with one year of
grace, one of USD26.3 million to be repaid over 12 years with one year of grace
and the remaining tranche of USD368.6 million, to be repaid over 15 years with
one year of grace. In addition, Sidor's commercial indebtedness with certain
Venezuelan government-owned suppliers amounted to USD45.4 million, to be repaid
over the next five years.
After consummation of the 2003 restructuring, Tamsider continues to bear
the risk of further losses in the equity value of its investment in Amazonia as
well as losses in the equity value of its investment in Ylopa, but none of
Tamsa, Tamsider or Ylopa guarantees the restructured indebtedness of Sidor. The
restructuring agreements contemplate, however, certain continuing obligations
and restrictions, including:
•
pledges to the Sidor financial lenders of Sidor and Amazonia
shares, which will remain in effect for two years from the date of the
restructuring so long as no event of default has occurred and is
continuing under Sidor's refinanced loan agreements;
•
pledges to the Sidor financial lenders of any future debt of
Amazonia, which will remain in effect until such time as the pledges of
the Amazonia and Sidor shares referred to above are released;
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Table of Contents
•
negative pledges not to create, incur or suffer to exist a lien
(other than certain permitted liens) over any of the equity or debt of
Amazonia held by, or owed to, the Amazonia shareholders;
and
•
restrictions on the ability to institute or join a proceeding seeking
the liquidation, bankruptcy or reorganization of Amazonia or Sidor.
Tavsa
. On October 9, 1998, Tamsa and the Venezuelan government entered
into a joint venture agreement (
convenio de asociación estratégica
), pursuant
to which Tamsa acquired 70% of Tavsa, a company formed to run the seamless pipe
business formerly part of Sidor, for an initial equity contribution of USD11.7
million. On June 29, 2000, Tamsa made an additional cash contribution of USD4.4
million.
The facilities of Tavsa are physically located within the Sidor compound
and its operations depend, to a significant extent, on services provided by
Sidor. Tamsa believes that Tavsa's proximity and access to low-cost materials
and energy, in the form of iron ore, electricity and natural gas, provide an
opportunity for it to become a low-cost producer of seamless steel pipes. In
addition, Tamsa believes that the Tenaris companies' combined marketing,
manufacturing and distribution experience can be favorably applied to Tavsa's
operations. The acquisition of Tavsa was central to Tamsa's growth strategy as
it enabled Tamsa to become a local supplier in Venezuela, Tamsa's largest
export market and the biggest market for OCTG in Latin America. However, any
negative development in Sidor's operations or a change of control at Sidor
could adversely affect Tavsa's access to raw materials and, consequently,
negatively impact Tavsa's operations and financial results.
The current facilities of Tavsa include a pilger mill and finishing line.
The Tavsa joint venture agreement provides for the acquisition and installation
of a new multi-stand pipe mill, or MPM. The agreement between Tamsa and the
Venezuelan government contemplates a two-stage modernization and expansion plan
for Tavsa:
•
The first phase included modernization of current
installations, which increased total capacity from 40,000 tons per
year to 65,000 tons per year as well as improved product quality. In
October 2000, the first phase was completed.
•
The second phase included the expansion, subject to the
achievement of certain conditions contained in the economic and
financial feasibility studies for the project and the installation
and startup of the MPM and heat treatment and finishing lines. At a
shareholders' meeting held on April 11, 2001, the joint venture
partners expressed their view that, due to economic and market
conditions, the second phase did not appear to be feasible, and
granted authority to senior management to cancel the expansion.
Tavsa and the Venezuelan government currently have no plans to go
forward with the second-phase expansion.
In order to bolster Tamsa's position in a market where a major state-owned
oil company and a large number of private operators co-exist, Tavsa is
emphasizing an expansion of the range and quality of its products and
broadening the range of services offered. For this purpose Tavsa invested over
USD1.8 million in 2002, USD5.2 million in 2001 and USD8.4 million in 2000.
During 2001, production at the Tavsa facility reached more than 41,000 tons of
seamless steel pipe. In 2002, Tavsa completed its planned investments in its
new finishing line. This has allowed Tavsa to produce more value-added
products, and so diversify its customer base. During 2002, production at the
Tavsa facility declined to approximately 20,000 tons of seamless steel pipe, as
a result of economic and political events in Venezuela. See Item 3.D. "Risk
Factors—Risks Relating to Mexico and Venezuela."
Sidtam Limited
. In November 1997, Tamsa indirectly acquired a 49% interest
in Sidtam Limited, a company controlled by Siderca's subsidiary, Siderca
International ApS (formerly Siderca Denmark ApS). The purpose of Tamsa's
investment in Sidtam is to participate in different types of investment
projects including, among others, the purchase of shares of Tamsa's common
stock.
Sale of CFF
. In October 2000, Tamsa sold its equity interest in CFF de
México, S.A. de C.V. On June 4, 1996, Tamsa invested USD1.8 million in CFF
Inmobiliaria S.A. de C.V., or CFF, representing a 30% interest in CFF's capital
stock. Tamsa originally intended for this investment and related supply
agreements with CFF to provide a reliable long-term supply of a portion of
Tamsa's requirements for low-cost shredded scrap. However, CFF has been unable
to supply scrap on a reasonably low-cost basis. Tamsa instituted arbitration
proceedings to
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enforce its rights under the supply agreements. As a result of this proceeding
Tamsa obtained a total payment of USD750 thousand, which includes reimbursement
of its investment and legal fees.
Complejo Siderúrgico de Guayana C.A
.,
or Comsigua.
During 1995, Tamsa
entered into a shareholders' agreement to acquire a 6.9% equity interest in
Comsigua, a joint venture project with several international companies led by
Kobe Steel Ltd., to design, construct and operate an industrial plant in
Venezuela for the processing of iron oxides into hot briquetted iron, or HBI.
The Comsigua shareholders' agreement was subsequently amended on May 24, 1996,
October 10, 1996, March 27, 1998 and February 11, 1999. The plant has reached a
rated design capacity of one million tons per year and cost approximately
USD282.5 million. The project has been financed with USD115 million in equity,
USD156 million in long-term loans provided by commercial banks with the
participation of the International Finance Corporation, or IFC, and the
remainder through subordinated loans by the sponsors. The plant became
operational in August 1998.
Tamsa's participation in Comsigua's equity involves a total disbursement
of USD8.0 million. Until the project's "financial completion" (as that term is
defined in the Comsigua shareholders' agreement), the sponsors have agreed to
pay the costs of overruns or related financing shortfalls associated with the
construction and operation of Comsigua and to guarantee repayment of the
long-term loans referenced above in a manner proportional to their
participation in the project. In February and May 2002 and in January 2003,
Tamsa was required to pay, and accordingly paid, an aggregate of USD1.5
million, representing its share of a shortfall of USD14.7 million payable by
Comsigua under the IFC loan and additional operating shortfalls of USD5.3
million. Pursuant to the guarantees made by the sponsors in connection with the
financing of the Comsigua project, Tamsa has pledged its shares of Comsigua.
The Comsigua lenders may foreclose on such shares if an event of default
occurs.
Comsigua's financial condition has been adversely affected by the
consistently weak international market conditions for HBI since Comsigua's
start-up in 1998 and, unless market conditions improve substantially, Tamsa may
be required to make additional proportional payments in respect of its
participation in the Comsigua joint venture.
In addition to the original equity investments, on December 31, 2001
Comsigua's shareholders contributed USD128.4 million through subordinated
loans, of which 66% was provided by the offtakers through the purchase of HBI
above market prices set forth in the offtake contracts. Tamsa's contribution
through this mechanism has been approximately USD12.6 million. See "—Raw
Materials and Energy."
Tamsa and the other offtakers are exploring different schemes to share the
responsibilities proportionally among all the sponsors in accordance with their
participation in Comsigua. Nevertheless, it is not possible to predict the
outcome of this matter.
Tamdel LLC.
Tamdel LLC was created on February 9, 2001, and has since
received all investments previously held by Tamsider, with the exception of the
investment in Amazonia.
Riga.
On June 20, 2001, Tamsa purchased 100% of the outstanding common
stock of Riga for USD6.5 million. Riga is engaged in the manufacture of
fittings with a total annual capacity of 15,000 tons. Its manufacturing plant
has received the ISO 9002 certification. This acquisition is consistent with
Tamsa's strategy of offering a wide range of higher value-added products.
Raw Materials and Energy
Tamsa produces steel ingots and bars from a mix of direct reduced iron, or
DRI, pig iron, ferrous scrap and ferroalloys and uses the steel ingots and bars
to produce seamless steel pipe. Tamsa obtains its requirements for ferrous
scrap, pig iron, and ferroalloys in both the domestic and international markets
pursuant to short-term supply arrangements. In addition, as discussed below,
Comsigua has since its inception in 1998 met Tamsa's requirements for HBI. As
discussed above, Comsigua is a joint venture project in Venezuela to which
Tamsa is a party.
Tamsa obtains its supply of DRI and pig iron mainly from foreign
suppliers. During 2000, 2001 and 2002, the percentage of DRI and pig iron used
in the steel shop represented 22%, 21% and 22%, respectively, by weight,
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of the total metal requirements, and the percentage of HBI was 15% in 2000, 17%
in 2001 and 18% in 2002. Tamsa obtained the rest of its metal requirements for
2000, 2001 and 2002 from the following principal sources (in percentage of
total metal required):
•
26%, 27% and 28%, respectively, from domestic market scrap mainly in
southeast Mexico and internal recycling, approximately 3% in 2000, 11% in
2001 and 13% in 2002 of which was provided by Tamsa's own "scrap
collection yard" located at Coatzacoalcos, Veracruz, which started
operations in June 1998;
and
•
36% for each of 2000 and 2001 and 31% for 2002, from imported scrap
mainly from the east coast of the United States, Europe, Russia and
Ukraine and the remaining portion from local market sources.
Reflecting the effects of a worldwide steel crisis in 2001, the average cost of
Tamsa's metallic raw materials experienced a 14% decrease in 2001, followed by
a gradual recovery that generated a 9% increase in raw material costs for 2002.
Tamsa's purchases of raw materials are made pursuant to primarily
short-term supply arrangements. However, to secure a long-term supply of DRI in
hot briquetted form, or HBI, Tamsa entered into an off-take contract with
Comsigua to purchase on a take-and-pay basis 75,000 tons of HBI annually for
twenty years beginning in April 1998 with an option to terminate the contract
at any time after the tenth year upon one year's notice. Pursuant to this
off-take contract, Tamsa would be required to purchase the HBI at a formula
price reflecting Comsigua's production costs during the first eight contract
years; thereafter, it would purchase the HBI at a slight discount to market
price. The agreements among the joint venture parties provide that, if during
the eight-year period the average market price is lower than the formula price
paid during such period, Tamsa would be entitled to a reimbursement of the
difference plus interest, payable after the project financing and other
specific credits are repaid. In addition, under the arrangements entered into
with Comsigua's other shareholders, as described hereunder, Tamsa has the
option to purchase on an annual basis up to a further 80,000 tons of HBI
produced by Comsigua at market prices. Under its off-take contract with
Comsigua, as a result of weak market prices for HBI, Tamsa has paid
higher-than-market prices for its HBI and has accumulated a credit that, at
December 31, 2002, amounted to approximately USD12.6 million. This credit,
however, is offset by a provision for an equal amount recorded as a result of
Comsigua's weak financial condition.
In connection with Tamsa's original 6.9% equity interest in the joint
venture company, Tamsa paid USD8.0 million and agreed to cover its proportional
share (7.5%) of Comsigua's cash operating and debt service shortfalls. In
addition, Tamsa pledged its shares in Comsigua and provided a proportional
guarantee in support of the USD156 million (USD88.5 million outstanding as of
December 31, 2002) project financing loan made by the International Finance
Corporation, or IFC, to Comsigua. In February and May 2002 and in January 2003,
Tamsa was required to pay, and accordingly paid, an aggregate of USD1.5
million, representing its share of a shortfall of USD14.7 million payable by
Comsigua under the IFC loan and additional operating shortfalls of USD5.3
million. Comsigua's financial condition has been adversely affected by the
consistently weak international market conditions for HBI since its start-up in
1998 and, unless market conditions improve substantially, Tamsa may be required
to make additional proportional payments in respect of its participation in the
Comsigua joint venture and continue to pay higher-than-market prices for its
HBI pursuant to its off-take contract.
In addition, on May 24, 1996, Tamsa signed a twenty-year HBI repurchase
off-take contract with Kobe Steel Ltd. giving Tamsa an option to purchase at
market price up to 40,000 tons per year of the HBI which Kobe Steel Ltd. has
committed to purchase from Comsigua and a letter of intent dated May 18, 1998
whereby Kobe Steel Ltd. undertakes to secure for Tamsa, directly or indirectly,
an additional 40,000 tons of HBI on the same economic and delivery conditions
as the HBI repurchase off-take contract, giving Tamsa the option to purchase a
total of up to 80,000 tons. Tamsa's rights and obligations under the HBI
repurchase off-take contract were subsequently assigned to Marubeni Corporation
and concurrently Marubeni and Tamsa entered into an HBI Basic Sales Contract
for a total of 80,000 tons, 40,000 of which are derived from of the assigned
HBI repurchase off-take contract and 40,000 from the letter of intent (with
Marubeni acting as the indirect supplier). In 2002, Comsigua supplied 46% and
Marubeni supplied 54% of Tamsa's total purchases of HBI.
Tamsa consumes large quantities of electric power, particularly in
operating the electric furnaces used to produce steel. This electric power is
furnished by the Mexican government-owned Federal Electric Power
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Commission (
Comisión Federal de Electricidad
). Tamsa's cost of electric power
in Mexico increased by approximately 4% in 2001 and 1.4% in 2002. This increase
is primarily due to higher electric power rates resulting from higher fuel
prices and the appreciation of the Mexican peso.
In addition, Tamsa purchases from Pemex, at prevailing international
prices, natural gas used for the furnaces that reheat steel ingots in the
pipemaking process. Natural gas costs increased approximately 21% in 2001, and
due to the hedging strategy described below, natural gas costs decreased 19% in
2002. Tamsa estimates that approximately 17% and 16% of its production costs
in 2001 and 2002, respectively, were spent on electricity, oxygen and natural
gas. Tamsa obtains all of its water requirements from wells at the plant sites.
On February 22, 2001, Tamsa signed a three-year agreement with Pemex for
the supply of 296,600 million British Thermal Units, or BTUs, of natural gas
on a monthly basis from January 1, 2001, to December 31, 2003, at a fixed price
of USD4.00 per million BTUs. In order to cover a decrease in natural gas
prices, on March 2, 2001, Tamsa entered into a forward contract with Enron
North America Corp., or Enron, with the option to sell up to 200,000 million
BTUs per month of natural gas at a minimum base price of USD4.05 per million
BTUs from March 2002, through December 2003. As a result of Enron's bankruptcy
in late 2001, no reasonable prospect existed of exercising Tamsa's option under
this contract and, consequently, the premium paid to Enron of USD2.3 million
for this put option was written off during the fourth quarter of 2001. In order
to reduce its exposure to above-market prices under the natural gas supply
agreement with Pemex, Tamsa entered into two option contracts with Citibank,
N.A., New York, or Citibank, and JPMorgan Chase Bank, or JPMorgan Chase in
March 2002 and April 2002. The two option contracts consist in to swap the
fixed price from US$4.00 per million BTUs established in the contract to the
market price, to sell 160,000 million BTUs of natural gas monthly for each
contract, at a strike price of US$4.00 per million BTUs when market prices of
natural gas are not lower than US$2.00 and not higher than US$4.0 per million
BTUs, for the period from May 1, 2002 to February 28, 2003; likewise, for the
period from March 1, to December 31, 2003, the strike price is US$4.00 per
million BTUs when market prices of natural gas are not lower than US$2.25 and
not higher than US$4.00 per million BTUs. Likewise, the Company is obligated to
sell natural gas at US$4.00 when market prices are higher than US$4.00 for the
period from May 1, 2002 to December 31, 2003. Additionally, the Company is
obligated to buy 320,000 million BTUs of natural gas monthly at a base price of
US$2.765 per million BTUs, for the period from January 1, 2004 to December 31,
2005.
Employees
At December 31, 2002, Tamsa and its consolidated subsidiaries had 2,664
employees, including temporary workers, of whom approximately 1,650 were
production, quality assurance and maintenance personnel. Approximately 1,280
employees are represented by a local affiliate of the Mexican Confederation of
Workers, or MCW, the principal labor union in Mexico, with which Tamsa has had
collective bargaining agreements since 1953.
Wages and benefits for unionized employees are fixed by contracts covering
a one-year period beginning May 1 of each year. Negotiations with the MCW in
2001, 2002 and 2003 resulted in wage increases of 10%, 6% and 4.8%,
respectively. On December 31, 2002, Tamsa determined a statutory profit sharing
liability of Ps138,583 thousand for fiscal year 2002 that was paid in May 2003.
Tamsa believes that it enjoys satisfactory relations with its employees
and the MCW in Mexico. Our ability to adapt to changing market conditions in
1998 and 1999 was made possible by the implementation of temporary shutdowns,
which allowed for the adjustment of production levels to market demand while
maintaining efficiency and operating margins. The technical suspensions, which
are contemplated by Mexican labor law, were endorsed by the MCW.
Product Quality Standards
Tamsa's seamless steel pipes are manufactured in accordance with the
specifications of the American Petroleum Institute and the American Society for
Testing and Materials. The products must also satisfy the proprietary standards
of Tamsa as well as the requirements of customers. Tamsa maintains an extensive
quality control program to ensure that its products continue to satisfy
proprietary and industry standards and are competitive from a product quality
standpoint with products offered by its competitors. In May 1994, Tamsa
received ISO 9001 certification from Lloyd's Register Quality Assurance
Limited, a requirement for selling to the major oil companies,
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which have rigorous quality standards. In October 1994, Tamsa was one of the
first companies to obtain the newest version of the ISO 9001 certification. The
ISO 9001 quality management system assures that the product complies with
customer requirements from the acquisition of raw material to the delivery of
the final product. ISO 9001 is designed to ensure the reliability of both the
product and the processes associated with the manufacturing operation. In 2000,
this certification was renewed for an additional three-year period ending in
May 2003. Moreover, on October 30, 1996, Tamsa's cold-drawn mill received the
ISO 9001 certification from Lloyd's Register Quality Assurance Limited. In
1998, this mill received the ISO 9002/QS 9000 certification for mechanical and
automotive industry related pipes that was renewed in 1999. In March 2003 Tamsa
was audited by the same certification company in accordance with the new
requirements of ISO 9001:2000 version with the result that our cold-drawn mill
will be certified in accordance with this new ISO standard.
Tamsa continues to train personnel and use advanced equipment in its
ongoing effort to improve quality. It has also introduced statistical controls
at various stages of the production process. In addition to Tamsa's own
inspection systems, a representative of the buyer often verifies the quality of
the finished products at Tamsa's facilities before shipment. Accordingly,
claims other than those for damage incurred during shipping are rare. Rejection
rates upon customer inspection at no time exceeded 0.13% during 2001 or 0.11%
during 2002.
Tamsa continues to invest in new technology to improve process control and
products quality, and at the same time important activity is performed in
product development and research to improve performance of existing products
and to develop tailor made products for specific customer needs. Tamsa's
facility is a leading mill where are manufactured products with very stringent
requirements for deep and ultra deep water applications mainly for the Gulf of
México - USA.
Research and Development
Research and development, or R&D, of new products and processes to meet
the increasingly stringent requirements of their customers is an important
aspect of the Tenaris companies' business. Tamsa's R&D activities are
coordinated through the Tenaris companies by Siderca, which coordinates and
allocates R&D activities among the Tenaris companies.
The Tenaris companies allocate R&D activities among themselves in order to
achieve greater efficiencies and better access to each member's particular
strengths. Tamsa is responsible for the development of line pipe products,
while Siderca retains responsibility for the development of OCTG products and
Dalmine for the development of mechanical pipe products. The costs of R&D are
allocated among the three companies in accordance with the cost contribution
agreement among them. See Item 4.B. "Information on the
Company—Tenaris—Arrangements Underlying Tenaris."
R&D activities are carried out primarily at Tamsa's plant in Veracruz, at
research facilities located in Campana, operated by the
Fundación para el
Desarrollo Tecnológico
and at the research facilities of the Centro Sviluppo
Materiali S.p.A. in Rome.
Product development and research currently being undertaken by the Tenaris companies includes development of:
•
proprietary premium joint products;
•
high collapse deep water line pipe;
•
high strength mechanical tubing;
and
•
internal metallic coating of tubing by plasma powder welding.
In addition to R&D aimed at new products, the Tenaris companies
continuously study opportunities to optimize their manufacturing processes.
Recent projects in this area include ongoing studies for the addition of
electromagnetic stirring to continuous casting with the goal of improving
product quality and range.
Tamsa spent Ps57,376 thousand for R&D in 2002, compared to Ps17,782
thousand in 2001 and Ps23,778 thousand in 2000.
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Environmental
Tamsa is subject to a wide range of city, state and federal laws,
regulations, permits and decrees in Mexico concerning, among other things,
human health, discharges to the air and water and the handling and disposal of
solid and hazardous wastes. Compliance with environmental laws and regulations
is a significant factor in Tamsa's business.
Tamsa has not been fined for any environmental violation in the last five
years, and is not aware of any current material legal or administrative
proceedings pending against it with respect to environmental matters which
could have an adverse material impact on its financial condition or results of
operations. Tamsa has not been required or requested, nor is it aware of any
obligation, to conduct remedial activities at any of its sites or facilities.
In 1991, Tamsa initiated a series of studies regarding the effects of its
industrial operations on the environment. In early 1992, Tamsa began projects
to implement the recommendations of these studies and to maintain compliance
with the latest laws and regulations of the
Secretaría de Medio Ambiente y
Recursos Naturales
, the Mexican environmental regulatory agency more commonly
known as the SEMARNAT (formerly
Secretaría del Medio Ambiente, Recursos
Naturales y Pesca
, or SEMARNAP), regarding air, water and soil pollution
control. In 1994, Tamsa requested a voluntary review of its facilities by the
SEMARNAT. In 1995, Tamsa entered into an agreement with the SEMARNAT pursuant
to which it agreed to conduct periodic internal audits and undertake a number
of environmental improvements. The review concluded that Tamsa was in
compliance with all but two defined environmental targets. Tamsa, in
cooperation with the SEMARNAT, is working towards meeting the two outstanding
targets, which relate to levels of dust generated by Tamsa's manufacturing
activities in Veracruz and soil conditions at Tamsa's waste management site in
Villa Rica. In an effort to meet environmental targets regarding dust levels,
under a proposal approved by the SEMARNAT, Tamsa completed construction of a
dust storage facility in December 2001. The facility is currently operational.
Tamsa is currently working with the SEMARNAT in order to define the activities
permissible at the site in Villa Rica.
Tamsa's consolidated subsidiary, Tavsa, has manufacturing operations in
Venezuela that are subject to Venezuelan environmental regulations. Tamsa is
not aware of any current material legal or administrative proceedings pending
against Tamsa or Tamsa's subsidiary with respect to environmental matters which
could have an adverse material impact on Tamsa's financial condition or results
of operations.
Insurance
Tamsa carries property, accident, fire, third party liability, product
liability and other insurance (such as vehicle insurance) in amounts that are
customary in the steel products industry. In certain cases, insurers have the
option to replace damaged or destroyed plant and equipment rather than to pay
Tamsa the insured amount. Tamsa does not carry loss-of-profit or business
interruption insurance.
Litigation
OCTG Antidumping Proceedings
On June 20, 1995, the U.S. Commerce Department issued a final
determination that producers of OCTG products in seven countries, including
Tamsa, had engaged in "dumping" in the United States. The "antidumping"
proceeding was filed in June 1994 by eight U.S. steel manufacturers against
producers of OCTG products in Argentina, Austria, Italy, Japan, Korea, Mexico
and Spain. Under the antidumping determination, importers of OCTG into the
United States from Mexico and four other countries were required to post cash
deposits at the anti-dumping margins established by the Commerce Department. In
the case of Mexico, a margin of 23.8% was established.
On July 26, 1995, Tamsa requested a NAFTA Panel review of the antidumping
margins, and the Panel issued its decision on July 31, 1996. While the Panel
agreed with Tamsa that the Commerce Department made certain errors that
artificially inflated the dumping margin, the Panel upheld other aspects of the
decision. As a result, imports of Tamsa's OCTG continued to be subject to
antidumping duty deposits but at a new margin of 21.7%.
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In August 1997, Tamsa requested that the U.S. Department of Commerce
conduct an administrative review of the antidumping margin applicable to its
OCTG exports to the United States. The final resolution of that review resulted
in a determination of no dumping, published March 11, 1999, applicable to Tamsa
OCTG exports entering the United States from July 31, 1996 to August 1, 1997.
This determination became applicable as the new deposit requirement for Tamsa's
exports to the United States beginning August 1, 1997.
In August 1998, Tamsa entered the process of a second formal
administrative review of the case for the period August 1, 1997 to July 31,
1998. The final resolution of this second review resulted in a finding of no
dumping which was published on January 5, 2000.
In August 1999, Tamsa entered into a third formal administrative review of
the case for the period from August 1, 1998 to July 31, 1999. The final
resolution of this third review resulted in a zero tariff and was published on
March 21, 2001. This was the third consecutive review that resulted in a
finding of no dumping. However, the U.S. Department of Commerce in the same
review rejected Tamsa's request that the U.S. government revoke the antidumping
order.
In July 2000, the U.S. government initiated a "sunset review" to determine
whether the antidumping measures applied against Tamsa's OCTG should be
revoked, or whether they should continue for an additional five years. After
decisions by two government agencies, the U.S. Department of Commerce on July
25, 2001 issued a final decision to continue the antidumping measures against
Tamsa's exports of OCTG casing and tubing, but to revoke the antidumping
measure applicable to Tamsa's OCTG drill pipe.
Tamsa has several pending appeals challenging the U.S. government's
decision to continue the antidumping measures on Tamsa's OCTG. Nonetheless, the
effect of the imposition of the antidumping duties described above is
essentially to close the U.S. market for Tamsa's OCTG products.
Line Pipe Antidumping Proceedings
On June 20, 2000, the U.S. Department of Commerce announced that its final
analysis of Tamsa's sales of the large diameter standard, line, and pressure
(SL&P) pipe to the United States revealed a dumping margin of 19.6%.
Subsequently, on July 13, 2000, the United States International Trade
Commission, or ITC, announced its final decision that Tamsa's U.S. sales of
this product to the United States are causing material injury to the U.S.
industry. The ITC decision cleared the way for the U.S. Department of Commerce
to issue its final antidumping order in August 2000, which imposed an
antidumping duty cash deposit requirement of 15.1%, a level reflecting the
correction of calculation errors of the original U.S. Department of Commerce
decision previously mentioned. The cash deposit requirement affects principally
Tamsa's large diameter line and pressure pipe (greater than 4 1/2 inches up
to and including 16 inches in outside diameter) entering the United States,
except for line pipe used in deep water applications (water depth of 1,500 feet
or more) and rated for specified yield strength of not less than 60,000 PSI,
which is excluded from the antidumping order.
During the first quarter of 1999, Tamsa's shipments of large diameter
seamless SL&P pipe to the U.S. accounted for an estimated 1.3% of the total
U.S. market for these products and represented 1.6% of Tamsa's total pipe sales
during that period. In spite of petitioners' claims that the U.S. market is
being flooded with dumped imports of seamless steel pipe, Tamsa's shipments to
the U.S. market of the pipes referenced in the petition have declined
continuously since the last quarter of 1998.
As a result of the imposition of the antidumping margins described above,
Tamsa has essentially stopped exporting the covered SL&P pipe to the United
States, except for those products excluded from the order.
In June 2001, the United States initiated a proceeding known as a 201
Investigation, to impose measures that would safeguard the U.S. steel industry
from increasing imports of several different steel products. Seamless tubular
products of the type produced by Tamsa were determined not to be causing or
threatening serious injury to the U.S. industry, and therefore were excluded
from the relief ultimately granted to the U.S. industry. All steel products
from Canada and Mexico were excluded for the additional reason that the special
requirements of the NAFTA Agreement had not been satisfied in the case.
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In April 2002, the Canadian government initiated a similar safeguard
investigation against certain steel products, including certain seamless pipe.
The Canadian government subsequently excluded from the proceeding all Mexican
imports under the special NAFTA provisions.
On May 20, 2002, the government of the People's Republic of China
initiated a similar safeguard investigation against certain steel products
imports including OCTG and line pipe used for oil and gas pipelines.
Provisional measures were imposed for six months. On November 20, 2002, this
investigation was concluded and seamless pipes were excluded from the safeguard
measures.
On July 19, 2002, Tamsa (through SECON) requested the initiation of an
antidumping investigation and the application of antidumping duties on imports
from Russia and Romania of line pipe with a diameter smaller than 18 inches.
The Mexican government initiated the investigation on October 18, 2002. Tamsa
expects that a preliminary determination will be made in the next several
months.
Other Legal Proceedings
Tamsa is also involved in certain legal proceedings incidental to the
normal conduct of its business, for which it has made provisions in accordance
with its corporate policy and the rules of the Mexican Stock Exchange as
approved by the securities regulatory authority in Mexico. Tamsa believes such
provisions are adequate. Tamsa does not believe that liabilities relating to
such proceedings are likely to be, individually or in the aggregate, material
to its audited consolidated financial position.
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B. Tenaris
General
Tenaris began with the formation of Siderca by San Faustín's predecessor
in Argentina in 1948. Siat S.A.I.C., or Siat, an Argentine welded steel pipe
manufacturer, was acquired in 1986. Tenaris grew organically in Argentina and
then, in the early 1990s, began to evolve beyond its initial base in Argentina
into a global business through a series of strategic investments. These
investments included the acquisition, directly or indirectly, of controlling or
substantial interests in:
•
Tamsa, the sole Mexican producer of seamless steel pipe products (June 1993);
•
Dalmine, a leading Italian producer of seamless steel pipe products (February 1996);
•
Tavsa, the sole Venezuelan producer of seamless steel pipe products (October 1998);
•
Confab, the leading Brazilian producer of welded steel pipe products (August 1999);
•
NKKTubes, a leading Japanese producer of seamless steel pipe
products and source of advanced seamless steel pipe manufacturing
technology (August 2000);
and
•
AlgomaTubes, the sole Canadian producer of seamless steel pipe
products (October 2000).
In addition, Tenaris, through Tenaris Global Services, has developed a
global network of pipe distribution and service facilities with a direct
presence in most major oil and gas markets.
In December 2002, Tenaris became a publicly listed company after
completing an exchange offer for the outstanding shares and ADSs of its three
main operating subsidiaries, Tamsa, Siderca and Dalmine, as described in Item
4. "Information on the Company—Tamsa—Introduction."
Below is a simplified diagram of Tenaris's corporate structure, as of May
30, 2003:
(1)
The remainder of Confab is owned by the public. As of May 30, 2003,
Siderca held 99.22% of Confab's voting stock.
(2)
As of May 30, 2003, the remainder of NKKTubes was beneficially owned by
JFE Holdings Inc.
(3)
As of May 30, 2003, the remainder of Tavsa was owned by the Republic of
Venezuela through the Corporación Venezolana de Guayana.
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Tenaris's Business Strategy
Tenaris provides tubular products and associated services to its customers
around the world through global business units serving specific market segments
and local business units serving the local markets where it has production
facilities. These global business units include:
•
Tenaris Oilfield Services, responding to the tubular needs of
oil and gas companies in their drilling activities;
•
Tenaris Pipeline Services, responding to the tubular needs of
oil and gas and other energy companies in their activities of
transporting fluids and gases;
•
Tenaris Process and Power Plant Services, responding to the
tubular needs of refineries, petrochemical companies and energy
generating plants for construction and maintenance purposes;
and
•
Tenaris Industrial and Automotive Services, responding to the
tubular needs of automobile and other industrial manufacturers.
Tenaris's business strategy is to continue expanding its operations
internationally and further consolidate its position as a leading supplier of
high-quality tubular products and services worldwide to the oil and gas, energy
and mechanical industries by:
•
completing the integration of the operations of its
subsidiaries to provide customers a complete range of products
worldwide and to maximize operational flexibility and synergies;
•
developing a comprehensive range of value-added services
designed to enable customers to reduce working capital and inventory
requirements while integrating Tenaris's production activities with
the customer supply chain;
and
•
continuing to pursue strategic acquisition opportunities.
Completing the integration of the operations of its subsidiaries
. Tenaris
has taken and continues to take steps to integrate the operations of its
subsidiaries in order to reinforce its strong position in the international
seamless steel pipe market and its leading presence in the domestic markets of
such subsidiaries, including:
•
the reorganization of the commercial activities of its
subsidiaries under global and local customer-focused business units;
•
the common use of the Tenaris brand, launched in May 2001, with
which Tenaris is positioning itself as an integrated supplier of
high-value products and industry-leading services;
•
the sharing of operational technology and coordination of Tenaris's research and development activities;
and
•
the reorganization of Tenaris's procurement, information technology, or IT, and premium joint licensing activities.
Tenaris's strategy is based on the idea that, by aligning the interests of
all shareholders through its exchange offer for Tamsa, Siderca and Dalmine,
which closed in December 2002, Tenaris can pursue further integration of its
operations and thereby expects to continue to increase flexibility and
synergies across six seamless and two welded pipe mills and their common
commercial network organized under Tenaris Global Services.
Developing value-added services
. Tenaris continues to develop its
capabilities to supply value-added services to its customers worldwide, in
order to enable its customers to reduce costs and concentrate on their core
businesses, and in order to enable Tenaris to differentiate itself from its
competition, further strengthen Tenaris's
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relationship with its customers worldwide through long-term agreements and to
capture more of the value in its supply chain. These value-added services
include:
•
working with its customers to anticipate their needs and develop customized products for particular applications;
•
providing comprehensive pipe management services, including JIT delivery and stocking programs;
and
•
developing integrated supply chain management services through
alliances with specialist service providers and extensive use of
information technology.
Pursuing strategic acquisition opportunities
. Tenaris has grown in the
past through strategic acquisitions. Future selective strategic acquisitions
may provide Tenaris with a means to expand its operations, enhance its global
competitive position and capitalize on potential operational synergies.
Joint Policy Regarding Allocation of Sales Orders
The Tenaris companies have agreed to adopt a uniform, voluntary policy
governing the allocation of sales orders among themselves. The purpose of this
policy is to facilitate the most efficient and profitable allocation of sales
orders among themselves by taking advantage of each company's manufacturing and
distribution capabilities, while at the same time ensuring equitable treatment
of the three companies. The principal features of this policy are as follows:
•
sales orders involving products or product specifications that
are manufactured by only one of the three companies will be allocated
to that company;
•
sales orders for delivery within one of the companies'
respective local markets will be allocated to that company if it
manufactures the products requested by the customer. Tamsa's local
market consists of Mexico, Siderca's local market consists of
Argentina and Dalmine's local market consists of the member countries
of the EU plus Switzerland and Norway (except sales of OCTG and line
pipe products destined for the North Sea area);
and
•
sales orders for delivery outside the three companies' local
markets involving products that are manufactured by more than one of
them will be allocated based on the recommendation of a central mill
load coordinator, who is appointed by mutual agreement among the
three companies. This recommendation will be based on several
considerations, including the customer's desired delivery schedule
and logistical and service needs, the optimal utilization of each
company's manufacturing facilities and the maximization of profits
for the three companies. Each company will have the right to reject a
sales order allocated to it and to appeal the allocation of that
sales order to another company.
To ensure transparency under this uniform policy, all requests for
quotation received by any of the three companies or by Tenaris Global Services
relating to their products are entered by the relevant business unit into a
centralized internal bidding system, which can be accessed by each of them. The
business unit offers the customer a single quotation without identifying the
company to whom the sales order will be allocated (unless the customer requires
otherwise). At the same time, each of the three companies has agreed to use
commercially reasonable efforts to satisfy the requirements imposed on
suppliers by their customers, thereby qualifying themselves to make sales to
those customers on an equal basis.
Arrangements Underlying Tenaris
In order to implement specific actions, the Tenaris companies have entered
into various agreements and arrangements among themselves and other companies
of Tenaris Global Services.
37
Table of Contents
Marketing Agreements
Each of Tamsa, Siderca and Dalmine and certain of their subsidiaries are
parties to export agency agreements each appointing a Tenaris Global Services
company as its non-exclusive agent for the sale of all of its products in all
countries except Argentina, Mexico and Italy and, in the case of Dalmine,
excluding also the other member countries of the EU and certain other
countries. In addition, some of the Tenaris companies have entered into
agreements with each other in respect of sales in their home countries. The
purpose of these arrangements is to maximize the commercial penetration of the
Tenaris companies in their export markets and take maximum advantage of each
company's manufacturing and distribution capabilities in its respective
domestic market. A description of these marketing agreements follows.
•
Business Opportunities Agreement
. This agreement governs the
creation and activities of organized joint business units. These
units combine in single management structures planning and marketing
activities that will focus on specific product lines, client types
and territorial coverage (global, regional and local). Tamsa, Siderca
and Dalmine finalized this arrangement with the signing of the
"Business Opportunities Agreement" on March 30, 2001.
•
Siderca, Tamsa and Dalmine export agency agreements
. Pursuant
to these agreements, restated as of October 4, 2000, September 29,
2000 and September 27, 2000, respectively, and assigned to a Tenaris
Global Services company effective December 17, 2002, each of Tamsa,
Siderca and Dalmine appointed a Tenaris Global Services company as
its non-exclusive agent for the sale of all of its products in all
countries except Mexico, Argentina and Italy and, in the case of
Dalmine, excluding also the other member countries of the EU.
Tenaris Global Services is entitled to a commission equal to 3% of
the FOB value of their sales of Siderca's, Tamsa's and Dalmine's
products, and to be reimbursed by Tamsa, Siderca and Dalmine, as the
case may be, for a portion of the total general expenses incurred by
Tenaris Global Services and for special sales costs. Siderca's and
Tamsa's agreements expire on September 30, 2003, and Dalmine's on
October 1, 2003, and all of them are automatically renewable for
successive three-year terms unless, in each case, one party notifies
the other in advance of its intention not to renew the agreement.
Amounts accrued under these agreements (and their predecessor
agreements) totaled, in the case of Tamsa, USD10.1 million in 2000,
USD12.7 million in 2001 and USD17.6 million in 2002.
•
NKKTubes export agency agreement.
Pursuant to this agreement,
dated May 24, 2000, NKKTubes has appointed a Tenaris Global Services
company as its non-exclusive agent for the sale of its products in
all countries outside Japan. The Tenaris Global Services company
purchases NKKTubes' products for resale to third parties at priced
agreed upon on a case-by-case basis. The agreement has a term of
fifteen years.
•
Confab and Siat export agency agreements
. Confab and Siat
appointed a Tenaris Global Services company as their non-exclusive
agent for the sale of all of their products in all countries except
Brazil, in the case of Confab, and Argentina, Brazil, Italy and
Mexico, in the case of Siat. Tenaris Global Services is entitled to a
commission equal to 5% of the FOB value of its sales of Confab's and
Siat's products. The agreements expire on January 1, 2004 and
September 30, 2004, and are automatically renewable for successive
one-year and three-year terms, respectively.
•
Reciprocal export agency agreement between Tamsa and Siderca
relating to sales in Mexico and Argentina
. Pursuant to this
agreement, dated December 23, 1993, Tamsa has granted Siderca the
non-exclusive right to market and sell Tamsa's products in Argentina,
and Siderca has granted Tamsa the non-exclusive right to market and
sell Siderca's products in Mexico. This agreement provides for Tamsa
and Siderca to purchase each other's products for resale in their
domestic markets at prices which permit them to earn the equivalent
of a 7.5% commission on the actual price charged to third-party
customers.
•
Reciprocal export agency agreement between Tamsa, Siderca and
Dalmine
. Pursuant to this agreement, dated March 29, 1996, Tamsa and
Siderca have granted to Dalmine, and Dalmine has granted to Tamsa and
Siderca, the non-exclusive right to market and sell their respective
products through their respective local commercial networks. This
agreement provides that Dalmine will purchase the products of Tamsa
and Siderca, and Tamsa and Siderca will purchase the products of
Dalmine, at third-party export prices. The agreement additionally
provides for Dalmine's distributors
38
Table of Contents
to purchase Tamsa's and Siderca's products for resale at prices which
would earn them the equivalent of a commission on sales varying between
3% and 15% depending on the nature of the services rendered by Dalmine's
distributors.
•
Other agreements.
Tamsa, Siderca and Dalmine have entered into
numerous agreements with member companies of Tenaris Global Services
in various countries around the world pursuant to which one or more
of them agrees to sell, and one or more Tenaris Global Services
companies agrees to buy, seamless steel pipe products for resale
under stocking programs (and other similar programs) to oil and gas
companies or other buyers or end users which operate in their
territories (as defined in each agreement). The selling party under
these agreements generally agrees to assume any and all risks of the
operation. To this end, under specified circumstances (e.g., failure
to consummate resale, product rejection, customer delay), the selling
party would be required to repurchase the pipes sold to the reseller.
Effective as of December 17, 2002, all these contracts were assigned
to Tenaris Global Services or its subsidiaries.
Agreements to Share Costs and Know-How
Tamsa, Siderca and Dalmine have entered into agreements among themselves
to share costs and know-how and provide each other with technical assistance. A
description of these agreements follows.
•
Industrial and Technical Integration and Exchange Agreement
(Contrato de Intercambio y Complementación Industrial)
. Pursuant to
this agreement, dated August 1996, Tamsa and Siderca have agreed to
exchange technical and operational assistance and technology in the
areas of manufacturing and supply and in other areas affecting
manufacturing operations. Fees are payable for transfers of
technology and other services provided under the agreement.
•
Cost Contribution Agreement
. Pursuant to this agreement, dated
May 11, 1999, Tamsa, Dalmine and Siderca have agreed to share the
cost of various activities whose costs and benefits can be shared
among the three companies and for which the three companies have not
established special purpose companies (in areas such as R&D,
marketing and communications, human resources management, information
systems and general management issues) in order to avoid duplicative
efforts and expenses. The agreement establishes the bases to carry
out these activities, such as guidelines for approval and execution,
rules for usage of resources and the percentage of sharing of costs
among the parties. Management of the three companies will decide on a
case-by-case basis which activities will be included as part of this
agreement. The agreement has no fixed term.
Agreements Relating to NKK's Technology
Under the agreements relating to Siderca's purchase, on May 24, 2000, of a
51% shareholding in NKKTubes, NKK agreed to license to Tenaris its
manufacturing technology, patents and trademarks for manufacturing steel (for
use in the manufacturing of seamless steel pipe) and seamless steel pipe. NKK
also agreed to license its manufacturing technology, patents and trademarks for
making premium connections to Tenaris. Amounts accrued under these agreements
were Japanese yen 174.6 million in 2002, Japanese yen 112.2 million and USD0.8
million in 2001 and Japanese yen 548.6 million and USD0.1 million in 2000.
In February 2002, Tenaris acquired NKK's manufacturing technology, patents
and trademarks for making premium connections for USD1.9 million.
In connection with NKK's and Kawasaki Steel's business combination,
effective on September 27, 2002, NKK's 49% interest in NKKTubes was transferred
to a subsidiary of JFE. In addition, Siderca and NKK signed on September 25,
2002 an agreement that amends certain provisions of the various agreements
relating to the creation and governance of NKKTubes. On April 1, 2003, the
licensing agreements relating to NKK's technology were terminated. Under the
terms of the termination agreement, Tenaris will not have access to NKK's
technology and know-how in the future but will continue to use the technology
and know-how already licensed to it. In addition, the termination of the
licensing agreements would not affect Tenaris's rights to the NKK range of
premium connections, which Tenaris acquired in 2002. For a discussion of NKK
and Kawasaki Steel's business combination, see Item 4.A. "Information on the
Company—Tamsa—Competition."
39
Table of Contents
Reorganization of Premium Joint Technology and Licensing Activities
In January 2000, Tamsa, Siderca and Dalmine agreed to reorganize their
premium joint technology and licensing activities under an existing special
purpose company and each of them invested approximately USD0.5 million in the
capital stock of Tenaris Connections A.G., or Tenaris Connections, a company
owned in equal shares by Tamsa, Siderca and Dalmine. All of the Tenaris
companies' research, development, licensing, patent maintenance activities
relating to premium joint technologies owned by, or licensed to, the Tenaris
companies and the corresponding technical information, know-how, certain
trademarks, commercial names, and licenses of the Antares, SEC and Atlas
Bradford premium joint technologies are concentrated in Tenaris Connections and
its subsidiary, Tenaris Connections B.V. Antares and SEC premium joint
technologies are proprietary to the Tenaris companies. Atlas Bradford premium
joint technology was licensed to Tenaris Connections by Grant Prideco Inc. in
June 1998. Tenaris Connections has granted sublicenses to each of Tamsa,
Dalmine and Siderca for the premium joint technologies for which it has
licensing rights, including NKK's premium joint technology. Except for certain
domestic market sales, royalty payments under these sublicenses are
standardized at 6% of the net export selling price.
Reorganization of Information Technology and Procurement Activities
Tamsa, Siderca and Dalmine have established a special purpose company to
develop an e-procurement portal and a second special purpose company to develop
new IT systems. These IT systems are intended to integrate the commercial
activities of the Tenaris companies and enable them to offer value-added
services, differentiating them from their competitors and facilitating customer
retention. Subsequently, it was determined that additional synergies could be
gained from extending the scope and benefits of these special purpose companies
to Siderar S.A.I.C.
•
Specialized Procurement Company
. Tamsa, Siderca, Dalmine and
Siderar invested USD9.5 million (divided into four equal shares) to
develop a specialized procurement company with an internet portal,
known as Exiros, through which they have centralized their
procurement activities. It is also intended to improve the supply of
products associated with the sale of the Tenaris companies' pipes.
The portal began operating in March 2001, and is owned by Lomond
Holdings B.V., a Netherlands company, whose shares are held in equal
parts by Tamsa, Siderca, Dalmine and Siderar. In August 2001, Tamsa
entered into an agreement appointing Exiros México as its
non-exclusive purchase agent, subject to Tamsa's right to reject any
purchase order. Fees payable to Exiros México under this agreement
will be determined on a cost-plus basis and will be revised annually.
Tamsa has delegated all of its procurement activities to Exiros
México under this arrangement and has transferred 30 of its employees
to Exiros México to assist with these activities. Tenaris is in the
process of acquiring from Siderar the remaining 25% in Lomond
Holdings for a total of USD304 thousand.
•
Development of New IT Systems
. Tamsa, Siderca, Dalmine and
Siderar have established a new IT company, Information Systems and
Technologies N.V., a Netherlands company, whose shares are held by
Siderca (25%), Tamsa (25%), Dalmine (25%) and Siderar (25%). The
purpose of this company is to develop IT systems and hardware for use
by the Tenaris companies, the Techint commercial network, Siderar and
Sidor. These systems will be used to enhance the management of the
commercial activities of the Tenaris companies and their customer
service capabilities worldwide.
•
License and free use of Tenaris Brand — Brand Registration,
Licensing and Ownership Agreement.
Pursuant to this agreement,
executed on September 10, 2001 by Tamsa, Tenaris Connections granted
to Tamsa, Siderca and Dalmine a royalty-free license to use the
Tenaris trademark in accordance with certain guidelines defined
therein.
40
Table of Contents
Item 5.
Operating and Financial Review and Prospects
General
Tamsa is the sole producer and supplier in Mexico of various types of
seamless steel pipe. Tamsa's principal finished products are seamless steel
casing and tubing, seamless steel line pipe and various other mechanical and
structural seamless pipes for different uses. Tamsa has an annual installed
capacity of 780,000 tons of finished products, and exports more than 70% of its
production to over 60 countries worldwide.
Demand for Tamsa's products depends primarily upon the type and level of
domestic and international oil and gas drilling activity, which in turn is
substantially influenced by the level of oil prices and by the political and
economic developments in countries with high drilling activity. Historically,
Pemex has been Tamsa's largest customer by a significant margin. Sales to Pemex
fluctuate in response to changes in Pemex's investment program, which
historically decreases when oil prices experience a significant fall. Any
increase in drilling activity as a result of larger investment programs does
not necessarily result in increased demand for pipe.
Faced with declining sales to Pemex during the 1980s, Tamsa aggressively
pursued opportunities in export markets. In order to be competitive in these
markets in terms of price and quality, Tamsa increased its emphasis on
efficiency and quality assurance. The growth of Tamsa's exports has made its
revenues less dependent on conditions within Mexico. In addition, while the
ratio of export revenues to total revenues is lower than the ratio of export
volumes to total volumes, exports, which are typically invoiced in dollars,
have increased Tamsa's dollar revenue base and reduced the exchange rate risk
associated with dollar denominated liabilities and incurring dollar denominated
expenses. However, exports to Venezuela, one of Tamsa's main export markets, as
well as sales in Venezuela by Tavsa, began to suffer in the last quarter of
2001 and continue to suffer to date, due to recent adverse political and
economic developments in that country.
For a more complete description of Tamsa's business and market position
and of the competitive and other factors that could affect Tamsa's financial
condition and results of operation, see Item 4.A. "Information on the
Company—Tamsa."
Operating Results
The following discussion should be read in conjunction with Tamsa's
audited consolidated financial statements and the notes thereto included in
this annual report. Tamsa prepares its financial statements in conformity with
generally accepted accounting principles in Mexico, commonly referred to as
"Mexican GAAP." Mexican GAAP differs in some important respects from U.S. GAAP.
See note 12 to Tamsa's audited consolidated financial statements included in
this annual report for a description of the principal differences between
Mexican GAAP and U.S. GAAP as they relate to Tamsa and for a reconciliation of
net income and total shareholders' equity for the periods and at the dates
indicated. Mexican GAAP require that these consolidated financial statements
recognize certain effects of inflation in accordance with Bulletin B-10 and its
amendments. Unless otherwise noted, all data in the audited consolidated
financial statements and the financial information derived therefrom included
in this discussion and all other Tamsa financial data included throughout this
annual report and relating to the dates or periods covered by the financial
statements have been restated in constant Mexican pesos as of December 31,
2002. From January 1, 2002 to December 31, 2002, the rate of inflation (based
on the Mexican Consumer Price Index) was 5.7%. See "Accounting Principles."
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Table of Contents
The table below sets forth, for the periods indicated, selected financial
data from Tamsa's income statements.
For the year ended December 31,
2002
2001
2000
(thousands of constant December 31, 2002 Mexican pesos,
except share and per share amounts)
Net sales
Ps
6,728,275
Ps
Ps 6,899,027
Ps
6,463,007
Operating cost and expenses:
Cost of products sold
(4,145,970
)
(4,067,468
)
(4,231,637
)
Selling, general and administrative expenses
(1,191,082
)
(1,288,774
)
(1,175,100
)
Total operating cost and expenses
(5,337,052
)
(5,356,242
)
(5,406,737
)
Operating profit
1,391,223
1,542,785
1,056,270
Comprehensive financing cost
(165,924
)
(42,106
)
(88,544
)
Other expenses – net
(13,115
)
(26,834
)
(9,879
)
Income before taxes, employees' statutory profit
sharing and equity in associated companies
1,212,184
1,473,845
957,847
Income tax, asset tax and employees' statutory profit
sharing
(60,114
)
(592,710
)
(483,743
)
Equity in loss of associated companies
(1)
(16,047
)
(290,930
)
(52,608
)
Cumulative effect of change in accounting
principle
(2)
—
(11,567
)
—
Net income
Ps
1,136,023
Ps
578,638
Ps
421,496
Weighted average number of shares
outstanding
(3)
339,284,120
339,284,120
339,284,120
Earnings per share
3.35
1.71
1.24
U.S. GAAP
Net sales
Ps
6,860,137
Ps
6,905,335
Ps
6,173,953
Operating income
1,534,310
1,496,643
924,017
Net income
1,381,633
734,766
500,536
Earnings per share
4.07
2.17
1.48
(1)
Mainly corresponding to Tamsa's equity participation in Amazonia. See note 11 to Tamsa's audited consolidated financial statements.
(2)
Corresponds to the net effect at the beginning of the year from changes in the accounting principles, as a result of the adoption of Statement C-2, effective January 1,
2001, which establishes the accounting treatment for derivatives and financial instruments.
(3)
Amounts for 2002, 2001, 2000, 1999 and 1998 exclude 3,650,000 shares which were held in treasury in 2002 and held in 2001 and 2000 by a wholly-owned subsidiary of Tamsa.
On July 10, 2001, each outstanding share of Tamsa's common stock was split into five shares; concurrently, the ADR ratio was modified from one ADR for each share of common
stock to one ADR for five shares of common stock. For comparative purposes, the number of shares shown for prior years has been adjusted to reflect the split retroactively.
See note 5 to Tamsa's audited consolidated financial statements.
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Table of Contents
The following table sets forth Tamsa's operating and other costs and
expenses as a percentage of net sales for the periods indicated.
For the year ended December 31,
2002
2001
2000
(percentage of net sales)
Net sales
100
100
100
Operating cost and expenses:
Cost of products sold
(62
)
(59
)
(66
)
Selling, general and administrative expenses
(18
)
(19
)
(18
)
Total operating cost and expenses
(80
)
(78
)
(84
)
Operating profit
20
22
16
Comprehensive financing cost
(2
)
(1
)
(1
)
Other expenses — net
—
—
—
Income before taxes, employees' statutory profit
sharing and equity in associated companies
18
21
15
Income tax, asset tax and employees' statutory
profit sharing and deferred income tax
(1
)
(8
)
(7
)
Equity in loss of associated companies
—
(5
)
(1
)
Cumulative effect of change in accounting principle
—
—
—
Net income
17
8
7
The following table shows Tamsa's total sales volume by product and market
for the periods indicated.
For the year ended December 31,
2002
2001
2000
(tons)
Domestic pipe sales (Mexico)
154,997
138,725
167,068
Export sales and Tavsa
510,174
575,129
498,696
Other products and Riga
20,077
19,091
14,186
Total sales
685,248
732,945
679,950
The following table shows the geographic distribution of Tamsa's exports
as a percentage of total export sales volume for the periods indicated.
For the year ended December 31,
2002
2001
2000
(percentages)
North America
16
17
19
Latin America
11
30
34
Africa
19
10
12
Europe
11
9
6
Middle East
34
24
19
Far East and Oceania
9
10
10
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The table below shows Tamsa's net sales by market and product for the
periods indicated.
For the year ended December 31,
2002
2001
2000
(thousands of constant December 31, 2002 Mexican pesos)
Domestic pipe sales (Mexico)
Ps
2,066,204
Ps
1,944,758
Ps
2,320,882
Export pipe sales and Tavsa
4,375,536
4,645,969
3,919,316
Other products and Riga
286,535
308,300
222,809
Total sales
Ps
6,728,275
Ps
6,899,027
Ps
6,463,007
Year Ended December 31, 2002 Compared to Year Ended December 31, 2001
Sales
volume
Total sales volume in 2002 decreased 6.5% to 685,248 tons, from 732,945
tons in 2001. This decrease was mainly due to an 8.3% reduction in export sales
volume, a 49.1% drop in Tavsa's sales volume and a 4.5% decrease in the sales
volume from the non-oil domestic market, partially offset by a 22.8% increase
in the domestic petroleum market.
Domestic sales volume to oil-related customers totaled 101,364 tons in
2002, compared to 82,546 tons in 2001. This growth in sales during 2002 was due
to higher demand from Pemex in both the Northern and Southern regions of
Mexico. Demand from the Northern region, which is related to Pemex's strategic
natural gas program, remained firm during the year due to Pemex's needs to
maintain its gas production quota in order to satisfy domestic demand. Demand
from the Southern region increased mainly as a result of higher exploration and
production spending in the region. Domestic sales volume to non-oil related
customers totaled 53,633 tons in 2002, compared to 56,179 tons during 2001.
This decrease was due to the contraction of industrial production in the
Mexican economy throughout most of the year, coupled with a slow recovery in
the U.S. economy, affecting the automotive and industrial sectors.
Export sales volume in 2002 totaled 488,986 tons, compared to a record
533,471 tons in 2001. This 8.3% decrease was due to lower international
drilling activity in Latin America—mainly in Venezuela, Europe and Canada,
partially offset by higher activity in the Middle East and Africa resulting in
increased sales to those regions.
Tavsa's sales volume totaled 21,188 tons in 2002, compared to 41,658 tons
in 2001. This 49.1% decrease was the result of lower demand by PDVSA and
reduced exploration and production activities in the oil sector in Venezuela as
a result of adverse economic and political conditions.
Riga's sales volume totaled 8,164 tons in 2002, compared to 6,189 tons in
2001. This 31.9% increase was attributable to Tamsa's acquisition of Riga on
June 20, 2001.
Sales volume of steel bars decreased 7.7% to 11,913 tons during 2002,
compared to 12,902 tons in 2001.
Net
sales
Net sales during 2002 were Ps6,728,275 thousand, compared to Ps6,899,027
thousand in 2001. This 2.5% decrease in net sales was attributable to lower
sales volume, mainly in the export market, at Tavsa and in the non-oil domestic
market, partially offset by higher sales in the domestic petroleum market.
Cost
of products sold
Cost of products sold, expressed as a percentage of net sales, was 61.6%
in 2002, compared to 59.0% in 2001. This increase in costs was mainly due to
higher depreciation expenses at Tamsa and Tavsa, higher raw material prices,
energy costs and a higher provision for obsolete inventories. Some cost items
denominated in U.S. dollars also impacted the cost in peso terms due to the
depreciation of the peso.
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Table of Contents
Selling,
general and administrative expenses
Selling, general and administrative expenses, or SG&A, in 2002, as a
percentage of net sales, were 17.7%, compared to 18.7% in 2001. In absolute
terms, SG&A decreased 7.6% from Ps1,288,744 thousand in 2001 to Ps1,191,082
thousand in 2002. Selling expenses in 2002 remained stable when compared to
those incurred in 2001, representing 11.1% in 2002 and 11.0% in 2001. General
and administrative expenses in 2002 decreased to 6.6% of net sales from 7.7% in
2001, mainly due to a reduction in personnel and general expenses.
Comprehensive
financing cost
Comprehensive financing cost during 2002 was Ps165,924 thousand, compared
to Ps42,106 thousand in 2001. This increase was primarily due to an exchange
related loss of Ps178,965 thousand in 2002, compared to an exchange related
gain of Ps14,841 thousand in 2001, mainly derived from the 85% devaluation of
the Venezuelan bolivar, as Tavsa's debt is denominated in U.S. dollars, as well
as to the 12.8% depreciation of the Mexican peso during the year. The increase
in comprehensive financing cost was partially offset by a monetary gain of
Ps59,340 thousand in 2002, compared to Ps24,225 thousand in 2001, and by lower
net interest expenses in 2002 of Ps46,299 thousand, compared to Ps81,172
thousand in 2001, due to lower interest rates in 2002.
Other
expenses — net
Other expenses totaled Ps13,115 thousand in 2002, compared to Ps26,834
thousand in 2001. This decrease in expenses was attributable to an increase in
net income in 2002 due to a higher volume of transactions in which Tamsa traded
products to or from other Tenaris companies.
Income
tax, asset tax and employees' statutory profit sharing
Income tax, asset tax and employee statutory profit sharing provisions
totaled Ps307,052 thousand during 2002, compared to Ps586,794 thousand in 2001.
Income tax for 2002 includes Ps355,620 thousand corresponding to a tax
recovery, which resulted primarily from a favorable court judgment against the
Ministry of Finance for tax inequality obtained in May 2002. Additionally,
Tamsa recorded a net deferred tax credit of Ps246,938 thousand in 2002,
resulting mainly from a change in tax rates from 35% to 32% to compute deferred
income tax, given that the income tax rate will be reduced by 1% annually from
year 2003 until it becomes into a rate of 32% in year 2005, compared to a net
deferred tax charge of Ps5,916 thousand in 2001.
Equity
in loss of associated companies
Losses from associated companies totaled Ps16,047 thousand in 2002,
compared to Ps290,930 thousand in 2001. Tamsa's losses from associated
companies are mainly attributable to its 14.1% equity participation in Amazonia
through its subsidiary Tamsider. The decrease in Tamsa's losses from associated
companies in 2002 was mainly the result of a reduced loss at Amazonia
(resulting in equity in Amazonia's loss of Ps39,906 thousand in 2002, compared
to Ps305,692 thousand in 2001) primarily due to lower losses at Sidor. The net
loss in Amazonia during 2002 included a credit of Ps77,894 thousand, due to a
monetary gain derived from the application of Statement B-15, compared to a
credit of Ps41,752 thousand in 2001. Additionally, in 2002 Tamsa's loss in
Amazonia was partially offset by a gain of Ps23,859 thousand in other
associated companies. See Item 4.A. "Information on the
Company—Tamsa—Investments in Other Companies" and note 11 to Tamsa's audited
consolidated financial statements.
Net
income
Net income during 2002 totaled Ps1,136,023 thousand, compared to Ps578,638
thousand in 2001. This increase of 96.3% is mainly due to lower net income tax
and lower losses from associated companies, which more than offset a lower
operating profit and a higher comprehensive financing cost. Net income
corresponding to majority shareholders during 2002 totaled Ps1,177,049,
compared to Ps574,947 in 2001.
Tavsa's net losses for 2002 were Ps136,754 thousand, compared to a net
gain of Ps12,294 thousand for 2001, due to lower sales, lower absorption of
fixed and semi-fixed costs and to an exchange related loss resulting
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Table of Contents
from the impact of the devaluation of the Venezuelan bolivar on Tavsa's
U.S. dollar-denominated debt. Minority interest associated with these results
represented a loss of Ps41,026 thousand in 2002, compared to a gain of Ps3,691
thousand in 2001.
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
Sales
volume
Sales volume in 2001 increased 7.8% to 732,945 tons from 679,950 tons in
2000. This increase was mainly due to higher export sales volume, a recovery in
domestic sales to oil related customers, and an increase in sales by Tavsa,
partially offset by a significant decline in domestic sales to non-oil related
customers.
Domestic sales volume to oil-related customers totaled 82,546 tons in
2001, compared to 76,172 tons in 2000. This increase of 8.4% in sales was
mainly due to the resumption of normal operations by Pemex in late June 2001
following the delayed approval of its budget and the national strategic gas
program. Sales to non-oil related domestic customers decreased by 38.2%,
amounting to 56,179 tons in 2001, from 90,896 tons in 2000. This decrease was
mainly due to the effect of the slowdown in the Mexican and U.S. economies on
the automotive, mechanical and industrial sectors in Mexico as well as the
impact of imports from Eastern Europe.
Export sales volume in 2001 totaled 533,471 tons—a record for Tamsa
compared to 459,791 tons in 2000. This increase of 16.0% was mainly due to
sustained demand from export oil and gas customers reflecting strong investment
in exploration and production activities.
Tavsa's sales volume totaled 41,658 tons in 2001, compared to 38,905 tons
in 2000, representing a 7.1% increase. This increase in sales volume was mainly
due to an increase in production capacity upon the completion of the first
stage of the modernization program in October 2000, partially offset by a
production stoppage resulting from a strike at Sidor in May 2001 and a decrease
in drilling activity following a reduction in Venezuela's OPEC-mandated oil
production quota.
Beginning in the third quarter of 2001, sales by Riga were consolidated
into Tamsa's results. Riga's sales volume during the second half of 2001
totaled 6,189 tons of welded pipe fittings.
Sales volume of steel bars decreased 9.1% to 12,902 tons during 2001,
compared to 14,186 tons in 2000.
Net
sales
Net sales during 2001 were Ps6,899,027 thousand, representing an increase
of 6.7%, compared to sales of Ps6,463,007 thousand in 2000, mainly due to
higher export sales, higher domestic sales of OCTG, and increased sales by
Tavsa. This increase in demand was due to high oil prices during the first nine
months of 2001. However, the increase in net sales was partially offset by
lower sales volume in the non-oil domestic market and by the effect of restated
2000 Mexican peso figures converted into Mexican pesos with purchasing power as
of December 31, 2002. Net sales in U.S. dollar terms increased by 15.2%.
Cost
of products sold
Cost of products sold, expressed as a percentage of net sales, decreased
to 59.0% in 2001, from 65.5% in 2000. This significant reduction in costs is
explained by lower raw material prices, higher absorption of fixed and
semi-fixed costs, greater operating efficiencies, better production yields and
lower costs at Tavsa, partially offset by a maintenance stoppage at Tamsa in
October 2001.
Selling,
general and administrative expenses
SG&A during 2001 were Ps1,288,774 thousand, compared to Ps1,175,100
thousand in 2000. As a percentage of net sales, SG&A expenses were 18.7% for
2001, remaining practically at the same level of 18.2% for 2000, despite being
9.7% higher in absolute terms. Selling expenses, which relate primarily to
export activities and are inherently variable, remained stable as a percentage
of net sales. General and administrative expenses increased
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during 2001 compared to 2000 as a result of Tamsa's share under its cost
sharing agreement with Siderca and Dalmine of expenses relating to e-business
and IT initiatives.
Comprehensive
financing cost
Comprehensive financing cost during 2001 was Ps42,106 thousand, compared
to a cost of Ps88,544 thousand in 2000. This figure reflects an exchange
related gain of Ps14,841 thousand in 2001 resulting from the peso appreciation
of 4.5% during the year, compared to an exchange related loss of Ps36,961
thousand during 2000. Tamsa's comprehensive financing cost during 2001
consisted primarily of net interest expenses of Ps81,172 thousand, which
included a provision of Ps13,692 thousand (or 50% of accrued interest) in
respect of Amazonia's convertible debentures, compared to Ps76,393 thousand
registered in 2000. Monetary gain in 2001 was Ps24,225 thousand compared to a
monetary gain of Ps24,810 thousand during 2000.
Other
expenses — net
During 2001, other expenses totaled Ps26,834 thousand, compared to Ps9,879
thousand in 2000. Other expenses in 2001 include the amortization of Tavsa's
and Riga's goodwill, and expenses related to the acquisition of Riga.
Income
tax, asset tax and employees' statutory profit sharing
During 2001, income tax, asset tax and profit sharing provisions totaled
Ps586,794 thousand, compared to Ps307,458 thousand in 2000. This increase
reflected significantly lower tax arising from the utilization of tax loss
carry forwards and an asset tax credit during 2001 that totaled Ps56,757
thousand, compared to Ps192,411 thousand in 2000. Additionally, during 2001, a
net deferred tax charge was registered for Ps5,916 thousand, compared to a
charge of Ps176,285 thousand in 2000 that resulted from the application of
Statement D-4 (Deferred income taxes) effective January 1, 2000.
Equity
in loss of associated companies
Losses from associated companies equaled Ps290,930 thousand during 2001
compared to a loss of Ps52,608 thousand during 2000. This result was mainly due
to Tamsa's share, through Tamsider's investment in Amazonia, in the losses
recorded by Sidor. During the year ended December 31, 2001, Tamsa recognized a
gain on net monetary position corresponding to Amazonia of Ps41,572 thousand,
compared to Ps90,557 thousand during 2000, which is included in the equity in
loss of associated companies in accordance with Statement B-15 issued by the
MIPA. See Item 4.A. "Information on the Company—Tamsa—Investments in Other
Companies" and note 11 to Tamsa's audited consolidated financial statements.
Tamsa recorded an interest adjustment of Ps11,567 thousand, accrued from
the convertible debentures of Amazonia, which were registered in the first
quarter of 2001. This is a result of the adoption of Statement C-2 effective
January 1, 2001, which establishes the accounting treatment for derivatives and
financial instruments. This adjustment is shown on Tamsa's statements of
earnings as a net effect at the beginning of the year due to changes in the
accounting principles.
Net
income
Tamsa's net income during 2001 totaled Ps578,638 thousand, compared to
Ps421,496 thousand in 2000. This increase of 37.3% stems mainly from higher net
sales, lower cost of products sold and lower comprehensive financing cost and
reflects the impact of the allowance for the investments in Amazonia and its
losses incurred during the year as discussed.
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Liquidity and Capital Resources
For the year ended December 31,
2002
2001
2000
(thousands of constant December 31, 2002 Mexican pesos)
Cash provided by operations after extraordinary items
Ps
1,280,043
Ps
1,209,529
Ps
1,019,980
Cash used in investment activities
(205,515
)
(903,792
)
(856,750
)
Cash used in financing activities
(274,471
)
(48,671
)
(131,091
)
Increase in cash and cash equivalents
800,057
257,066
32,139
Cash and cash equivalents at the beginning of year
588,632
331,566
299,427
Cash and cash equivalents at the end of year
Ps
1,388,689
Ps
588,632
Ps
331,566
Year Ended December 31, 2002 Compared to Year Ended December 31, 2001
Tamsa's cash balances at December 31, 2002 increased to Ps1,388,689
thousand from Ps588,632 thousand at December 31, 2001. Of this amount,
Ps1,280,043 thousand was provided by operations after extraordinary items and
the net proceeds from additional long-term financing of Ps6,187 thousand. Tamsa
used these funds in the following activities: capital expenditures of Ps184,212
thousand, contribution to associated companies in the amount of Ps21,303
thousand and a dividend payment of Ps280,658 thousand.
Net working capital, calculated as the excess of current assets over
current liabilities, was Ps3,167,509 thousand compared to Ps2,712,465 thousand,
as a result of an increase in cash and cash equivalents, accounts and notes
receivable, partially offset by a decrease in inventories, higher current
liabilities (which include a portion of long-term debt) and trade accounts and
notes payable. We believe that the net working capital is sufficient to meet
our liquidity needs for the present and the foreseeable future.
On February 5, 2003, a new exchange control regime became effective in
Venezuela. These exchange controls limit Tavsa's ability to make purchases in
foreign currency and to distribute profits to Tamsa. These exchange controls
have not yet had a material impact on our ability to meet our cash obligations,
and are currently not expected to have such an impact. There can be no
assurance when, if at all, the Venezuelan government will lift these controls
or otherwise take future action to allow for greater flexibility in the
repatriation of capital. For more information, see Item 3.D. "Risk
Factors—Risks Relating to Mexico and Venezuela."
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
Tamsa's cash balances at December 31, 2001 increased to Ps588,632 thousand
from Ps331,566 thousand at December 31, 2000. Of this amount, Ps1,209,529
thousand was provided by operations after extraordinary items and the net
proceeds from additional long-term financing of Ps263,434 thousand. Tamsa used
the funds in the following activities: capital expenditures of Ps851,186
thousand, acquisition of Riga of Ps52,606 thousand, and a dividend payment of
Ps312,105 thousand, increased by Ps263,434 from additional financing.
Net working capital, calculated as the excess of current assets over
current liabilities, was Ps2,712,465 at December 31, 2001, compared to
Ps2,523,247 at December 31, 2000. The principal reasons for this variation were
a considerable increase in cash and cash equivalents, inventories as well as
decrease in current liabilities due to lower short-term debt and trade accounts
and notes payable, partially offset by a decrease accounts and notes
receivable, prepaid expenses and recoverable taxes.
Financings
Tamsa's financial debt was Ps1,723,219 thousand (USD167.1 million) as of
December 31, 2002, compared to Ps1,608,970 thousand (USD166.5 million) as of
December 31, 2001. Financial debt, net of cash and cash equivalents, at
year-end decreased to Ps334,530 thousand (USD32.4 million) in 2002, compared to
Ps1,020,338 thousand (USD105.6 million) in 2001. The deferred tax liability as
of December 31, 2002 equaled Ps2,171,121 thousand.
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Total liabilities increased from Ps4,949,637 thousand as of December 31,
2001 to Ps5,368,728 thousand as of December 31, 2002 mainly due to an increase
in trade accounts and notes payable, other accounts payable, accrued interest
and unsecured loans from financial institutions to Tavsa.
As of December 31, 2002, Tamsa had USD111.0 million of short-term credit
lines (export-import financing and unsecured loans) with Mexican and foreign
financial institutions, of which USD36.9 million were short-term loans to Tavsa
and guarantees. Short-term debt as of December 31, 2002 was comprised of: (i)
USD21.6 million of outstanding short-term loans to Tavsa, guaranteed by Tamsa,
with a maturity of 270 days at an average annual interest rate of 3.5%; (ii)
USD78.0 million of the portion of a long-term syndicated loan; and (iii) USD1.3
million of long-term debt of Riga. As of December 31, 2001, USD25.6 million of
short-term loans to Tavsa guaranteed by Tamsa were outstanding, with maturities
between 139 and 194 days at an average annual interest rate of 3.98%.
On December 14, 2001, Tamsa subscribed a new 30-month unsecured syndicated
loan for USD130.0 million with various financial institutions for the repayment
of a USD100.0 million loan and for general corporate purposes. This new
syndicated loan, provides for payments of USD26.0 million in June 2003 and
USD52.0 million each in December 2003 and June 2004, and bears interest at
LIBOR plus 1.125 percentage points for the first two years, and at LIBOR plus
1.25 percentage points for the last six months.
Long-term debt as of December 31, 2002 was USD66.3 million, corresponding
to the portion of a USD130.0 million long-term syndicated loan to Tamsa.
Additionally, this debt is also comprised of USD15.5 million debt, of which
USD5.0 million corresponds to Riga, are guaranteed by Tamsa, bearing an annual
interest of 3.05%, with maturity in June 2006 and with semi-annual installments
of USD625 thousand commencing on June 2003; and USD10.5 million debt
corresponding to Tavsa, guaranteed by Tamsa, bearing an annual interest of
3.29%, with maturity in May 2004.
There were no scheduled repayments on any long-term loan during 2002.
On July 1, 1991, Tamsa established a U.S. and Euro commercial paper
program for up to USD50.0 million, with maturities of up to 360 days. In August
1992, Tamsa increased the program to USD75.0 million. As of December 31, 2002,
this program had been terminated.
Tamsa does not have any limitations on investments in fixed assets or in
other companies. Dividend payments and repurchase of shares are permitted if
there are no events of default under the syndicated loan agreement and if such
payments or repurchases of shares do not otherwise result in an event of
default under the syndicated loan agreement. Tamsa is required to comply with
certain financial ratios related to working capital, debt to EBITDA levels and
debt service. At December 31, 2002, Tamsa was in compliance with all financial
and other covenants.
Contractual Obligations and Commercial Commitments
The following table summarizes Tamsa's contractual obligations at December
31, 2002 and the effect such obligations are expected to have on its liquidity
and cash flow in future periods:
Payments Due by Period
as of December 31, 2002
Less than 1
1-3
4-5
After 5
Contractual Obligations
Total
year
years
years
years
(thousands of constant December 31, 2002 Mexican pesos)
Short-Term Debt
Ps
1,040,016
Ps
1,040,016
—
—
—
Long-Term Debt
683,203
—
Ps
683,203
—
—
Total Contractual Cash Obligations
Ps
1,723,219
Ps
1,040,016
Ps
683,203
—
—
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Amount of Commitment
Expiration Per Period
as of December 31, 2002
Total
Amounts
Less than 1
1-3
4-5
After 5
Other Commitments
Committed
year
years
years
years
(thousands of constant December 31, 2002 Mexican pesos)
Guarantees
(1)
Ps
1,086,934
Ps
1,069,907
Ps
17,027
—
—
Other Commercial Commitments
(2)
Ps
531,215
Ps
242,917
Ps
192,199
Ps
96,100
—
Total Commitments
Ps
1,618,150
Ps
1,312,824
Ps
209,227
Ps
96,100
—
(1)
See Item 4.A. "Information on the Company––Tamsa––Investments in Other
Companies––Amazonia and Comsigua".
(2)
Represents Tamsa's off-balance sheet commitments under its contract with
Comsigua to purchase HBI and its contract with Pemex for the supply of
natural gas. For a description of these arrangements, see Item 4.B
"Information on the Company—Tamsa—Raw Materials and Energy".
Critical Accounting Policies and Estimates
Tamsa's operating and financial review and prospects are based on Tamsa's
audited consolidated financial statements, which have been prepared in
accordance with Mexican GAAP. The use of Mexican GAAP as opposed to U.S. GAAP
has an impact on Tamsa's critical accounting policies and estimates. The
application of U.S. GAAP would have affected the determination of consolidated
net income for the periods ended December 31, 2001, and December 31, 2002, and
the determination of consolidated shareholders' equity and consolidated
financial position as of December 31, 2001 and December 31, 2002. Note 12 to
the audited consolidated financial statements provides a reconciliation to U.S.
GAAP of Tamsa's results of operations, shareholders' equity and certain other
selected financial data.
The preparation of these financial statements requires Tamsa to make
certain estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, Tamsa evaluates its estimates, including
those related to bad debts, valuation of long-lived and intangible assets,
long-term investments reserve for obsolescence, income taxes, deferred income
taxes and environmental contingencies. Tamsa bases its estimates on historical
experience and on various other assumptions that it believes to be reasonable
under the circumstances. These estimates form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.
Tamsa believes the following critical accounting policies and estimates
affect its more significant judgments and estimates used in the preparation of
its audited consolidated financial statements.
Allowance
for Doubtful Accounts.
Tamsa evaluates the collectibility of
its accounts receivable based on a combination of factors. In circumstances
where Tamsa is aware of a specific customer's inability to meet its financial
obligations to it (e.g., bankruptcy filings, substantial down-grading of credit
scores), Tamsa records a specific reserve for bad debts against outstanding
amounts to reduce the net recognized receivable to the amount it reasonably
believes will be collected. For all other customers, Tamsa performs ongoing
credit evaluations based upon its analysis of historical bad debts, customer
concentrations, customer credit worthiness, current economic trends and changes
in customer payment terms, as determined by its review of their current credit
information.
While, based on Tamsa's experience, losses due to credit failures have
been within expectations and the provisions established, if circumstances
change (i.e., higher than expected defaults or an unexpected material adverse
change in a major customer's ability to meet its financial obligation to
Tamsa), management's estimates of the recoverability of amounts due to it could
be reduced by a material amount. In this case, Tamsa's results of operations,
financial condition and net worth would be materially and adversely affected.
Inventory
Obsolescence Reserve.
Tamsa's management also creates provisions
for obsolete or unmarketable inventory equal to the difference between the cost
of inventory and the estimated market value based upon inventory turnover
levels and assumptions about future demand and market conditions. If actual
future demand or market conditions are less favorable than those projected by
management, additional inventory write-downs may be required.
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While, based on Tamsa's experience, losses due to obsolescence and scrap
of inventory have been within expectations and the provisions established, if
circumstances change (i.e., significant changes in the technology used in the
mills), management's estimates of the recoverability of these inventories could
be reduced by a material amount. In this case, Tamsa's results of operations,
financial condition and net worth would be further materially and adversely
affected.
Impairment
of Long-Term Investments.
Tamsa holds minority interests in
non-publicly traded companies (whose value is difficult to determine) having
operations in areas related to its main activity. Tamsa records an investment
impairment charge when it believes an investment has experienced a decline in
value that is other than temporary. Future adverse changes in market conditions
or poor operating results of these investments could result in losses or an
inability to recover the carrying value of the investments that may not be
reflected in an investment's current carrying value, thereby possibly requiring
an impairment charge in the future. As a consequence of certain adverse
economic and operating factors experienced by Amazonia, Tamsa recorded an
allowance of Ps154,688 thousand as of December 31, 2001, to account for
potential losses in the value of its investment and subordinated convertible
debentures in Amazonia, which was applied against equity in Amazonia's 2002
results.
Accounting
for Income Taxes.
As part of the process of preparing its
consolidated financial statements, Tamsa is required to estimate its income
taxes in each of the jurisdictions in which it operates. This process involves
estimations of Tamsa's actual current tax exposure together with assessing
temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and
liabilities, which are included within Tamsa's consolidated balance sheet.
Tamsa must then assess the likelihood that its deferred tax assets will be
recovered from future taxable income and to the extent it believes that
recovery is not likely, it must establish a valuation allowance. To the extent
Tamsa establishes a valuation allowance or increases this allowance in a
period, Tamsa must include an expense within the tax provision in the statement
of operations.
Significant management judgment is required in determining a provision for
income taxes, deferred tax assets and liabilities and any valuation allowance
recorded against net deferred tax assets. Tamsa has recorded a valuation
allowance of Ps61,497 thousand as of December 31, 2001, and Ps77,188 thousand
as of December 31, 2002 due to uncertainties related to its ability to utilize
certain deferred tax assets, primarily consisting of tax losses of Tavsa
carried forward, before they expire. The valuation allowance is based on
estimates of taxable income and the period over which deferred tax assets will
be recoverable. In the event that actual results differ from these estimates or
Tamsa adjusts these estimates in future periods, Tamsa may need to establish an
additional valuation allowance which could impact its financial position and
results of operations.
Provision
for Environmental Contingencies.
The risk of incurring
environmental liability is inherent to Tamsa's industry. Management
periodically evaluates Tamsa's environmental risks associated with its
manufacturing activities and recognizes provisions to cover possible
environmental contingencies. Tamsa recorded a liability for environmental
contingencies amounting to Ps84,721 thousand as of December 31, 2001, and
Ps97,650 thousand as of December 31, 2002, which will be mainly used to confine
the scrap derived from its steel manufacturing process. Tamsa does not foresee
that compliance with the requirements imposed by applicable environmental
legislation will impair its competitive capability or result in any material
additional capital expenditures or operating or maintenance costs.
Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed.
Long-lived assets and intangibles are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less the cost
to sell.
Pursuant to SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, we periodically evaluate long-lived assets, including
property, plant and equipment and definite lived intangible assets whenever
events or changes in conditions may indicate that the carrying value may not be
recoverable. Factors that management considers important that could initiate an
impairment review include the following:
•
significant operating losses;
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•
significant declines in demand for a product whereby an
asset is only able to produce that product;
•
assets that are idled;
and
•
assets that are likely to be divested.
The impairment review requires management to estimate future undiscounted
cash flows associated with an asset or group of assets and sum the estimated
future cash flows. If the future undiscounted cash flows is less than the
carrying amount of the asset, then we must estimate the fair value of the
asset. If the fair value of the asset exceeds the carrying value then the
difference will be written-off. Estimating future cash flows requires
management to make judgments regarding future economic conditions, product
demand and pricing.
Net Income and Total Shareholders' Equity Information on a U.S. GAAP Basis
Tamsa's audited consolidated financial statements have been prepared in
accordance with Mexican GAAP, which, as applied to Tamsa, differ in certain
respects from U.S. GAAP.
Tamsa's net income under U.S. GAAP was Ps1,381,633 thousand in 2002,
Ps734,766 thousand in 2001 and Ps500,536 thousand in 2000, respectively. The
principal differences between Mexican GAAP and U.S. GAAP that affected Tamsa's
results of operations were due to:
•
the basis of Tamsa's investments in Amazonia and Tavsa;
•
deferred employees' statutory profit sharing;
•
adjustments to the annual depreciation of foreign machinery and equipment;
•
revenue recognition;
•
purchase accounting, which had an effect on the accounting for the acquisition of Tavsa;
•
deferred income tax;
•
the minority interest effect of
the adjustments;
and
•
capitalization of interest.
For additional information regarding the reconciliation of consolidated
net income and shareholders' equity and the analysis of changes in
shareholders' equity, see note 12 to Tamsa's audited consolidated financial
statements.
Recent Events
On March 31, 2003, Tenaris announced that it intends to cause the
delisting of Tamsa from the Mexican Stock Exchange and the American Stock
Exchange, the termination of Tamsa's ADR facility and, if and when appropriate,
the termination of Tamsa's registration with the SEC. Following its delisting
from the Mexican Stock Exchange, Tamsa will no longer be required to have
independent directors and is expected not to have any independent directors in
the future. Tenaris also announced that, subject to the approvals of the U.S.
and Mexican securities regulators, it intends to propose an exchange of its
shares and ADSs for any Tamsa shares and ADSs not held by Tenaris or its
affiliates in accordance with Mexican and U.S. laws. Tenaris stated that it did
not expect to obtain the requisite approvals, and consequently be in a position
to propose any exchange of shares and ADSs, prior to June 2003. On April 30,
2003, Tamsa's shareholders' meeting gave the requisite approvals to effect such
exchange.
On April 30, 2003, Tamsa's shareholders' meeting approved a proposal for
the payment of a dividend of USD0.08748 per share or USD0.4374 per ADR (each
ADR representing five shares) and the creation of a reserve for future
dividends in the amount of USD70 million and delegated to Tamsa's board of
directors the power to declare and pay any dividends against this reserve,
unless otherwise resolved by a subsequent shareholders' meeting. No assurances
are given as to if or when such dividends will be declared or paid.
In addition, Tamsa's shareholders' meeting on April 30, 2003 approved the
reduction of Tamsa's capital stock by 3,650,000 shares and an amendment of
Tamsa's By-Laws to allow Tamsa to guarantee obligations of other companies
controlled by Tenaris.
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Tamsa's shareholders' meeting on April 30, 2003 also approved the
delisting of Tamsa's shares from the Mexican Stock Exchange, the termination of
Tamsa's ADR facility and termination of the registration of Tamsa's securities
with the SEC, in each case as soon as practicable in accordance with applicable
law.
On May 30, 2003, the holders of Tamsa's ADSs were notified that the
deposit agreement relating to Tamsa's ADSs had been amended to provide that
each holder of Tamsa ADSs that are outstanding on the expiration date of any
exchange offer by Tenaris or any of its affiliates who has not tendered such
Tamsa ADSs pursuant to such exchange offer will be deemed to have instructed
the depositary to tender the underlying Tamsa shares into such exchange offer
in exchange for the appropriate amount of consideration, and the Tamsa
depositary will do so unless instructed otherwise by Tamsa. The amendment to
the Tamsa deposit agreement will go into effect on June 30, 2003.
On June 10, 2003, Roberto Rocca, the chairman of the board of directors of
Tenaris, our controlling shareholder, and the honorary chairman of San Faustín
N.V., Tenaris's controlling shareholder, passed away. Until June 10, 2003, San
Faustín was ultimately controlled by Mr. Rocca, either directly or through
Rocca & Partners. Following Mr. Rocca's death, San Faustín is controlled by
Rocca & Partners.
On June 23, 2003, Tamsa announced that Amazonia and Sidor reached an
agreement with their financial creditors and the Venezuelan government relating
to the restructuring of Sidor's and Amazonia's financial debt. Under the terms
of the agreements, Sidor's and Amazonia's aggregate financial debt was reduced
from USD1,883 million to USD791 million, certain shareholders of Amazonia
contributed USD133.5 million in cash to Ylopa, for the acquisition and
capitalization of Sidor's and Amazonia's financial debt, the government of
Venezuela increased its participation in Sidor from 30% to 40.3% and all the
guarantees provided by the shareholders of Amazonia with respect to loans made
to Sidor were released and replaced with a security on the fixed assets of
Sidor which, together with the pledges on the shares of Amazonia and the shares
that Amazonia holds in Sidor, were placed in trust for the benefit of Sidor's
financial creditors and the Venezuelan government. In addition, a portion of
Sidor's excess cash (determined in accordance with an agreed-upon formula) will
be applied to repay Sidor's financial debt and the remainder will be
distributed to the Venezuelan government and Ylopa.
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Item 6.     Directors, Senior Management and Employees
A.     Directors and Senior Management
1.
Board
of Directors
Management of our business is vested in a board of directors. Our by-laws
provide that the board of directors will consist of the number of directors
elected by the annual ordinary shareholders' meeting, provided that such number
may not be less than five or more than 20 (of whom one-fourth must be
independent directors as defined under Mexican law). Our by-laws further
provide that an equivalent number of alternate directors be appointed. In the
absence of the principal directors, alternate directors will attend meetings of
the board of directors. Under Mexican law, the board of directors must meet at
least once every three months and may be convened at any time by the chairman
of the board, any of the statutory auditors or one-fourth of the directors. A
majority of the board of directors constitutes a quorum. Resolutions are taken
by the vote of a majority of the members present at the meeting. In the case of
a tie, the chairman or the person replacing him at a particular meeting is
entitled to cast the deciding vote. Board resolutions may also be taken outside
a meeting as long as they are unanimous and are later confirmed in writing.
Directors and alternate directors are appointed at the annual ordinary
shareholders' meeting to serve yearly renewable terms, as decided by the
shareholders. In the event the board is comprised of more than three directors,
shareholders representing at least 10% of the capital stock of listed companies
(such as Tamsa) may appoint at least one of those directors. Our current board
of directors is comprised of 8 directors and 8 alternate directors, each of
whom was appointed at the annual ordinary shareholders' meeting held on April
30, 2003.
The following table sets out our current directors and alternate
directors, their respective positions on the board of directors, their
principal occupation, their years of service as a board member and their years
of birth.
Years as a
Director or
Alternate
Year of
Name
Position
Principal Occupation
Director
Birth
Paolo Rocca
(1)
Chairman
Chief Executive Officer of Tamsa,
Tenaris and the Techint group
10
1952
Adalberto Cortesi
(1)
Vice Chairman
Vice Chairman of the Board
10
1930
Guillermo F. Vogel
Vice Chairman
Vice Chairman of the Board
19
1950
Carlos Abedrop
Director
Private Investor
22
1920
Vincenzo Crapanzano
Director
Executive Vice President and
Managing Director of Tamsa
3
1952
Roberto Einaudi
Director
Chairman Emeritus of Techint Group
51
1906
Gianfelice Rocca
(1)
Director
Chairman of the
board of directors of San Faustín
20
1948
Luis Alberto Aziz
Director
Partner in S.A.I.
Consultores S.C.
6
1966
Cecilia Bilesio
Alternate Director
Assistant to the Chairman of the
Board of Directors and Corporate
Affairs
—
1954
Emilio Paulón
Alternate Director
Private Investor
22
1928
Gerardo Varela
Alternate Director
Chief Financial Officer of Tamsa
4
1947
Alejandro Cervantes Riba
Alternate Director
Private Investor
10
1938
Roberto Altamura
Alternate Director
Managing Director of Techint S.A.
de C.V.
10
1949
Fernando Mantilla
Alternate Director
Secretary of San Faustín
10
1948
Javier Pérez Rocha
Alternate Director
Senior Partner of a Law Firm
15
1941
Hernando Sabau García
Alternate Director
Partner in S.A.I.
Consultores S.C.
—
1953
(1)
Paolo Rocca and Gianfelice Rocca are brothers and are the nephews of
Adalberto Cortesi and the sons of Roberto Rocca.
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Table of Contents
Félix Todd Piñero is the Secretary of the Board of Directors and Francisco
José Muñoz Jiménez is the Assistant Secretary of the Board of Directors.
Under amendments to the Mexican Securities Market Law, the board of
directors' approval is required for related party transactions not in the
ordinary course of business, purchases and sales of 10% or more of Tamsa's
total assets, the granting of guarantees in an amount exceeding 30% of Tamsa's
total assets, and all other transactions involving an amount greater than 1% of
Tamsa's total assets.
Under Mexican law, members of the board of directors shall have the duties
and responsibilities inherent to their position and those imposed upon them by
the terms of the company's by-laws. Our directors are jointly liable to us for
the absence of shareholder capital contributions, any breach of applicable law
or our by-laws in regards to the payment of dividends, transactions that
require specific board approval as described above, the absence of mandatory
accounting, control, information and recording systems and the lack of
implementation of shareholder resolutions.
Causes of action against directors may be initiated by us upon resolution
of our shareholders' meeting or by 15% of our shareholders, as long as, in the
latter case, such enforcement is for the total amount for which the directors
are liable, and the promoting shareholders did not vote not to proceed against
the directors. A director will not be liable notwithstanding his presence at
the meeting where the respective resolution was passed if the director opposed
the relevant resolution.
Any director whose interests may in any way be in conflict with the
interests of Tamsa must make such situation known to the remaining directors
and abstain from voting in any matter related to such transaction. There are
no service contracts between any director and Tamsa or any of its subsidiaries
that provide for benefits upon termination of employment; Tamsa's directors,
however, may be entitled to certain benefits under Mexican law upon termination
of employment.
In accordance with recent amendments to the Mexican Securities Market Law,
the board of directors must constitute an audit committee comprised of members
of the board of directors, the chairman and majority of which must be
independent directors. The statutory auditors must attend as guests, with the
right to express their opinion but without the right to vote. The audit
committee is required to issue a report to be submitted to the general
shareholders' meeting.
On May 10, 2002, an Audit Committee was created in accordance with the
Mexican Securities Law. The Audit Committee is comprised of three members of
the Board of Directors (Luis Alberto Aziz as Chairman, Emilio Paulon and Gerardo
Varela), the majority of which, including the chairman, are independent
Directors. The statutory auditors must attend as guests, with the right to
express their opinion but without the right to vote. The Audit Committee is
required to issue a report to be submitted to the general shareholders'
meeting.
The
Audit Committee's duties
include, among others, to assist the board of directors in the
fulfillment of its oversight responsibilities with respect to the
financial statements, the system of internal controls, the accounting
policies and procedures and the audit process. In addition, the Audit
Committee will perform other duties entrusted to it by the board of
directors, particularly with respect to relations with the
independent auditors.
2.
Statutory
Auditors
Our by-laws require the appointment of at least one statutory auditor and
one alternate statutory auditor. According to Mexican law, shareholders
representing at least 10% of the capital stock of listed companies (such as
Tamsa) may appoint one of those statutory auditors.
The primary responsibilities of the statutory auditors are to monitor the
performance of our board of directors and our management and report to the
shareholders at the annual ordinary shareholders' meeting regarding the
accuracy and reasonableness of the board of directors' annual report. The
statutory auditors are also authorized to:
•
call ordinary or extraordinary shareholder meetings;
•
attend all shareholder, board of directors or audit committee meetings; and
•
generally monitor our affairs.
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Table of Contents
There is currently one statutory auditor and one alternate statutory
auditor, each of whom was appointed at our annual ordinary shareholders'
meeting held on April 30, 2003. The following table sets out the current
statutory auditors, the position currently held by each of them and the years
of service as statutory and alternate statutory auditors.
Years as
a Member or Alternate
Name
Position
Member
Enrique Osorno Heinze
Statutory Auditor
4
Juan Manuel Cárdenas López
Alternate Statutory Auditor
2
3.
Senior
Management
Our executive officers, their respective positions and their years of
service with us are as follows:
Name
Position
Years as an Executive Officer
Cecilia Bilesio
Assistant to the Chairman
of the Board of Directors
and Corporate Affairs
7
Vincenzo Crapanzano
Executive Vice President and
Managing Director
3
Sergio de la Maza
Domestic Sales Director
2
Marcelo de Virgiliis
Export Sales Director
—
Claudio Gugliuzza
Administrative Director
4
Gustavo Kehr
Director of Operations
4
Héctor Quintanilla
Quality Director
8
Julio Eduardo Stulich
Logistics Director
3
Félix Todd Piñero
Legal Director
10
Gerardo Varela
Chief Financial Officer
11
Roberto Vilate
Technical Director
3
Cecilia
Bilesio.
Ms. Bilesio currently serves as Assistant to the
Chairman of the Board of Directors and Corporate Affairs of Tamsa. From 1984 to
1986, Ms. Bilesio worked for Techint Inc. in New York where she was in charge
of negotiating financings for Siderca's plant expansion project. From 1986 to
1996, Ms. Bilesio managed her own firm dedicated to the export business between
Mexico and the United States. In 1996, she assumed her current position with
Tamsa. Ms. Bilesio was born on September 12, 1954.
Vincenzo
Crapanzano.
Mr. Crapanzano currently serves as Director,
Executive Vice President and Managing Director of Tamsa. Prior to joining
Tamsa, he held various positions at Grupo Falck from 1979 to 1989. When Dalmine
acquired Grupo Falck in 1990, he was appointed managing director of the cold
drawn tubes division. He assumed his current position with Tamsa in 2000. Mr.
Crapanzano was born on September 12, 1952.
Sergio
de la Maza.
Mr. de la Maza currently serves as Domestic Sales
Director of Tamsa. He first joined Tamsa in 1980. From 1983 to 1988, Mr. de la
Maza worked for Dalmine. He then became manager of Tamsa's new pipe factory and
later served as Manufacturing Manager and Quality Director of Tamsa.
Subsequently, he was named Manufacturing Director of Siderca. In 2001, he
assumed his current position with Tamsa. Mr. de la Maza was born on June 16,
1956.
Marcelo
de Virgiliis.
Mr. de Virgiliis currently serves as Director of
Tenaris Line Pipe Services Global Business. He began his career with the
Tenaris companies in 1983, when he joined the financial planning division of
Propulsora Siderúrgica (now Siderar). In 1986, he was assigned to the
commercial department of Siat. He held various positions at Siat and
ultimately, in 1999, was appointed General Manager of Siat. In 2003, he
assumed his current position in Tamsa. Mr. de Virgiliis was born on July 20,
1959.
Claudio
Gugliuzza.
Mr. Gugliuzza currently serves as Administrative
Director of Tamsa. He joined Siderca in 1988 as operative auditor. In 1994,
he joined Tamsa in the internal audit department and later became responsible
for financial planning and commercial planning. In 1999, he was named
Administrative Manager and in 2001, Administrative Director of Tamsa. Mr.
Gugliuzza was born on April 25, 1966.
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Table of Contents
Gustavo Kehr.
Mr. Kehr currently serves as Director of Operations of
Tamsa. He started his career with the Tenaris companies in 1980. In 1981, he
joined Siderca as process engineer and later worked as a member of the team in
charge of starting up the rolling mill operations. In 1993, he became rolling
mill manager. In 1999, he joined Tamsa as pipe factory manager and in 2000, he
assumed his current responsibilities. Mr. Kehr was born on February 11, 1957.
Héctor
Quintanilla.
Mr. Quintanilla currently serves as Quality Director
of Tamsa. He joined Tamsa in 1983 as head of quality control of melt shop,
sponge iron and round bar rolling mill. He served as product engineering
manager from 1994 until 2000, when he assumed his current responsibilities.
Mr. Quintanilla was born on December 12, 1955.
Julio
Eduardo Stulich.
Mr. Stulich currently serves as Logistics Director
of Tamsa. He began his career with the Tenaris companies in 1989, when he
joined the production division of seamless steel pipes at Siderca. He held
various positions at Siderca and ultimately was appointed head of planning and
production programming. In 1999, he left Siderca and joined Tamsa. Mr.
Stulich was born on May 25, 1959.
Félix
Todd Piñero.
Mr. Todd currently serves as Secretary of the Board
and Legal Director of Tamsa. He joined Tamsa in 1993 as internal legal
counsel. Prior to joining Tamsa, he was legal counsel for Union Carbide
Mexicana, S.A. de C.V. (from 1988 to 1993) and Colgate Palmolive, S.A. de C.V.
(from 1985 to 1988). Mr. Todd was born on November 15, 1957.
Gerardo Varela.
Mr. Varela currently serves as Alternate Director and
Chief Financial Officer of Tamsa. Prior to joining Tamsa in 1992, Mr. Varela
was Chief Financial Officer of Grupo Aluminio from 1982 to 1992. Mr. Varela
also worked at Eastman Kodak Company in Rochester, New York from 1980 to 1982
and at Kodak Mexicana from 1969 to 1980 in the corporate finance and planning
department where he held the position of Chief Financial Officer. Between 1963
and 1969, Mr. Varela worked at Bancomer in the internal control and auditing
department. Mr. Varela received a M.S. in Systems and Planning from
Universidad Iberoamericana in 1980, and an M.B.A. from Syracuse University in
1975. Mr. Varela is a certified public accountant with the B.A. degree from
the National Autonomous University of Mexico. Mr. Varela was born on September
25, 1947.
Roberto
Vilate.
Mr. Vilate currently serves as Technical Director
of Tamsa. He was first employed with the Tenaris companies in 1969. From 1978
to 1982, Mr. Vilate worked as an independent consultant for the Argentine
Nuclear Plan in Bariloche, Argentina. He rejoined the Tenaris companies in 1982
and in 1998 was assigned to the technical division of Siderca, Siat, Tamsa and
Tavsa. In 2000, he assumed his current position with Tamsa. Mr. Vilate was born
on September 10, 1940.
B.
Compensation
The compensation of the directors and statutory auditors is determined at
the annual ordinary shareholders' meeting.
For fiscal year 2002, the aggregate compensation of all our directors,
alternate directors, statutory and alternate statutory auditors and executive
officers paid or accrued in such year for services in all capacities was
approximately Ps63.5 million.
C.
Board Practices
See Item 6.A. "Directors, Senior Management and Employees—Directors and
Senior Management."
D.
Employees
See Item 4. "Information on the Company—Tamsa—Employees."
E.
Share Ownership
As of May 30, 2003, none of our directors, alternate directors, statutory
and alternate statutory auditors or executive officers owned any shares in
Tamsa.
57
Table of Contents
Item 7.
Major Shareholders and Related Party Transactions.
A.
Major Shareholders
The following table shows the current beneficial ownership of our shares,
as of May 30, 2003, by (a) our principal shareholders (persons or entities that
own beneficially 5% or more of our shares), (b) our directors, alternate
directors, members and alternate member of the supervisory council and
executive officers as a group and (c) non-affiliated public shareholders.
Identity of Person or Group
Number
Percent
Tenaris S.A.
320,414,223
94.44
Directors, alternate directors, members and
alternate member of the supervisory council and
executive officers, as a group
—
—
Public
18,869,897
5.56
Total
339,284,120
100.00
As of
June 17, 2003, 3,698,211 ADSs were registered in the name of
1,483 holders resident in the United States.
As of
October 18, 2002, Tenaris held, directly or indirectly through
Siderca,
approximately 50.77% of Tamsa's outstanding capital stock. On November 11,
2002, Tenaris launched an exchange offer for all the remaining outstanding
shares and ADSs of Tamsa. After consummation of that exchange offer on December
17, 2002, Tenaris held, directly or indirectly, 94.50% of Tamsa's outstanding
capital stock. On April 30, 2003, Tamsa cancelled 3,650,000 shares of Tamsa
held by its subsidiary Tamsider and, as a result, Tenaris's ownership of
Tamsa's outstanding capital stock was reduced to 94.44%, which includes 44.3%
of Tamsa's outstanding capital stock held indirectly through its subsidiaries.
As of May 30, 2003, San Faustín N.V., a Netherlands Antilles corporation,
beneficially owned 61.2% of Tenaris's outstanding voting stock. Until June 10,
2003, San Faustín was ultimately controlled by Roberto Rocca, either directly
or through Rocca & Partners. Following Mr. Rocca's death on June 10, 2003, San
Faustín is controlled by Rocca & Partners.
Tamsa is not aware of any person, other than Siderca, Tenaris, San Faustín
or Rocca & Partners, who beneficially owns more than 5% of Tamsa's capital
stock as of the date of this annual report. None of the shares owned by Tenaris
possesses extraordinary voting or other characteristics.
B.
Related Party Transactions
In addition to the related party transactions that arise from the
operation of the Tenaris companies (see Item 4.B. "Information on the
Company—Tenaris") we are not party to other material related party agreements.
C.
Interest of Experts and Counsel
Not applicable.
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Table of Contents
Item 8.
Financial Information
A.
Financial Statements
See Item 17 for Tamsa's audited consolidated financial statements.
B.
Legal Proceedings
See Item 4.A. "Information on the Company—Tamsa—Litigation."
C.
Dividend Policy
Tamsa does not have a formal policy governing the amount and payment of
dividends. The amount and payment of dividends are determined by majority vote
of the shareholders of Tamsa, generally, but not necessarily, on the
recommendation of Tamsa's board of directors. Since our controlling shareholder
beneficially owned 94.44% of the capital stock of Tamsa as of May 30, 2003, it
effectively has and will continue to effectively have the discretion to
determine the amount and payment of future dividends. The payment of future
dividends will also depend on Tamsa's earnings, financial condition and other
factors, including the requirements of Mexican law. All shares of Tamsa's
capital stock rank
pari passu
with respect to the payment of dividends.
Tamsa declared and paid dividends of:
•
fiscal year 2000: USD30 million (or USD0.4374 per share at
the exchange rate of Ps9.7025 per dollar). This amount was paid on
May 31, 2001 in cash.
•
fiscal year 2001: USD30 million (or USD0.08748 per share,
after the stock split, at the exchange rate of Ps9.1182 per dollar).
This amount was paid on May 31, 2002 in cash.
•
fiscal year 2002: USD29.7 million (or USD0.08748 per share,
at the exchange rate of Ps11.0584 per dollar). This amount was paid
on May 15, 2003 in cash.
In addition, on April 30, 2003, Tamsa's shareholders' meeting approved the
creation of a reserve for future dividends in the amount of USD70 million and
delegated to Tamsa's board of directors the power to declare and pay any
dividends against this reserve, unless otherwise resolved by a subsequent
shareholders' meeting. No assurances are given as to if or when such dividends
will be declared or paid.
The board of directors submits the consolidated financial statements of
Tamsa for the preceding fiscal year, together with reports thereon by the
statutory auditor, to the annual ordinary shareholders' meeting for approval.
Holders of Tamsa's ADSs are entitled to vote at any shareholders' meeting that
may resolve on the payment of dividends, except that if Tamsa does not provide
the depositary with the necessary voting materials on a timely basis, such
holders of ADSs might not be able to exercise their voting rights. Tamsa has
never failed to provide voting materials on a timely basis. On or before April
30 of each fiscal year, an ordinary shareholders' meeting must be held to
approve the consolidated financial statements and determine the allocation of
Tamsa's net income for the preceding fiscal year. Under Mexican law, the
shareholders are required to allocate not less than 5% of net income per year
to the legal reserve until the amount of the reserve equals 20% of Tamsa's
subscribed capital stock. If the legal reserve is subsequently reduced,
dividends may not be paid until the legal reserve has been restored to its
former level. The legal reserve is not available for distribution. At December
31, 2002, Tamsa's legal reserve represented 8.64% of Tamsa's subscribed capital
stock, as adjusted. Under Tamsa's by-laws, after the allocation to the legal
reserve has been made, amounts may be segregated to fund additional reserves as
determined by the shareholders' meeting. The remainder of the retained earnings
for the year may be distributed as dividends on capital stock or retained as a
voluntary reserve, contingency reserve or other account, or any combination
thereof, all as determined by the shareholders at the ordinary shareholders'
meeting. On April 30, 2003, Tamsa's shareholders' meeting approved an increase
of the legal reserve by USD58.9 million.
Owners of Tamsa's ADSs are entitled to receive any dividends payable in
respect of the underlying shares. Cash dividends are paid to the ADS depositary
in U.S. dollars, directly or through a designated paying agent.
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Table of Contents
Item 9.
The Offer and Listing
Our shares are listed on the Mexican Stock Exchange and our ADSs are
listed on the AMEX.
A.
Mexican Stock Exchange
Although Tamsa's shares continue to be listed on the Mexican Stock
Exchange, following the announcement of the results of the exchange offer by
Tenaris, described in Item 4. "Information on the Company—Tamsa—Introduction"
and "Information on the Company—Tenaris—General," there have been no
transactions with respect to Tamsa's shares on the Mexican Stock Exchange.
Set forth in the following table are reported high and low trade prices
(in nominal Mexican pesos per share) of our shares on the Mexican Stock
Exchange for the stated periods. For comparative purposes, the amounts shown
below have been adjusted retroactively to reflect the stock split that occurred
in July 2001.
Price per Share
High
Low
2003
First quarter
(1)
16.50
16.50
2002
First quarter
19.52
15.91
Second quarter
20.50
17.50
Third quarter
19.45
16.15
Fourth quarter
(1)
19.80
16.50
2001
First quarter
31.00
20.64
Second quarter
25.00
19.80
Third quarter
24.10
17.20
Fourth quarter
20.80
14.35
2000
First quarter
31.60
23.80
Second quarter
30.80
22.57
Third quarter
32.70
25.82
Fourth quarter
31.98
23.46
1999
First quarter
17.32
12.36
Second quarter
22.80
16.72
Third quarter
23.60
17.40
Fourth quarter
26.66
20.00
1998
First quarter
34.78
25.60
Second quarter
31.50
23.00
Third quarter
24.60
9.40
Fourth quarter
19.60
12.80
Price per Share
High
Low
Last Six Months
(1)
December 2002
18.80
16.50
January 2003
16.50
16.50
February 2003
16.50
16.50
March 2003
16.50
16.50
April 2003
16.50
16.50
May 2003
16.50
16.50
(1)
Following the announcement, on December 16, 2002, of the results of the
exchange offer by Tenaris, described in Item 4. "Information on the
Company—Tamsa—Introduction" and "Information on the
Company—Tenaris—General," there have been no transactions with respect to
Tamsa's shares on the Mexican Stock Exchange.
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Table of Contents
On December 13, 2002, the last full trading day on which Tamsa's shares
were traded on the Mexican Stock Exchange, the closing sales price for our
shares was Ps16.50. As of May 30, 2003, there were 339,284,120 issued and
outstanding shares of common stock of Tamsa, including 18,513,280 shares
deposited with Banco Nacional de México, S.A., Institución de Banca Múltiple,
Grupo Financiero Banamex Accival, or Banamex, as agent for JPMorgan Chase Bank,
formerly known as Morgan Guaranty Trust Company of New York (the "Depositary"),
as depositary under the Deposit Agreement dated January 1, 1964 as amended and
restated as of June 1, 1991, October 15, 1991, July 1, 1993 and September 12,
1996 and amended as of July 9, 2001 and May 28, 2003 (the "Deposit Agreement"),
among Tamsa, the Depositary and all holders from time to time of Tamsa's ADSs.
On March 31, 2003, Tenaris announced that it intends to cause the
delisting of Tamsa from the Mexican Stock Exchange and the American Stock
Exchange, the termination of Tamsa's ADR facility and, if and when appropriate,
the termination of Tamsa's registration with the SEC. Following its delisting
from the Mexican Stock Exchange, Tamsa will no longer be required to have
independent directors and is expected not to have any independent directors in
the future. Tenaris also announced that, subject to the approvals of the U.S.
and Mexican securities regulators, it intends to effect an exchange of its
shares and ADSs for any Tamsa shares and ADSs not held by Tenaris or its
affiliates in accordance with Mexican and U.S. laws. Tenaris stated that it did
not expect to obtain the requisite approvals, and consequently be in a position
to propose any exchange of shares and ADSs, prior to June 2003. On April 30,
2003, Tamsa's shareholders' meeting gave the requisite approvals to effect such
exchange.
As of May 30, 2003, 320,414,223 shares of common stock (representing
94.44% of the total capital stock of Tamsa) had been registered with the
National Foreign Investment Registry maintained by the SECON as being owned by
Tenaris or by its direct or indirect subsidiaries.
Tamsa is a 49.0% shareholder of Sidtam, a limited liability company
organized under the laws of the British Virgin Islands. Siderca holds the
remaining 51.0% of the capital stock of Sidtam. The purpose of Tamsa's
investment in Sidtam is to participate in different types of investment
projects including, among others, the purchase of shares of Tamsa. Tamsa's
board of directors has authorized a capital contribution to Sidtam in an amount
sufficient for Tamsa to participate proportionately in the purchase by Sidtam
of two million shares of Tamsa's capital stock. As of December 31, 2002, Sidtam
held 9,700,000 shares of Tamsa.
On March 2, 2001, Tamsa's board of directors proposed a five-for-one stock
split. Tamsa's shareholders approved at the extraordinary shareholders' meeting
held on April 27, 2001 the five-for one stock split effective as of July 10,
2001. As a result, holders received five shares for each share held by them.
Additionally, a modification of the ratio of ADSs to shares, from one ADS for
each share to one ADS for each five shares, was approved. The increase in the
number of shares issued and outstanding did not modify the capital stock. Tamsa
issued 342,934,120 shares in exchange for the then outstanding 68,586,824
shares. New shares issued as a result of the stock split have the same rights
as the shares then issued and outstanding.
On March 19, 2002, the board of directors of Tamsa recommended a proposal
for a dividend payment in the amount of USD30 million or USD0.08748 per share
at the exchange rate of Ps9.1182 per dollar. Tamsa's shareholders approved the
dividend payment at the annual ordinary shareholders' meeting held on April 30,
2002. The record date for such dividend payment was May 30, 2002.
On February 28, 2003, the board of directors of Tamsa recommended a
proposal for a dividend payment in the amount of USD29.7 million, or USD0.08748
per share at the exchange rate of Ps11.0584 per dollar, for the creation of a
reserve for future dividends of USD70 million, and a reduction of Tamsa's
capital stock by 3,650,000 shares, to be submitted for approval at the general
shareholders' meeting to be held on April 30, 2003. Tamsa's shareholders
approved these proposals at the annual ordinary shareholders' meeting held on
April 30, 2003. The record date for such dividend payment was May 14, 2003, and
the dividend was paid on May 15, 2003 in cash.
The Mexican Stock Exchange is the only stock exchange in Mexico. It is
organized as a corporation whose shareholders are the only entities authorized
to trade in securities listed on the Exchange. Trading on the Mexican Stock
Exchange is conducted electronically from 8:30 A.M. to 3:00 P.M. each business
day.
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Table of Contents
Although the Mexican Stock Exchange is one of Latin America's largest
securities exchanges in terms of market capitalization, it remains relatively
small and illiquid compared to major world markets, and, therefore, subject to
greater volatility. Investors in the Mexican Securities Market are mostly
individuals, mutual and pension funds and companies.
B.
American Stock Exchange
As of May 30, 2003, a total of 3,702,656 ADSs were registered of record.
This represents a decline from the 25,066,719 ADSs that were registered of
record as of May 30, 2002. This decline was primarily due to the consummation
on December 17, 2002 of the exchange offer by Tenaris described in Item 4.
"Information on the Company—Tamsa—Introduction" and "Information on the
Company—Tenaris—General." JPMorgan Chase Bank, formerly known as Morgan
Guaranty Trust Company of New York, acts as depositary for issuing ADRs
evidencing the ADSs. Fluctuations between the Mexican peso and the U.S. dollar
will affect the U.S. dollar equivalent of the price of the shares on the
Mexican Stock Exchange and the price of the ADSs on the AMEX. On June 24, 2003,
the closing sales price of our ADSs on the AMEX was USD13.10.
Price per ADS
(in U.S. dollars)
High
Low
2003
First quarter
11.40
9.65
2002
First quarter
10.70
8.65
Second quarter
11.00
9.20
Third quarter
9.95
8.25
Fourth quarter
9.76
8.38
2001
First quarter
16.25
10.80
Second quarter
13.89
10.01
Third quarter
13.25
9.00
Fourth quarter
11.25
7.85
2000
First quarter
16.88
12.38
Second quarter
16.38
12.19
Third quarter
17.44
13.69
Fourth quarter
16.94
12.57
1999
First quarter
9.00
6.00
Second quarter
12.44
8.56
Third quarter
12.56
9.13
Fourth quarter
14.38
10.44
1998
First quarter
21.13
15.31
Second quarter
19.00
12.19
Third quarter
13.63
4.50
Fourth quarter
9.88
6.38
Price per ADS
High
Low
Last Six Months
December 2002
9.57
8.38
January 2003
11.39
9.65
February 2003
10.95
10.50
March 2003
11.40
10.45
April 2003
12.30
10.70
May 2003
12.61
11.00
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Table of Contents
Item 10.
Additional Information
The following is a summary of the rights of the holders of our shares.
These rights are set out in our
estatutos sociales
(by-laws) or are provided
for by applicable Mexican law. This summary does not contain all information
that may be important to you. For more complete information, you should read
our by-laws, which are attached as an exhibit to this annual report.
A.
Share Capital
Not applicable.
B.
Memorandum and Articles of Association
1.
Shareholders' Liability
A shareholder's liability under Mexican law for losses of a company is
limited to the value of its shareholdings in the company. Shareholders of
Mexican companies are not liable for further capital calls.
2.
Registration and Transfer
Tamsa's shares may only be held in book-entry form through an intermediary
participating in S.D. Indeval, S.A. de C.V.
Institución para el Depósito de
Valores
, or Indeval. The Depositary through Banamex, which maintains an account
with Indeval, holds the shares underlying Tamsa's ADSs.
3.
Voting Rights
Under Tamsa's by-laws, each share entitles the holder thereof to one vote
at any shareholders' meeting.
Attendance of at least 50% of the outstanding shares of common stock is
required to hold an ordinary shareholders' meeting pursuant to a first call and
action may be taken by a majority of the shares present. If a quorum is not
available, a second meeting may be called at which action may be taken by a
majority of the shares present regardless of the number of shares present.
Attendance of at least 75% of Tamsa's outstanding shares of common stock
is required to hold an extraordinary shareholders' meeting pursuant to a first
call. If a quorum is not available, a meeting may be held pursuant to a second
call. The quorum for such second meeting is 50% of the outstanding shares of
common stock and action may be taken by a vote of not less than 50% of the
outstanding shares of common stock.
Under Tamsa's by-laws and in accordance with the Mexican Securities Market
Law, holders of 10% of Tamsa's outstanding capital stock may request that a
vote on any action be delayed on the grounds that the shareholders have not
received sufficient information on which to base their decision. Also, holders
of 20% of Tamsa's outstanding capital stock may have any shareholder action set
aside by filing a complaint with a court of law within fifteen days after the
close of the meeting at which such action was taken and showing that the
challenged action violates Mexican law or Tamsa's by-laws.
4.
Shareholders' Meetings
General shareholders' meetings may be ordinary meetings or extraordinary
meetings. Extraordinary general meetings are those called to consider certain
matters specified in Article 182 of the Mexican General Corporate Law
including, principally, amendments of the by-laws, liquidation, merger and
transformation from one type of company to another. General meetings called to
consider all other matters are ordinary meetings. An annual ordinary general
meeting must be held each year to consider the approval of the consolidated
financial statements for the preceding fiscal year, allocate profits, if any,
from such preceding fiscal year, appoint directors and stockholders' examiners
and determine their compensation.
Shareholders' meetings may be called by the board of directors or the
stockholders' examiners and shall be called by the board or the stockholders'
examiners at the written request of the holders of 10% of Tamsa's outstanding
capital stock. Notice of meetings must be published in the official gazette of
Tamsa's corporate domicile
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or in a newspaper of general circulation in Tamsa's corporate domicile and
in a newspaper of general circulation in New York City at least fifteen days
prior to the meeting and, if deemed advisable by the board, in other Mexican
and foreign newspapers. Meetings must be held at Tamsa's corporate domicile. In
order to attend a meeting, shareholders must deposit their shares at Tamsa's
offices, corporate domicile, at Indeval or with a Mexican or foreign banking
institution as specified in the call itself. If so entitled to attend the
meeting, a shareholder may be represented by proxy.
5.
Dividends
See Item 8.C. "Financial Information—Dividend Policy."
6.
Capital Increases and Reductions
Our capital stock may be increased by resolution of an extraordinary
shareholders' meeting unless such increase is a consequence of the conversion
of previously issued convertible debentures. Capital increases require an
amendment of Tamsa's by-laws, and must be registered with the Public Registry
of Commerce. Increases in Tamsa's capital stock through a public offering of
shares requires approval from the
Comisión Nacional Bancaria y de Valores
, or
Mexican National Banking and Securities Commission or CNBV. Reductions of
Tamsa's capital stock must be approved at an extraordinary shareholders'
meeting and must be registered in the Public Registry of Commerce.
7.
Rights
Holders of common stock, including common stock held in the form of ADSs,
except in the case of the issuance of treasury shares to be held for exchange
of convertible securities, and except in the case of common stock issued in
connection with a public offering as described below, have pre-emptive rights
to subscribe for new shares of capital stock of the class they hold, in
proportion to the number of such shares held. Pre-emptive rights may be
exercised after publication in the official gazette of Tamsa's corporate
domicile of a notice of the proposed issuance of additional capital stock and
the period for exercise must be at least fifteen days. Under Mexican law,
pre-emptive rights cannot be represented by an instrument that is negotiable
separately from the corresponding share.
Pre-emptive rights are provided to holders of common stock by the Mexican
Securities Market Law and the Mexican General Corporate Law and changes to such
rights could be effected only through changes to Mexican law.
8.
Appraisal Rights
Whenever the shareholders approve a:
•
change of corporate purposes;
•
change of nationality of the corporation;
•
transformation from one type of company to another;
or a
•
spin-off of the company,
any shareholder entitled to vote on such change who has voted against it may
withdraw from the company and receive the book value attributable to its
shares, provided the shareholder requests such action within fifteen days
following the adjournment of the meeting at which the change was approved.
9.
Liquidation
Upon dissolution of Tamsa, liquidation of Tamsa's business will be carried
out by one or more liquidators appointed by the shareholders to wind up Tamsa's
affairs. In the event of liquidation, Tamsa's assets will be applied to satisfy
its debts and liabilities. Any remaining amounts will be distributed to Tamsa's
shareholders in proportion to their respective shareholdings.
10.
Redemption and Repurchase
Tamsa's shares are subject to redemption in connection with a reduction in
capital by majority vote of shareholders at an extraordinary shareholders'
meeting. Redeemed shares shall be determined by lottery. Any shares so redeemed
must be canceled. Tamsa may repurchase its shares through purchases on the
Mexican Stock Exchange in accordance with applicable provisions of Mexican law.
Tamsa may not exercise the corporate rights of shares it
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Table of Contents
has repurchased, which shall not be considered outstanding for purposes of
determining a quorum or for voting at shareholders' meetings.
11.
Exclusive Jurisdiction
Tamsa's by-laws are governed by Mexican law and any action relating to
enforcement of Tamsa's by-laws or shareholder's rights thereunder is required
to be brought in a Mexican court.
12.
Duration and Purpose
Under Tamsa's by-laws, our duration is 90 years counted as of April 30,
1997. Tamsa's duration may be extended by shareholder approval at an
extraordinary shareholders' meeting.
Tamsa's corporate purpose is the manufacture, purchase, sale and
distribution of steel, iron and any other kind of metal and metal-pipe,
especially seamless pipe; the participation, by itself or with third parties,
in industrial and commercial companies engaged in any activities similar,
related or supplementary activities to those mentioned above; the rendering of
technical and administrative services related to the corporate purpose, such as
services connected with the distribution and sale of pipes and the assistance
to users of pipes manufactured by Tamsa, as well as supplementary services,
with the petroleum industry or with other industries using seamless pipe and
support services to suppliers and clients, including financing, technical and
administrative assistance. Further description can be found in Article Two of
Tamsa's By-laws, an English translation of which is an exhibit to this annual
report.
13.
Conflict of Interest
A shareholder that votes on a business transaction involving Tamsa in
which its interest conflicts with Tamsa's interest may be liable for damages,
but only if the transaction would not have been approved without its vote.
14.
Foreign Investment Legislation
Under Mexican law governing foreign investment in Mexico, the purchase of
shares of a Mexican corporation by an individual or legal entity domiciled
abroad or by a Mexican company with a majority of foreign capital constitutes
foreign investment. Currently, foreign investment in companies engaged in the
steel sector is not restricted, and no prior approval is required for foreign
investments. No prior approval is required in order to acquire or exercise any
right under Tamsa's shares or ADSs.
As required by Mexican law, the by-laws of Tamsa provide that "Foreign
individuals or corporations may participate in the capital stock of the
Company, with the limitations as regards proportion and with the obligations
set forth by the applicable laws. Any foreigner who at the time of
incorporation or at any ulterior time, acquires an interest or corporate
participation in the Company shall be considered, by that simple fact as
Mexican regarding one and the other, and it shall be understood that he agrees
not to invoke the protection of his Government under the penalty, in case of
not honoring his commitment, of forfeiting such interest or participation to
the benefit of the Mexican nation."
C.
Material Contracts
For a summary of any material contract entered into by Tamsa or any of its
consolidated subsidiaries outside of the ordinary course of business during the
last two years, see Item 4.A. "Information on the Company—Tamsa " and Item 4.B.
"Information on the Company—Tenaris."
D.
Exchange Controls
See Item 3.E. "Key Information—Exchange Rates."
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E.
Taxation
Mexican Tax Considerations
Dividends
Dividends paid to holders with respect to the shares, including shares
represented by ADSs from retained earnings not previously taxed are subject to
a 51.52% tax payable by Tamsa. Dividends paid from previously taxed retained
earnings are not subject to any income tax payable by Tamsa. Since January 1,
2002, the dividends paid to shareholders of Tamsa have not been subject to a
withholding tax.
Other
Gain or loss on the sale or other disposition of ADSs, whether or not held
by Mexican residents, will not be subject to Mexican tax. Deposits of shares in
exchange for ADSs and withdrawals of common stock in exchange for ADSs will not
give rise to Mexican tax or transfer duties.
Gain or loss on the sale of shares will not be subject to any Mexican tax
if the transaction is carried out through the Mexican Stock Exchange or the
AMEX. Gain or loss on sales or other dispositions of common stock made in other
circumstances would be subject to a 34% Mexican tax, regardless of the
nationality or residence of the transferor. As a result of modifications to the
Income Tax Law, approved on January 1, 2002, the current tax rate of 35% will
be decreased by 1% annually beginning in 2003 until it reaches a rate of 32% in
2005.
There are no Mexican inheritance, gift or succession taxes applicable to
the ownership, transfer or disposition of ADSs or shares. There are no Mexican
stamp, issue, registration or similar taxes or duties payable by holders of
ADSs or shares.
Deposits and withdrawals of shares in exchange for ADSs will not be
subject to Mexican federal withholding tax.
The Convention Between the Government of the United States of America and
the Government of Mexico for the Avoidance of Double Taxation with Respect to
Taxes on Income and the Prevention of Fraud or Fiscal Evasion and a Protocol
thereto (the "Treaty") initially came into force on January 1, 1994. The United
States and Mexico have also entered into an agreement that covers the exchange
of information with respect to tax matters. Under the Treaty, a holder that is
eligible to claim the benefits of the Treaty will be exempt from Mexican tax on
gains realized on a sale or other disposition of shares in a transaction that
is not carried out through the Mexican Stock Exchange or other securities
markets approved by the Mexican
Secretaría de Hacienda y Crédito Público
or
Ministry of Finance and Public Credit, so long as the holder did not own,
directly or indirectly, 25% or more of common stock within the 12-month period
preceding such sale or other disposition.
United States Tax Considerations
The following discussion describes the material United States federal
income tax consequences of the ownership of shares or ADSs. It applies to you
only if you are a United States Holder, as defined below, and you hold your
shares or ADSs as capital assets for tax purposes.
This section does not apply to you if you are a member of a special class
of holders subject to special rules, including:
•
a dealer in securities,
•
a trader in securities that elects to use a mark-to-market
method of accounting for your securities holdings,
•
a tax-exempt organization,
•
a life insurance company,
•
a person liable for alternative minimum tax,
•
a person that actually or constructively owns 10% or more of the voting stock of Tamsa,
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•
a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction,
or
•
a person whose functional currency is not the U.S. dollar.
This section is based on the Internal Revenue Code of 1986, as amended,
its legislative history, existing and proposed regulations and published
rulings and court decisions, all as currently in effect, as well as the Treaty.
These laws are subject to change, possibly on a retroactive basis.
In addition, this section is based in part upon the representations of the
Depositary and the assumption that each obligation in the Deposit Agreement and
any related agreement will be performed in accordance with its terms.
For purposes of this discussion, you are a United States Holder if you are
a beneficial owner of shares or ADSs and you are
•
a citizen or resident of the United States,
•
a domestic corporation,
•
an estate whose income is subject to United States federal income tax regardless of its source,
or
•
a trust if a United States court can exercise primary
supervision over the trust's administration and one or more United
States persons are authorized to control all substantial decisions
of the trust.
United States Holders are urged to consult their own tax advisors
regarding the United States federal, state and local and other tax consequences
of owning and disposing of shares or ADSs.
In general, and taking into account the earlier assumptions, for United
States federal income tax purposes, if you hold ADRs evidencing ADSs, you will
be treated as the owner of the shares represented by those ADRs. Exchanges of
shares for ADRs, and ADRs for shares, generally will not be subject to United
States federal income tax.
Taxation of Dividends
Under the United States federal income tax laws, if you are a United
States Holder, the gross amount of any dividend paid by Tamsa out of its
current or accumulated earnings and profits (as determined for United States
federal income tax purposes) is subject to United States federal taxation. If
you are a noncorporate U.S. holder, dividends paid to you in taxable years
beginning after December 31, 2002 and before January 2, 2009 that constitute
qualified dividend income will be taxable to you at a maximum tax rate of 15%
provided that you hold the shares or ADSs for more than 60 days during the
120-day period beginning 60 days before the ex-dividend date and meet other
holding period requirements. Dividends we pay with respect to the shares or
ADSs generally will be qualified dividend income. The dividend is taxable to
you when you, in the case of shares, or the Depositary, in the case of ADSs,
receive the dividend, actually or constructively. The dividend will not be
eligible for the dividends-received deduction generally allowed to United
States corporations in respect of dividends received from other United States
corporations. The amount of the dividend distribution that you must include in
your income as a United States Holder will be the U.S. dollar value of the
Mexican peso payments made, determined at the spot Mexican peso/U.S. dollar
rate on the date the dividend distribution is includible in your income,
regardless of whether the payment is in fact converted into U.S. dollars.
Generally, any gain or loss resulting from currency exchange fluctuations
during the period from the date you include the dividend payment in income to
the date you convert the payment into U.S. dollars will be treated as ordinary
income or loss and will not be eligible for the special tax rate applicable to
qualified dividend income. The gain or loss generally will be income or loss
from sources within the United States for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated earnings and
profits, as determined for United States federal income tax purposes, will be
treated as a non-taxable return of capital to the extent of your basis in your
shares or ADSs and thereafter as capital gain.
Dividends will be income from sources outside the United States, but
generally will be "passive income" or "financial services income" which is
treated separately from other types of income for purposes of computing the
foreign tax credit allowable to you.
Distributions of additional shares to you with respect to shares that are
made as part of a pro rata distribution to all shareholders of Tamsa generally
will not be subject to United States federal income tax.
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Taxation of Capital Gains
If you are a United States Holder and you sell or otherwise dispose of
your shares or ADSs, you will recognize capital gain or loss for United States
federal income tax purposes equal to the difference between the U.S. dollar
value of the amount that you realize and your tax basis, determined in U.S.
dollars, in your shares or ADSs. Capital gain of a noncorporate U.S. holder
that is recognized on or after May 6, 2003 and before January 1, 2009 is
generally taxed at a maximum rate of 15% where the property is held for more
than one year. The gain or loss will generally be income or loss from sources
within the United States for foreign tax credit limitation purposes.
PFIC Considerations
Tamsa does not believe that it will be treated as a passive foreign
investment company, or a "PFIC", for United States federal income tax purposes,
and this discussion so assumes, but that is a factual determination made
annually and therefore may be subject to change. If Tamsa were to be treated as
a PFIC, a United States Holder could be subject to certain adverse tax
consequences.
F.
Dividends and Paying Agents
Not applicable.
G.
Statement by Experts
Not applicable.
H.
Documents on Display
Tamsa is subject to the informational requirements of the CNBV and the
Mexican Stock Exchange and files reports and other information relating to its
business, financial condition and other matters with the CNBV and the Mexican
Stock Exchange. You may read such reports, statements and other information,
including Tamsa's publicly-filed consolidated financial statements, at the
public reference facilities of the National Banking and Securities Commission
and Mexican Stock Exchange maintained in Mexico City. Tamsa is required to file
annual and special reports and other information with the SEC. You may read and
copy any documents filed by Tamsa at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Tamsa's
filings with the SEC are also available to the public at the offices of the
AMEX, 86 Trinity Place, New York, New York 10006.
JPMorgan Chase Bank acts as depositary for Tamsa's ADSs. During the time
there continue to be Tamsa ADSs deposited with the Depositary, Tamsa will
furnish the Depositary with:
•
its annual reports,
and
•
summaries of all notices of general meetings of shareholders
and other reports and communications that are made generally
available to shareholders of Tamsa.
The Depositary will, as provided in the deposit agreement, arrange for the
mailing of summaries in English of such reports and communications to all
record holders of the ADSs of Tamsa. Any record holder of ADSs may read such
reports, notices, or summaries thereof, and communications at the Depositary's
office. The depositary's office is located at 1 Chase Manhattan Plaza, New
York, NY 10081.
Whenever a reference is made in this annual report to a contract or other
document of Tamsa, please be aware that such reference is not necessarily
complete and that you should refer to the exhibits that are a part of the
annual report for a copy of the contract or other document. You may review a
copy of the annual report at the SEC's public reference room in Washington,
D.C.
I.
Subsidiary Information
Not applicable.
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Item 11.
Quantitative and Qualitative Disclosure About Market Risk
The following discussion concerning Tamsa's risk management activities
includes forward contracts and other derivatives that involve risks and
uncertainties. Actual results could differ due to the nature of these financial
transactions. The analysis shown below presents the hypothetical loss/earnings
on the fair value of the financial instruments and derivative instruments which
were held by Tamsa at December 31, 2002 and are sensitive to changes in
interest rates, foreign exchange rates and market prices. Such loss/earnings
are presented using December 31, 2002 constant Mexican pesos and actual amounts
could differ as a result of Mexican GAAP restatement provisions. None of these
instruments are held for trading purposes. In the ordinary course of business,
Tamsa also faces risks with respect to financial instruments that are either
non-financial or non-quantifiable, such risks principally include country risk
and credit risk and are not presented in the following analysis. The risk
analysis does set forth the sensitivity of Tamsa's financial instruments to
selected changes in interest rates, foreign exchange rates or quoted market
prices.
1.
Interest Rate Sensitivity
Tamsa generally does not undertake any specific actions to cover its
exposure to interest rate risk and at December 31, 2002 was not a party to any
interest rate risk management transactions.
The following table provides information about Tamsa's debt obligations as
of December 31, 2002, which included fixed and variable interest rate. The
variable portion of some of these debt obligations was LIBOR and established
fixed spreads. Fair values from the majority of Tamsa's long-term debt
obligations are based on quotes from dealers.
Favorable
Favorable
(Unfavorable)
(Unfavorable)
effect in fair
effect in fair
Carrying
Carrying
Fair value
value Mexican
value U.S.
value (millions
value
(millions of
Fair value
pesos (millions
dollars
of Mexican
(millions of
Mexican
(millions of
of Mexican
(millions of
Financial instrument
pesos)
U.S. dollars)
pesos)
U.S. dollars)
pesos)
U.S. dollars)
Unsecured loans from
foreign financial institutions (fixed rate)
1,040.0
100.9
1,040.0
100.9
1.44/(1.44)
0.14/(0.14)
Other long-term liabilities
683.2
66.3
683.2
66.3
0.94/(0.94)
0.09/(0.09)
An increase/decrease in LIBOR of 10% would represent an increase/decrease
in the interest cost of approximately USD0.2 million per year.
At December 31, 2002, Tamsa's temporary investment portfolio consisted
primarily of fixed short-term deposits. Given the short-term nature of such
instruments, an increase in interest rates would not significantly decrease the
market value of such securities. This sensitivity analysis does not consider
the monetary gain or loss, if any, which would be recognized under Mexican GAAP
as a result of the expected net monetary position of Tamsa in 2002 and future
effects of inflation. At December 31, 2002, Tamsa had a net monetary liability
position. See notes 1 and 2 to Tamsa's audited consolidated financial
statements included in this annual report. As discussed in note 10 to Tamsa's
audited consolidated financial statements, at December 31, 2002, Tamsa was not
party to any interest swap arrangements.
2.
Foreign Exchange Rate Risk
Tamsa continuously monitors its economic exposure to changes in foreign
exchange rates. At December 31, 2002, Tamsa's net monetary asset position in
U.S. dollars and subject to foreign currency exchange rate fluctuations
amounted to USD68,448 thousand (Ps705,870 thousand). The exposure amount is
determined based on the monetary position of Tamsa and its Mexican subsidiaries
and primarily reflects U.S. dollar-denominated debt, reduced by Tamsa's cash
and cash equivalents and other U.S. dollar denominated assets (mainly
receivables). See note 2 to Tamsa's audited consolidated financial statements
included in this annual report. The aggregate hypothetical loss on an annual
basis that would result from a hypothetical appreciation of 10.0% in the U.S.
dollar to Mexican peso exchange rate is estimated to be Ps70,578 thousand.
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Tamsa is subject to risk from changes in foreign exchange rates, in
particular in regards to its sales in Canadian dollars, which as of December
31, 2002, amounted to approximately 31 million Canadian dollars.
In order to hedge the exchange rate exposures on receivables denominated
in Euros maturing in January and March, 2003, on December 10 and 13, 2002,
Tamsa entered into two forward contracts to sell EUR8,973 thousand and EUR2,000
thousand at a fixed exchange rate of USD1.003 and USD1.0194 per Euro,
respectively, with maturities at January 31 and March 27, 2003, respectively.
At December 31, 2002, Tamsa recorded a loss provision of USD418 thousand;
however, at the maturity of these forward contracts Tamsa will realize an
exchange gain of USD174 thousand.
3.
Commodity Derivative Instruments
On February 22, 2001, Tamsa entered into a three-year agreement with Pemex
to receive approximately 296,600 million BTUs of natural gas, on a monthly
basis, for the period from January 1, 2001 to December 31, 2003, at a fixed
price of USD4.00 dollars per million BTUs.
In order to cover a decrease in natural gas prices, on March 2, 2001,
Tamsa entered into a forward contract with Enron with the option to sell up to
200,000 million BTUs per month of natural gas at a minimum base price of
USD4.05 per million BTUs from March 2002, through December 2003. As a result of
Enron's bankruptcy in late 2001, no reasonable prospect exists of exercising
Tamsa's option under this contract and, consequently, the premium paid to Enron
of USD2.3 million for this put option was written off during the fourth quarter
of 2001.
In order to reduce its exposure to above-market prices under the natural
gas supply agreement with Pemex, Tamsa entered into agreements with Citibank
and JPMorgan Chase in March 2002 and April 2002. The economic effect of the
agreements with Citibank and JPMorgan Chase is to permit Tamsa to purchase
320,000 million BTUs per month at market prices instead of at the USD4.00 per
million BTUs rate charged by Pemex, resulting in a more favorable price to
Tamsa for natural gas so long as the market price remains below USD4.00. Under
the agreements, Tamsa must continue to make its purchases of natural gas at
market prices even if the market price rises above USD4.00 per million BTUs,
thereby exposing Tamsa to the risk in the future of rising market prices.
Also, under the agreements, Tamsa must continue to make purchases at the
USD4.00 per million BTUs rate if the market price of natural gas falls to
USD2.00 per million BTUs or lower (during the period from May 1, 2002, to
February 28, 2003) or to USD2.25 per million BTUs or lower (during the period
from March 1, 2003, to December 31, 2003). In addition, under each of the
agreements with Citibank and JPMorgan Chase, Tamsa is required to purchase
160,000 million BTUs of natural gas per month from January 1, 2004, to December
31, 2005, at a price of USD2.765 per million BTUs. At December 31, 2002, the
fair value of these instruments was a liability of Ps29,567 thousand, which was
charged to income of the year as a part of cost of products sold.
Item 12.
Description of Securities Other Than Equity Securities
Not applicable.
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PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies
Not applicable.
Item 14.
Material Modifications to the Rights of Security Holders and Use
of Proceeds
On May 30, 2003, the holders of Tamsa's ADSs were notified that the
deposit agreement relating to Tamsa's ADSs had been amended to provide that
each holder of Tamsa ADSs that are outstanding on the expiration date of any
exchange offer by Tenaris or any of its affiliates who has not tendered such
Tamsa ADSs pursuant to such exchange offer will be deemed to have instructed
the depositary to tender the underlying Tamsa shares into such exchange offer
in exchange for the appropriate amount of consideration, and the Tamsa
depositary will do so unless instructed otherwise by Tamsa. The amendment to
the Tamsa deposit agreement will go into effect on June 30, 2003.
Item 15.
Controls and Procedures
Under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, the Company has evaluated the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined in
Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934) within 90
days of the filing date of this Annual Report. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that these
disclosure controls and procedures are effective.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their most recent evaluation.
Item 16A.
Audit Committee Financial Expert
Not applicable.
Item 16B.
Code of Ethics
Not applicable.
Item 16C.
Principal Accountant Fees and Services
Not applicable.
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PART III
Item 17.
Financial Statements
We have responded to Item 18 in lieu of responding to this Item.
Item 18.
Financial Statements
See pages F-1 through F-40 of this annual report.
Item 19.
Exhibits
Exhibit
Number
Description
1.1
By-laws of Tamsa, as amended as of April 30, 2003.*
2.1
Deposit Agreement dated as of January 1, 1964, as amended and
restated as of June 1, 1991, October 15, 1991, July 1, 1993 and
September 12, 1996, and amended as of July 9, 2001, between
Tamsa, JPMorgan Chase Bank, formerly known as Morgan Guaranty
Trust Company of New York, as depositary, and the holders of
American Depositary Receipts (such agreement is incorporated
herein by reference to the Registration Statement on Form F-6
relating to the ADSs (File Nos. 33-41380, 33-35558 and
333-13702) filed with the SEC on July 9, 2001).
2.2
Amendment, dated as of May 28, 2003, to the Deposit Agreement
dated as of January 1, 1964, as amended and restated as of June
1, 1991, October 15, 1991, July 1, 1993 and September 12, 1996,
and amended as of July 9, 2001, between Tamsa, JPMorgan Chase
Bank, formerly known as Morgan Guaranty Trust Company of New
York, as depositary, and the holders of American Depositary
Receipts (such agreement is incorporated herein by reference to
the Registration Statement on Form F-6 relating to the ADSs
(File Nos. 33-41380, 33-35558 and 333-13702) filed with the SEC
on May 28, 2003).
4.1
Atlas Bradford Technology Sublicense Agreement, dated May 24,
2002, between Tenaris Connections B.V. and Tamsa.
4.2
Tenaris Premium Connections Technology License Agreement, dated
July 10, 2002, between Tenaris Connections B.V. and Tamsa, and
Addendum thereto, dated November 10, 2002.
4.3
Service Agreement dated as of August 30, 2001, between Tamsa and
Exiros México, S.A. de C.V. (such agreement is incorporated
herein by reference to Tamsa's annual report on Form 20-F for
the fiscal year 2001).*
4.4
Amended and Restated Export Agency Agreement, dated as of
October 4, 2000 between Tamsa and Techint Engineering L.L.C.
(such agreement is incorporated herein by reference to Tamsa's
annual report on Form 20-F for the fiscal year 2000).
4.5
Assignment Agreement, dated October 15, 2002, between Techint
Engineering LLC and Tenaris Global Services LLC relating to the
assignment of export agency agreements (such agreement is
incorporated herein by reference to the Registration Statement
on Form F-4 by Tenaris S.A., File No. 333-99769)
4.6
NKK-Premium Connections Technology and Trademark Sublicense
Agreement, dated as of October 2, 2000, between DST Connection
Systems BV and Tamsa (such agreement is incorporated herein by
reference to Tamsa's annual report on Form 20-F for the fiscal
year 2000).
4.7
Business Opportunities Agreement dated as of March 30, 2001
between Tamsa, Siderca and Dalmine (such agreement is
incorporated herein by reference to Tamsa's annual report on
Form 20-F for the fiscal year 2000).
4.8
Just-In-Time Agreement dated as of March 23, 2001 between Tamsa
and Pemex Exploración y Producción (such agreement is
incorporated herein by reference to Tamsa's annual report on
Form 20-F for the fiscal year 2000).
8.1
List of Tamsa subsidiaries.
*
English translation.
72
Table of Contents
INDEX TO FINANCIAL STATEMENTS
Consolidated Financial Statements
Page
Report of independent accountants
F-2
Consolidated financial statements:
Balance sheets
F-4
Statements of income
F-5
Statements of changes in shareholders' equity
F-6
Statements of changes in financial position
F-7
Notes to financial statements
F-8
Statutory Auditor's Report
F-40
F-1
Table of Contents
REPORT OF INDEPENDENT ACCOUNTANTS
February 21, 2003
To the Shareholders of
Tubos de Acero de México, S. A.
1.
We have audited the accompanying consolidated balance sheets of Tubos de
Acero de México, S. A. and subsidiaries at December 31, 2002 and 2001, and
the related consolidated statements of income, of changes in shareholders'
equity and of changes in financial position for the three years ended
December 31, 2002, 2001, and 2000, all expressed in constant Mexican pesos
of December 31, 2002 purchasing power. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
2.
We conducted our audits in accordance with auditing standards generally
accepted in Mexico and in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and that they were prepared in accordance with generally
accepted accounting principles. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
3.
In our opinion, the aforementioned consolidated financial statements
present fairly, in all material respects, the consolidated financial
position of Tubos de Acero de México, S. A. and subsidiaries at December
31, 2002 and 2001, and the results of their operations and the changes in
their shareholders' equity and in their financial position for the three
years ended December 31, 2002, 2001 and 2000 in conformity with accounting
principles generally accepted in Mexico.
F-2
Table of Contents
4.
Accounting principles generally accepted in Mexico vary in certain
important respects from accounting principles generally accepted in the
United States of America (US GAAP). The application of the latter would
have affected the determination of consolidated net income expressed in
Mexican pesos of December 31, 2002 purchasing power for the years ended
December 31, 2002, 2001 and 2000, and the determination of consolidated
shareholders' equity and consolidated financial position, also expressed
in Mexican pesos of December 31, 2002 purchasing power, at December 31,
2002, 2001 and 2000, to the extent summarized in Note 12 to the
consolidated financial statements.
PricewaterhouseCoopers
/s/ Bernardo Ismael González Vidrio
Bernardo Ismael González Vidrio
F-3
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(Note 1)
CONSOLIDATED BALANCE SHEETS
Thousands of Mexican pesos of
December 31, 2002 purchasing
power
December 31,
2002
2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 8a.)
Ps1,388,689
Ps588,632
Accounts and notes receivable — Net
    (Note 8b.)
2,582,889
1,767,614
Inventories — Net (Note 8c.)
1,488,968
1,528,581
Prepaid expenses and recoverable taxes
    (Note 8d.)
49,378
69,532
Total current assets
5,509,924
3,954,359
INVESTMENTS IN ASSOCIATED COMPANIES —
    Net (Note 11)
517,697
614,351
PROPERTY, PLANT AND EQUIPMENT — Net
    (Note 3)
8,280,347
7,928,131
OTHER ASSETS
12,144
81,442
Total assets
Ps14,320,112
Ps12,578,283
LIABILITIES AND SHAREHOLDERS'
    EQUITY
CURRENT LIABILITIES:
Notes payable to financial institutions,
    including current portion of long-term debt (Note 4)
Ps1,040,016
Ps247,385
Trade accounts and notes payable
881,936
652,518
Other accounts payable and accrued expenses
    (Note 8e.)
420,463
341,991
Total current liabilities
2,342,415
1,241,894
LONG-TERM DEBT (Note 4)
683,203
1,361,585
OTHER LIABILITIES AND DEFERRED CREDITS
171,989
192,001
DEFERRED INCOME TAX (Note 6)
2,171,121
2,154,157
Total non-current liabilities
3,026,313
3,707,743
Total liabilities
5,368,728
4,949,637
SHAREHOLDERS' EQUITY (Note 5):
Capital stock
10,694,466
10,694,466
Additional paid-in capital
6,993,640
6,993,640
Retained earnings
16,950,221
16,053,830
Initial effect of deferred income tax
(2,389,797
)
(2,389,797
)
Cumulative translation adjustment
(898,224
)
(833,676
)
Cumulative loss from holding non-monetary assets
(22,386,592
)
(22,919,670
)
Equity of majority shareholders
8,963,714
7,598,793
Minority interest in consolidated subsidiary
(12,330
)
29,853
Total shareholders' equity
8,951,384
7,628,646
CONTINGENCIES AND COMMITMENT (Notes 9 and 10)
Total liabilities and shareholders' equity
Ps14,320,112
Ps12,578,283
The accompanying twelve notes are an integral
part of these consolidated financial statements.
Guillermo Vogel H.
Claudio Gugliuzza V.
Vice Chairman of the Board
Administrative Director
F-4
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Note 7)
Thousands of Mexican pesos — except
income
per share — of December 31,
2002 purchasing power
Years ended December 31,
2002
2001
2000
Net sales
Ps6,728,275
Ps6,899,027
Ps6,463,007
Cost of products sold
(4,145,970
)
(4,067,468
)
(4,231,637
)
Operating expenses
(1,191,082
)
(1,288,774
)
(1,175,100
)
Operating profit
1,391,223
1,542,785
1,056,270
Comprehensive financing cost (Note 1a.)
(165,924
)
(42,106
)
(88,544
)
Other expenses — Net
(13,115
)
(26,834
)
(9,879
)
Income before the following items
1,212,184
1,473,845
957,847
Income tax, asset tax and employees'
    statutory profit sharing (Note 6)
(60,114
)
(592,710
)
(483,743
)
Income before equity in associated companies and
    other items
1,152,070
881,135
474,104
Equity in loss of associated companies
    (Note 11)
(16,047
)
(290,930
)
(52,608
)
Income before the following item
1,136,023
590,205
421,496
Cumulative effect of change in accounting
    principle (Note 1q.)
(11,567
)
Net income for the year
Ps1,136,023
Ps578,638
Ps421,496
Income corresponding to majority shareholders
Ps1,177,049
Ps574,947
Ps439,319
Minority interest in (loss) income of
    consolidated subsidiary
(41,026
)
3,691
(17,823
)
Net income for the year
Ps1,136,023
Ps578,638
Ps421,496
Income per share in Mexican pesos (Note 1o.):
Income per share before the following item
Ps3.35
Ps1.74
Ps1.24
Cumulative effect of change in accounting
    principle
(0.03
)
Net income per share
Ps3.35
Ps1.71
Ps1.24
The accompanying twelve notes are an integral
part of these consolidated financial statements.
Guillermo Vogel H.
Claudio Gugliuzza V.
Vice Chairman of the Board
Administrative Director
F-5
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(Note 5)
Thousands of Mexican pesos of
December 31, 2002 purchasing
power
Initial
Cumulative loss
Minority
Additional
effect of
Cumulative
from holding
Equity of
interest in
Total
Capital
paid-in
Retained
deferred
translation
non-monetary
majority
consolidated
shareholders'
stock
capital
Earnings
income tax
adjustment
assets
shareholders
subsidiary
equity
Balances at January 1, 2000
Ps10,694,466
Ps6,993,640
Ps15,671,845
(Ps572,053
)
(Ps22,125,692
)
Ps10,662,206
Ps30,996
Ps10,693,202
Dividends paid
(320,176
)
(320,176
)
(320,176
)
Comprehensive loss (Note 1r.)
439,319
(Ps2,389,797
)
(149,567
)
(486,255
)
(2,586,300
)
46
(2,586,254
)
Balances at December 31, 2000
10,694,466
6,993,640
15,790,988
(2,389,797
)
(721,620
)
(22,611,947
)
7,755,730
31,042
7,786,772
Dividends paid
(312,105
)
(312,105
)
(312,105
)
Comprehensive income (Note 1r.)
574,947
(112,056
)
(307,723
)
155,168
(1,189
)
153,979
Balances at December 31, 2001
10,694,466
6,993,640
16,053,830
(2,389,797
)
(833,676
)
(22,919,670
)
7,598,793
29,853
7,628,646
Dividends paid
(280,658
)
(280,658
)
(280,658
)
Comprehensive income (Note 1r.)
1,177,049
(64,548
)
533,078
1,645,579
(42,183
)
1,603,396
Balances at December 31, 2002
Ps10,694,466
Ps6,993,640
Ps16,950,221
(Ps2,389,797
)
(Ps898,224
)
(Ps22,386,592
)
Ps8,963,714
(Ps12,330
)
Ps8,951,384
The accompanying twelve notes are an integral
part of these consolidated financial statements.
Guillermo Vogel H.
Claudio Gugliuzza V.
Vice Chairman of the Board
Administrative Director
F-6
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
FINANCIAL POSITION
Thousands of Mexican pesos of
December 31, 2002 purchasing power
Years ended December 31,
2002
2001
2000
Resources provided by operations:
Income before cumulative effect of change in
    accounting principle
Ps1,136,023
Ps590,205
Ps421,496
Adjustments to reconcile net income to resources
    provided by operating activities:
Depreciation and other
501,307
433,810
417,005
Deferred income tax
(246,938
)
5,916
176,285
Equity in loss of associated companies
16,047
290,930
52,608
Exchange loss (gain) which did not require
    resources
108,402
17,621
(8,876
)
(Increase) decrease in accounts receivable, notes
    receivable, prepaid expenses and recoverable taxes
(702,823
)
422,760
(423,204
)
Decrease (increase) in inventories
175,622
(199,577
)
37,581
Increase (decrease) in trade accounts and
    other accounts payable and accrued expenses
292,403
(340,569
)
347,085
Total adjustments
144,020
630,891
598,484
Resources provided by operations before the
    following item
1,280,043
1,221,096
1,019,980
Cumulative effect of change in accounting
    principle
(11,567
)
Resources provided by operations
1,280,043
1,209,529
1,019,980
Resources used in investing activities:
Increase in interest in associated companies
(21,303
)
(52,606
)
(404,651
)
Purchases of property, plant and
    equipment — Net
(184,212
)
(851,186
)
(452,099
)
Resources used in investing activities
(205,515
)
(903,792
)
(856,750
)
Resources used in financing activities:
Net increase (decrease) in short-term notes
    payable to banks
776,016
(106,226
)
(867,259
)
(Decrease) increase in long-term debt —
    Net
(769,829
)
369,660
1,056,344
Dividends paid
(280,658
)
(312,105
)
(320,176
)
Resources used in financing activities
(274,471
)
(48,671
)
(131,091
)
Increase in cash and cash equivalents
800,057
257,066
32,139
Cash and cash equivalents at beginning of year
588,632
331,566
299,427
Cash and cash equivalents at end of year
Ps1,388,689
Ps588,632
Ps331,566
The accompanying twelve notes are an integral
part of these consolidated financial statements.
Guillermo Vogel H.
Claudio Gugliuzza V.
Vice Chairman of the Board
Administrative Director
F-7
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
(Amounts in thousands of Mexican pesos (Ps) of
December 31, 2002 purchasing power and
thousands of US dollars, euros and Japanese
yen, except for exchange rates)
Note 1 — Main Activity and Summary
of Significant Accounting Policies:
Tubos de Acero de México, S. A. (Tamsa or
the Company) was formed in 1952 and consists of a group of
companies that manufacture and sell seamless steel pipe,
primarily for use in the petroleum industry.
Tamsa is a subsidiary of Tenaris, S. A.
(Tenaris), a Luxembourg corporation, created in 2001 to hold
investments in the steel pipe manufacturing and distribution
businesses. Tenaris is a leading global manufacturer and
supplier of seamless steel pipe products and associated services
to the oil and gas, energy and other industries (see Note 5).
At December 31, 2002 and at
February 21, 2003, date of issuance of the consolidated
financial statements, Tenaris and its subsidiaries had an
ownership interest in Tamsa of 94.5%.
The accompanying consolidated financial
statements are expressed in thousands of Mexican pesos of
December 31, 2002 purchasing power and have been prepared
applying accounting principles generally accepted in Mexico.
The significant accounting policies, including
the concepts, methods and criteria related to the recognition of
the effects of inflation on the financial information, are
summarized below:
a.  Recognition
of the effects of inflation in the consolidated financial
statements
The Company recognizes the effects of inflation
in its consolidated financial statements in accordance with
accounting principles generally accepted in Mexico. As a result
of the recognition of the effects of inflation in the
consolidated financial statements, the following concepts are
included.
The gain (loss) from holding non-monetary
assets mainly represents the change in the basis of restatement
of non-monetary assets (primarily property, plant and equipment)
vis-a-vis the rate of inflation as measured by the National
Consumer Price Index (NCPI — see Note 1f.).
Additionally, this item includes the effect of the restatement
of inventories and cost of products sold at replacement cost as
required by Statement B-10 issued by the Mexican Institute of
Public Accountants (MIPA). This gain (loss) is included
directly in shareholders' equity as a component of
comprehensive income (loss) of the year.
Gain on net monetary position represents the
purchasing power gain from holding monetary items, measured by
the NCPI, in Mexican pesos of December 31, 2002 purchasing
power. This item is included in comprehensive financing cost in
the accompanying consolidated statements of income, as shown
below:
Years ended December 31,
2002
2001
2000
Gain on net monetary position
Ps59,340
Ps24,225
Ps24,810
Interest and financing expense — Net
(46,299
)
(81,172
)
(76,393
)
Foreign exchange (loss) gain — Net
(178,965
)
14,841
(36,961
)
Comprehensive financing cost
(Ps165,924
)
(Ps42,106
)
(Ps88,544
)
Inflation rates in Mexico and Venezuela for the
reported periods were as follows:
2002
2001
2000
Mexico
5.7%
4.4%
9.0%
Venezuela
31.2%
12.3%
12.8%
F-8
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
b.  Principles
of consolidation and valuation of investments in associated
companies
The accompanying consolidated financial
statements include the financial statements of Tamsa and its
wholly-owned subsidiaries, which are shown below:
Company
Main activity
Inmobiliaria Tamsa, S.A. de C.V.
Leasing of real estate
Tamsider, S.A. de C.V. (Tamsider)
and subsidiaries, including Tavsa — Tubos
de Acero de Venezuela, S. A. (Tavsa)
Promotion and organization and of steel-related
    companies
Tamtrade, S.A. de C.V. (Tamtrade)
Sale of seamless steel pipe
Empresas Riga, S.A. de C.V. (Riga)
(acquired on June 20, 2001)
Manufacture of welded connectors made of seamless
    steel pipe
Socover, S.A. de C.V. (acquired on
    October 1, 2001 and merged with Tamtrade on January 1,
    2003)
Sale of seamless steel pipe
Corporación Tamsa, S.A. (liquidated on
    August 1, 2002)
Sale of seamless steel pipe
Balances and transactions between Tamsa and its
subsidiaries were eliminated in consolidation.
Investments in associated companies in which
Tamsa owns 10% or more of the common stock are accounted for by
the equity method of accounting. Investments representing less
than 10% of the investee's equity are carried at
acquisition cost, restated using the NCPI.
c.  Cash
and cash equivalents
Cash and cash equivalents comprise cash and
highly liquid short-term securities with an initial maturity of
less than three months. Highly liquid short-term securities are
carried at fair market value (see Note 8a.).
d.  Inventories
Inventories are stated at their estimated net
replacement cost, which is not in excess of their net realizable
value (see Note 8c.). The cost of products sold reflects their
estimated replacement cost at the time of sale.
In conformity with industry practices,
manufacturing tools, spare parts and supplies are included under
current assets, even though they may not be consumed within one
year.
Based on inventory turnover levels, the Company
increased its allowance for obsolescence, debiting the cost of
products sold by Ps15,466 in 2002 and Ps2,045 in 2000. In 2001
it was not necessary to increase this allowance.
e.  Maintenance
expenses of production capacity
Ordinary maintenance expenses are expensed as
cost of products sold in the period in which they are incurred.
Special maintenance expenses incurred to maintain
the production capacity of the industrial facilities are
recorded as deferred expenses when incurred and amortized over a
period of 12 to 24 months, which corresponds to the period
in which the benefits of the maintenance are expected to be
realized (see Note 8d.).
F-9
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
f.  Property,
plant and equipment
The Company follows the following policies in
respect of property, plant and equipment:
•
Property and domestically-sourced machinery and
    equipment are restated by applying factors derived from the NCPI
    to their carrying value as determined at December 31, 1996,
    or to their acquisition cost if purchased after that date.
•
Imported machinery and equipment are restated by
    applying inflation factors of the country of origin to the
    acquisition cost (expressed in the original currency), and
    subsequently translated at the period-end exchange rate.
As a result of the foregoing valuation methods,
the Company recorded a gain from holding non-monetary assets of
Ps636,326 in 2002 and a loss from holding non-monetary assets of
Ps288,380 in 2001 and Ps624,849 in 2000, which are included as a
component of comprehensive income (loss) of the year.
Depreciation is calculated by the straight-line
method, based on the useful lives of the assets as determined by
the Company (see Note 3).
Fully depreciated assets are retained in property
and accumulated depreciation accounts until they are removed
from service. In the case of disposals, assets and related
depreciation are removed from the accounts and the net amount,
less proceeds from disposal, is charged or credited to income.
g.  Licenses
and computer software costs
Licenses and costs related to the development of
software for internal use are capitalized and amortized on a
straight-line basis over three years.
h.  Goodwill
Goodwill is restated by applying inflation
factors derived from the NCPI to the acquisition cost and is
amortized by the straight-line method over a period that in
Management's opinion approximates the period in which the
acquired subsidiaries will benefit the Company. At
December 31, 2002, goodwill recorded in previous years had
been wholly amortized.
i.  Long-lived
assets
The Company periodically evaluates the carrying
value of long-lived assets to be held and used, including
intangible assets, when events and circumstances warrant such a
review. The carrying value of a long-lived asset is considered
impaired when the anticipated undiscounted cash flow from such
an asset is less than its carrying value. In that event, a loss
is recognized based on the amount by which the carrying value
exceeds the fair market value of the long-lived asset. Fair
market value is determined primarily using the anticipated cash
flows discounted at a rate commensurate with the risk involved.
j.  Seniority
premiums
Seniority premiums to which employees are
entitled upon termination of employment, for any cause, after
15 years of service, in accordance with the Federal Labor
Law, are recognized as expenses as these premiums accrue, based
on actuarial calculations, in conformity with Statement D-3,
"Labor Liabilities" issued by the MIPA. The Company
has established a trust fund and a provision for this purpose.
F-10
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Following is a summary of the relevant
significant data related to these benefits:
December 31,
2002
2001
2000
Actuarially determined projected benefit
    obligation
(Ps13,527
)
(Ps12,004
)
(Ps9,787
)
Liability reserve to cover the plan
10,969
10,890
11,749
Net assets of the trust
2,127
2,208
1,454
Unamortized prior service cost and assumption
    variations and experience adjustments
431
(1,094
)
(3,416
)
Net projected benefit obligation
Ps—
Ps—
Ps—
Accumulated benefit obligation
(Ps11,762
)
(Ps10,439
)
(Ps8,525
)
Liability reserve to cover the plan
10,969
10,890
11,749
Net assets of the trust
2,127
2,208
1,454
Accumulated net asset
1,334
2,659
4,678
Net projected benefit obligation
Additional liability
Ps—
Ps—
Ps—
Years ended December 31,
2002
2001
2000
Service cost
Ps729
Ps652
Ps674
Interest cost
523
432
455
Return on plan assets
(132
)
(96
)
(79
)
Amortization of transition assets and assumption
    variations and experience adjustments
183
(51
)
12
Net cost for the year
Ps1,303
Ps937
Ps1,062
The following actuarial assumptions were used to
determine the present value of accumulated obligations for
seniority premiums (excluding inflation effects):
Years ended December 31,
2002
2001
2000
Discount rate
4.50%
4.50%
4.50%
Salary increase rate
1.00%
1.00%
1.00%
Return on plan assets
6.00%
6.50%
6.00%
Other benefits based on length of service to
which employees may be entitled in the event of dismissal or
death, in accordance with the Federal Labor Law, are charged to
income when they become payable.
k.  Foreign
currency balances and transactions
Transactions in foreign currencies are recorded
at the exchange rates prevailing on the dates they are entered
into. Balances denominated in foreign currencies are translated
at period-end exchange rates. Exchange differences arising from
fluctuations in rates between the date of the transaction and
the date of settlement, or the balance sheet date, are charged
or credited to income.
The financial statements of foreign subsidiaries
and associated companies classified as foreign entities are
restated using the NCPI of the country in which the entity
operates and subsequently translated into Mexican pesos at the
exchange rate of the year-end.
The financial statements of foreign subsidiaries
classified as integrated foreign operations are translated as
follows: a) monetary assets and liabilities at the exchange rate
on the date of the financial
F-11
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
statements; b) non-monetary items at the
historical exchange rate; c) income statement items at the
average monthly exchange rate; and d) the translation gain or
loss is recorded as a component of comprehensive financing cost.
Mexican peso financial statements are restated at the
Company's balance sheet date by applying the provisions of
Statement B-10.
l.  Revenue
recognition
The Company recognizes its revenue in accordance
with international commercial terms (incoterms), pursuant to
which delivery of products to customers finishes at different
points, ranging from Tamsa's to the customer's site.
m.  Debt
costs
Costs related to syndicated loans are amortized
over the term of the related debt.
n.  Income
tax, asset tax and employees' statutory profit
sharing
Income tax and employees' statutory profit
sharing are charged to income of the period in which they are
incurred. Asset tax is recorded as an advance payment of income
tax, at its estimated recoverable value at the date of the
financial statements.
Deferred income tax is recognized by the
comprehensive assets and liabilities method. This method
consists of calculating deferred income tax by applying the
respective income tax rate to the temporary differences between
the accounting and tax values of assets and liabilities at the
financial statements date.
o.  Net
income per share
Net income per share is computed by dividing
consolidated net income by the weighted average number of shares
outstanding during the periods, taking into consideration the
split mentioned in Note 5 (339,284,120 in 2002, 2001 and 2000).
This weighted average number of shares outstanding excludes
3,650,000 shares in treasury in 2002 and owned by Tamsider in
2001 and 2000. As of December 31, 2002, 2001 and 2000, no
dilutive instruments were outstanding (see Note 5).
p.  Insurance
In accordance with industry practices, the
Company is insured for catastrophic casualty and certain
property and business interruption exposures. Additionally, the
Company is insured for third party liability as well as for
risks required to be covered by law or contract. Costs of
insurance are recorded as prepaid expenses and amortized by the
straight-line method over the term of the contracts. Costs
resulting from noninsured losses are charged to income upon
occurrence.
q.  Derivative
financial instruments
The Company occasionally enters into various
derivative instruments to hedge its exchange rate exposures,
mainly from balances in United States dollars ($), euros
(EUR) and Japanese yens (JPY). Additionally, the Company
enters into forward contracts to hedge the change in market
prices related to raw material (aluminum) and fuel (natural
gas), used in its operations.
Derivative financial instruments are valued at
their fair value at the valuation date. Financial assets and
liabilities derived from these financial instruments are
accounted for in the balance sheet. Variations in the fair value
of the financial instruments from one period to another are
charged to income of the period. The cost of these contracts is
amortized over their term, and is charged to interest expense
(see Note 10).
F-12
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Contracts to hedge the variations in market
prices of natural gas do not exceed the production requirements
of the period. Accrued gains or losses are charged to cost of
products sold.
The cumulative effect at the adoption date of the
fair market value (January 1, 2001) amounted to Ps11,567,
net of taxes, and is shown as cumulative effect of change in
accounting principle in 2001, in accordance with Statement A-7
"Comparability" issued by the MIPA.
r.  Comprehensive
income (loss)
The items that integrate earned surplus
(deficit) capital during the year are shown in the
statement of changes in shareholders' equity under the
concept of comprehensive income (loss). Comprehensive income
(loss) is shown below:
December 31,
2002
2001
2000
Majority shareholders:
Net income
Ps1,177,049
Ps574,947
Ps439,319
Initial effect of deferred income tax
(2,389,797
)
Cumulative translation adjustment
(64,548
)
(112,056
)
(149,567
)
Gain (loss) from holding non-monetary assets
— Net of deferred income tax (see
    Note 6)
533,078
(307,723
)
(486,255
)
Comprehensive income (loss) of majority
    shareholders
1,645,579
155,168
(2,586,300
)
Minority shareholders:
Net (loss) income
(41,026
)
3,691
(17,823
)
Cumulative translation adjustment
(7,230
)
(1,168
)
19,107
Gain (loss) from holding non-monetary assets
— Net of deferred income tax (see
    Note 6)
6,073
(3,712
)
(1,238
)
Comprehensive (loss) income of minority
    shareholders
(42,183
)
(1,189
)
46
Total comprehensive income (loss)
Ps1,603,396
Ps153,979
(Ps2,586,254
)
s.  New
accounting standards
In December 2001, the MIPA issued revised
Statement C-9, "Liabilities, Provisions, Contingent Assets
and Liabilities and Commitments", which supersedes the
original Statements C-9 and C-12, both from 1974, and Circulars
46, 47 and 48. The provisions of this new Statement are
effective for years commencing on or after January 1, 2003.
The objective of revised Statement C-9 is to
establish rules for valuation and disclosure of liabilities and
provisions, to determine particular rules for valuation and
disclosure of contingent assets and liabilities, and to provide
rules for disclosure of commitments acquired by an entity as a
part of its normal activities. Management considers that the
adoption of revised Statement C-9 will not have a material
effect on the consolidated financial statements.
In January 2002, the MIPA issued revised
Statement C-8, "Intangible Assets", which supersedes
the current Statement C-8, effective since 1976. The provisions
of this new Statement are effective for years commencing on or
after January 1, 2003.
The significant provisions of revised Statement
C-8 are: (i) it establishes rules and criteria for
accounting for research and development costs; (ii)
pre-operating costs identified with research and development
activities are charged to expenses; and (iii) valuation
rules are based on a logical sequence of the assets' useful
life, considering initial recognition and valuation of the
intangible asset, recognition of
F-13
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
an expense, additional payments and valuation
after the initial recognition. Management considers that the
adoption of revised Statement C-8 will not have a material
effect on the consolidated financial statements.
Note 2 — Position in
Foreign Currencies:
The Company had assets and liabilities
denominated in foreign currencies, mainly US dollars, as follows:
December 31,
2002
2001
Assets:
Cash and cash equivalents
$
126,081
$
44,483
Other current assets (mainly receivables)
200,541
135,415
Assets of foreign subsidiaries
7,525
20,213
334,147
200,111
Liabilities:
Notes payable to banks
(1)
100,850
25,600
Other current liabilities
77,345
49,338
Liabilities of foreign subsidiaries
6,281
6,821
Long-term debt
(2)
66,250
140,900
Deferred liabilities
14,973
17,404
265,699
240,063
Net asset (liability) position
$
68,448
($
39,952
)
(1)
Includes $21,600 in 2002 and $25,600 in 2001 of
    notes payable by Tavsa.
(2)
Includes $10,500 in 2002 and $5,900
    in 2001 of notes payable by Tavsa.
All of the above monetary assets and liabilities
were translated at the exchange rates of Ps10.3125 and Ps9.1423
per US dollar at December 31, 2002 and 2001, respectively.
Assets and liabilities from Tavsa were translated into
Venezuelan bolivars (Bs) at the exchange rates of Bs1,400.50 and
Bs758.00 per US dollar at December 31, 2002 and 2001,
respectively.
As of February 21, 2003, date of issuance of
the consolidated financial statements, exchange rates were
Ps10.84 and Bs1,600.00 per US dollar.
The Company had non-monetary assets purchased in
foreign currencies, or for which replacement values were mainly
determinable in foreign currencies, as follows:
December 31,
2002
2001
Inventories
$
81,100
$
78,439
Property, plant and equipment
571,885
566,305
Investments in associated companies
50,200
62,123
F-14
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
The following represents a summary of foreign
currency transactions carried out by the Company:
Years ended December 31,
2002
2001
2000
Sales
$
452,134
$
473,651
$
365,670
Inventory purchases
(147,968
)
(164,165
)
(129,662
)
Purchases of plant and equipment
(5,580
)
(17,778
)
(13,840
)
Operating expenses
(58,721
)
(59,619
)
(45,941
)
Financing costs — Net
(3,967
)
(8,182
)
(10,022
)
Note 3 — Property, Plant and
Equipment:
Remaining estimated years
December,
of useful life
2002
2001
2002
2001
Land
Ps434,096
Ps437,308
Buildings
2,502,140
2,263,914
34
35
Machinery and equipment
13,665,717
12,171,502
19 and 11
20 and 12
16,167,857
14,435,416
Accumulated depreciation
(9,341,527
)
(8,077,623
)
6,826,330
6,357,793
Construction in progress
1,019,921
1,133,030
Ps8,280,347
Ps7,928,131
Depreciation expense for the years ended
December 31, 2002, 2001 and 2000 amounted to Ps446,403,
Ps396,290 and Ps386,896, respectively.
Note 4 — Debt
Obligations:
a.  Short-term
debt
Notes payable to financial institutions with
maturity within one year, and other short-term debt, were as
follows:
December 31,
2002
2001
Unsecured loans from financial institutions
Ps222,750
$
21,600
Ps247,385
$
25,600
Current portion of long-term unsecured loans
12,891
1,250
Current portion of long-term syndicated loans
804,375
78,000
Ps1,040,016
$
100,850
Ps247,385
$
25,600
The 2001 Mexican peso amounts were originally
translated using the corresponding exchange rate and are
restated in thousands of Mexican pesos of December 31, 2002
purchasing power.
The average annual interest rate on short-term
debt for the years ended December 31, 2002 and 2001 were
3.61% and 5.77%, respectively.
Short-term debt at December 31, 2002,
comprised $21,600 of loans to Tavsa guaranteed by Tamsa, bearing
interest at 3.5% annually, $78,000 of the first two installments
of the long-term syndicated loan and $1,250 of the first two
installments of the long-term debt of Riga.
F-15
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
At December 31, 2001 short-term debt
comprised $25,600 of loans to Tavsa, guaranteed by Tamsa,
bearing interest at 3.98% annually.
Interest rates include the effect of a Mexican
withholding tax of 4.9% and a Venezuelan withholding tax of
4.95%.
At December 31, 2002 the Company had
approved lines of credit amounting to $111,000, of which $36,900
had been utilized for short-term loans to Tavsa and guarantees.
b.  Long-term
debt
Long-term debt was payable in US dollars and is
analyzed as follows:
December 31,
2002
2001
Syndicated loan payable to foreign and Mexican
    financial institutions in three semi-annual installments from
    June 2003 to June 2004
Ps1,340,625
$
130,000
Ps1,256,253
$
130,000
Unsecured loans from financial institutions to
    subsidiary companies
159,844
15,500
105,332
10,900
Current portion of long-term debt
(817,266
)
(79,250
)
Ps683,203
$
66,250
Ps1,361,585
$
140,900
The average annual interest rates paid on
long-term debt for the years ended December 31, 2002 and
2001, were 3.19% and 6.91%, respectively.
On December 14, 2001 Tamsa entered into a
new syndicated loan in the amount of $130,000, with a term of
two and a half years. This new loan provides for payments of
$26,000 in June 2003 and $52,000 each in December 2003 and June
2004, and bears interest at LIBOR plus 1.125 percentage
points for the first two years, and at LIBOR plus
1.25 percentage points for the last six months. This loan
was utilized to prepay on December 14, 2001 the syndicated
loan of $100,000, with original maturity on May 23, 2002
and to cover working capital needs and for other general
corporate purposes of the Company.
The annual interest rate on long-term syndicated
loan, for the years ended December 31, 2002 and 2001, was
2.67% and 3.14%, respectively.
The long-term debt as of December 31, 2002
was $15,500 corresponding to debt of Riga in the amount of
$5,000, guaranteed by Tamsa, bearing interest at 3.05% annually,
with maturity in June, 2006 and with semi-annual installments of
$625 commencing on June, 2003; and debt of Tavsa in the amount
of $10,500, guaranteed by Tamsa, bearing interest at 3.29%
annually, with maturity in May, 2004.
The long-term debt of $10,900, as of
December 31, 2001, comprises debt of Tavsa in the amount of
$5,900, guaranteed by Corporación Tamsa, S. A., bearing
interest at 10.5% annually, and debt of Riga in the amount of
$5,000, as mentioned above.
Interest rates include the effect of a Mexican
withholding tax of 4.9% for Tamsa and Riga and a Venezuelan
withholding tax of 4.95% for Tavsa.
F-16
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Based on the existing terms of the above loan
agreements, payments over the next four years are expected to be
as follows:
Year ending
December 31,
2003
$
79,250
2004
63,750
2005
1,250
2006
1,250
$
145,500
c.  Covenants
The most significant covenants under the current
syndicated loan agreement are as follows:
•
Maintenance of minimum working capital ratios;
•
Maintenance of maximum levels of total
    indebtedness; and
•
Compliance with debt service ratios.
At December 31, 2002, and February 21,
2003, date of issuance of the consolidated financial statements,
the Company was in compliance with the above-mentioned covenants.
The new syndicated loan is guaranteed by two of
the Company's subsidiaries.
Note 5 — Shareholders'
Equity:
On November 11, 2002, Tenaris made a public
offer to exchange Tamsa's ordinary shares and American
Depositary Shares (ADS), listed on the Mexican Stock Exchange
(BMV) and the American Stock Exchange (Amex), respectively,
for ordinary shares and ADS of Tenaris. The public exchange
offer ended on December 13, 2002, as a result, Tenaris
owns, directly or indirectly, 94.5% of Tamsa's outstanding
shares, with the remaining 5.5% (shares or ADS) of Tamsa's
shares held by other investors. In accordance with Mexican Law,
Tenaris has the right, and might be required by the Mexican
National Banking and Securities Commission, to make a new public
exchange offer to retire the remaining Tamsa shares from the BMV
and the Amex.
At the April 27, 2001 ordinary meeting, the
Company's stockholders approved a five-to-one split of
Tamsa's shares effective July 10, 2001. Also, the
conversion factor of the American Depositary Receipts
(ADR) was modified, from one ADR to one share, to one ADR
to five shares, so that the value of the ADR traded in the
American Stock Exchange in New York would not be changed.
The objective of the split was to reduce the
relative price of Tamsa's shares and, therefore, to
increase their trading volume in Mexico. For comparative
purposes, the amounts of prior years related to number of shares
have been adjusted to reflect the split retroactively.
All outstanding shares have been subscribed and
paid in full and carry the same rights and obligations.
F-17
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
At December 31, 2002, the authorized capital
stock consisted of 342,934,120 (68,586,824 before the split)
common nominative shares with no par value. The number of
authorized and outstanding shares at December 31, 2002,
2001 and 2000 was as follows:
Series
Authorized
In treasury
(1)
Outstanding
Single
342,934,120
(3,650,000
)
339,284,120
(1)
Shares held in treasury in 2002 and owned by
    Tamsider, a subsidiary of the Company, in 2001 and 2000.These
    shares were eliminated in consolidation.
At the December 16, 2002 ordinary Tamsider
shareholders' meeting, a reduction of variable capital
stock in the amount of Ps60,225 was approved, which was effected
by the transfer of a certificate held by Tamsider for 3,650,000
shares of Tamsa.
At the April 30, 2002 ordinary
shareholders' meeting, dividends amounting to Ps283,671
(Ps273,546 nominal, equivalent to $0.0875 dollars per share and
to $0.4374 dollars per ADR at the exchange rate of Ps9.1182 per
dollar) were declared, payable on May 31 of that year.
Dividend payments were not subject to withholding tax.
At the April 27, 2001 ordinary
shareholders' meeting, dividends amounting to Ps312,105
(Ps291,075 nominal, equivalent to $0.0875 dollars per share and
to $0.4374 dollars per ADR at the exchange rate of Ps9.7025 per
dollar) were declared, payable on May 30 of that year. The
payment of these dividends was subject to a 7.6925% income tax
withholding.
The capital stock balance at December 31,
2002 and 2001, expressed in of thousands of Mexican pesos of
December 31, 2002 purchasing power, comprised the following:
Contributions in historical pesos
Ps1,195,221
Cumulative inflation adjustments
9,499,245
Amounts as reported in the consolidated balance
    sheet
Ps10,694,466
As of December 31, 2002, the Company and its
subsidiaries had retained earnings amounting to Ps923,475
appropriated to legal reserves.
Dividends paid from previously taxed retained
earnings (which amounted to Ps1,368,189 at December 31,
2002) are not subject to any income tax payable by the Company.
Dividends paid from retained earnings not previously taxed are
subject to a 51.52% tax payable by the Company.
Capital reductions are accorded the same tax
treatment as dividends for any amount exceeding the value of the
cash contributions, adjusted for inflation, plus previously
taxed earnings and reinvested previously taxed earnings, in
accordance with the provisions of the Income Tax Law. Such
inflation-indexed contributions amounted to Ps14,655,487 at
December 31, 2002.
Note 6 — Income Tax, Asset Tax and
Employees' Statutory Profit Sharing:
The Company and its subsidiaries do not file a
consolidated income tax return.
F-18
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
The provisions for income tax, asset tax and
employees' statutory profit sharing charged to income were
as follows:
Years ended December 31,
2002
2001
2000
Income tax currently payable
(Ps517,162
)
(Ps477,259
)
(Ps193,609
)
Asset tax
(2,927
)
(3,925
)
Employees' statutory profit sharing
(142,583
)
(105,610
)
(113,849
)
(662,672
)
(586,794
)
(307,458
)
Deferred income tax
246,938
(5,916
)
(176,285
)
Tax benefit (see last paragraph of this Note)
355,620
(Ps60,114
)
(Ps592,710
)
(Ps483,743
)
Following is a reconciliation of financial
reporting income before income tax and taxable income.
Years ended December 31,
2002
2001
2000
Consolidated income before taxes, employees'
    statutory profit sharing, equity in associated companies and
    other items
Ps1,212,184
Ps1,473,845
Ps957,847
Permanent differences:
Net monetary loss for tax purposes
(98,942
)
(78,074
)
(122,082
)
Gain on net monetary position
(59,340
)
(24,225
)
(24,810
)
Timing differences:
Depreciation and other items
501,307
433,810
417,005
Depreciation and accelerated depreciation of
    fixed asset acquisitions
(216,645
)
(147,151
)
(206,096
)
Excess of cost of sales over inventory purchases
57,116
Deduction of inventory purchases in excess of
    cost of sales
(99,728
)
(47,634
)
Other items
203,360
(63,825
)
103,011
Combined net taxable income
1,599,040
1,494,652
1,077,241
Current year tax losses
5,957
622
Taxable income
1,604,997
1,494,652
1,077,863
Tax rate (%)
35
35
35
561,749
523,128
377,252
Restatement for inflation
15,997
10,888
8,768
577,746
534,016
386,020
Recovery of asset tax, amortization of prior
    years' tax losses and other
(60,584
)
(56,757
)
(192,411
)
Provision for income tax
Ps517,162
Ps477,259
Ps193,609
F-19
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
The main temporary differences of Tamsa and its
Mexican subsidiaries for which deferred income tax is recognized
are analyzed as follows:
At December 31,
2002
2001
Inventories
Ps1,172,449
Ps951,249
Properties, plant and equipment — Net
6,048,588
5,586,785
Provisions and allowances
(405,032)
(243,645)
Tax loss carryforwards
(77,720)
(69,095)
6,738,285
6,225,294
Income tax rate (average rate in 2002)
32%
35%
Deferred income tax
2,180,566
2,178,853
Asset tax carryforwards
(15,277)
(24,696)
Valuation allowance of Riga
5,832
Deferred income tax payable
Ps2,171,121
Ps2,154,157
Deferred income tax of the year was determined as
follows:
At December 31,
2002
2001
Deferred income tax at the end of the year
Ps2,180,566
Ps2,178,853
Deferred income tax at the beginning of the year
(2,178,853)
(2,331,971)
Application to the loss from holding non-monetary
    assets
(248,651)
159,034
Deferred income tax of the year
(Ps246,938)
Ps5,916
As a result of modifications to the Income Tax
Law approved on January 1, 2002, the current income tax
rate of 35% will be reduced by 1% annually beginning in 2003
until it reaches a rate of 32% in 2005.
At December 31, 2002, deferred income tax
was calculated applying the income tax rate that will be
effective on the date of reversal of the temporary differences;
consequently, deferred income tax payable was reduced by
Ps156,716. This benefit is included in the provision for income
tax of the year 2002, as a part of deferred income tax.
At December 31, 2002, the Company and its
subsidiaries had an aggregate Ps77,720 of accumulated tax
losses, which can be applied against profits subject to income
tax arising in subsequent years, as shown below:
Year of
Restated
Year of
origin
amount
expiration
1998
Ps37,064
2008
2000
18,315
2010
2001
8,282
2011
2002
14,059
2012
Ps77,720
The foregoing tax loss carryforwards were
restated as of December 31, 2002 in accordance with the
provisions of the Income Tax Law.
According to the Mexican tax Law, the Company
must pay annually the higher of income or asset tax, which is
determined based on the average value of assets, less certain
liabilities established by Law.
F-20
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Asset tax payments, when higher than income tax,
are refundable and may be carried forward for ten years and
credited against future income tax to the extent it exceeds
future asset tax. The Company has the right to recover the asset
tax paid through 2002 in the aggregate amount of Ps15,277, as
shown below.
Year of
Restated
Year of
origin
amount
expiration
1993
Ps1,146
2003
1994
1,350
2004
1995
1,281
2005
1996
2,093
2006
1997
2,018
2007
1998
2,324
2008
1999
2,006
2009
2000
1,596
2010
2001
923
2011
2002
540
2012
Ps15,277
The asset tax amounts were restated in accordance
with the provisions of the Asset Tax Law.
In 2002, 2001 and 2000, the Company recorded
provisions of Ps142,583, Ps105,610 and Ps113,849 (Ps138,583,
Ps97,804 and Ps74,245 nominal amounts), respectively,
corresponding to employees' statutory profit sharing, which
were charged to income of those years.
Tax benefit:
During 2002, Tamsa received a favorable decision
in the injunction case brought by Tamsa against the Ministry of
Finance regarding tax inequality. This decision increased
recoverable income tax loss carryforwards of prior years, the
main effect of which was a benefit of Ps355,620 (Ps338,740
nominal), which is included in the provision for income tax,
asset tax and employees' statutory sharing in the statement
of income for the year ended December 31, 2002.
Note 7 — Balances and Transactions
with Related Parties:
The Company had the following balances with
related parties:
December 31,
2002
2001
Accounts and notes receivable
Ps1,162,015
Ps877,951
Advance payments for construction in progress
174
7,212
Accounts and notes payable
(335,007
)
(185,933
)
Other accounts payable
(44
)
F-21
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Transactions with related parties are summarized
as follows:
Years ended December 31,
2002
2001
2000
Revenues
Sales of pipe
Ps2,656,521
Ps2,894,687
Ps2,614,283
Rent and services
110,230
68,906
69,966
Interest earned
17,234
12,015
25,647
Purchases and expenses:
Purchase of raw materials and pipe
Ps565,654
Ps220,763
Ps366,174
Purchase of manufacturing equipment, tools and
    spare parts
8,138
8,052
16,070
Brokerage service commissions
173,589
166,255
119,999
Technical assistance and industrial support
4,116
11,259
30,833
Royalties
51,352
44,268
27,550
Investment in fixed assets
74,351
201,385
94,040
Plant maintenance
47,467
33,410
25,783
Other expenses
254,150
183,255
87,483
The Company maintains several operating
agreements with related parties derived from their strategic
alliance.
Note 8 — Other
Information:
Following are details of certain amounts included
in the consolidated balance sheets.
a.  Cash
and cash equivalents:
The Company places its investments with
high-credit-quality financial institutions. At December 31,
2002 and 2001, the Company had cash deposits amounting to
Ps4,125 and Ps62,616, respectively, the use of which is
restricted to guarantees granted in support of loans to
subsidiaries and to cover bid and performance bonds related to
export operations.
b.  Accounts
and notes receivable:
December 31,
2002
2001
Customers
Ps
1,245,950
Ps
775,337
Officers and employees
17,892
11,748
Recoverable income tax
6,753
Related parties
1,162,015
877,951
Other
218,778
164,853
2,651,388
1,829,889
Allowance for doubtful accounts
(68,499
)
(62,275
)
Ps
2,582,889
Ps
1,767,614
The majority of the Company's trade accounts
receivable are derived from sales to affiliated companies, which
make sales to unaffiliated companies that operate in the oil
exploration and production industry. The Company performs
ongoing credit evaluations of its customers' financial
condition, requires collateral whenever deemed necessary, and
maintains allowances for potential credit losses.
F-22
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
c.  Inventories:
December 31,
2002
2001
Raw materials
Ps
345,856
Ps
362,162
Finished and in-process goods
662,574
779,247
Supplies and spare parts
737,554
621,179
1,745,984
1,762,588
Allowance for obsolescence
(257,016
)
(234,007
)
Ps
1,488,968
Ps
1,528,581
d.  Prepaid
expenses and recoverable taxes:
December 31,
2002
2001
Other prepaid taxes
Ps
10,570
Ps
3,538
Debt issuance expenses and other
38,808
28,752
Deferred special maintenance expenses
—
37,242
Ps
49,378
Ps
69,532
e.  Other
accounts payable and accrued expenses:
December 31,
2002
2001
Income tax payable
Ps
61,430
Ps
95,309
Employees' statutory profit sharing payable
138,583
50,816
Other taxes payable
127,306
128,513
Interest and commissions payable
1,804
6,400
Related parties
—
44
Other
91,340
60,909
Ps
420,463
Ps
341,991
Note 9 — Information About Segments
and Foreign Operations:
Tamsa operates primarily in one industry segment,
the production and sale of seamless steel pipe used mainly in
oil exploration and production. The Company generates sales from
two geographic areas: Mexico and Venezuela. Sales from Venezuela
are generated through Tavsa.
F-23
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Net sales to individual foreign markets that
exceeded 10% of consolidated net sales are as follows:
2002
2001
2000
Net sales:
Mexico
Ps2,253,748
Ps2,140,692
Ps2,502,862
United States
369,328
365,331
264,285
Nigeria
518,801
210,130
108,043
Canada
317,029
414,881
447,620
Venezuela
387,400
1,287,787
1,167,920
Egypt
135,376
173,909
13,391
All other
2,746,593
2,306,297
1,958,886
Total
Ps6,728,275
Ps6,899,027
Ps6,463,007
Sales to companies serving the Mexican oil
industry were approximately 15% and 11% of net sales in the
years ended December 31, 2002 and 2001, respectively.
Following is a detail of additional disclosures
required by International Accounting Standard 14, "Segment
Reporting", regarding geographic areas in which the Company
operates:
As of and for the year ended December 31, 2002
Mexico
Venezuela
United States
Total
Balance sheet:
Total assets
Ps13,639,089
Ps507,458
Ps173,565
Ps14,320,112
Total liabilities
4,956,602
412,126
—
5,368,728
Income statement:
Depreciation and other non-cash expenses
(481,147
)
(20,160
)
—
(501,307
)
Other information:
Equity in income (loss) of associated
    companies
23,859
(39,906
)
—
(16,047
)
Capital expenditures
122,926
61,286
—
184,212
The Company has been involved in the following
events regarding its foreign commercial activities:
a.     In June 1995 the
US Department of Commerce (DOC) established compensatory
quotas of 23.79% applicable to the Oil Country Tubular Goods
(OCTG) exports, which was reduced to 21.79% in July 1996. During
the five years in which the antidumping order was applicable,
there were three administrative reviews in which no dumping
margin was found. In August 2000, Tamsa started a sunset review
process on this case. On March 9 and June 15, 2001, the
final resolutions of the US International Trade Commission were
issued, respectively, ratifying the continuation of the
antidumping order. Tamsa appealed these decisions, which it
considered as unjustified, before a North American Free Trade
Agreement (NAFTA) panel; also, the Mexican government is
preparing an appeal to the World Trade Organization.
b.   On June 30, 1999, the
DOC filed an antidumping complaint against manufacturers of
conduction seamless steel pipes of high and standard pressure
from Japan, Romania, South Africa, Mexico and the Czech
Republic. In July 2000, the final resolution on antidumping was
issued, resulting in the imposition of a margin of 15.05%. The
American industry agreed that line pipes installed in water
deeper than 1,500 feet (458 meters) would not be subject to
antidumping restrictions, since American steel manufacturers
cannot produce these types of pipes.
c.    In March 1999, Tamsa
(through the Mexican Ministry of Commerce and Industry,
currently the Ministry of Economics) requested the initiation of
an antidumping investigation and the application of
F-24
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
dumping margins on seamless steel pipe imports
from Japan. The request refers to seamless steel line pipe with
a diameter of 16 inches or less. In November 2000, the final
resolution was issued establishing compensatory quotas of 99.9%,
excluding pipe with a diameter smaller than 4 inches.
d.   In July 2002, Tamsa (through
the Ministry of Economics) requested the initiation of an
antidumping investigation and the application of dumping margins
on conduction steel pipe, for non-oil use with a diameter
smaller than 18 inches, imported from Russia and Romania. On
October 18, 2002, the initiation of the investigation was
published. The Company is currently responding to the complaints
made by the importers and the manufacturers. The Mexican
authorities have 130 business days (ending on April 18,
2003) from the initiation of the investigation, to issue a
preliminary resolution, in which compensatory quotas would be
established, if the investigation is continued.
e.     The Mexican steel
industry requested the Ministry of Economics to increase duties
on certain steel products from those countries that did not have
trade agreements with Mexico, in order to protect itself against
imports from those countries that cannot sell their products in
the US and divert them to Mexico as an alternative market. On
September 5, 2001, the Official Gazette published a decree
in which the duties on 41 tariffs were modified, including all
non-oil related seamless tubular products, as well as welded
steel fittings.
On March 15, 2002, duties for these products
were subject to an increase, from 25% to 35%; this increase was
motivated by the significant increase in imports from Eastern
Europe. On September 24, 2002, the Mexican Government
reduced these duties to 25%, which will be effective until
September 2003.
Note 10 — Fair Value of Financial
Instruments and Other Investments and Commitment:
The following methods and assumptions were used
by the Company in estimating the fair value of its financial
instruments:
Cash and cash equivalents, short-term investments
and accounts and notes receivable — The carrying
amounts approximate their fair market value.
Short-term notes payable to banks — The
carrying amounts of the Company's borrowings under its
short-term credit agreements approximate their fair value. These
liabilities are presented in the consolidated balance sheets at
their face value. The interest payable on these liabilities is
included in other accounts payable and accrued expenses and the
carrying amounts of these liabilities also approximate their
fair market values.
Derivative financial instruments — The
Company enters into forward contracts in foreign currencies,
metals and energy sources.
To hedge the decrease in natural gas market
price, on March 2, 2001, the Company entered into an
agreement with ENRON North America Corp. (ENRON) for a put
option to sell 200,000 million British Thermal Units
(BTU) of natural gas monthly, with a strike price of $4.05
dollars per million BTU from March 1, 2002 to
December 31, 2003. However, as a result of ENRON's
bankruptcy, there is no reasonable prospect of exercising the
Company's option under this contract, consequently the
premium of $2,290 paid to ENRON was written off in the last
quarter of 2001.
In order to cover its exposure from the contract
signed with Petróleos Mexicanos (PEMEX), mentioned below,
and to swap the fixed price from $4 dollars per million BTU
established in the contract to the market price, during March 27
and April 5, 2002, the Company entered into two option
contracts with Citibank, N. A., New York and JP Morgan Chase
Bank to sell 160,000 million BTU of natural gas monthly for
each contract, at a strike price of $4 dollars per million BTU
when market prices of natural
F-25
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
gas are not lower than $2 dollars and not higher
than $4 dollars per million BTU, for the period from May 1,
2002 to February 28, 2003; likewise, for the period from
March 1, to December 31, 2003, the strike price is $4
dollars per million BTU when market prices of natural gas are
not lower than $2.25 dollars and not higher than $4 dollars per
million BTU. Likewise, the Company is obligated to sell natural
gas at $4 dollars when market prices are higher than $4 dollars
for the period from May 1, 2002 to December 31, 2003.
Additionally, the Company is obligated to buy 320,000 million
BTU of natural gas monthly at a base price of $2.765 dollars per
million BTU, for the period from January 1, 2004 to
December 31, 2005. At December 31, 2002, the fair
value of these instruments was a liability of Ps29,567, which
was charged to income of the year as a part of cost of products
sold.
In order to hedge the exchange rate exposures on
receivables denominated in euros maturing in January and March,
2003, on December 10 and 13, 2002, the Company entered into
two forward contracts to sell EUR8,973 and EUR2,000 at a fixed
exchange rate of $1.003 and $1.0194 per EUR, respectively, with
maturities at January 31 and March 27, 2003,
respectively. At December 31, 2002, the Company recorded a
loss provision of $418; however, at the maturity of these
forward contracts the Company will realize an exchange gain of
$174.
Commitment:
On February 22, 2001, the Company entered
into a three-year agreement with PEMEX to receive approximately
296,600 million BTUs of natural gas, on a monthly basis,
for the period from January 1, 2001 to December 31,
2003, at a fixed price of $4.0 dollars per million BTU.
Note 11 — Investments in Associated
Companies:
Investments in associated companies are as
follows:
Cumulative
Cumulative
inflation
equity
and
Investments at
Historical
in
translation
December
December 31, 2002
% equity
cost
losses
adjustments
31, 2002
- Consorcio Siderurgia Amazonia, Ltd.
14.11
Ps895,726
(Ps1,021,239
)
Ps47,118
(Ps78,395
)
- Convertible debentures of Amazonia
—
214,583
—
245
214,828
- Sidtam, Ltd.
49.00
164,720
(5
)
7,584
172,299
- Complejo Siderúrgico de Guayana, C.A
7.58
66,317
—
52,622
118,939
- Other
—
46,092
35,453
8,481
90,026
Ps1,387,438
(Ps985,791
)
Ps116,050
Ps517,697
F-26
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Cumulative
Cumulative
inflation
equity
and
Investments at
Historical
in
translation
December
December 31, 2002
% equity
cost
losses
adjustments
31, 2001
- Consorcio Siderurgia Amazonia, Ltd.
14.11
Ps895,726
(Ps836,381
)
Ps122,531
Ps181,876
- Convertible debentures of Amazonia
—
214,583
—
(13,274
)
201,309
- Valuation allowance for investment in
    Amazonia and convertible debentures
—
(137,134
)
—
(7,818
)
(144,952
)
- Sidtam, Ltd.
49.00
164,720
(5
)
(3,260
)
161,455
- Complejo Siderúrgico de Guayana, C.A
7.58
66,317
—
52,622
118,939
- Goodwill in shares of TAVSA — Net
—
36,662
—
2,090
38,752
- Goodwill in shares of RIGA
—
12,979
—
1,048
14,027
- Other
—
25,171
11,595
6,179
42,945
Ps1,279,024
(Ps824,791
)
Ps160,118
Ps614,351
Consorcio
Siderurgia Amazonia, Ltd.
On January 27, 1998, Consorcio Siderurgia
Amazonia, Ltd. (Amazonia), of which Tamsa owned 12.5% through
its wholly-owned subsidiary Tamsider LLC, acquired 70% of CVG
Siderúrgica del Orinoco, C. A. (Sidor), a Venezuelan
company, for $1,202,000. The purchase price was subsequently
reduced by $150,000.
The share purchase agreement contains certain
covenants for Amazonia and its shareholders, for a period of
five years, that should be guaranteed by Amazonia's
shareholders to the Fondo de Inversiones de Venezuela (currently
The Venezuelan Bank of Economic and Social Development) and
Corporacion Venezolana de Guayana (CVG) for up to $150,000.
Covenants include the obligations to continue with Sidor's
operations, to supply the requirements of the Venezuelan market,
to make certain capital investments and to manage the labor
force, as well as the obligation to maintain majority ownership
of Sidor. This guarantee would be reduced to $125,000 in 2001
and to $75,000 in 2002, if there were no execution of the
guarantee in the immediately preceding year. At
December 31, 2002, Tamsa's maximum guarantee was
$9,375; this guarantee expired in January 2003.
Additionally, the stockholders of Amazonia
entered into an agreement under which it and its stockholders
were jointly liable to the Venezuelan government for certain
debt of Sidor amounting to $602,800. This guarantee was limited
only to any interest due and unpaid during the years ended
December 31, 1998 and 1999; however, from the third year
onwards it also covered any principal amounts due and unpaid.
On February 23, 2000, Amazonia and Sidor
completed the agreements with their creditors to restructure
their respective debts. The restructuring agreement with the
creditors of Amazonia and of Sidor required additional
contributions of $300,000 by the stockholders of Sidor, of which
$210,000 were provided indirectly by the stockholders of
Amazonia through the subscription of subordinated convertible
debt and through capital contributions, and the Company was
granted a two-year grace period before commencing repayments of
its restructured liabilities.
Tamsa's participation, via Tamsider LLC, was
$36,144, which included capital and interest due on prior loans
to Sidor of $18,866. A portion of the funds, $18,137, was
contributed as capital stock,
F-27
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
increasing Tamsider LLC's equity in Amazonia
from 12.5% to 14.1%, and the remainder as subscription of
convertible debentures of subordinated debt of $18,007 issued by
Amazonia. Tamsider LLC's participation included the portion
corresponding to Siderúrgica Venezolana Sivensa, S. A., a
stockholder of Amazonia, which was not in a position to
contribute additional funds.
As a result of the restructuring, Amazonia had
debt of approximately $245,000 (excluding the subordinated
convertible debt detailed later in this Note) and Sidor's
debt was approximately $1,200,000. Additionally, Sidor agreed to
assign a part of its fixed assets to a trust designating its
creditors as beneficiaries for up to $827,000. As of
December 31, 2002, Amazonia and Sidor had debt of
approximately $313,000 and $1,580,000, respectively. Tamsider
LLC's shares in Amazonia continue to be pledged to
Amazonia's creditors.
As a consequence of the worldwide steel industry
crisis, the slow-down in the financial markets, the adverse
economic and political situation in Venezuela and other adverse
factors, at December 31, 2002, Sidor was in default on
certain contractual obligations under the restructuring
agreement with its creditors and The Venezuelan Investment Fund,
such as: (i) payment of interest due on December 18,
2001, (ii) the deposit of payments of interest, in reserve
accounts, on certain debts as stated in the restructuring
agreements, and (iii) meeting certain financial ratios. As a
result of this default, Sidor's debt may be accelerated at
the option of its creditors.
Amazonia and Sidor have initiated in December
2001 negotiations with their creditors and The Venezuelan
Investment Fund to restructure their debt.
Tamsa accounts for its equity in the losses of
Amazonia, through its subsidiary, by translating Amazonia's
financial statements expressed in US dollars at the balance
sheet exchange rate. Additionally, Tamsa recognized a gain on
net monetary position corresponding to Amazonia of Ps77,894 and
Ps41,572 during 2002 and 2001, respectively, which is included
in the equity in loss of associated companies in accordance with
Statement B-15 issued by the MIPA.
Due to Sidor's financial situation, as a
result of the events mentioned above, at December 31, 2001,
Tamsider LLC recorded a valuation allowance of Ps154,688
($15,000) to reduce the value of its investment in Amazonia and
the subordinated convertible debentures, which was applied
against the equity in the result of Amazonia of the year 2002.
Tamsa's initial investment, made through Tamsider LLC, of
$87,800 and its additional capital contribution of $18,137 have
been reduced to Ps136,433 ($13,230) at December 31, 2002,
due to the recognition of Amazonia's losses using the
equity method of accounting. Assets of Tamsider LLC comprise
Amazonia's shares and the subordinated convertible
debentures.
At December 31, 2002, Tamsider LLC had a
maximum exposure of $98,799 corresponding to guarantees covering
Sidor's debt with The Venezuelan Bank of Economic and
Social Development (formerly The Venezuelan Investment Fund).
Note 12 — Reconciliation Between
Mexican (Mexican GAAP) and United States (US GAAP) Generally
Accepted Accounting Principles:
The Company's consolidated financial
statements are prepared in accordance with Mexican GAAP, which
differ in certain respects from US GAAP. The Mexican GAAP
consolidated financial statements include the effects of
inflation as provided for under Statement B-10,
"Recognition of the Effects of Inflation on Financial
Information". The application of this statement represents
a comprehensive measure of the effects of price level changes in
the Mexican economy, which for many years was hyperinflationary,
and is considered to result in a more meaningful presentation
than historical cost-based financial reporting for both Mexican
and U.S. accounting purposes.
F-28
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Therefore, the following reconciliations to US
GAAP do not include the reversal of such inflationary effects,
except for the valuation of machinery and equipment of foreign
origin since 1997, as explained later in this Note.
The main accounting differences between Mexican
GAAP and US GAAP are itemized in the reconciliations below (net
of any price-level gain or loss), to show their effects on net
income and shareholders' equity. Significant US GAAP
disclosure requirements that do not represent quantifiable
accounting differences are itemized and explained following the
reconciliations.
Reconciliation
of consolidated net income
Year ended December 31,
See
Sub-Note
2002
2001
2000
Net income corresponding to majority shareholders
    under Mexican GAAP
Ps1,177,049
Ps574,947
Ps439,319
Depreciation of machinery and equipment of
    foreign origin
(a
)
51,122
(17,248
)
(31,085
)
Deferred income taxes
(b
)
(8,682
)
72,709
103,948
Deferred employees' statutory profit sharing
(b
)
10,390
(17,084
)
21,377
Revenue recognition
(c
)
91,965
(28,893
)
(101,169
)
Purchase accounting differences affecting
    Company's investment in Amazonia, associated company
(e
)
—
109,631
5,704
Purchase accounting and pre-operating expense
    differences affecting the acquisition of TAVSA,
    subsidiary — Net of amortization
(e
)
41,917
19,376
27,476
Minority interest effect of adjustments
(12,575
)
(5,812
)
(8,243
)
Interest capitalized in construction in progress
(g
)
30,447
27,140
43,209
Net income under US GAAP
Ps1,381,633
Ps734,766
Ps500,536
Weighted average number of shares outstanding
339,284,120
339,284,120
339,284,120
Basic earnings per share computed under
US GAAP (in Mexican pesos)
Ps4.07
Ps2.17
Ps1.48
F-29
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Reconciliation
of comprehensive net income
Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income"
(SFAS 130), establishes rules for the reporting of
comprehensive income and its components. Comprehensive income
consists of net income, translation adjustments related to
foreign subsidiaries and loss from holding non-monetary assets.
The following table summarizes the components of comprehensive
income:
Years ended December 31,
2002
2001
2000
Net income under US GAAP
Ps1,381,633
Ps734,766
Ps500,536
Cumulative translation adjustment related to
    foreign subsidiaries
(64,548
)
(112,056
)
(149,567
)
Gain (loss) from holding non-monetary assets
145,409
(178,380
)
(121,016
)
Comprehensive net income under US GAAP
1,462,494
444,330
229,953
Cumulative comprehensive loss at the beginning of
    the year under US GAAP
(7,659,708
)
(8,104,038
)
(8,333,991
)
Cumulative comprehensive loss at the end of the
    year under US GAAP
(Ps6,197,214
)
(Ps7,659,708
)
(Ps8,104,038
)
Reconciliation
of shareholders' equity
At December 31,
See
Sub-
Note
2002
2001
2000
Shareholders' equity under Mexican GAAP
Ps8,963,714
Ps7,598,793
Ps7,755,730
Restatement of machinery and equipment of foreign
    origin
(a
)
2,537,969
3,174,297
2,885,915
Accumulated depreciation of machinery and
    equipment of foreign origin
(a
)
(68,109
)
(119,231
)
(101,982
)
Deferred income taxes
(b
)
(819,261
)
(1,059,238
)
(972,911
)
Deferred employees' statutory profit sharing
(b
)
(863,317
)
(873,707
)
(856,624
)
Revenue recognition
(c
)
(38,098
)
(130,063
)
(101,169
)
Purchase accounting differences affecting
    Company's investment in Amazonia, associated company
(e
)
(109,631
)
Purchase accounting and pre-operating expense
    differences affecting the acquisition of Tavsa,
    subsidiary — Net of accumulated amortization
(e
)
(41,917
)
(61,293
)
Minority interest effect of adjustments
12,575
18,388
Interest capitalized in construction in progress
(g
)
131,834
101,387
74,248
Shareholders' equity under US GAAP
Ps9,844,732
Ps8,662,896
Ps8,530,671
Analysis of
changes in shareholders' equity under US GAAP
2002
2001
2000
Balance at beginning of year
Ps8,662,896
Ps8,530,671
Ps8,620,894
Net income under US GAAP
1,381,633
734,766
500,536
Gain (loss) from holding non-monetary assets
145,409
(178,380
)
(121,016
)
Translation adjustment of foreign subsidiaries
(64,548
)
(112,056
)
(149,567
)
Dividends paid
(280,658
)
(312,105
)
(320,176
)
Balance at year end
Ps9,844,732
Ps8,662,896
Ps8,530,671
F-30
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
Significant differences between Mexican GAAP
and US GAAP
a.  Restatement
of machinery and equipment of foreign origin
In accordance with the Fifth Amendment to
Statement B-10, commencing in 1997 the Company elected to use
inflationary factors of the country of origin applied to the
acquisition costs expressed in the currency of origin, converted
to Mexican pesos at the year-end exchange rates. Under US GAAP,
this methodology does not comply with Rule 3-20 of the
Securities and Exchange Commission (SEC)'s
Regulation S-X for presenting price level adjusted
financial statements, and consequently, the Company has
determined the effects of the machinery and equipment of foreign
origin.
The difference between the machinery and
equipment of foreign origin restatement determined in accordance
with the Fifth Amendment to Statement B-10 compared to the
restatement using the NCPI would have resulted in a higher value
of these assets of Ps2,469,860 (net of accumulated depreciation
of Ps68,109) at December 31, 2002, and Ps3,055,066 (net of
accumulated depreciation of Ps119,231) at December 31, 2001.
b.  Deferred
income tax and employees' statutory profit
sharing
The Company follows the provisions of revised
Statement D-4, "Accounting Treatment of Income Tax, Asset
Tax, and Employees Profit Sharing". The provisions of
Statement D-4 require the full asset and liability method,
requiring the recognition of the deferred tax effects of all
temporary differences between accounting and tax values of
assets and liabilities.
Under US GAAP, the Company follows Statement of
Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes" (SFAS 109) to account
its deferred income tax and profit sharing. The provisions of
SFAS 109 require deferred income tax and profit sharing to be
recognized for all temporary differences including the benefits
from utilizing tax loss carryforwards and asset tax credits in
the year in which the loss or credits arise (subject to a
valuation allowance in respect of any tax benefits not expected
to be realized). The subsequent realization of these benefits
does not affect income.
The temporary differences under SFAS 109 are
determined based on the difference between the indexed tax-basis
amount of the asset or liability and the related restated amount
reported in the financial statements.
The deferred income tax expense or benefit is
calculated as the difference between: a) the deferred tax assets
and liabilities at the end of the current period determined as
indicated above, and b) the deferred tax assets and liabilities
reported at the end of the prior period remeasured to units of
current general purchasing power at the end of the current
period. The deferred employees' statutory profit sharing
expense or benefit is calculated similarly.
F-31
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
The significant components of income tax expense
under US GAAP were as follows:
Year ended December 31,
2002
2001
2000
Current tax
(Ps161,542
)
(Ps477,259
)
(Ps193,609
)
Deferred tax
238,256
66,793
(72,336
)
Total income tax
76,714
(410,466
)
(265,945
)
Current employees' statutory profit sharing
(142,583
)
(105,610
)
(113,849
)
Deferred employees' statutory profit sharing
10,390
(17,084
)
21,377
Total employees' statutory profit sharing *
(132,193
)
(122,694
)
(92,472
)
Asset tax
(2,927
)
(3,925
)
Total income tax, employees' statutory
    profit sharing and asset tax
(Ps58,406
)
(Ps537,085
)
(Ps358,417
)
*
Under US GAAP employees' statutory profit
    sharing is classified as a component of operating expenses.
F-32
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
The income tax and profit sharing effects of
significant items comprising the Company's net deferred
income tax and profit sharing assets and liabilities under US
GAAP are as follows:
December 31,
2002
2001
Deferred income tax liabilities
Current:
Inventories
Ps536,369
Ps489,399
Other
10,223
3,221
546,592
492,620
Property, plant and equipment
2,773,451
3,043,671
Total
3,320,043
3,536,291
Deferred income tax assets
Current:
Asset tax carryforwards
(13,970
)
(27,956
)
Tax loss carryforwards
(78,514
)
(54,319
)
Provisions
(99,206
)
(50,743
)
Revenue recognition
(12,953
)
(45,522
)
(204,643
)
(178,540
)
Noncurrent:
Other
(202,206
)
(205,853
)
(406,849
)
(384,393
)
Valuation allowance for deferred income tax of
    Tavsa
77,188
61,497
Net deferred income tax liability under US
    GAAP
2,990,382
3,213,395
Net deferred income tax liability under
    Mexican GAAP
2,171,121
2,154,157
US GAAP adjustment
Ps819,261
Ps1,059,238
Deferred employees' statutory profit
    sharing liability
Current:
Inventories
Ps130,582
Ps139,733
Other
2,534
921
133,116
140,654
Noncurrent:
Property, plant and equipment
803,215
813,780
936,331
954,434
Deferred employees' statutory profit
    sharing liability
Current:
Revenue recognition
(3,810
)
(13,006
)
Provisions
(12,940
)
(8,904
)
(16,750
)
(21,910
)
Noncurrent:
Other
(56,264
)
(58,817
)
(73,014
)
(80,727
)
Net deferred employees' profit sharing
    liability under US GAAP
Ps863,317
Ps873,707
F-33
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
c.  Revenue
recognition
In December 1999, the SEC issued SAB
No. 101, "Revenue recognition in Financial
Statements" which summarizes the SEC staff's
interpretation of US GAAP related to revenue recognition and
classification.
In late 1998, the Company initiated a stocking
program that provides just-in-time inventory services to its
customers around the world. Under Mexican GAAP, revenues are
recognized when materials are shipped to affiliated companies
that deliver the materials to the customers when requested.
Payments are subsequently made to the Company once the customers
have paid the affiliated companies for the materials supplied
under the terms of the agreements. Based on the guidance
provided in SAB 101, revenue would not be recognized until the
materials have been delivered to the customers and, accordingly,
the Company has retroactively adjusted its revenues and costs of
sales for materials that had not been delivered to its customers
as of December 31, 2002, 2001 and 2000.
The effect of prior years has been reported as a
cumulative effect of change in accounting principle at
December 31, 2000. Provided below is a summary of the
revenues and costs of sales which would be deferred as of
December 31, 2002, 2001 and 2000 under US GAAP.
December 31,
2002
2001
2000
Revenues
Ps150,884
Ps282,746
Ps289,054
Cost of goods sold
112,786
152,683
187,885
Ps38,098
Ps130,063
Ps101,169
d.  Use
of estimates
The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. Actual
results could differ from those estimates.
e.  Accounting
for workforce reduction programs and pre-operating
expenses
As explained in Note 11, the Company invested in
two companies in Venezuela in 1998 in connection with the
privatization of companies in the Venezuelan steel industry. As
part of these investments, the Company and its partners
developed business plans which contemplated workforce reductions
in both companies.
As a result of the Company's plans to reduce
the workforces in these companies, the liabilities associated
with the reductions were accrued by Sidor and Tavsa as of the
date of the acquisitions, which resulted in additional goodwill
under Mexican GAAP. During the last quarter of 2001, due to the
adverse financial condition of Sidor, the Company wrote off the
remaining balance. For US GAAP purposes, however, due to the
voluntary nature of the workforce reduction programs, as
required by Venezuelan labor laws and the terms of the
privatization agreements, the costs associated with these
programs would be considered as an expense of the period in
which the employees accepted the termination offers.
Due to the start-up nature of the operations at
Tavsa the Company deferred certain start-up costs. At
December 31, 2002, the Company had amortized all deferred
pre-operating expenses. At December 31, 2001 and 2000,
deferred pre-operating expenses amounted to Ps41,917 and
Ps61,293 (Ps29,342 and Ps42,905 net of minority interest),
respectively. Under US GAAP start-up costs are expensed as
incurred.
F-34
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
f.  Additional
information about termination benefits
Additional disclosures required by SFAS 132,
"Employers' Disclosures about Pensions and Other
Postretirement Benefits-an amendment of FASB Statements
No. 87, 88 and 106" are as follows:
December 31,
2002
2001
Change in benefit obligation:
Benefit obligation at the beginning of the year
Ps12,004
Ps9,787
Service cost
729
652
Interest cost
523
432
Actuarial losses
1,715
1,774
Benefits paid
(1,181
)
(1,071
)
Inflation effects
(263
)
430
Net liability position at the end of the year
Ps13,527
Ps12,004
December 31,
2002
2001
Change in plan assets:
Fair value of plan assets at the beginning of the
    year
Ps2,208
Ps1,454
Actual return on plan assets
37
815
Inflation effects
(118
)
(61
)
Fair value of plan assets at the end of the year
Ps2,127
Ps2,208
g.  Capitalization
of interest
Under Mexican GAAP, interest can be capitalized
on loans identified with construction projects.
Under US GAAP, interest is capitalized based upon
total interest incurred in relation to additions to construction
in progress. During 2002, 2001 and 2000, the Company would have
capitalized Ps38,032, Ps40,174 and Ps47,199, respectively, of
interest under US GAAP.
The adjustment for capitalized interest is
presented net of the effects of inflation and its corresponding
depreciation on a straight-line basis. Depreciation of
capitalized interest amounted to Ps7,585 in 2002, Ps13,034 in
2001 and Ps3,990 in 2000.
h.  Equity
method of accounting for Amazonia
Under US GAAP, a company normally uses the equity
method when it owns more than 20% but less than a controlling
interest in an investee, provided that it can demonstrate that
it has the ability to exercise significant influence over the
investee's operating and financial policies.
At December 31, 2002 and 2001, Tamsa had a
14.1% interest in Amazonia; however, it has elected to account
for this investment using the equity method since Tamsa forms
part of the Techint Group, which had a combined interest of
39.5% in Amazonia at December 31, 2002 and 2001.
i.  Statement
of cash flows
Under US GAAP, a statement of cash flows is
prepared based on the provisions of SFAS 95, "Statement of
Cash Flows". This statement does not provide specific
guidance for the preparation of cash flows statements for
price-level-adjusted financial statements. Cash flows from
operating, investing and financing activities in the following
statement of cash flows have been adjusted for the effects of
inflation
F-35
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
on monetary items. The effects of exchange rate
changes and inflationary effects on cash have also been
segregated from other cash flow activities.
Year ended December 31,
2002
2001
2000
Resources provided by operations:
Net income under US GAAP
Ps1,381,633
Ps734,766
Ps500,536
Adjustments to reconcile net income to resources
    provided by operating activities:
Monetary gain
(59,340
)
(24,225
)
(24,810
)
Minority interest
(28,451
)
9,501
(9,583
)
Depreciation and other
487,338
451,059
448,089
Equity in loss of associated companies
16,047
181,299
46,906
Deferred income taxes and employees'
    statutory profit sharing
(248,646
)
(49,709
)
50,959
Exchange loss
224,870
46,336
89,518
(Increase) decrease in accounts and notes
    receivable
(995,203
)
111,617
(870,298
)
Decrease (increase) in inventories
207,599
(199,577
)
37,581
(Increase) decrease in prepaid expenses and
    recoverable taxes
(36,181
)
207,043
140,623
Increase (decrease) in trade accounts payable
333,745
(237,493
)
315,584
Increase (decrease) in other accounts
    payable and accrued expenses
109,350
(3,067
)
152,906
Total adjustments
11,128
492,784
377,475
Resources provided by operations
1,392,761
1,227,550
878,011
Resources used in investing activities:
Purchase of associated companies
(2,740
)
(52,606
)
(24,667
)
Purchase of convertible subordinate debentures
—
—
(185,566
)
Purchase of property, plant and equipment
(222,244
)
(878,326
)
(495,305
)
Resources used in investing activities
(224,984
)
(930,932
)
(705,538
)
Resources used in financing activities:
Increase in short-term debt
399,964
633,462
1,006,715
Decrease in short-term debt
(340,195
)
(742,955
)
(1,873,673
)
Increase in long-term debt
—
1,342,410
1,047,969
Repayments of long-term debt
(53,892
)
(969,490
)
Dividends paid
(280,658
)
(312,105
)
(320,176
)
Resources used in financing activities
(274,781
)
(48,678
)
(139,165
)
Net increase in cash and equivalents
892,996
247,940
33,308
Effect of exchange rate changes and inflationary
    effects on cash and equivalents
(61,192
)
40,238
49,238
Cash and cash equivalents at beginning of year
    (nominal figures)
556,885
300,454
249,020
Cash and cash equivalents at end of year
Ps1,388,689
Ps588,632
Ps331,566
Supplemental cash flow information:
Interest paid net of interest capitalized
Ps50,712
Ps101,459
Ps143,108
Income tax and asset tax paid
Ps280,167
Ps370,392
Ps318,132
Other non-cash activities:
Investment in associated companies through the
    capitalization of accounts receivable
Ps18,659
Ps8,266
Ps194,418
F-36
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
j.  Recently
issued accounting pronouncements
In July 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No. 141, "Business
Combinations" (SFAS 141) which supersedes APB Opinion
No. 16, "Business Combinations" and amends or
supersedes a number of related interpretations of APB 16. The
statement is effective for all business combinations initiated
after June 30, 2001 and for all business combinations
accounted for by the purchase method that are completed after
June 30, 2001. SFAS 141 addresses financial accounting and
reporting for business combinations, eliminates the
pooling-of-interests method of accounting for business
combinations, and prescribes the initial recognition and
measurement of goodwill and other intangible assets, accounting
for negative goodwill and the required disclosures in respect of
business combinations. The adoption of SFAS 141 did not have a
material effect on the consolidated financial statements.
Also in July 2001, the FASB issued SFAS
No. 142, "Goodwill and Other Intangible Assets"
(SFAS 142), which supersedes APB Opinion No. 17,
"Intangible Assets". SFAS 142 addresses how intangible
assets that are acquired individually or with a group of other
assets (but not those acquired in a business acquisition) should
be accounted for in financial statements upon their acquisition.
SFAS 142 also addresses how goodwill and other intangible assets
should be accounted for after they have been initially
recognized in the financial statements. The provisions of SFAS
142 are required to be applied starting with fiscal years
beginning after December 15, 2001. SFAS 142 is required to
be applied at the beginning of an entity's fiscal year and
to be applied to all goodwill and other intangible assets
recognized in its financial statements at that date. The
adoption of SFAS 142 did not have a material effect on the
consolidated financial statements.
In June 2001, the FASB issued SFAS No. 143,
"Accounting for Asset Retirement Obligations" (SFAS
143). SFAS 143 requires the recognition of a liability for the
legal obligations associated with the retirement of a tangible
long-lived asset that results from the acquisition, construction
and/or normal operation of the asset. The liability is
recognized at fair value in the period in which it is incurred
if a reasonable estimate of fair value can be made. A
corresponding asset retirement cost is added to the carrying
value of the long-lived asset and is depreciated to expense
using a systematic and rational method over its useful life.
SFAS 143 is effective for fiscal years beginning after
June 15, 2002. Upon initial adoption, a liability is
recognized for existing asset retirement obligations and the
associated asset retirement cost is capitalized as an increase
to the carrying value of the asset. The recognized liability and
asset are adjusted for cumulative accretion and accumulated
depreciation, respectively, from the time period when the asset
retirement obligation would have originally been recognized had
this statement been in effect to the date of initial adoption.
The cumulative effect of initial adoption of SFAS 143 is
recorded as a change in accounting principle. Management is
currently evaluating the impact that the adoption of SFAS 143
will have on the consolidated financial statements.
In August 2001, the FASB issued SFAS
No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" (SFAS 144). SFAS 144 supersedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of" and the
accounting and reporting provisions of APB Opinion No. 30,
"Reporting the Results of Operations — Reporting
the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions". SFAS 144 retains the fundamental provisions
of SFAS 121 for recognition and measurement of the impairment of
long-lived assets to be held and used, but resolves a number of
implementation issues and establishes a single accounting model
for assets to be disposed of. SFAS 144 also retains the
requirements to report discontinued operations separately from
continuing operations and extends that reporting to a component
of an entity that either has been disposed of by sale,
abandonment or distribution to owners or is classified as held
for sale. The provisions of SFAS 144 are effective for financial
statements issued for fiscal years beginning after
December 15, 2001 and their interim periods.
F-37
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
The provisions of SFAS 144 for long-lived assets
to be disposed of by sale or otherwise are effective for
disposal activities initiated after the effective date of SFAS
144 or after its initial application. The adoption of SFAS 144
did not have a material effect on the consolidated financial
statements.
In April 2002, the FASB issued SFAS No. 145,
"Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS
13, and Technical Corrections as of April 2002." SFAS 145
rescinds SFAS No. 4, "Reporting Gains and Losses from
Extinguishment of Debt," SFAS No. 44, "Accounting
for Intangible Assets of Motor Carriers," and SFAS 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements." As a result, gains and losses from
extinguishment of debt will no longer be classified as
extraordinary items unless they meet the criteria of unusual or
infrequent as described in Accounting Principles Boards Opinion
30, "Reporting the Results of Operations —
Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." In addition, SFAS 145 amends SFAS
No. 13, "Accounting for Leases," to eliminate an
inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease
modifications that have economic effects that are similar to
sale-leaseback transactions. SFAS 145 also amends other existing
authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability
under changed conditions. SFAS 145 is effective for fiscal years
beginning after May 15, 2002. Management is currently
evaluating the impact that the adoption of SFAS 145 will have on
the consolidated financial statements.
In June 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS 146"). The issuance of SFAS
146 nullifies the former guidance provided by the Emerging
Issues Task Force ("EITF") Issue No. 94-3,
"Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)" ("EITF
94-3"). SFAS 146 requires the recognition of a liability
for costs associated with exit or disposal activity when the
liability is incurred, rather than on the date commitment to an
exit or disposal plan. SFAS 146 is effective for liabilities,
related to exit or disposal activities, which are incurred after
December 31, 2002, while earlier application is encouraged.
Management is currently evaluating the impact that the adoption
of SFAS 146 will have on the consolidated financial statements.
In October 2002 the FASB issued SFAS No. 147
"Acquisitions of Certain Financial Institutions" (SFAS
147), an amendment of SFAS No. 72 and 144 and FASB
Interpretation No. 9. SFAS 147 provides guidance for
(1) the accounting and reporting for the acquisition of all
or part of a financial institution, excluding those transactions
between two or more mutual enterprises and (2) accounting
for the impairment or disposal of long-term customer
relationship intangible assets of financial institutions,
including the long-term customer-relationship intangibles of
mutual enterprises. The provisions of SFAS 147 regarding the
method of accounting to be used for acquisitions of financial
institutions are effective for acquisitions for which the date
of the acquisition is on or after October 1, 2002. The
guidance for the impairment or disposal of long-term customer
relationship intangible assets of financial institutions,
including mutual enterprises, is effective on October 1,
2002. The Company management believes that the adoption of SFAS
147 will not have a material impact on the consolidated
financial statements.
In December 2002, the FASB issued SFAS
No. 148, "Accounting for Stock-Based
Compensation — Transition and Disclosure —
an amendment of FAS 123" (SFAS 148). As the title of the
standard implies, it is fairly limited in its scope, however it
will have implications for all entities that issue stock-based
compensation to their employees. The standard is intended to
encourage the adoption of the accounting provisions of SFAS 123.
It is also intended to address constituent concerns about the
so-called "ramp-up effect" on net income that resulted
from the application of the transition guidance originally
required by SFAS 123. The transition and annual disclosure
provisions of SFAS 148 are effective for fiscal years ending
after December 15, 2002. Early application is permitted,
provided that the entity has not yet issued its
F-38
Table of Contents
TUBOS DE ACERO DE MEXICO, S. A. AND
SUBSIDIARIES
(a subsidiary of Tenaris, S. A.)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2002, 2001 AND 2000
fiscal 2002 financial statements. The new interim
disclosure provisions are effective for the first interim period
beginning after December 15, 2002. The Company management
believes that the adoption of SFAS 148 will not have a material
impact on the consolidated financial statements.
Guillermo Vogel H.
Claudio Gugliuzza
Vice Chairman of the Board
Administrative Director
F-39
Table of Contents
STATUTORY AUDITOR'S REPORT
February 21, 2003
To the General Meeting of Shareholders of Tubos
de Acero de México, S.A.
In my capacity as Statutory Auditor and in
accordance with the Article 166 of the General Corporations
Law and with the company's by laws, I submit my report upon
the correctness, sufficiency and fairness of the financial
information that the Board of Directors has presented to your
attention in relation with the Company's operations for the
year ended December 31, 2002.
I attended the stockholders' meetings and
the meetings of the Board of Directors to which I have been
called, and obtained from Management the information on
operations, documentation and records that I considered it
necessary to examine. My review has been performed in accordance
with auditing standards generally accepted in Mexico.
In my opinion, the accounting and reporting
policies and criteria followed by the Company and applied by
Management in preparing the financial information presented to
this Meeting are appropriate and adequate and have been applied
on a basis consistent with that of the previous year; therefore,
such information correctly, fairly and adequately presents the
financial position of Tubos de Acero de México, S. A. and
subsidiaries at December 31, 2002 and the results of its
operations, the changes in its stockholders' equity and the
changes in its financial position for the year then ended, in
conformity with accounting principles generally accepted in
Mexico.
F-40
Table of Contents
SIGNATURES
The registrant hereby certifies that it meets all the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.
June 27, 2003
TUBOS DE ACERO DE MEXICO, S.A.
By:
/s/ Gerardo Varela
Name:
Gerardo Varela
Title:
Chief Financial Officer
By:
/s/ Cecilia Bilesio
Name:
Cecilia Bilesio
Title:
Assistant to Chairman of the Board of Directors
and Corporate Affairs
Table of Contents
CERTIFICATIONS
Certification of Chief Executive Officer
I, Paolo Rocca, certify that:
1.
I have reviewed this annual report on Form 20-F of Tubos de Acero de
México, S.A.;
2.
Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4.
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
(a)
Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
(b)
Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
(c)
Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a)
All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b)
Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6.
The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: June 27, 2003
/s/ Paolo Rocca
Paolo Rocca
Chief Executive Officer
Table of Contents
Certification of Chief Financial Officer
I, Gerardo Varela, certify that:
1.
I have reviewed this annual report on Form 20-F of Tubos de Acero de
México, S.A.;
2.
Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4.
The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
(a)
Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
(b)
Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
(c)
Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5.
The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a)
All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b)
Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6.
The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: June 27, 2003
/s/ Gerardo Varela
Gerardo Varela
Chief Financial Officer
Table of Contents
EXHIBIT INDEX
Exhibit
Number
Description
1.1
By-laws of Tamsa, as amended as of April 30, 2003.*
2.1
Deposit Agreement dated as of January 1, 1964, as amended and
restated as of June 1, 1991, October 15, 1991, July 1, 1993 and
September 12, 1996, and amended as of July 9, 2001, between
Tamsa, JPMorgan Chase Bank, formerly known as Morgan Guaranty
Trust Company of New York, as depositary, and the holders of
American Depositary Receipts (such agreement is incorporated
herein by reference to the Registration Statement on Form F-6
relating to the ADSs (File Nos. 33-41380, 33-35558 and
333-13702) filed with the SEC on July 9, 2001).
2.2
Amendment, dated as of May 28, 2003, to the Deposit Agreement
dated as of January 1, 1964, as amended and restated as of June
1, 1991, October 15, 1991, July 1, 1993 and September 12, 1996,
and amended as of July 9, 2001, between Tamsa, JPMorgan Chase
Bank, formerly known as Morgan Guaranty Trust Company of New
York, as depositary, and the holders of American Depositary
Receipts (such agreement is incorporated herein by reference to
the Registration Statement on Form F-6 relating to the ADSs
(File Nos. 33-41380, 33-35558 and 333-13702) filed with the SEC
on May 28, 2003).
4.1
Atlas Bradford Technology Sublicense Agreement, dated May 24,
2002, between Tenaris Connections B.V. and Tamsa.
4.2
Tenaris Premium Connections Technology License Agreement, dated
July 10, 2002, between Tenaris Connections B.V. and Tamsa, and
Addendum thereto, dated November 10, 2002.
4.3
Service Agreement dated as of August 30, 2001, between Tamsa and
Exiros México, S.A. de C.V. (such agreement is incorporated
herein by reference to Tamsa's annual report on Form 20-F for
the fiscal year 2001).*
4.4
Amended and Restated Export Agency Agreement, dated as of
October 4, 2000 between Tamsa and Techint Engineering L.L.C.
(such agreement is incorporated herein by reference to Tamsa's
annual report on Form 20-F for the fiscal year 2000).
4.5
Assignment Agreement, dated October 15, 2002, between Techint
Engineering LLC and Tenaris Global Services LLC relating to the
assignment of export agency agreements (such agreement is
incorporated herein by reference to the Registration Statement
on Form F-4 by Tenaris S.A., File No. 333-99769)
4.6
NKK-Premium Connections Technology and Trademark Sublicense
Agreement, dated as of October 2, 2000, between DST Connection
Systems BV and Tamsa (such agreement is incorporated herein by
reference to Tamsa's annual report on Form 20-F for the fiscal
year 2000).
4.7
Business Opportunities Agreement dated as of March 30, 2001
between Tamsa, Siderca and Dalmine (such agreement is
incorporated herein by reference to Tamsa's annual report on
Form 20-F for the fiscal year 2000).
4.8
Just-In-Time Agreement dated as of March 23, 2001 between Tamsa
and Pemex Exploración y Producción (such agreement is
incorporated herein by reference to Tamsa's annual report on
Form 20-F for the fiscal year 2000).
8.1
List of Tamsa subsidiaries.
* English translation.