TCRLA_Public/041027.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                    L A T I N   A M E R I C A

           Wednesday, October 27, 2004, Vol. 5, Issue 213

                            Headlines


A R G E N T I N A

AIRSYS S.A.: Reports Submission Set
BANCO B.I. CREDITANSTALT: $250M Bonds Carry Default Rating
BANCO RIO: US$1.75B of Bonds Get BBB(arg) Rating from Fitch
BREMAR S.R.L.: Court Designates Trustee For Bankruptcy
CIE: Local S&P Retains Default Ratings To Bonds

CRESUD: To Pay Cash Dividends Totaling $3M
DELCO SERVICIOS: Court Schedules Report Submission
EYS COMPUTACION: Court Orders Liquidation
IMPSA: Moody's Maintains D Rating on Bonds
LANSTON S.A.: Initiates Bankruptcy Proceedings

MADET S.A.: Court Converts Bankruptcy to Reorganization
MENDOZA BURSATIL: Verification Deadline Moved
MULTICANAL: $719M of Bonds Remain on Junk Level
PEHUEN VIAL: Liquidates Assets to Pay Debts
PROIN ALIMENTOS: Court Grants Reorganization Plea

SANCOR COOP: Local Moody's Issues Default Rating
* ARGENTINA: To File Debt Prospectus With SEC Soon


B R A Z I L

EMBRATEL: Adds Two New Satellites
KLABIN: Records Net Profit of BRL366Mln up to September 2004
PARMALAT BRAZIL: Operations Return to Normal After Scandal
RBS PARTICIPACOES: S&P Issues Update on Ratings
VASP: TAM Takes Over One of its Routes


M E X I C O

AHMSA: EBITDA Jumps to $350M in First 9 Months
CYDSA: Creditors Take Over, Outline Rescue Plan
GRUPO MEXICO: Cananea, La Caridad Workers Halt Strike
GRUPO MEXICO: Fitch Places Ratings on Watch Positive
GRUPO SIMEC: Net Sales Jump 85% in 1st 9 Mos. of 2004

HYLSAMEX: Generates $232M EBITDA in 3Q04


V E N E Z U E L A

BELLSOUTH CORP.: Posts $5.1B Consolidated Revenue for 3Q04

     -  -  -  -  -  -  -  -

=================
A R G E N T I N A
=================

AIRSYS S.A.: Reports Submission Set
-----------------------------------
Mr. Gustavo Alejandro Pagliere, the trustee assigned to
supervise the reorganization of Airsys S.A., will submit the
validated individual claims for Court approval on February 16,
2005. These reports explain the basis for the accepted and
rejected claims. The trustee will also submit a general report
on April 1, 2005. The informative assembly is scheduled on
September 29, 2005.

Infobae reports that Court no. 4 of Buenos Aires' civil and
commercial has jurisdiction over this bankruptcy case. Clerk no.
8 assists the Court with the proceedings.

CONTACT: Mr. Gustavo Alejandro Pagliere, Trustee
         Tucuman 1424
         Buenos Aires


BANCO B.I. CREDITANSTALT: $250M Bonds Carry Default Rating
----------------------------------------------------------
Fitch Argentina Calificadora de Reisgo S.A. retains the `D(arg)'
rating previously assigned on US$250M worth of bonds issued by
Banco B.I. Creditanstalt S.A.

Comision Nacional de Valores, Argentina's securities regulator,
labeled the affected bonds as "Programa Global de Emision de
Oblig. Negociables a Mediano Plazo". This bond issue matured on
July 28, 2000.

The rating action was taken based on the Company's finances as
of June 30, 2004.

CONTACT: Banco B.I. Creditanstalt S.A.
         Bouchard 547, 24o y 25o, 1106
         Buenos Aires
         Tel: (11) 4319-8400
         Fax: (11) 4319-8230
         e-mail: bicreditanstalt.com.ar

         Web Site: www.bicreditanstalt.com.ar


BANCO RIO: US$1.75B of Bonds Get BBB(arg) Rating from Fitch
-----------------------------------------------------------
Fitch Argentina Calificadora de Riesgo S.A. retained the
'BBB(arg)' rating given to these bonds issued by Banco Rio de la
Plata S.A.

- US$500 million worth of 'Program' described as "Programa
  Global de Obligaciones Negociables de Corto Plazo;" and

- US$1 billion worth of 'Program' described as "Programa de
  Obligaciones Negociables tramo subordinado por
  US$1000.000.000."

The maturity dates of all the issues were not disclosed.

The rating action, which was taken based on the Company's
financial status as of June 30, 2004, means that the issue
carries an adequate credit risk relative to other issues in
Argentina.

Banco Rio de la Plata, the Argentine subsidiary of Spanish
financial group Grupo Santander (NYSE: STD), is one of
Argentina's three largest private sector banks.

CONTACT:  BANCO RIO DE LA PLATA S.A.
          Bartolome Mitre 480
          1036 Buenos Aires, Argentina
          Phone: +54-14-341-1081-1580
          Fax: +54-14-341-1074-1084
          Home Page: http://www.bancorio.com.ar

          Ms. Ana Patricia B. S. de Sautuola y O'Shea
          Chairman
          Mr. Jose L. E. Cristofani
          Executive Vice Chairman and CEO
          Mr. Pablo Caride
          Corporate Finance


BREMAR S.R.L.: Court Designates Trustee For Bankruptcy
------------------------------------------------------
Buenos Aires accountant Jorge Serrano was assigned trustee for
the bankruptcy of local company Bremar S.R.L., relates Infobae.
The city's civil and commercial Court no. 24 holds jurisdiction
over the Company's case.

The trustee will verify creditors' claims until March 31 next
year, the source adds. After that, he will prepare the
individual reports, which are to be submitted to the Court on
April 12, 2005. The general report should follow on June 27,
2005.

CONTACT: Mr. Jorge Serrano, Trustee
         Uruguay 662
         Buenos Aires


CIE: Local S&P Retains Default Ratings To Bonds
-----------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
maintained the default ratings assigned to a total of US$220
million of corporate bonds issued by local company Compania de
Inversiones de Energia S.A.

Argentina's securities regulator, the CNV described the bonds as
"Obligaciones Negociables autorizadas por AGE de fecha
13.12.96", under "Simple". The bonds matured in April last year.

The rating was taken based on the Company's finances as of June
30, 2004.


CRESUD: To Pay Cash Dividends Totaling $3M
------------------------------------------
Cresud Sociedad Anonima Comercial Inmobiliaria (Cresud) reported
through a letter filed with the Bolsa de Comercio de Buenos
Aires and with the Comision Nacional de Valores on October 22,
2004 that among the items discussed in the shareholders meeting
held on October 22, 2004, the distribution of a cash dividend
for the amount of $3,000,000 was resolved, instructing to the
Board of Directors to decide the implementation process.

Also, and in relation to the shareholders' personal income tax
(impuesto a los bienes personales ) said tax will be absorbed by
the Company.

Finally, the creation of a Global Program for the Issue of
Simple Corporate Bonds, Not Convertible into Shares, with
special, ordinary or floating guarantee, or guaranteed by third
parties, and for a maximum outstanding amount of up to
US$30,000,000 (Thirty million US dollars) or its equivalent in
any currency, pursuant to the provisions set forth in Law No. 23
576 was approved.

CONTACT: Cresud S.A.C.I.F. y A
         Av. Roque Saenz Pena 832
         8th Fl.
         Buenos Aires
         Argentina
         Phone: 001-54-1-3287808


DELCO SERVICIOS: Court Schedules Report Submission
--------------------------------------------------
Court-appointed trustee Alicia Irene Kurlat will submit the
validated individual claims for Court approval on December 3.
These reports explain the basis for the accepted and rejected
claims. Ms. Kurlat will also submit a general report on April 4,
2005.

Infobae reports that Court no. 18 of Buenos Aires' civil and
commercial tribunal has jurisdiction over this bankruptcy case.
Clerk no. 35 assists the Court with the proceedings.

CONTACT: Delco Servicios S.R.L.
         Azara 1342
         Buenos Aires

         Ms. Alicia Irene Kurlat, Trustee
         Carlos Pellegrini 1079
         Buenos Aires


EYS COMPUTACION: Court Orders Liquidation
-----------------------------------------
Eys Computacion S.A. prepares to wind-up its operations
following the bankruptcy pronouncement issued by Court no. 7 of
Buenos Aires' civil and commercial tribunal. The declaration
effectively prohibits the company from administering its assets,
control of which will be transferred to a Court-appointed
trustee.

Infobae reports that the Court appointed Ms. Jorge Luis Berisso
as trustee. He will be reviewing creditors' proofs of claims
until December 22.

Clerk no. 14 assists the Court on this case that will end with
the disposal of the company's assets to repay its liabilities.

CONTACT: Mr. Jorge Luis Berisso, Trustee
         Paraguay 866
         Buenos Aires


IMPSA: Moody's Maintains D Rating on Bonds
------------------------------------------
Argentina's securities regulator, CNV, reports that Moody's
Latin America Calificadora de Riesgo S.A. is maintaining a `D'
rating on US$150 million worth of bonds issued by Industrias
Metalurgicas Pescarmona.

The affected bonds are described as "2Ý Serie emitida por U$S
150 millones del Programa Global de U$S 250 millones " that
matured on May 30 2002.

The rating action was taken based on the Company's financial
status as of July 31, 2004.

CONTACT: Industrias Metalurgicas Pescarmona
         Rodriguez Pena 2451
         Godoy Cruz, Mendoza
         Argentina

         Telephone: 54 1 315 2400
         Fax: 54 1 315 2388


LANSTON S.A.: Initiates Bankruptcy Proceedings
----------------------------------------------
Court no. 6 of Buenos Aires' civil and commercial tribunal
declared local company Lanston S.A. "Quiebra," reports Infobae.

Ms. Sandra Dallo, who has been appointed as trustee, will verify
creditors' claims until March 18, 2005 and then prepare the
individual reports based on the results of the verification
process.

The individual reports will then be submitted in Court on May 3,
2005, followed by the general report on June 15, 2005.

Clerk no. 12 assists the Court on the case that will close with
the liquidation of the Company's assets to repay creditors.

CONTACT: Ms. Sandra Dallo, Trustee
         Tucuman 1711
         Buenos Aires


MADET S.A.: Court Converts Bankruptcy to Reorganization
-------------------------------------------------------
Madet S.A. will proceed with reorganization after Court no. 6 of
Buenos Aires' civil and commercial tribunal converted the
Company's ongoing bankruptcy case into a "concurso preventivo",
states Infobae.

Under Insolvency protection, the Company will be able to draft a
proposal designed to settle its debts with creditors. The
reorganization also prevents an outright liquidation.

Mr. Luis Orlando Benedossi, the Court-appointed trustee, will
verify creditors' proofs of claims "por via incidental."

CONTACT: Mr. Luis Orlando Benedossi, Trustee
         Bernardo de Yrigoyen 330
         Buenos Aires


MENDOZA BURSATIL: Verification Deadline Moved
---------------------------------------------
Court no. 6 of Buenos Aires' civil and commercial tribunal reset
key events in the Mendoza Bursatil S.A. bankruptcy case to these
dates:

1. Credit Verification Deadline - December 3, 2004
2. Submission of Individual Reports - February 17, 2005
3. Submission of the General Report - April 4, 2005

All proof of claims must be forwarded to trustee Norberto Markel
for verifications before the said deadline.

CONTACT: Mr. Norberto Markel, Trustee
         Tucuman 1657
         Buenos Aires


MULTICANAL: $719M of Bonds Remain on Junk Level
-----------------------------------------------
The Argentine arm of Standard & Poor's maintains an `raD' rating
to a total of US$719 million of bonds issued by Argentine
company Multicanal S.A., according to the CNV.

The bonds, which carry the same rating, are:

-- US$125 million of "Obligaciones Negociables simples, con
vencimiento a 10 anos, autorizada poa AGOyE de fecha 7.10.96",
due on February 1, 2007. These were classified under "Simple
Issue"

-- US$125 million of "Obligaciones Negociables simples, con
vencimiento a 5 anos, autorizadas por AGOyE de fecha 7.10.96",
which matured in February 2002, and classified under "Simple
issue".

-- US$150 million of "SERIE C, bajo el Programa de U$S 1050
millones", due on April 15, 2018. These were classified under
"Series and/or Class".

--US$175 million of "Serie E de Ons, bajo el Programa de U$S
1050 millones", also under "series and/or class". The bonds will
mature on April 15, 2009.

-- US$144 million of bonds called "Serie J de ON bajo el
Programa de ON de USD 1050 MM", with undisclosed maturity date.
These bonds are classified as "Series and/or Class."

The rating was given based on the Company's financial status as
of June 30, 2004.


PEHUEN VIAL: Liquidates Assets to Pay Debts
-------------------------------------------
Pehuen Vial S.R.L. will begin liquidating its assets following
the pronouncement of the city's civil and commercial Court no.
26 that the company is bankrupt, Infobae reports.

The bankruptcy ruling places the Company under the supervision
of Court-appointed trustee, Ms. Maria Silvia Cosoli. The trustee
will verify creditors' proofs of claims until December 22.
Afterwards, the validated claims will be presented in Court as
individual reports on February 17, 2005.

The trustee will also submit a general report, containing a
summary of the Company's financial status as well as relevant
events pertaining to the bankruptcy on March 31, 2005.

CONTACT: Pehuen Vial S.R.L.
         Avda Rivadavia 882
         Buenos Aires

         Ms. Maria Silvia Cosoli, Trustee
         Uruguay 750
         Buenos Aires


PROIN ALIMENTOS: Court Grants Reorganization Plea
-------------------------------------------------
Proin Alimentos S.A., a company operating in Buenos Aires,
begins reorganization proceedings after the Court no. 22 of the
city's civil and commercial tribunal, with the assistance of
clerk no. 44, granted its petition for "concurso preventivo".

During the reorganization, the Company will be able to negotiate
a settlement proposal for its creditors so as to avoid a
straight liquidation.

According to Argentine news source Infobae, the reorganization
will be conducted under the direction of accounting firm "Bejar,
Pantin y Asociados."

Creditors with claims against the Company must present proofs of
the indebtedness to the trustee before December 9. These claims
will constitute the individual reports to be submitted in Court
on February 22, 2005.

The Court also requires the trustee to present an audit of the
company's accounting and business records through a general
report due on April 5, 2005.

Creditors are scheduled to ratify the settlement plan prepared
by the Company at the informative assembly on August 17, 2005.

CONTACT: "Bejar, Pantin y Asociados"
         Trustee
         Suipacha 211
         Buenos Aires


SANCOR COOP: Local Moody's Issues Default Rating
------------------------------------------------
Moody's Latin America Calificadora de Riesgo S.A. maintains a
`D' rating on US$300 million worth of corporate bonds issued by
Sancor Coop. Unidas Ltda. under `Program.' The bonds affected
were described as "Titulos de Deuda de Mediano Plazo", the CNV
reports, without revealing the maturity date of the issue.

The rating given is based on the Company's financial standing as
of June 30, 2004.


* ARGENTINA: To File Debt Prospectus With SEC Soon
--------------------------------------------------
A senior official of Argentina's Economy Ministry said Monday
that the government's prospectus for its US$100 billion debt
restructuring will be filed with the U.S. Securities and
Exchange Commission in the "next few days."

The unnamed official said the government expects the SEC would
need about 14 more days to evaluate the documents before an
international roadshow could start.

If the filing is not completed and approved shortly, there is
concern that the government won't be able to launch its exchange
with enough time to complete it before year-end.

And since it is thought to be undesirable to keep it open over
the quiet year-end holiday period, analysts are now speculating
that the offering, which is expected to be open for five weeks,
might not be launched until next year.



===========
B R A Z I L
===========

EMBRATEL: Adds Two New Satellites
---------------------------------
Carlos Henrique Moreira, president of Embratel Participacoes SA
(EMT), revealed Monday that the Brazilian telecommunications
firm is investing US$600 million to build two new satellites,
relates Dow Jones.

The investment is part of Embratel's program to modernize its
existing fleet of four satellites, Moreira said. Embratel's
subsidiary Star One will operate the satellites, which will
carry phone calls, data services and television broadcasts.

Moreover, the new satellites will include capacity to meet
Embratel's commitments with the Brazilian government and armed
forces, Moreira said.

Earlier this year, as phone giant Telefonos de Mexico SA de CV
(Telmex) negotiated the purchase of Embratel, the Brazilian
government won a concession to take a golden share in Star One
to ensure that it had certain veto powers to protect its
national security interests. All the details have been agreed
but no final deal has been signed and there is no specific
timetable for completion, the executive said.

Embratel, Brazil's largest long-distance operator, recently
reported a third-quarter net loss of BRL66.6 million
($1=BRL2.879). The result was considerably worse than markets
had expected due to a surprise BRL107-million provision for
possible tax and labor liabilities. Executives indicated further
provisions might impact fourth-quarter results as well.

To view financial statements:
http://bankrupt.com/misc/Emb3Q.pdf

CONTACT: Embratel Participacoes S.A.
         Rua Regenta Feijo
         166 sala 1687-B Centro
         Rio de Janeiro, 20060-060
         Brazil
         Phone: 5521-519-6474
         Website: http://www.embratel.net.br


KLABIN: Records Net Profit of BRL366Mln up to September 2004
------------------------------------------------------------
HIGHLIGHTS:

- Net revenue in the domestic market totaled R$ 533 million.
- Export revenue reached US$ 69 million.
- Cash generation totaled R$ 282 million, with an EBITDA margin
of 38%.
- Intermediary dividends paid on 06/10/04: R$ 84.38 per 1,000
preferred shares, and R$ 76.71 per 1,000 common shares.

The results for the third quarter are in line with the
Management's expectations. Sales volume reached 348 thousand
tons due to the growing demand from the export market and the
recovery in domestic sales.

International higher prices for kraftliner, coupled with a
recovery in corrugated boxes prices, and revenues from the sale
of a larger volume of wood at better prices raised net revenue
to R$ 737 million, with positive outlook for further growth in
the last quarter of the year.

Initial Considerations:

As the restructuring process completed in 2003 does not permit
an appropriate comparison and analysis of Klabin's figures for
3Q04, 3Q03, 9M04 and 9M03, pro forma financial statements have
been prepared for 3Q03 and 9M03, disregarding the business
concerns that are no longer part of Klabin S.A.. The information
presented herewith in connection with the Company's operations
and finances in 3Q04, 3Q03 and 2Q04 consists of consolidated
figures stated in local currency (R$), in accordance with the
generally accepted accounting practices adopted in Brazil,
except where otherwise indicated.

ECONOMIC AND FINANCIAL PERFORMANCE

Sales Volume and Net Revenue

The growth of the Brazilian economy was driven by a consistent
improvement in export activities. This expansion, coupled with a
recovery in domestic demand, increased Klabin's sales volume to
348 thousand tons in 3Q04. The domestic market accounted for 53%
of the total sales volume in 1Q04. From there, it grew to 59% in
2Q04 and to 62% in 3Q04.

Logistic problems affecting Brazilian ports, such as the
shortage of containers and vessels, remain unchanged, delaying
shipments and raising the cost of export freight.

Sales volume amounted to 1,018 thousand tons in 9M04, up 15%
from the same period of 2003.

Net revenue (including wood) totaled R$ 737 million in 3Q04,
with domestic sales accounting for 72% of total net revenue.

As for the first nine months of the year, net revenue amounted
to R$ 2,027 million, 14% more than the same period of 2003.

Operating Result

Gross profit was R$ 354 million, up 26% and 19% from 3Q03 and
2Q04, respectively, with a gross margin of 48%.

Selling expenses in the amount of R$ 78 million or 11% of net
revenue were influenced by an increase in export freight costs,
which added up to R$ 54 million.

General and administrative expenses totaled R$ 39 million or 5%
of net revenue.

Labor wages adjustments have already been granted in some of the
units. In the larger and paper conversion units, the adjustment
rates will be under negotiation throughout the month of October.

Operating result before financial expenses (EBIT) reached R$ 224
million, up 35% and 31% from 3Q03 and 2Q04, respectively.

The operating margin for 3Q04 was 30%, against 27% in 3Q03 and
26% in 2Q04.

EBITDA

Operating cash generation (EBITDA) totaled R$ 282 million in
3Q04, which is 25% and 23% higher than 3Q03 and 2Q04,
respectively. In 9M04, totaled R$ 742 million, up 6% from the
same period in 2003.

The EBITDA margin for 3Q04 was 38%, as compared to 37% in 3Q03
and 35% in 2Q04.

Financial Results and Indebtedness

Net financial expenses amounted R$ 48 million in 3Q04, an
increase of R$ 7 million when compared to the R$ 41 million
reported in 2Q04. This growth reflects an 8% appreciation of the
real against the U.S. dollar and its effect on dollar-
denominated assets, which exceeded the liabilities denominated
in the same currency as at September 30, 2004.

The EBITDA/Net Financial Expenses ratio in 9M04 was 6.7x.

Long-term gross debt accounts for 74% of total indebtedness, as
compared to 66% at the end of 2003. Local currency denominated
debt corresponded to 48% of total indebtedness in September
2004, versus 38% in December 2003.

Foreign currency denominated debt fell to US$ 249 million, with
the Eurobond redemption in August. Foreign debt represents 52%
of gross debt, 85% of which refer to trade finance (natural
hedge). Hedge as of September 30, 2004 totaled US$ 100 million.

Net debt shrank from R$ 513 million at the end of 2003 to R$ 499
million in September 2004. Net debt is worth to 18% of total
capitalization, and the Net Debt/EBITDA ratio is 0.5x.

Net Result

Net profit totaled R$ 135 million in 3Q04, up 21% from R$ 111
million in 2Q04. Accumulated net profit from January to
September 2004 was R$ 366 million. Earnings per share totaled R$
0.40.

Business Evolution

PACKAGING PAPER - The highlight in the 3Q04 was the downtime at
Monte Alegre (PR) mill for maintenance. It also allowed Klabin
to revamp paper machine #6, thus completing the first phase of
the debottlenecking project and increase of installed pulp
capacity. The paper machine #6 revamping will increase the
installed capacity to 150 thousand tons of kraftliner per year.
However, this extra capacity cannot be used until the plant
begins to produce an additional 110 thousand tons of pulp per
year, which start up is scheduled for early 2005.

The packaging paper mills are running at full capacity. The
scenario for the prices in the export market is positive and
with rising prices in the export sales.

The export volume of packaging paper, which includes boards and
kraftliner, totaled 117 thousand tons in 3Q04.

BOARDS - As per preliminary estimates, the Brazilian boards
market should reach a sales volume of 600 thousand tons in 2004,
up 8% from the 557 thousand tons observed in 2003. Boards sales
totaled 81 thousand tons in 3Q04, an increase of 6% and 4% when
compared to 3Q03 and 2Q04, respectively. Domestic sales volume
amounted to 64 thousand tons.

Klabin is a regular exporter of boards to Argentina and China,
mainly for liquid packaging boards (LPB), and has also started
exporting to USA and Europe, opening markets for doubling the
installed production capacity planned for 2007.

Net revenue was R$ 167 million, up 10% and 11% from 3Q03 and
2Q04, respectively.

Klabin's board have both quality and performance recognized in
the global market, comparable to the European and American
producers, which is the basis of our competitiveness.

As technical and economical feasibility studies for the capacity
increase are advanced, the Management will recommend to the
Board of Directors the approval to hire the basic engineering of
the undertaking, preparing the decision for the investment until
mid of 2005.

KRAFTLINER - Klabin exports kraftliner mainly to Europe, Chile
and Argentina, where prices tend to be more stable. It also
maintains long-term freight contracts with ship owners.
Consequently, it is reducing the sales volume to spot markets,
where prices are volatile and freight costs had an increase.

Kraftliner sales totaled 113 thousand tons in 3Q04, up 2% from
3Q03 but down 2% from 2Q04. Exports reached 99 thousand tons,
shrinking 1% and 4% in relation to 3Q03 and 2Q04, respectively.

In the first nine months of 2004, kraftliner sales reached 371
thousand tons, a 21% growth when compared to the same period in
2003.

CORRUGATED BOXES - As per preliminary data provided by the
Brazilian Association of Corrugated Boxes Producers (ABPO),
Brazilian shipments of corrugated boxes, sheet and accessories
totaled 556 thousand tons in 3Q04, up 18% from 3Q03, totaling
1,575 thousand tons in 9M04, up 13% from the same period of
2003.

Klabin sold 112 thousand tons of corrugated boxes in 3Q04, up
23% and 9% from 3Q03 and 2Q04, respectively. The sales volume
for 9M04 was 307 thousand tons, an 12% increase compared to
9M03.

Net revenue reached R$ 216 million in 3Q04, a 16% and 11% growth
when compared to 3Q03 and 2Q04, respectively. Accumulated net
revenue in the first nine months of 2004 was R$ 587 million, up
5% from the same period in 2003.

Klabin has initiated a large-scale technology upgrading project
in its recycled paper mill at Guapimirim (RJ), which will enable
the Company to produce a lower caliper high quality paper. Plans
for this business segment includes extending such technological
improvements to other paper recycling units in the medium term.

Klabin is also modernizing the corrugated boxes plants at Feira
de Santana (BA), Goiana (PE) and Sao Leopoldo (RS) so they may
be better prepared to meet all customer demands.

MULTIWALL BAGS - The sales volume of multiwall bags totaled 31
thousand tons in 3Q04, up 8% and 6% from 3Q03 and 2Q04,
respectively. In the first nine months of 2004, Klabin sold 88
thousand tons of multiwall bags, up 6% compared to 9M03.

The highlight of this segment was the sales volume of seed bags,
which grew 13% in 9M04 as compared to 9M03. Sales to the
building industry (cement and lime), which buys a lot more than
other sectors, showed a moderate growth rate of 2% in 9M04, when
compared to 9M03.

Net revenue totaled R$ 93 million in 3Q04, up 16% and 7% from
3Q03 and 2Q04, respectively, the net revenue for 9M04 amounted
to R$ 261 million, a 10% increase in relation to the same period
in 2003.

The unit at Lages (SC) is being enlarged to receive, as of
December 2004, the multiwall bag conversion lines current
installed at Correia Pinto (SC)., contributing for the
production rationalization.

WOOD - Klabin harvested 2 million tons of pine and eucalyptus
logs in 3Q04, 1.1 million of which were transferred to its own
mills in Parana, Santa Catarina and Sao Paulo.

Sales volume to third parties in 3Q04 totaled 958 thousand tons,
up 64% and 16% from 3Q03 and 2Q04, respectively. The sales
volume for 9M04 was 2.5 million tons or 47% higher than the
amount reported in 9M03.

Net revenue from sales to third parties totaled R$ 93 million in
3Q04, an 86% and 31% increase when compared to 3Q03 and 2Q04,
respectively. As for the first nine months of 2004, the Company
generated net revenue of R$ 225 million, which is 47% higher
than the same period of 2003.

The strong demand for pine logs in the domestic market can be
attributed to the following:

a) Demand has been on the rise in the United States over the
past two years. The main building industry index reached the top
level of 2 million housing starts per year;

b) The Brazilian industry has expanded its pine log processing
capacity;

c) The prices for wood products in USA increased 60% to 70% over
the past two years;

d) Consequently, the price of logs wood in Brazil has doubled in
Reais compared to 2003.

Klabin is benefiting from this current scenario of higher
volumes and prices. However, analysts are forecasting that both
demand and prices might decline by the end of the year, due to
the effect of the US interest hike on the building industry.

Capital Expenditures

Below is a list of the capital expenditures in the first nine
months of 2004 and the forecast for the year:

The investment in Monte Alegre (PR) mill will be concluded in
January 2005. The installed production capacity of pulp and
kraftliner will increase 100 thousand tons/year and 50
thousand/year, respectively.

R$ Million                                9M03       2004
Debottlenecking project in Monte Alegre     86        135
Packaging and Recycled Paper                25         40
Environment project in Santa Catarina       18         29
Forestry: planting and maintenance          21         32
Current Investments and other projects      53         84
Total                                      204        320

Capital Markets

Klabin's preferred shares (KLBN4) were quoted at R$ 4.78 at the
closing of the trading session on September 30, 2004. In 9M04,
KLBN4 appreciated 27% while the Sao Paulo Stock Exchange Index
(Ibovespa) rose 5%.

Altogether, 14,372 transactions involving 53 million preferred
shares were carried out in 3Q04. The average daily traded volume
in 3Q04 was R$ 3,732.

The capital stock of Klabin S.A. as at September 30, 2004
consisted of 918.8 million shares, 317.0 million of which were
common shares, and 601.8 million preferred shares. On that date,
the Company held 1.1 million shares in treasury.

Dividends

In a extraordinary meeting held on September 10, 2004 the Board
of Directors approved the distribution of intermediary dividends
in the amount of R$ 76.71 per 1,000 common shares (ON) and R$
84.38 per 1,000 preferred shares (PN). The payment was made on
October 6, 2004. Klabin's stocks were therefore traded ex-
dividends as of September 21, 2004.

CORPORATE GOVERNANCE

In addition to being listed on the Ibovespa stock portfolio,
Klabin also carries the Level I Corporate Governance seal
granted by the Sao Paulo Stock Exchange, meaning that the
Company has assumed a commitment to provide reliable and high
quality information to investors and stockholders, and to adopt
an ethical conduct with respect to the environment and the local
communities adjacent to the areas where its industrial units are
installed.

With a gross revenue of R$ 2.4 billion in the first nine months
of 2004, Klabin stands as the largest integrated packaging paper
manufacturer in Brazil, with a production capacity of 1.5
million tons per year, and as a leader in most of its business
markets.

For strategic purposes, the Company will focus on the following
business lines: packaging paper and board products, corrugated
boxes, multiwall bags and wood.

To view financial statements:
http://bankrupt.com/misc/Klabin.pdf

CONTACTS: Mr. Ronald Seckelmann
          Financial and IR Director

          Mr. Luiz Marciano Candalaft
          IR Manager
          Phone: +55 (11) 3225-4045
          e-mail: marciano@klabin.com.br

          Mr. Gustavo V. Schroden
          IR Analyst
          Phone: (11) 3225-4059
          e-mail: gvschroden@klabin.com.br


PARMALAT BRAZIL: Operations Return to Normal After Scandal
----------------------------------------------------------
Ten months after a fraud scandal at its Italian parent broke
out, Parmalat resumes normal activities in Brazil, reports Valor
Economico

Active in dairy and food products markets, the Company
registered in August the first operating profit of its pre and
post scandal history.

The Company's turnover that shrunk to BRL30 million in February,
hit BRL80 million in September. Nevertheless, the figure is
still way below the BRL120 million in monthly income Parmalat
used to have until 2003.

Also, the unit is now poised to resume investments in
advertising. Known for an aggressive marketing that pushed its
expansion in the 90's, Parmalat releases in November a campaign
in the selling points. In 1999, Parmalat spent BRL25 million in
marketing and in 2003 it spent BRL12.8 million.


RBS PARTICIPACOES: S&P Issues Update on Ratings
-----------------------------------------------

Rationale

Brazil-based RBS Participacoes S.A. (B-/Stable/--) is part of
the RBS Group (RBS), which operates in television and radio
broadcasting, newspaper publishing, and other media businesses
in the southern states of the country. Total gross debt for the
combined RBS entities as of August 2004 was $170 million. The
outlook on RBS reflects Standard & Poor's expectation that the
group will manage to sustain the positive operating results
achieved in past quarters, benefiting from stronger advertising
spending in Brazil and from cost savings it has been
implementing since 2003. Going forward, the group is expected to
generate positive free cash flow, although not enough to cover
all maturities in the next several years, which together with
the completion of the Exchange Offer on 53% of the company's
MTNs have reduced refinancing risks in 2007.

The ratings on RBS Group reflect the Group's susceptibility to
the volatile results of the media industry in Brazil, its
leveraged financial profile, and its still-insufficient free
operating cash generation to cover all future debt amortization
requirements. While the profile of the Group's bank debt and
senior notes has improved considerably since 2003, it is
expected that RBS will have to resort to its cash reserves to
meet all amortizations until 2006 and will still run some
refinancing risk in 2007. These vulnerabilities are partially
offset by the group's dominant share of audience and advertising
in its service area, its good-quality programming and the
distribution of TV Globo's high-quality content, the sustained
recovery of the Brazilian media industry at least during 2004
and 2005, and its track record of financial support from
shareholders.

RBS' operating performance continued to improve in 2004. The
combination of a more positive environment for advertising
activity-media spending in Brazil is expected to grow 9% in
2004-coupled with RBS' efforts to reduce its costs and expense
structure have gradually resulted in improved profitability and
cash-flow protection measures. The EBITDA margin reached 21% in
the first half of 2004 compared to 16% in 2003. Interest
coverage (EBITDA to gross interest) improved to 1.5x in the six
months ended June 2004, from 1.03x in December 2003 and 0.65x in
December 2002. Interest coverage is expected to improve further
during the next few years, reaching 2.0x at year-end 2004,
helped by projected EBITDA generation of $50 million-$60 million
per year.

Cash-flow protection measures have improved but remain fairly
low, with funds from operations (FFO) to total debt reaching
8.3% in June 2004 (annualized), compared to 4.2% in the year
ended December 2003. RBS should continue to show adequate
operating performance in 2004 and 2005, but as the interest
burden remains high, Standard & Poor's expects RBS to generate a
modest $15 million/year in 2004 and 2005 of cash available for
debt service.

With the completion of the $125 million MTN Exchange Offer, the
company also completed its plan to smooth debt maturities and
reduce refinancing risk. The company was successful in
exchanging $66.8 million of the total issue for notes maturing
in 2010, with a $10 million cash down payment. The new notes,
issued by RBS Zero Hora Editora Jornal¡stica S.A., the newspaper
publishing division of the group, will have the same coupon as
the 2007 notes and will be guaranteed by TV Ga£cha S.A., RBS TV
Florian¢polis S.A., and Radio Ga£cha S.A. The successful outcome
of the exchange offer was important in order to achieve the
reduction of the company's vulnerability to the significant debt
maturity in 2007 and to enhance its financial flexibility.

The analysis is based on a combined view of RBS Group companies
to reflect the group's commitments and financial flexibility in
a more comprehensive way. Financial information includes the
combined figures of all media entities (Media Companies, which
also includes the cash collection company RBS Administracao e
Cobrancas), RBS Participacoes, and offshore RBS Par Ltd. RBS
Administracao e Cobrancas is not part of the group of companies
that guarantee the notes.

Liquidity

RBS Group's liquidity position has improved in the past 12
months and is now comfortable for the rating category. During
2003, the company worked on the refinancing of its short-term
debt through amortizing local currency loans, which fit better
into the company's capacity to generate cash and reduce its
exposure to currency mismatches. The group is now in a
relatively comfortable position to deal with debt repayments in
the next two years, since total debt amortizing in the period is
$55 million. The group could fund these maturities internally
through generation of free cash flow (expected at about $15
million per year) and use of its cash cushion (some $35 million
after a $10 million down payment of notes). Capital expenditures
should remain at a steady $10 million level, and dividend
distribution is expected to be conservative and defined by the
Group's liquidity. Standard & Poor's estimates that the Group's
refinancing risk in 2007 would be about $30 million.

In addition, RBS still holds an interest in Net's total capital,
which could potentially represent additional liquidity for the
group (as part of the company's strategy to divest noncore
assets). Under current market terms, these shares could be
monetized for some Br$48 million.

Outlook

The stable outlook indicates that Standard & Poor's expects RBS
to be able to sustain the operating profitability it has been
posting in past quarters, including positive free cash flow to
cover part of its debt maturities in the next several years.
Nevertheless, earnings volatility and some refinancing risk
continue to constrain the rating. If RBS is able to sustain
current stronger results, represented by FFO to debt at 15% and
total debt to EBITDA lower than 4x in the next two to three
quarters, the outlook for the ratings could be changed to
positive. A ratings upgrade to 'B' would depend on a clearer
picture of how the company can resolve the bond maturity in
2007. On the other hand, as leverage is still high and financial
results are linked to the local economy, a deceleration or
downturn in advertising or economic prospects for Brazil would
lead to a stabilization of the ratings at 'B-' or even a change
in outlook to negative.

Business Description

RBS Participacoes is a holding company for the RBS Group, which
operates in television and radio broadcasting, newspaper
publishing, and other media businesses. RBS Group owns and
operates 24 radio stations with leading market share (both AM
and FM stations), and six daily newspapers with high readership
in their territories. RBS' activities are concentrated in Santa
Catarina (SC) and Rio Grande do Sul (RS) states. Its TV
broadcasting business is affiliated with Globo, the dominant
media group in Brazil. The RBS Group is the dominant media group
in the south of the country, and its strong regional identity
and high quality regional content are the main competitive
advantages compared to companies with a more national focus. RBS
counts on an internal news agency that provides all media
vehicles with exclusive, region-oriented news production. Some
back-office functions are shared between radio and TV, but each
vehicle has its own editorship.

Business Profile

Standard & Poor's analyses the business profile of RBS
considering the aggregate strategy for the Group, in which each
company plays an important and synergic role. The main companies
of the RBS Group, answering for 82% of revenues, are RBS Zero
Hora - Editora Jornal¡stica S.A., Televisao Ga£cha S.A., RBS TV
de Florian¢polis S.A., and Radio Ga£cha S.A. (guarantors of the
2007 Senior Notes). RBS Zero Hora is the issuer of RBS' recent
"2010 Notes" and the other companies guarantee the notes. RBS
Participacoes, the holding company for the Group, owns the
trademarks of the Group, and its main source of revenue is
royalty payments (3.5%) over the net operating revenues of the
operating companies. The "Media Group" also includes other media
companies, such as radio and smaller TV stations, besides the
companies mentioned above.

Newspaper Publishing (49% of media companies' consolidated net
revenues and 39% of EBITDA in 2003). RBS publishes six different
titles in the states of Rio Grande do Sul and Santa Catarina,
with a combined average circulation of 397,000 issues per day,
and is the second-largest newspaper publisher in Brazil in terms
of circulation. The key earning contributors are the newspapers
Zero Hora and Diario Catarinense, with average daily circulation
of some 210,000 (circulation numbers represent an average for
the first half of 2004). Both newspapers count on a strong
subscribers' base, which guarantees a more stable source of
revenue to the company, as almost 45% of revenues come from
circulation.

The Group's second-largest newspaper in terms of circulation is
Diario Ga£cho. This newspaper focuses on a more price-sensitive
reader in the Porto Alegre region and represented a market
protection movement by RBS to curtail the growth of competitors
in this segment. Diario Ga£cho already accounts for roughly 31%
of RBS' total newspapers daily average circulation and is sold
only at newsstands.

RBS has successfully been reducing the dependency of newspaper
revenues on the volatile advertising market, increasing the
contribution from the more steady flows from circulation. While
the top 10 newspapers in Brazil declined in circulation when
comparing first-half 2003 with the same period of 2004, RBS'
newspapers reported a 7.4% growth, gaining share. The growth in
volumes, together with close control on fixed costs, has been
supporting a steady improvement in margins (EBITDA margin of
17.3% in the first half of 2004, compared to 11.8% for the same
period in 2003). The group has been financing newsprint
acquisitions with suppliers (180 days) instead of import finance
and keeping a minimum 60-day inventory level.

TV (29.3% net revenues and 48.6% of consolidated EBITDA).
RBS' TV broadcasting network covers the states of Rio Grande do
Sul (RS) and Santa Catarina (SC) through 19 TV stations (RBS
TV), two local cable-TV channels (TVCOM), and one channel
designated for agribusiness-related themes (broadcasted
nationwide through cable and satellite). RBS has operated as a
regional Globo affiliate for more than 30 years now, benefiting
from the high audience of Globo's programming all over the
country. RBS' audience ratings have increased over the past few
years: the prime time audience of TV Ga£cha (RS) reached 65% in
June 2004 from 61% in December 2003, and TV Florian¢polis' (SC)
audience increased to 81% from 75% during the same period. RBS
is very focused on developing local TV production and is already
responsible for about 15%-18% of RBS' TV line-up (the highest
among all of Globo's affiliates). The production of local
content is an important business differentiation for RBS as it
increases audience loyalty and identity, as well as generating
related non-TV businesses for the Group.

Radio (3.6% revenues and 5.5% of EBITDA)

RBS owns the fourth-largest radio group in Brazil in terms of
revenues and the second-largest affiliated network. RBS' radio
group is comprised of seven AM and 14 FM stations in the states
of RS and SC. The AM network had a 68.9% audience rating in
Porto Alegre (RS), and the FM network captured a 20% rating in
June 2004. Radio Farroupilha, one of RBS' AM stations in Porto
Alegre, has the largest audience share among all radio stations
in Brazil (48% in June 2004). Revenues derive exclusively from
advertising. Radio Ga£cha, which is responsible for 52% of the
group's radio revenues, counts on a vast and independent
affiliated network under its brand, which propels advertising
revenues thanks to its strategic reach.

Market environment

In the second half of 2003, the Brazilian advertising market
started recovering from the sharp 15% reduction in 2001 and
achieved a 12.2% nominal growth even with the weak performance
of the overall economy (Brazil's GDP decreased by 0.2% in 2003).
Media spending amounted to $4.8 billion in 2003, out of which
roughly 58% was directed to open TV.

During the sizable slowdown of the industry, RBS demonstrated
somewhat more stable revenues than the market due to its strong
identity in regional markets and a typical concentration of
reduced ad budgets on open TV (and mostly on the Globo and its
affiliates due to their leading audience share). RBS has the
highest market share in broadcast TV within its region, with
about 80% in RS and 60% in SC. Local advertisers represent
almost 90% of the radio and newspaper ad revenues and some 50%
of television. The Brazilian advertising market is expected to
grow by 10% during 2004 together with the more favorable
scenario of the Brazilian economy, and RBS revenues should
follow the industry upward.

Financial Profile

Standard & Poor's analyzes RBS' financial profile by combining
the results of all media companies (Media Group) with the cash
collection company (RBS Administracao e Cobranca), the holding
company (RBS Participacoes S.A.), and its offshore company
(RBSPar Ltd.). Financial analysis is based on this combined view
in order to reflect the group's commitments and its financial
flexibility in a more comprehensive way. After facing the
difficult market and liquidity environment in 2001/2002,
management has been focusing on the need to strengthen operating
results to deal with the intrinsic volatility of the media
industry and reduce exposure to currency mismatches. The group
implemented a plan of incentives driven by results and
centralized procurement policies at the corporate level in order
to reduce costs, initiatives that have been allowing the Group
to grasp the positive trend in advertising spending. Most of the
bank debt has been converted to local currency and amortizing
loans that are more compatible with cash flow generation
capacity. The long-term dollar debt has been swapped to local
interest rates until maturity.

Profitability and cash flow

The group's financial results are closely dependent on the
performance of the advertising market and indirectly dependent
on the economic prospects for Brazil. As it is aware that it
needs to show stronger margins to offset the potential
volatility of its numbers, RBS is focusing on cost cutting.
Together with the recovery of the advertising market in 2003-
2004, the company's EBITDA margin increased to 21.4% in the six
months ended June 2004, above the 15.9% posted in full-year
2003. The EBITDA-to-interest coverage ratio has reached 1.5x in
June 2004 compared to a low 1.03x in December 2003, mostly
because of a stronger EBITDA since the interest burden remains
high. Cash flow coverage ratios are expected to gradually
improve, as margins will remain fairly stable at least until
2005 and the group continues to amortize debt. Standard & Poor's
Ratings Services expects RBS to be able to sustain its EBITDA
margins at least at the 20% level, and to reach an EBITDA-to-
interest ratio of 2x by the end of 2004. The group is expected
to generate some $25 million/year from operations after interest
payments (funds from operation - FFO), which should represent
some $15 million available for debt amortization. Even
considering a marked operating improvement in 2004, cash flow
protection measures should remain fairly low, with FFO to debt
of 18% in 2004 and total debt to EBITDA of 3x.

Capital structure and financial flexibility

Capital requirements are small and mostly discretionary. Within
the first half of 2004, the RBS group invested $ 2.9 million,
predominantly in its publishing operations.

The group's cash position, currently estimated at some $35
million, is an important source of financial flexibility, as
part of this cash is expected to be used to meet debt maturities
in the next two years. During 2003, the company worked on the
refinancing of its short-term debt through amortizing local
currency loans, which fit better into the Group's capacity to
generate free cash flows and at the same time to reduce exposure
to currency mismatches. RBS also managed to improve the
amortization profile of its long-term capital markets debt by
tendering to exchange part of its 2007 $125 million MTN to new
bonds, issued by RBS - Zero Hora Editora Jornal¡stica S.A., the
newspaper publishing division of the group, maturing in 2010.
Investors accepted the agreement to exchange $66.8 million of
the total issue for the new notes, receiving a $10 million cash
down payment. The new notes will have the same coupon as the
2007 notes.

The group is now in a relatively comfortable position to deal
with debt repayments for the next two years, since total debt
amortizing in the period is $55 million. The group is expected
to fund part of these maturities with internal generation of
free cash flow (expected at about $15 million per year) and use
of its cash cushion.

The still-low level of free operating cash flow and the
significant maturity in 2007 ($58 million) pose some refinancing
risks to RBS. In a favorable macroeconomic environment, Standard
& Poor's believes that RBS would be able to refinance a portion
of the notes even if this must be done through local banks (by
2007, the group will have paid off all its bank loans) or
another international issue. However, given the intrinsic
volatility of the media industry and of the country, there is a
considerable degree of uncertainty in the forecast of RBS' cash
flows over the next three years. The results achieved in the
next two to three quarters will give a better indication that
RBS has consolidated a new level of operating profitability.

PRIMARY CREDIT ANALYST:  Milena Zaniboni, Sao Paulo (55) 11-
5501-8945; milena_zaniboni@standardandpoors.com


VASP: TAM Takes Over One of its Routes
--------------------------------------
Brazil's largest airline, TAM, will assume one domestic route
from financially troubled competitor Vasp in a move likely to be
repeated in the near future, TAM said in a statement Monday.

Tam said it will assume the route between Campo Grande and
Corumba - cities in Brazil's center-west state of Mato Grosso do
Sul. The company said it has won government permission to take
the route, which was abandoned two weeks ago by Vasp during a
period of financial turmoil for the smaller company.

TAM said the Mato Grosso do Sul state government requested it
take the route.

The move comes a week after federal officials said they might
have to give up on efforts to save financially troubled Vasp.
The officials said, at that time, that they were confident TAM
and no-frills domestic airline Gol could take up the slack if
Vasp were to fail.

Vasp, Brazil's fourth-largest airline, has been experiencing
financial difficulties since the 2001 recession that hit the
industry. It has also lost market share to Gol, which has moved
into the number three slot among Brazilian airlines.

Vasp is currently operating on a six-month "emergency" license
granted by the government pending presentation of a
comprehensive financial plan.

Last week, Vasp reached an agreement to pay 11.7 million reals
(US$1=BRL2.88) of debts owed to the Federal Airport Authority.
The agreement covers payment of airport charges for three months
between mid-July and mid-October.

However, Vasp's total debt with the authority, known as
Infraero, is BRL760 million relating to airport charges not paid
since the 1990s.



===========
M E X I C O
===========

AHMSA: EBITDA Jumps to $350M in First 9 Months
----------------------------------------------
- EBITDA increases to US$350 million in the first nine months
- 1,679 million of pesos of net income in the first nine months
- Production will be increased by 20% in 2005
- "Excellent maintenance", reports evaluation made by Hatch
Consulting

Altos Hornos de M‚xico, S.A. de C.V. ("AHMSA" or the "Company"),
announced Monday its 2004 Third Quarter and First Nine Months
Results for the quarter ended September 30, 2004. All figures
herein are unaudited and based on generally accepted accounting
principles in Mexico (Mexican GAAP) and have been restated in
constant pesos as of September 30, 2004.

In the third quarter of 2004, AHMSA had an operating income of
Ps. 1,600 million with an operating margin of 27.3%, a net
income of Ps. 1,267 million and an EBITDA of Ps. 2,160 million
(US$187 million).

In the first nine months of 1999, the Company had an operating
income of Ps. 2,627 million with an operating margin of 16.3%
and a net income of Ps. 1,680 million. The EBITDA was Ps. 4,038
million (US$350 million).

The results reflect the cost-reduction effort implemented by the
Company through its AHMSA XXI Plan as well as a consequence of
the sustained recovery of the steel prices.

Comments made by the Board of Directors related to the good
results obtained in the Third Quarter were that EBITDA was
affected by the particular condition of the Company, that means
that it had to continue with the Capex and maintenance programs
using its own cash flow and those expenses will be reflected as
an investment until next term. Without that singular situation,
EBITDA would have reached US$250 million in the third quarter.

Also, they remarked that the high cost of fuels in Mexico is a
heavy charge for the industry, even though the Company is less
affected by those costs because AHMSA generates its own coal
(main fuel source) and that condition will allow AHMSA to
maintain higher margins than other Mexican steel companies.

On this base, AHMSA is making the necessary investments to
increase the production of liquid steel and surpass 3.6 million
metric tons next year. With that production output, AHMSA will
be better placed as the Mexican steel company with the higher
production and higher net income.

Casa de Bolsa Vector informed to the Board of Directors that
they have made a Technical Evaluation of AHMSA through the firm
Hatch Consulting. The report established that the maintenance of
plants and equipments is impressive even better than
international standard in many areas.

The following figures from 2003 and 2004 illustrate the recovery
of income and margins:


   July-September 2004/2003                        Variation
   Concept            Jul-Sep 03  Jul-Sep 04       $      %

Sales
(millions of pesos)    3,021      5,861        +2,840   +94.0
Operating (Loss) Income
(millions of pesos)    (417)      1,600        +2,017      NA
Net (Loss) Income
(millions of pesos)    (507)      1,267        +1,774      NA
Operating Margin    (13.8 %)      27.3 %           NA      NA
EBITDA
(millions of pesos)     110       2,160        +2,050  +1864.8
EBIDTDA
(millions of US Dollars) 10         187          +177  +1864.6
Steel Sales Volume
(metric tons)       595,340     660,180        64,840    +10.9


  January-September 2004/2003                       Variation
  Concept            Jan-Sep 03  Jan-Sep 04        $       %
Sales
(millions of pesos)   9,717       14,253       +4,536   +46.7
Operating (Loss) Income
(millions of pesos)  (1,033)       2,326       +3,359      NA
Net (Loss) Income
(millions of pesos)  (1,141)       1,679       +2,820      NA
Operating Margin    (10.6 %)        16.3 %         NA      NA
EBITDA
(millions of pesos)     428        4,038       +3,610  +843.4
EBIDTDA
(millions of US Dollars) 38          350         +312  +822.9
Steel Sales Volume 1'924.283   1'906.956      (17,327)   -0.9

Located in Monclova, in the state of Coahuila, AHMSA is the
largest integrated steel producer in Mexico. The Company is
Mexico's leader in the production of flat products and also
manufactures higher value-added coated products. AHMSA owns and
operates iron and metallurgical coal mines that produce raw
materials used in the Company's steelmaking process. Through its
subsidiary MICARE, the Company is also engaged in the production
and sale of steam coal for power generation.


CYDSA: Creditors Take Over, Outline Rescue Plan
-----------------------------------------------
Creditors of Mexican textile firm Cydsa SA (CYDSASA.MX) are
moving to take control (60%) of the debt-laden firm, reports El
Financiero.

The move is part of a debt-restructuring agreement inked between
the Company and the creditors in June this year.

The new owners will now outline a program to rescue the Company,
which has been struggling to regain its financial health since
December 2002 when it defaulted on interest payments for a $159
million debt.

The Company has total debts of US$400 million plus interests.

CONTACTS: CYDSA, S.A. de C.V. (BMV: CYDSASA)
          Ave. Ricardo Margain Zozaya # 565
          Parque Corporativo Santa Engracia, Edificio B,
          66267 Garza Garca, Nuevo Leon
          Mexico

          Mr. Oscar Casas Kirchner
          Financing Manager
          Direct Phone: (52) (81) 81-52-46-04
          Fax: (52) (81) 81-52-48-13
          E-mail: ocasas@cydsa.com

          Mr. Alberto Balderas Calderon
          Administrative Information Manager
          Direct Phone:(52) (81) 81-52-46-08
          Fax: (52) (81) 81-52-48-13
          E-mail: abalderas@cydsa.com

          Web Site: www.cydsa.com


GRUPO MEXICO: Cananea, La Caridad Workers Halt Strike
-----------------------------------------------------
Strikes at Grupo Mexico's (BMV: GMEXICOB) Cananea and La Caridad
copper mines have been lifted after the company agreed to pay
workers the equivalent of 5% in property equity.

"Today, the workers are going to hand over the facilities,"
Consuelo Aguilar, spokesperson of the National Mineworkers
Union, said on Saturday.

Grupo Mexico also agreed to pay workers 50% of the salaries they
would have received during the strike, which lasted 9 days for
Cananea and 6 days for Caridad and the smelter, according the
union.

The end to the strikes comes after management at Southern Peru
Copper Corp, (PCU) approved a proposed merger of Southern Peru
and Minera Mexico, Grupo Mexico's Mexican mining unit which
includes Cananea and La Caridad.

Grupo Mexico, the world's third largest copper producer, owns
54.2% of Southern Peru, and its stake would rise with the merger
of Minera Mexico into its Peruvian unit. The merger still
requires shareholder approval.

CONTACT:  GRUPO MEXICO S.A. DE C.V.
          Avenida Baja California 200,
          Colonia Roma Sur
          06760 Mexico, D.F., Mexico
          Phone: +52-55-5264-7775
          Fax: +52-55-5264-7769
          Home Page: http://www.gmexico.com
          Contacts:
          Germ n Larrea Mota-Velasco, Chairman and CEO
          Xavier Garca de Quevedo Topete, President and COO
          Alfredo Casar Perez, COO, Ferrocarril Mexicano
          Daniel Chavez Carren, COO, Industrial Minera Mexico
          Daniel Tellechea Salido, VP and Administration and
                                         Finance President


GRUPO MEXICO: Fitch Places Ratings on Watch Positive
----------------------------------------------------
Fitch Ratings has placed the 'B' local and foreign currency
ratings of Minera Mexico S.A. de C.V. (Minera Mexico) on Rating
Watch Positive. The company's secured export notes (SENs) and
its guaranteed senior notes (Yankee bonds) that mature in 2008
and 2028 are affected by this rating action.

In conjunction with these rating actions, Fitch has placed the
'B-' rating of Grupo Mexico S.A. de C.V. (Grupo Mexico) and the
'B' rating of Americas Mining Corporation (AMC) on Rating Watch
Positive. Fitch has also revised the Rating Outlook to Positive
from Stable of the 'BB-' foreign currency rating of Southern
Peru Copper Corporation (SPCC) to reflect the recent change in
the Rating Outlook of Peru's foreign currency rating. AMC is a
wholly owned subsidiary of Grupo Mexico and is the direct parent
company of Minera Mexico, Asarco Inc., and SPCC.

The ratings of these related companies remain unchanged:

Asarco Inc. (Asarco)

--Senior unsecured rating, 'CCC'.

Grupo Ferroviario Mexicano, S.A. de C.V. (GFM)

--Senior unsecured local currency, 'BBB-';

--Senior unsecured foreign currency, 'BBB-'.

Minera Mexico's credit profile has improved in 2004 due to the
high price of copper and declining debt levels. During the first
six months of 2004, the company has generated US$338 million of
EBITDA. This compares with only US$193 million in all of 2003.
As a result of the strong free cash flow, the company's debt is
expected to decline from US$1.3 billion at the end of 2003 to
about US$1.0 billion at the end of 2004. Minera Mexico's ability
to increase its cash flow throughout the cycle should also
benefit from the refinancing of its SENs and existing bank debt
with a new US$600 million syndicated bank facility. By
refinancing this debt, which has covenants that restrict the
amount of free cash flow the company can use for investments,
Minera Mexico will be able to modestly invest in expansion
projects that should further enhance free cash flow that would
be available for debt service.

Grupo Mexico's 'B-' rating reflects the company's position as a
holding company with no operating assets. This rating was placed
on Rating Watch Positive to reflect an expectation that higher
copper prices will decrease the company's consolidated debt to
less than US$2.7 billion at year-end 2004 from more than US$3.1
billion at the end of 2003. This would result in a total debt-
to-EBITDA ratio for the company of less than 1.7 times (x)
during 2004. On a non-consolidated basis, Grupo Mexico has only
about US$30 million of bank debt. This holding company debt is
serviced primarily by the dividends Grupo Mexico receives from
its railway subsidiary, Grupo Ferroviario Mexicano, S.A. de C.V.
(GFM), which accounted for about 13% of GM's consolidated EBITDA
in the first half of 2004.

Fitch's 'B' rating of AMC, a direct subsidiary of Grupo Mexico,
reflects its leverage as measured by the ratio of total
consolidated debt-to-EBITDA of about 3.3x as of June 30, 2004.
This rating was placed on Rating Watch Positive due to the
improving financial profile of the companies it relies on for
dividends - SPCC and Minera Mexico.

AMC is rated one notch higher than its parent, Grupo Mexico,
since AMC's largest debt obligation is secured by its 54% stake
in SPCC. As of June 30, 2004, AMC's total consolidated debt,
including that of its mining subsidiaries, totaled approximately
US$2.4 billion while consolidated EBITDA for the first six
months of the year was US$737 million.

Grupo Mexico ranks as the world's third-largest copper producer
with consolidated output of 835,000 tons (1.8 billion pounds) in
2003. Grupo Mexico's assets consist of a 54% stake in SPCC, one
of the world's largest low-cost private-sector copper producers
located in Peru. Grupo Mexico's other mining activities are
consolidated under the Minera Mexico subsidiary, Mexico's
largest mining group, and Asarco in the United States. In 2003,
SPCC accounted for about 45% of the group's consolidated sales
of 790,000 tons of refined copper, Minera Mexico accounted for
35% and Asarco generated 20%. In addition to mining, Grupo
Mexico operates a major railway in Mexico under its GFM
subsidiary. The railway connects Mexico's major cities and six
seaports and has five points of connection along the U.S.
border.


GRUPO SIMEC: Net Sales Jump 85% in 1st 9 Mos. of 2004
-----------------------------------------------------
Grupo Simec, S.A. de C.V. (Amex: SIM; "Simec") announced Monday
its results of operations for the nine-month period ended
September 30, 2004. Net sales increased 85% to Ps. 3,882 million
in the first nine months of 2004 (including the net sales
recorded since August 1, 2004 generated by the newly acquired
plants in Apizaco and Cholula of Ps. 486 million), compared to
Ps. 2,098 million in the same period of 2003, primarily due to
higher finished product prices and also resulting from higher
production levels. Primarily as a result of the foregoing, Simec
recorded net income of Ps. 1,042 million in the first nine
months of 2004 versus net income of Ps. 295 million for the
first nine months of 2003.

On September 10, 2004 Simec completed the acquisition of the
property, plant and equipment and the inventories, and assumed
liabilities associated with seniority premiums of employees of
the Mexican steel-making facilities of Industrias Ferricas del
Norte, S.A. (Corporacion Sidenor of Spain) located in Apizaco,
Tlaxcala and Cholula, Puebla. Simec's total investment in this
transaction was approximately U.S. $135 million, funded with
internally generated resources of Simec and capital
contributions from ICH of U.S. $19 million for capital stock to
be issued in the future. On July 12, 2004 the shareholders of
Simec approved this transaction at an extraordinary shareholders
meeting. Simec began to operate the plants in Apizaco, Tlaxcala
and Cholula, Puebla on August 1, 2004, and, as a result, the
operations of both plants are reflected in Simec's financial
results as of such date.

Simec sold 542,705 metric tons of basic steel products during
the nine-month period ended September 30, 2004 (including 64,427
tons from the newly acquired plants in Apizaco and Cholula), an
increase of 17% as compared to 463,286 metric tons in the same
period of 2003. Exports of basic steel products were 70,112
metric tons in the first nine months of 2004 (including 1,205
tons from the newly acquired plants in Apizaco and Cholula)
versus 54,047 metric tons in the same period of 2003.

Additionally Simec sold 40,791 tons of billet in the nine-month
period ended September 30, 2004 as compared to 47,049 tons of
billet in the first nine months of 2003. Prices of finished
products sold in the first nine months of 2004 increased 61% in
real terms versus the same period of 2003.

Simec's direct cost of sales was Ps. 2,211 million in the nine-
month period ended September 30, 2004 (including Ps. 303 million
relating to the newly acquired plants in Apizaco and Cholula),
or 57% of net sales, versus Ps. 1,374 million, or 65% of net
sales, for the 2003 period. The average cost of raw materials
used to produce steel products increased 40% in real terms in
the nine-month period ended September 30, 2004 versus the first
nine months of 2003, primarily as a result of significant
increases in the price of scrap and certain other raw materials.
Indirect manufacturing, selling, general and administrative
expenses (including depreciation) was Ps. 406 million during the
first nine months of 2004 (including Ps. 52 million relating to
the newly acquired plants in Apizaco and Cholula), compared to
Ps. 365 million in the same period of 2003.

Simec's operating income increased 252% to Ps. 1,265 million
during the nine-month period ended September 30, 2004 (including
Ps. 131 million relating to the newly acquired plants in Apizaco
and Cholula) from Ps. 359 million in the same period of 2003.
Operating income was 33% of net sales in the nine-month period
ended September 30, 2004 compared to 17% of net sales in the
comparable period of 2003.

Simec recorded other income, net, from other financial
operations of Ps. 16 million in the nine-month period ended
September 30, 2004 compared to other income, net, of Ps. 0
million in the same period of 2003. In addition, Simec recorded
a provision for income tax and employee profit sharing of Ps.
223 million in the nine-month period ended September 30, 2004
versus a provision of Ps. 39 million in the same period of 2003.

Simec recorded financial expense of Ps. 16 million in the nine-
month period ended September 30, 2004 compared to financial
expense of Ps. 25 million in the first nine months of 2003 as a
result of:

i) net interest income of Ps. 3 million in the nine-month period
ended September 30, 2004 compared to net interest expense of Ps.
15 million in the same period of 2003;

ii) an exchange gain of Ps. 12 million in the nine-month period
ended September 30, 2004 compared to an exchange loss of Ps. 9
million in the same period of 2003, reflecting lower debt during
the nine-month period ended September 30, 2004 and a decrease of
1.6% in the value of the peso versus the dollar in the nine-
month period ended September 30, 2004 compared to a decrease of
6% in the value of the peso versus the dollar in the same period
of 2003; and

iii) a loss from monetary position of Ps. 31 million in the
nine-month period ended September 30, 2004 compared to a loss
from monetary position of Ps. 1 million in the same period of
2003, reflecting the domestic inflation rate of 3.4% in the
nine-month period ended September 30, 2004 compared to the
domestic inflation rate of 2.3% in the same period in 2003 and
lower debt levels during the 2004 period.

At September 30, 2004, Simec's total consolidated debt consisted
of US$302,000 of 8 7/8% MTN's due 1998 (accrued interest at
September 30, 2004 was $273,962) which were issued in 1993 as
part of a $68 million issuance. At December 31, 2003, Simec had
outstanding approximately $2 million of U.S. dollar-denominated
debt. Simec's lower debt level at September 30, 2004 reflected
the prepayment of $1.7 million of the remainder of its bank debt
in March 2004.

All figures were prepared in accordance with Mexican generally
accepted accounting principles and are stated in constant Pesos
at September 30, 2004.

Simec is a mini-mill steel producer in Mexico and manufactures a
broad range of non-flat structural steel products.

CONTACTS: Mr. Adolfo Luna
          Mr. Jose Flores
          Grupo Simec, S.A. de C.V.
          Calzada Lazaro Cardenas 601
          44440 Guadalajara,
          Jalisco, Mexico
          Phone: 52-33-1057-5740


HYLSAMEX: Generates $232M EBITDA in 3Q04
----------------------------------------

HIGHLIGHTS

- Hylsamex generated 3Q04 EBITDA of US$232 million, surpassing
the US$222 million and US$44 million registered in the previous
quarter and same quarter of 2003, respectively. EBITDA margin
reached 36% in 3Q04.

- On a per ton basis, EBITDA reached US$280/ton, similar to the
US$282/ton obtained in the previous quarter and more than four
times the US$61/ton generated in the same quarter of 2003.

- Excellent cash flow generation and net proceeds of US$137
million from the equity offering completed July 15th, 2004 led
to a sharp reduction in leverage, as net debt declined by US$280
million during the quarter to a balance of US$587 million as of
September 30, 2004. Cash reserves reached US$113 million, up
US$28 million since year-end 2003. The Net Debt to LTM EBITDA
ratio was 1.0x for 3Q04, while LTM Interest Coverage improved to
6.9x.

- Hylsamex again registered strong quarterly volumes: shipments
were 827,700 tons in 3Q04, up 5% and 14% compared to the
previous quarter and the same quarter of 2003, respectively.

- Closely following international steel prices , Hylsamex's
revenue per ton further increased in 3Q04 to US$773/ton, up 3%
and 52% from the levels registered in the previous quarter and
the same quarter of 2003, respectively. Revenues reached US$640
million during 3Q04.

- COGS per ton reached US$496/ton in 3Q04, 6% greater than the
US$468/ton attained in the previous quarter and 11% higher than
the US$449/ton recorded in the same quarter of 2003. Greater use
of DRI is behind the relative stability of COGS per ton.

- Net income for 3Q04 amounted to US$119 million (Ps.1,369
million), slightly de creasing from net income of US$124 million
(Ps.1,434 million) reported in the previous quarter and in
contrast to the net loss of US$24 million (Ps.273 million)
registered in the same quarter of 2003. Net income for the first
nine months of 2004 amounts to US$306 million (Ps.3,516
million).

- Hylsamex continues growing organically, investing in
downstream value-added products and services via its coated
steel operations: during the quarter, Galvak initiated
production at a new coated steel profiles line, which adds 38
thousand tons of annual processing capacity.

OVERVIEW

During the third quarter of 2004, Hylsamex enjoyed its third
consecutive quarter of record operating cash flow generation.
Hylsamex reported EBITDA of US$232 million for 3Q04, surpassing
the earlier EBITDA records of US$222 million and US$110 million
established in 2Q04 and 1Q04, respectively;

EBITDA for 3Q04 is also more than five times the EBITDA of US$44
million gained in the same quarter of 2003. On a per ton basis,
EBITDA for 3Q04 reached US$280/ton, similar to the US$282/ton
obtained in the previous quarter, and more than four times the
US$61/ton generated in the same quarter of 2003.

As has been the case throughout 2004, Hylsamex's competitive
strengths -built with the investments of US$1.6 billion made in
the 1990s- have permitted the Company to capitalize the
favorable environment in the global steel industry. While
Hylsamex's revenue per ton continued rising during 3Q04 due to
further tightness in international steel demand and supply, the
Company has maintained its cost per ton relatively stable as a
result of its competitive strengths: vertical integration with
in-house access to low-cost iron ore, DRI production capability,
and flexibility in its metallic charge.

The Company's EBITDA margin, therefore, has expanded more than
that of peers which either are less vertically integrated or
rely exclusively on metal scrap for their metallic needs. In
addition, Hylsamex's status as "supplier-of-choice" in the
Mexican market, strong distribution network and proximity to the
U.S. market, allowed it to register record quarterly sales
volume of 828 thousand tons in 3Q04, boosted by the highest
level of quarterly export tonnage registered since 1995.

Hylsamex's cumulative EBITDA of US$564 million for the first
nine months of 2004 has laid the cornerstone for a reshaping of
the Company's financial structure. Management's efforts were
focused on reducing the absolute level of debt and refinancing
the remaining debt under more favorable terms and conditions.
Strong internal free cash flow generation and net proceeds of
US$137 million from the equity issuance completed July 15th,
2004 produced a sharp US$280 million reduction in debt net of
cash during the quarter. In the first nine months of 2004,
Hylsamex has noticeably reduced debt, net of cash, by 42%, from
a balance of US$1,014 million as of year-end 2003, to a balance
of US$587 million at the end of 3Q04. Additionally, Hylsamex's
operating subsidiaries -Hylsa and Galvak- obtained new bank
loans totaling US$335 million to refinance bank debt under
improved terms (including a new, three-year unsecured US$60
million Liquidity Facility for Hylsa, currently fully
available). At the end of the day, the outstanding reduction in
leverage achieved so far in 2004 has paved the road for
Hylsamex's future growth and has significantly strengthened the
Company's balance sheet.

In the first nine months of 2004, Hylsamex has disbursed US$31
million in capital expenditures. Hylsa, the steel-producing
subsidiary, has invested US$22 million so far in 2004. The
investments are focused on replacement of equipment, mine
preparation, and energy conservation and substitution projects.

Hylsamex's growth is centered on Galvak, the processed steel
subsidiary. In the first nine months of 2004, Galvak has
invested US$8 million, primarily aimed at developing new
products, adding more value to galvanized steel and expanding
the subsidiary's distribution network in North America.

The cumulative figure for 2004 appears relatively low because
Galvak has opted to arrange "sale leaseback" transactions for
certain fixed assets totaling US$8 million. During 3Q04, the
subsidiary initiated production at a new coated steel profiles
line, which adds 38 thousand tons of annual processing capacity.
These projects are in addition to the ones that began operating
in the preceding two quarters: the start up of "Roll former line
#4" and the opening of additional service and distribution
centers in the U.S.

The global steel industry continues to experience a remarkable
year in 2004. Greater global economic growth has caused robust
steel demand. In addition, the industry's trend of
consolidation, definitive capacity shutdowns, raw materials
shortages- particularly affecting those participants using blast
furnaces- and underinvestment due to the lean years for
profitability recently, have limited the quickness and the size
of the supply response to greater demand, accentuating steel
shortages and increasing international steel prices. In Mexico,
an improved economic environment has also positively impacted
demand for Hylsamex's products. As a result of favorable
economic conditions, Hylsamex remains cautiously optimistic for
the coming quarters.

Elements such as Chinese and U.S. economic growth and their
effect on international steel prices coupled with energy cost
volatility, remain the key variables in assessing the future
performance of the Company.

STEEL MARKET

Hylsamex registered record sales volume during 3Q04, led by
sustained higher exports of flat products (also includes coated
and tubular products), which grew 29% and 23% versus the
previous quarter and the same quarter of 2003, respectively.
Total shipments for 3Q04 reached 827,700 tons, 5% or 41,000 tons
greater than the 786,700 tons sold in the previous quarter and
14% or 104,400 tons more than the 723,300 tons shipped during
the same quarter of 2003. Additional externally sourced steel
volumes for the coating operations allowed Hylsamex to increase
consolidated volume sold.

Domestic volumes for 3Q04 remained strong, but a small decrease
was observed compared to the preceding quarter due to rainy
weather in Mexico, which slowed construction and thus slightly
lowered sales of long products. Notwithstanding, the domestic
market remains robust, as seen by the 10% growth in volumes
compared to the same quarter of 2003. Volume sold in the
domestic market totaled 608,100 tons, 5,100 tons or 1% lower
than the 613,200 tons of the prior quarter but 10% or 56,700
tons more than the 551,400 tons registered in the same quarter
of 2003. Strong domestic volumes throughout 2004 reveal better
domestic fundamentals.

Hylsamex's export volume during 3Q04 represents the highest
exports recorded since 1995. Exports reached 219,600 tons, 27%
or 46,100 greater than the 173,500 tons of the previous quarter
and 28% or 47,700 tons more than the 171,900 tons exported in
the same quarter of 2003. Both increases primarily resulted from
further exports of flat products, which grew 29% and 23%
compared to the preceding quarter and the same quarter of 2003,
respectively. Export prices for 3Q04 calculated in nominal
dollars increased 7% and 59% versus the previous quarter and the
same quarter of 2003, respectively, following the trend in
international steel prices. Supported by strong export volumes
and prices, Hylsamex generated export revenues of US$174 million
in 3Q04, reflecting substantial increases of 32% and 94% versus
the previous quarter and the same quarter of 2003. The Company
continues to sense robust global demand for steel.

During the first nine months of 2004, Hylsamex has sold
2,402,200 tons, an increase of 12% over shipments of 2,152,500
recorded in the first nine months of 2003. Year-to-date, both
domestic and export shipments have registered solid growth:
domestic volumes have grown 12% to a level of 1,851,100 tons,
while exports have increased 11% to a total of 551,100 tons.
Greater economic growth in Mexico and abroad has led to stronger
sales volume in 2004.

REVENUE

Hylsamex's revenues further increased in 3Q04 due to the rise in
international steel prices and strong sales volume. The Company
generated sales revenue of US$640 million (Ps.7,353 million) in
3Q04, 9% higher than the US$589 million (Ps.6,802 million)
obtained in the previous quarter and 74% higher than the US$367
million (Ps.4,153 million) achieved in the same quarter of 2003.
The key element supporting revenue growth during 2004 has been
Hylsamex's ability to promptly price its products according to
international steel prices, particularly U.S. steel prices.
Prices also reflect the increased cost of certain inputs such as
steel scrap. Hylsamex especially benefited from the favorable
trends in prices since most sales (approximately 85%) are on a
spot basis. Finally, the strong pricing trends continued during
3Q04, as evidenced by some price increases successfully
implemented by Hylsamex to reflect international steel pricing
trends.

As a consequence of continued strong prices, in 3Q04 Hylsamex's
revenue per ton further increased to US$773/ton, consisting of
an average steel price of US$734/ton and a US$39/ton
contribution from other steel revenue. Hylsamex's revenue per
ton of US$773/ton for 3Q04 reflects a moderate increase of 3% or
US$25/ton compared to the US$748/ton obtained in the previous
quarter and represents a notable surge of 52% or US$266/ton in
relation to the US$507/ton achieved in the same quarter of 2003.
In the first nine months of 2004, Hylsamex has generated
US$1,690 million (Ps.19,390 million) in revenues, a significant
increase of 55% compared to the revenues of US$1,091 million
(Ps.12,346 million) reported for the same period of 2003.

Year-to-date, revenue per ton has reached US$703/ton, a
substantial increase of 39% compared to the revenue per ton of
US$507/ton obtained in the same period of 2003.

COST OF GOODS SOLD

In order to meet strong demand for steel in Mexico and abroad,
Hylsamex has operated at very high utilization levels so far in
2004 and 3Q04 was no exception. In addition, the input cost
environment for the steel industry has remained practically
unchanged since early in 2004. Consequently, Hylsamex has
maintained DRI production at maximum output and has continued to
benefit from DRI's renewed cost competitiveness vis-a-vis scrap.
In contrast to less integrated producers, Hylsamex's vertical
integration and metallic charge flexibility has allowed it to
register only moderate increases in aggregate COGS and cost per
ton, despite high, although relatively stable, natural gas
prices during most of 2004.

As a sign of continued robust demand, Mill #1 of the Flat
Products Division (the primary flat products facility in use
before the mid-1990s modernization program) operated at a
production pace of approximately 35 to 40 thousand tons per
month during 3Q04. Production at Mill #1 is entirely on a
variable cost basis (i.e. no incurrence of fixed costs) and is
easily started and stopped as needed.

Hylsamex incurred slightly lower natural gas costs in 3Q04, as
compared to the previous quarter. With respect to scrap prices,
the market for scrap tightened during 3Q04 after the softening
observed in 2Q04. U.S. scrap prices 1 sharply rebounded from
US$160/ton during most of 2Q04 to an average level of US$215/ton
for 3Q04. So far early in 4Q04, scrap prices are seen at
US$238/ton, as of October 15th. As a result of higher scrap
prices and despite a high cost of natural gas, Hylsamex's DRI
cost advantage persisted and DRI production carried on. During
3Q04, Hylsamex utilized 41% more DRI than in the same quarter of
2003.

COGS for 3Q04 amounted to US$411 million (Ps.4,721 million), 12%
higher than the US $368 million (Ps.4,256 million) recorded in
the preceding quarter and 27% greater than the US$325 million
(Ps.3,675 million) registered in the same quarter of 2003. The
increase in COGS versus the previous quarter was due to greater
sales volume, a higher cost for steel scrap, and higher volumes
and cost of externally sourced steel for the coating operations.
The rise against the same quarter of 2003 resulted from these
same factors and also from higher energy costs.

On a per ton basis, COGS in 3Q04 reached US$496/ton, US$28/ton
or 6% greater than the US$468/ton attained in the previous
quarter and US$47/ton or 11% superior to the US$449/ton recorded
in the same quarter of 2003. The US$28/ton increase in cost per
ton against the previous quarter was completely caused by an
increase in variable cost per ton, since fixed costs per ton
remained unchanged. A higher cost for steel scrap of externally
sourced steel for the coating operations explains the rise in
variable cost. The US$47/ton increase in cost per ton compared
to the
same quarter of 2003 consisted of a US$57/ton increase in
variable cost, partially offset by a drop in fixed cost per ton
of US$10/ton. The increase in variable cost results from higher
energy costs, greater prices for scrap metal, and a higher cost
of externally sourced steel, whereas greater shipment levels
allowed a better spreading of fixed costs, consequently
decreasing this cost figure on a per ton basis.

An explanation of the quarterly behavior for the main components
of COGS follows:

Energy Inputs: The effective natural gas price for Hylsamex
during 3Q04 was US$5.47/MMBtu (corresponding to a US$5.50/MMBtu
reference average price in South Texas), 3% lower than the
US$5.66/MMBtu observed in the previous quarter but 10% higher
than the US$4.98/MMBtu recorded in the same quarter of 2003.

During 3Q04, the Company received a US$0.375/MMBtu discount in
its natural gas cost on 200 natural gas contracts per month, as
a result of the monetization of the US$5.00/MMBtu cap that took
place in 4Q03.

The Company is constantly monitoring and studying the natural
gas markets to manage this exposure. As of the date of this
report, the natural gas hedging program consists of the
following positions:

4Q04

- October: The effective natural gas price for Hylsamex will be
approximately US$5.30/MMBtu, resulting from the US$0.375/MMBtu
discount on 200 contracts from the monetization of the
US$5.00/MMBtu cap that took place in 4Q03 and a favorable
outcome of US$0.203/MMBtu from a US$5.27/MMBtu swap on 200
contracts.

- November and December: 63% of the requirements are covered
through a costless collar between US$4.1225 and US$5.00/MMBtu.

2005

- Calendar 2005: 32% of the needs for the year are hedged with a
US$4.33/MMBtu swap capped at US$6.75/MMBtu.

- Calendar 2005: 32% of the requirements for the year are
covered through a US$5.78/MMBtu swap.

There is additional flexibility embedded in this swap: when
market prices hover between US$4.9501/MMBtu and US$5.78/MMBtu,
the Company will pay the prevailing market price. Also, the swap
at US$5.78/MMBtu is capped at US$7.75/MMBtu.

The adjacent graph describes Hylsamex's natural gas cost for
2005, including the combined effect of the financial hedges
mentioned above. The graph also shows the average and high-low
Calendar 2005 futures prices as of October 22, 2004.

2007

- Calendar 2007: The Company sold a swaption at US$4.25/MMBtu
for 32% of the requirements for the year.

Note: While some of the Company's financial hedges are
referenced to NYMEX natural gas prices, all of the Company's
financial hedges described above are shown at their South Texas
equivalent price. In 2003, South Texas prices were on average
US$0.25 lower than the NYMEX price.

Fair Value of Natural Gas Derivatives 2: As of October 22, 2004,
the fair value of Hylsamex's natural gas positions amounts to
US$44 million (which represents a positive amount).

The cost of electricity for 3Q04 was US›4.51/Kwh, 8% greater
than the US›4.16/Kwh registered in the previous quarter and 15%
higher than the US›3.93/Kwh recorded in the same quarter of
2003. The increase in the cost of electricity versus both
periods was the result of higher international prices for fossil
fuels.

Metallic Inputs: In 3Q04, the weighted average cost of the
Company's metallic charge increased US$10/ton compared to the
previous quarter, and was US$53/ton higher than the cost during
the same quarter of 2003. In both assessments, the metallic
charge's cost increase is mainly attributed to higher scrap
costs, as the cost of DRI remained remarkably stable.
DRI's cost marginally increased by US$2/ton in 3Q04 versus the
previous quarter and rose US$4/ton compared to the same period
of 2003. This stability is due to the fairly steady effective
cost of natural gas for Hylsamex, which has hovered around
US$5.00/MMBtu since 2003, in part as a result of the Company's
natural gas hedging strategy. Since late in 2003, DRI has
regained competitiveness vis-a-vis steel scrap as a result of
the ascending tendency in scrap prices. Accordingly, Hylsamex's
competitive position has been enhanced compared to less
integrated producers.

As a sign of continued tightness in the steel scrap markets, the
cost of Hylsamex's overall scrap mix remained relatively high
compared to prior years. The cost of Hylsamex's domestic scrap
mix in 3Q04 further increased by US$18/ton as measured against
the preceding quarter and also rose US$100/ton compared to the
same quarter of 2003, following the upward trend exhibited by
U.S. scrap prices.

During 3Q04, the cost of Hylsamex's imported scrap mix slightly
decreased for a second consecutive quarter, from the highs seen
in the first quarter of 2004: its cost dropped US$3/ton compared
to the previous quarter. In the comparison versus the same
quarter of 2003, the cost of imported scrap increased
considerably by US$90/ton. Sustained high scrap prices have been
induced by increased worldwide demand for steel products.

COGS for the first nine months of 2004 amounted to US$1,131
million (Ps.12,971 million), increasing 18% from the US$962
million (Ps.10,880 million) recorded in the same period of 2003.
The 18% rise in COGS is due to the 12% growth in shipments and
higher variable costs. On a per ton basis, COGS remained
relatively stable, as it only increased US$24/ton or 5%, from
US$447/the first nine months of 2003 to US$471/ton in the same
period of 2004. In this comparison, variable costs increased
US$35/ton due to the higher costs of scrap, greater cost of
externally-sourced steel, and higher prices of energy inputs.
But, the rise in variable cost per ton was somewhat offset by a
US$11/ton decrease in fixed costs derived from the
abovementioned greater shipment levels in 2004.

OPERATING EXPENSES

Operating expenses for 3Q04 summed US$28 million (Ps.318
million), 4% lower than the US$29 million (Ps.334 million) spent
in the previous quarter and 4% less than the US$29 million
(Ps.326 million) registered in the same quarter of 2003. The
stability of operating expenses reflects management's control
exerted in this area where most costs are fixed. A steady
absolute level of operating expenses coupled with increased
revenues, produced a considerable drop in the ratio of operating
expenses to sales, as it decreased to 4.3% in 3Q04, lower than
the 4.9% and 7.9% observed in the previous quarter and the same
quarter of 2003, respectively. On a per ton basis, operating
expenses reached US$33/ton, registering small decreases of
US$3/ton and US$6/ton compared to the preceding quarter and the
same period of 2003, respectively.

Cumulatively for the first nine months of 2004, operating
expenses amounted to US$87 million (Ps.997 million), up 4% from
the US$84 million (Ps.946 million) recorded in the same period
of 2003. In 9M04, the ratio of operating expenses to sales
decreased to 5.1%, from 7.7% registered in the same period of
2003.

OPERATING INCOME AND EBITDA

Thus far in 2004, Hylsamex has generated record operating
profitability. During 3Q04, operating income totaled US$201
million (Ps.2,314 million), US$10 million greater than the
US$191 million (Ps.2,212 million) gained in the previous quarter
and US$188 million more than the US$13 million (Ps.152 million)
obtained in the same quarter of 2003. Hylsamex's operating
profit margin for 3Q04 reached 31%, slightly below the 33%
registered in the previous quarter, but considerably above the
4% operating profit margin obtained in the same quarter of 2003.

As in the case of operating income, in terms of EBITDA Hylsamex
set a new quarterly record in 3Q04. The Company's EBITDA in 3Q04
of US$232 million (Ps.2,666 million) was US$10 million more than
the US$222 million (Ps.2,564 million) generated in the previous
quarter and more than five times the US$44 million (Ps.500
million) achieved in the same quarter of 2003. Hylsamex's EBITDA
margin reached 36% during 3Q04, slighly below the prior
quarter's EBITDA margin of 38%, but still sharply above the
EBITDA margin of 12% registered in the same quarter of 2003.

On a per ton  basis, EBITDA reached US$280/ton in 3Q04, similar
to the US$282/ton obtained in the previous quarter and more than
four times the US$61/ton generated in the same quarter of 2003.
Operating profitability again reached outstanding levels in
3Q04, explained by the current steel pricing environment and
Hylsamex's vertical integration that helped record relatively
stable costs.

Compared to the previous quarter, a very slight decrease in
margins was observed. This decrease is mostly explained by
greater volumes of higher cost externally-sourced steel for the
coating operations, which compressed Hylsamex's overall margin
slightly, but increased consolidated tonnage sold. At the end of
the day, these greater purchases of steel from third parties
were processed and sold by the Company with a relevant markup,
allowing Hylsamex to generate more operating income and EBITDA
in absolute terms. In the comparison against the same quarter of
2003, Hylsamex not only enjoyed the benefit of higher prices,
but also the Company's enhanced position as an efficient,
vertically integrated minimill, allowed it to expand profit
margins more than other steel producers since the Company's unit
production costs increased only marginally.

Operating income for the first nine months of 2004 amounted to
US$472 million (Ps.5,422 million), more than ten times the
operating income of US$46 million (Ps.520 million) obtained in
the same period of 2003. EBITDA also increased markedly, as
Hylsamex has generated US$564 million (Ps.6,479 million) in the
first nine months of 2004, more than four times the EBITDA of
US$139 million (Ps.1,577 million) accumulated in the same period
of 2003.

COMPREHENSIVE FINANCIAL RESULT (CFR)

Hylsamex recorded in 3Q04 a net financial cost of US$10 million
(Ps.113 million), as compared to net financial costs of US$45
million (Ps.522 million) and US$53 million (Ps.597 million)
registered in the previous quarter and the same quarter of 2003,
respectively. The CFR variations largely had to do with the
fluctuation of the Peso-dollar exchange rate and its significant
effect on the basically dollarized debt. During 3Q04, the
Company also experienced sizeable decreases in net interest
expense compared to both comparable periods, as a result of less
interest incurred due to the US$280 million reduction in net
debt during the quarter and the refinancing of bank debt at more
attractive terms.

Net interest expense for 3Q04 dropped 8% or US$2 million
compared to the previous quarter and also decreased 20% or US$5
million versus the same quarter of 2003.

During the first nine months of 2004, the Company registered a
net financial cos t of US$54 million (Ps.616 million), 47% less
than the net financial cost of US$103 million (Ps.1,168 million
reported for the comparable period of 2003. The reduction is
mostly explained by lower foreign exchange losses in 2004.

CONSOLIDATED NET INCOME

During 3Q04, the Company reported consolidated net income of
US$119 million (Ps.1,369 million), slightly below the net income
of US$124 million (Ps.1,434 million) in the previous quarter but
in contrast to the net loss of US$24 million (Ps.273 million)
registered in the same quarter of 2003. Against the same quarter
of 2003, the bottom line improved as a result of the sharp
increase in operating income and was also due to significant
equity income from Sidor.

Year-to-date, for the period ended September 30, 2004, Hylsamex
reported consolidated net income of US$306 million (Ps.3,516
million), which compares favorably to the US$16 million (Ps.190
million) of net loss registered in the same period of 2003. The
significant variation is mainly explained by the positive swing
in the Company's operating profitability from 2003 to 2004.

NET DEBT & OTHER ITEMS

NET DEBT VARIATION 3Q04

Debt Net of Cash: Hylsamex's net debt as of September 30, 2004
was reduced to US$587 million, US$280 million or 32% less than
the US$867 million outstanding as of June 30, 2004. The sharp
reduction in net debt versus the previous quarter was mainly
obtained through US$176 million in bank debt prepayments made by
the Company with internal cash generation and US$137 million in
net proceeds from equity issuance used entirely for bank debt
prepayments.

Cash Taxes Paid: Cash taxes paid during 3Q04 amounted to US$8
million, more than the US$6 million paid in the previous quarter
and identical to the US$8 million disbursed in the same quarter
of 2003. Despite the significant increase in operating
profitability, the Company is paying taxes that reflect only the
asset tax incurred. The Company will not face an additional
burden related to income taxes payments in 2004 due to the
shield provided by outstanding tax loss carryforwards and asset
tax credits. As of September 30, 2004, the Company holds US$346
million and US$157 million in tax loss carry forwards and asset
tax credits, respectively. Tax loss carry forwards can be used
to reduce future taxable income and consequently diminish income
tax incurred. Furthermore, if the remaining future income tax
incurred is greater than the asset tax, asset tax credits can be
utilized to reduce income tax payments to the asset tax level.

Net Working Capital (NWC): During 3Q04 net working capital
represented a significant use of funds of US$63 million;
however, the figure for 3Q04 was considerably less than the
investment in NWC of US$93 million made in the previous quarter.
In 3Q04, the Company invested working capital due to greater
production and sales volumes. Funds were destined primarily to
inventories -with an emphasis at Galvak, which purchased more
steel from third parties- and to a lesser degree in accounts
receivables.

The Company continued exhibiting efficient management of working
capital as demonstrated by the favorable tendency in the
operating activity ratios: NWC in days increased to 40 days in
3Q04 compared to 34 days in the previous quarter, but decreased
by 10 days in the comparison with the 50 days registered in the
same quarter of 2003.

Capital Expenditures: Capital expenditures reached US$5 million
during 3Q04, which represents decreases of US$8 million and US$6
million compared to the investments made in the previous quarter
and in the same quarter of 2003, respectively.

NET DEBT VARIATION 9M04

Debt Net of Cash: Hylsamex's net debt as of September 30, 2004
dropped to US$587 million, US$427 million or 42% less than the
US$1,014 million balance as of December 31, 2003. This
significant reduction in net debt in the first nine months of
2004 was largely obtained through US$261 million in bank debt
prepayments made by the Company with internal cash generation so
far in 2004, US$137 million in net proceeds from equity issuance
used entirely for bank debt prepayments, and a considerable
increase in free cash flow that bumped up cash reserves by US$28
million from year-end 2003 to a balance of US$113 million as of
September 30, 2004.

Cash Taxes Paid: Cash taxes paid during the first nine months of
2004 amounted to US$25 million, slightly less than the US$27
million paid in the same period of 2003.

Net Working Capital (NWC): For the first nine months of 2004,
net working capital represented a significant use of funds of
US$171 million. Year-to-date, NWC in days has dropped to 37
days, from 49 days in the first nine months of 2003. The
considerable investment in NWC during this period is essentially
due the sharp rise in the monetary value of steel shipments and
raw materials during the year, and to a lesser extent greater
production and sales volume.

Capital Expenditures: Capital expenditures totaled US$31 million
during the first nine months of 2004, US$7 million less than the
investments made in the same period of 2003. Galvak continues
its expansion program and has invested US$8 million so far in
2004.

The cumulative figure for 2004 appears relatively low because
Galvak has opted to arrange "sale-leaseback" transactions for
certain fixed assets totaling US$8 million. Also, out of the
figure for Hylsamex for the first nine months of 2004, US$5
million corresponded mainly to the removal of overburden
material at the mines and to US$17 million that was invested in
normal Capex at Hylsa.

LIQUIDITY AND CASH RESERVES

Hylsamex continued with its excellent overall liquidity during
3Q04. Greater operating cash flow maintained cash reserves at
high levels, even after using considerable funds to prepay
US$176 million of bank debt during 3Q04. Cash reserves reached
US$113 million as of September 30, 2004, lower than the balance
of US$140 million at the end of the previous quarter but US$28
million more than the balance of US$85 million as of year-end
2003.

Toward the end of 3Q04, the Company obtained a new, three-year
unsecured US$60 million Liquidity Facility for Hylsa, which was
granted for general corporate purposes and aimed at supporting
working capital needs. The new credit line significantly
enhances Hylsa's liquidity and credit strength; it remains
unused and has an expiration date of September 30, 2007. This
new credit facility replaced the former US$40 million secured
facility.

CAPITAL STRUCTURE & DEBT PROFILE

During 3Q04, Hylsamex's management took important steps to
substantially strengthen the Company's balance sheet and improve
its long -term debt profile. Hylsamex successfully carried out
the following corporate finance transactions:

- On July 15, 2004, Hylsamex successfully placed 101 million
HylsamxL shares in the local and international capital markets
at a price of Ps.16.00 per HylsamxL share. Net proceeds of the
offering amounted to US$137 million, which were used to prepay
bank debt at the holding company level Hylsamex, S.A. de C.V.
("Facility B").

- On August 9, 2004, Hylsa made a US$75 million prepayment to
"Facility A" using internally generated cash flow.

- On August 16, 2004, Galvak obtained US$175 million in medium-
term bank financing. Net proceeds were utilized by Galvak to
refinance US$119 million of its own indebtedness, applying the
remaining US$54 million and internal cash generation at the
subsidiary to fully repay the US$86 million bank "Facility B"
debt outstanding balance at the holding company Hylsamex S.A. de
C.V.

- On September 20, 2004, Hylsa made a US$70 million prepayment
to "Facility A" using internally generated cash flow.

- On September 30, 2004, Hylsa obtained US$100 million in
unsecured medium-term bank financing. Net proceeds of this
transaction were utilized by Hylsa to fully repay and close bank
debt denominated "Facility A". Additionally, Hylsa obtained a
new, unsecured three-year US$60 million Liquidity Facility that
replaces the former US$40 million secured credit line.

As a result of this transaction, Hylsa has committed with its
bank group to calling a minimum of US$59 million of its US$139
million, 9 1/4% Notes due 2007. Hylsa must make this prepayment
before December 31, 2005.

Through these transactions and the bank debt prepayments made in
the first nine months of 2004, Hylsamex has completely paid down
all bank debt originated in the 2002 debt restructuring.

Consequently, guarantees have been released and Hylsamex has
increased its flexibility. More specifically, the complete
paydown of debt originated in the 2002 restructuring strengthens
Hylsamex in the following ways:

- Hylsamex's consolidated debt profile reflects considerable
improvement: the Company's average life of debt is now 4.0
years;

- It allows Hylsa to classify 91% of its total debt as
"unsecured", thus strengthening Hylsa's credit profile;

- It improves borrowing costs;

- Hylsa and Galvak's renewed flexibility paves the road for
Hylsamex to resume a sound and continuing dividend policy.

KEY FINANCIAL RATIOS

Robust EBITDA generation and the sharp reduction in net debt
achieved during 3Q04 allowed further enhancement in Hylsamex's
financial ratios. The Company recorded Net Debt to LTM EBITDA of
1.0x as of the end of 3Q04, decreasing significantly from the
2.0x and 5.5x observed in the preceding quarter and the same
period of 2003, in that order. The Interest Coverage ratio (LTM
EBITDA to LTM Net Interest Expense) followed a similar trend: it
reached 6.9x as of the end of 3Q04, compared to 4.5x in the
previous quarter and 2.0x in the same quarter of 2003.

Fair Value of Interest Rate Derivatives3: As of October 21,
2004, the fair value of Hylsamex's interest rate derivatives
position amounted to US$0.8 million (which represents a positive
amount). All of Hylsamex's interest rate derivative transactions
are structured as Libor interest rate caps.

EQUITY INCOME FROM ASSOCIATED COMPANIES (SIDOR)

Hylsamex's minority stake in Amazonia generated a gain of US$11
million (Ps.125 million) in 3Q04, as compared to the gains of
US$21 million (Ps.246 million) and US$3 million (Ps.35 million)
recorded in the previous quarter and in the same quarter of
2003, respectively. Sidor continues to post a solid operating
performance as a result of favorable fundamentals in the global
steel market, the company's position as one of the world's
lowest-cost steel producers, and its privileged geographic
location that allows it to efficiently supply the domestic and
export markets.

To view financial statements:
http://bankrupt.com/misc/Hylsamex.PDF

CONTACTS: Mr. Othon D¡az Del Guante
          Phone: +(52) 81-8865-1240
          e-mail: odiaz@hylsamex.com.mx

          Mr. Ismael De La Garza
          Phone: +(52) 81-8865-1224
          e-mail: idelagarza@hylsamex.com.mx

          Mr. Kevin Kirkeby
          Phone: +(646) 284-9416
          e-mail: kkirkeby@hfgcg.com

          Web Site: http://www.Hylsamex.com/



=================
V E N E Z U E L A
=================

BELLSOUTH CORP.: Posts $5.1B Consolidated Revenue for 3Q04
----------------------------------------------------------
BellSouth Corporation (NYSE: BLS) announced third quarter 2004
earnings per share (EPS) from continuing operations of 46 cents
compared to 48 cents in the third quarter of 2003.  Normalized
EPS was 49 cents in the third quarter of 2004 compared to 50
cents in the same quarter a year ago.  Normalizing items
included hurricane-related expenses in the wireline business,
wireless merger integration planning costs and a fair value
adjustment for the pending sale of Cingular Interactive assets.
See below for further details.

For the quarter, consolidated revenue from continuing operations
totaled $5.1 billion.  Income from continuing operations was
$852 million compared to $894 million in the same quarter a year
ago.

In accordance with Generally Accepted Accounting Principles
(GAAP), BellSouth's reported consolidated revenues and
consolidated operating expenses from continuing operations do
not include the Company's 40 percent share of Cingular Wireless.
Normalized results from continuing operations are adjusted for
BellSouth's 40 percent proportionate share of Cingular's
revenues and expenses and other normalizing items described
below.  Normalized revenue was $6.7 billion, reflecting some
improvement compared to the third quarter of 2003.  Normalized
net income was $893 million compared to $926 million in the same
quarter a year ago.

Operating free cash flow from continuing operations (defined as
net cash provided by operating activities less capital
expenditures) totaled $923 million for the third quarter of
2004.  Capital expenditures for continuing operations in the
third quarter of 2004 were $768 million compared to $713 million
in the same period in 2003.

Communications Group

Communications Group revenue was $4.6 billion.  Operating margin
for the third quarter of 2004 was 26.3 percent, level with the
2003 full year operating margin and 40 basis points higher than
the 25.9 percent operating margin in the second quarter of 2004.

For the quarter ending Sept. 30, total access lines of 21.6
million declined 3.9 percent compared to a year earlier.  UNE-P
access lines resold by BellSouth competitors decreased by 54,000
in the third quarter compared to an increase of 188,000 in the
same quarter a year ago.

BellSouth added 532,000 mass-market long distance customers
during the third quarter of 2004 and now serves approximately
5.7 million mass-market long distance customers.  These
customers represent a 44 percent penetration of BellSouth's
mass-market base and spend an average of approximately $17 per
month on long distance with BellSouth.

For the third quarter, network data revenue was $1.1 billion, an
increase of 3.7 percent compared to the same quarter of 2003,
driven by DSL. BellSouth added 134,000 net DSL customers during
the third quarter of 2004, for a total of approximately 1.9
million at quarter-end.  In September, BellSouth launched
additional incentives and introduced new pricing for
FastAccess(R) DSL designed to increase long-term market
penetration.

With the third-quarter launch of our DIRECTV(R) offer, the
Company provides a competitively priced triple-play package of
voice, data and entertainment services.  Through Sept. 30, more
than 90,000 customers have added DIRECTV(R) to their
communications services packages.

In the third quarter, the hurricanes that hit BellSouth's
markets affected more than 1.2 million residential and business
customers.  As a result, the Company incurred approximately $38
million of incremental labor and material costs during the third
quarter.  The Company expects to recognize incremental costs in
the $90 million range during the fourth quarter.   Impacts to
capital are not expected to affect our guidance.   BellSouth's
emergency preparations and network capabilities ensured high
levels of service retention and restoration despite the storm-
related damages.  To date, fewer than 20,000 lines remain
affected, and BellSouth continues to work around the clock
restoring service to these customers in the hardest-hit areas.

Domestic Wireless/Cingular

For the third quarter, Cingular Wireless added 657,000 net
cellular/PCS customers, bringing its nationwide customer base to
25.7 million.  More than 80 percent of net additions were
postpaid.  Churn remained flat year-over-year at 2.8 percent.
BellSouth's share of Cingular's revenue was $1.7 billion in the
third quarter of 2004, a gain of 4.8 percent compared to the
same quarter a year ago.  Revenue growth was driven by a 4.3
percent increase in service revenue, which included a 116
percent increase in cellular/PCS data revenue.

The third quarter operating margin of 12.5 percent was impacted
by lower service ARPU, costs associated with record gross
customer additions and higher systems costs from increased
minutes of use.

During the third quarter, Cingular continued to make advances in
deploying next-generation network technologies that will give
customers access to high-speed wireless data services.  The
company has enabled substantially all of its markets with EDGE
(Enhanced Data for GSM Evolution) high-speed data technology.
Cingular is currently testing integrated voice and data wireless
services in a 3G UMTS (Universal Mobile Telecommunications
System) trial.

Cingular's purchase of AT&T Wireless will create the nation's
largest wireless provider with more than 47 million subscribers.
Cingular's plans for integration will position the company as a
leader in the wireless industry providing a high-quality
network, excellent customer care and innovative wireless
services.  Cingular's management team has experience integrating
wireless companies, and as the two companies' operations are
brought together, the number one focus will be giving customers
great service and a seamless transition.

The Cingular/AT&T Wireless transaction will be funded primarily
by equity contributions from Cingular's parent owners.
BellSouth's portion of the funding is approximately $14.5
billion, which will be funded with cash on hand, proceeds from
asset sales and incremental debt.  Net incremental financing for
this transaction is expected to be approximately $6 billion.

Advertising & Publishing

Advertising & Publishing revenue was $498 million in the third
quarter of 2004, a decrease of 1.4 percent compared to the same
quarter a year ago. Operating margin for the third quarter of
2004 was 46.0 percent compared to 47.1 percent in the third
quarter of 2003.  Segment net income was $141 million compared
to $147 million in the third quarter of 2003.

Discontinued Operations: Latin America Group

In March 2004, BellSouth signed a definitive agreement with
Telefonica Moviles, the wireless affiliate of Telefonica, S.A.,
to sell BellSouth's interests in its 10 Latin American
operations.  On Oct. 14, 2004, the company closed the sale of
wireless operations in Ecuador, Guatemala and Panama. Pending
required governmental approvals, the remaining seven properties
are expected to close by the end of 2004.

Following GAAP, the Company's financial statements, as of Sept.
30, 2004, reflect results for the Latin American segment in the
line item titled Discontinued Operations.  For the third
quarter, BellSouth reported a loss from discontinued operations
of 3 cents per share compared to income of 2 cents per share in
the third quarter of 2003.  Results for the third quarter of
2004 include an after-tax charge of approximately $190 million,
or 10 cents per share, related to an agreement in principle with
the other major shareholder of Telcel, our Venezuelan operation,
where we would purchase its 21.8 percent interest in Telcel and
settle all outstanding claims for an aggregate payment of $617
million.  In accordance with our agreement with Telefonica
Moviles, we will sell this interest for approximately $300
million.

The BellSouth consolidated Latin American operations added
583,000 customers in the third quarter of 2004, for a total of
12.1 million customers served at quarter-end.  Consolidated
Latin American operations produced $724 million in revenue for
the third quarter of 2004.

Normalizing Items

In the third quarter of 2004, the difference between reported
(GAAP) EPS from continuing operations and normalized EPS is
shown in the following table:

                                     3Q04           3Q03
GAAP Diluted EPS - Income from
   Continuing operations            $0.46          $0.48

    Hurricane-related expenses       0.01
    Wireless merger integration
      planning costs and fair
      value adjustment              $0.01
    Asset impairment                               $0.02

    Normalized Diluted EPS (1)      $0.49          $0.50

(1) Normalized Diluted EPS for 3Q04 does not sum due to rounding

Hurricane-related expenses -- Represents the incremental labor
and material costs incurred during the third quarter related to
service restoration and network repairs in the wireline business
due to Hurricanes Charley, Frances, Ivan and Jeanne.

Wireless merger integration planning costs and fair value
adjustment -- Represents BellSouth's 40 percent share of tax-
effected wireless merger integration planning costs of $43
million incurred during the third quarter in preparation for the
Cingular/AWE merger.  Also includes a $31 million fair value
adjustment for the announced sale of Cingular Interactive.

Asset impairment -- The third quarter 2003 charge for asset
impairment represents the write-off of capitalized software
related to an abandoned systems project.

About BellSouth Corporation

BellSouth Corporation is a Fortune 100 communications company
headquartered in Atlanta, GA, and a parent company of Cingular
Wireless, the nation's second largest wireless voice and data
provider.

Backed by award-winning customer service, BellSouth offers the
most comprehensive and innovative package of voice and data
services available in the market. Through BellSouth Answers(R),
residential and small business customers can bundle their local
and long distance service with dial up and high speed DSL
Internet access, satellite television and Cingular(R) Wireless
service. For businesses, BellSouth provides secure, reliable
local and long distance voice and data networking solutions.
BellSouth also offers online and directory advertising through
BellSouth(R) RealPages.com(R) and The Real Yellow Pages(R).

To view financial statements:
http://bankrupt.com/misc/BellSouth_Corporation.htm



                            ***********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Lucilo Junior M. Pinili, Editors.

Copyright 2004.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.

Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial
subscription or balance thereof are $25 each.  For subscription
information, contact Christopher Beard at 240/629-3300.


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