building a STRONGER foundation - Cemex

(U.S.$735 million) and Ps9,968 million (U.S.$807 million), respectively, of which, the funded amount as of December 31, 2010 was
Ps6,662 (U.S.$539 million). Unfunded amounts of receivables sold are not derecognized but are reclassified from trade receivables to
other accounts receivable in the balance sheet (see notes 5 and 6 to our consolidated financial statements included elsewhere in this
annual report). The accounts receivable qualifying for sale do not include amounts over specified days past due or concentrations over
specified limits to any one customer, according to the terms of the programs. Expenses incurred under these programs, originated by
the discount granted to the acquirers of the accounts receivable, are recognized in the statement of operations as financial expense and
were approximately Ps656 million (U.S.$58 million) in 2008, Ps645 million (U.S.$47 million) in 2009 and Ps368 million (U.S.$29
million) in 2010. The proceeds obtained through these programs have been used primarily to reduce net debt. On May 5, 2011, we
extended for five years our securitization program for accounts receivable for our operations in Spain until May 5, 2016. On May 17,
2011, we extended for two years our accounts receivable securitization program for our U.S. operations until May 17, 2013.
Stock Repurchase Program
Under Mexican law, our shareholders may authorize a stock repurchase program at our annual shareholders’ meeting. Unless
otherwise instructed by our shareholders, we are not required to purchase any minimum number of shares pursuant to such program.
In connection with our 2008, 2009 and 2010 annual shareholders’ meetings held on April 23, 2009, April 29, 2010 and
February 24, 2011, respectively, no stock repurchase program was proposed between April 2009 and April 2010, between April 2010
and April 2011 and between February 2011 and February 2012, respectively. Subject to certain exceptions, we are not permitted to
repurchase shares of our capital stock under the Financing Agreement.
Research and Development, Patents and Licenses, etc.
Our research and development, or R&D, efforts help us in achieving our goal of increasing market share in the markets in which
we operate. The department of the Vice President of Technology is responsible for developing new products for our cement and
ready-mix concrete businesses that respond to our clients’ needs. The department of the Vice President of Energy has the
responsibility for developing new processes, equipment and methods to optimize operational efficiencies and reduce our costs. For
example, we have developed processes and products that allow us to reduce heat consumption in our kilns, which in turn reduces
energy costs. Other products have also been developed to provide our customers a better and broader offering of products in a
sustainable manner. We believe this has helped us to keep or increase our market share in many of the markets in which we operate.
We have 10 laboratories dedicated to our R&D efforts. Nine of these laboratories are strategically located in close proximity to
our plants to assist our operating subsidiaries with troubleshooting, optimization techniques and quality assurance methods. One of our
laboratories is located in Switzerland, where we are continually improving and consolidating our research and development efforts in
the areas of cement, concrete, aggregates, admixtures, mortar and asphalt technology, as well as in information technology and energy
management. We have several patent registrations and pending applications in many of the countries in which we operate. These
patent registrations and applications relate primarily to different materials used in the construction industry and the production
processes related to them, as well as processes to improve our use of alternative fuels and raw materials.
Our Information Technology divisions have developed information management systems and software relating to cement and
ready-mix concrete operational practices, automation and maintenance. These systems have helped us to better serve our clients with
respect to purchasing, delivery and payment.
R&D activities comprise part of the daily routine of the departments and divisions mentioned above; therefore, the costs
associated with such activities are expensed as incurred. However, the costs incurred in the development of software for internal use
are capitalized and amortized in operating results over the estimated useful life of the software, which is approximately four years.
In 2008, 2009 and 2010, the combined total expense of the departments of the Vice President of Energy and the Vice President
of Technology, which includes R&D activities, amounted to approximately Ps348 million (U.S.$31 million), Ps408 million (U.S.$30
million) and Ps519 million (U.S.$41 million), respectively.
Summary of Material Contractual Obligations and Commercial Commitments
The Financing Agreement
On August 14, 2009, we entered into the Financing Agreement. The Financing Agreement extended the maturities of
approximately U.S.$15.1 billion in syndicated and bilateral bank facilities and private placement obligations, providing for a semiannual
amortization schedule, with a final amortization payment of approximately U.S.$6.8 billion on February 14, 2014, based on
prevailing exchange rates as of December 31, 2010. The Financing Agreement is secured by a first-priority security interest over the
Collateral and all proceeds of such Collateral.
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