building a STRONGER foundation - Cemex

In addition, we have entered into forward contracts on the TRI of the Mexican Stock Exchange through which we maintain
exposure to changes of such index, until maturity in October 2011. Upon liquidation, these forward contracts provide a cash settlement
of the estimated fair value and the effects are recognized in the statement of operations. Under these equity forward contracts, there is
a direct relationship in the change in the fair value of the derivative with the change in value of the TRI of the Mexican Stock
Exchange.
As of December 31, 2010, the potential change in the fair value of these contracts that would result from a hypothetical,
instantaneous decrease of 10% in the aforementioned index would be a loss of approximately U.S.$1 million (Ps12 million).
As of December 31, 2010, we were subject to the volatility of the market price of the CPOs in relation to our options over the
CPO price and our put option transactions on the CPOs, as described in “— Qualitative and Quantitative Market Disclosure — Our
Derivative Financial Instruments — Our Other Equity Derivative Contracts.” A decrease in the market price of the CPOs may
adversely affect our result from financial instruments and our net income.
As of December 31, 2010, the potential change in the fair value of these contracts that would result from a hypothetical,
instantaneous decrease of 10% in the market price of the CPOs would be a loss of approximately U.S.$31 million (Ps383 million).
In connection with the offering of the 2010 Optional Convertible Subordinated Notes issued in March 2010, we entered into a
capped call transaction with an affiliate of Citigroup Global Markets Inc., the sole global coordinator and sole structuring agent of the
2010 Optional Convertible Subordinated Notes. See “— Qualitative and Quantitative Market Disclosure — Our Derivative Financial
Instruments — Our Capped Call Transaction.” We have recently entered into capped call transactions with several financial
institutions in connection with the issuance of the 2011 Optional Convertible Subordinated Notes. See “— Recent Developments —
Recent Developments Relating to Our Indebtedness.”
Investments, Acquisitions and Divestitures
The transactions described below represent our principal investments, acquisitions and divestitures completed during 2008, 2009
and 2010.
Investments and Acquisitions
Our net investment in property, machinery and equipment, as reflected in our consolidated financial statements (see note 10 to
our consolidated financial statements included elsewhere in this annual report), excluding acquisitions of equity interests in
subsidiaries and associates, was approximately Ps23.2 billion (U.S.$2.1 billion) in 2008, Ps8.7 billion (U.S.$636 million) in 2009 and
Ps6.9 billion (U.S.$555 million) in 2010. This net investment in property, machinery and equipment has been applied to the
construction and upgrade of plants and equipment, to the maintenance of plants and equipment, including environmental controls and
technology updates.
As of the date of this annual report, we have allocated over U.S.$470 million in our 2011 budget to continue with this effort.
Divestitures
On August 27, 2010, we completed the sale of seven aggregates quarries, three resale aggregate distribution centers and one
concrete block manufacturing facility in Kentucky to Bluegrass Materials Company, LLC for U.S.$88 million in proceeds.
On October 1, 2009, we completed the sale of our operations in Australia to a subsidiary of Holcim Ltd for A$2.02 billion
(approximately U.S.$1.7 billion).
On June 15, 2009, we sold three quarries (located in Nebraska, Wyoming and Utah) and our 49% joint venture interest in the
operations of a quarry located in Granite Canyon, Wyoming, to Martin Marietta Materials, Inc. for U.S.$65 million.
On December 26, 2008, we sold our Canary Islands operations (consisting of cement and ready-mix concrete assets in Tenerife
and 50% of the shares in two joint-ventures, Cementos Especiales de las Islas, S.A. (CEISA) and Inprocoi, S.L.) to several Spanish
subsidiaries of Cimpor Cimentos de Portugal SGPS, S.A. for €162 million (approximately U.S.$227 million).
On July 31, 2008, we agreed to sell our operations in Austria (consisting of 26 aggregates and 41 ready-mix concrete plants) and
Hungary (consisting of 6 aggregates, 29 ready-mix concrete and 4 paving stone plants) to Strabag SE, one of Europe’s leading
construction and building materials groups, for €310 million (approximately U.S.$433 million). See “Item 4 — Information on the
Company — Regulatory Matters and Legal Proceedings — Other Legal Proceedings — Strabag Arbitration.” for a description of the
ongoing arbitration relating to the proposed sale of our Austrian and Hungarian operations.
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