building a STRONGER foundation - Cemex

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The November 2001 Voluntary Exchange Program In November 2001, we implemented a voluntary exchange program to offer participants in our ESOP new options in exchange for their existing options. The new options had an escalating strike price in Dollars at a 7% annual rate, while the old options had a fixed strike price in Pesos. As of December 31, 2010, considering the options granted under the program, the exercise of options through that date, the result of the February 2004 exchange program described below and the 2004 voluntary early exercise program, options to acquire 7,119,529 CPOs remained outstanding under this program, with a weighted average exercise price of approximately U.S.$1.52 per CPO. As of December 31, 2010, the outstanding options under this program had a remaining tenure of approximately 1.3 years. Exercise prices and the number of underlying CPOs are technically adjusted for the dilutive effect of stock dividends and recapitalization of retained earnings. The February 2004 Voluntary Exchange Program In February 2004, we implemented a voluntary exchange program to offer ESOP participants, as well as holders of options granted under our existing voluntary employee stock option plan, or VESOP, new options in exchange for their existing options. The strike price of the new options increased annually at a 7% rate. Holders of these options were entitled to receive an annual payment of U.S.$0.10 net of taxes per option outstanding as of the payment date until exercise or maturity of the options, which was scheduled to grow annually at a 10% rate. Exercise prices and the number of underlying CPOs were technically adjusted for the dilutive effect of stock dividends and recapitalization of retained earnings. The new options were automatically exercised when the closing CPO market price reached U.S.$7.50. Any gain realized through the exercise of these options was required to be invested in restricted CPOs at a 20% discount to market. The restrictions would be removed gradually within a period of between two and four years, depending on the exercise date. As a result of the voluntary exchange offer, 122,708,146 new options were issued in exchange for 114,121,358 existing options, which were subsequently cancelled. All options not exchanged in the offer maintained their existing terms and conditions. On January 17, 2005, the closing CPO market price reached U.S.$7.50 and, as a result, all existing options under this program were automatically exercised. Holders of these options received the corresponding gain in restricted CPOs, as described above. The 2004 Voluntary Early Exercise Program In December 2004, we offered ESOP and VESOP participants new options, conditioned on the participants exercising and receiving the intrinsic value of their existing options. As a result of this program, 120,827,370 options from the February 2004 voluntary exchange program, 16,580,004 options from other ESOPs, and 399,848 options from VESOP programs were exercised, and we granted a total of 139,151,236 new options. The new options had an initial strike price of U.S.$7.4661 per CPO, which was U.S.$0.50 above the closing CPO market price on the date on which the old options were exercised, and which increased at a rate of 5.5% per annum. All gains from the exercise of these new options would be paid in restricted CPOs. The restrictions would be removed gradually within a period of between two and four years, depending on the exercise date. Of the 139,151,236 new options, 120,827,370 would be automatically exercised if the closing CPO market price reached U.S.$8.50, while the remaining 18,323,866 options did not have an automatic exercise threshold. Holders of these options were entitled to receive an annual payment of U.S.$0.10 net of taxes per option outstanding as of the payment date until exercise or maturity of the options or until the closing CPO market price reached U.S.$8.50, which payment was scheduled to grow annually at a 10% rate. On June 17, 2005, the closing CPO market price reached U.S.$8.50, and, as a result, all outstanding options subject to automatic exercise were automatically exercised and the annual payment to which holders of the remaining options were entitled was terminated. As of December 31, 2010, options to acquire 70,481,496 CPOs remained outstanding under this program, with an exercise price of approximately U.S.$2.00 per CPO and a remaining tenure of approximately 1.5 years. For accounting purposes under MFRS and U.S. GAAP, as of December 31, 2010, we accounted for the options granted under the February 2004 voluntary exchange program by means of the fair value method through earnings. See notes 2T and 17 to our consolidated financial statements included elsewhere in this annual report. 138
Consolidated ESOP Information Stock options activity during 2009 and 2010, the balance of options outstanding as of December 31, 2009 and 2010 and other general information regarding our stock option programs, is presented in note 17 to our consolidated financial statements included elsewhere in this annual report. As of December 31, 2010, the following ESOP options to purchase our securities were outstanding: Title of security underlying options Number of CPOs or CPO equivalents underlying options 139 Expiration Date Range of exercise prices per CPO or CPO equivalent CPOs (Pesos)................................................... 2,760,842 2011 Ps 4.5-7.8 CPOs (Dollars) (may be instantly cashsettled) ........................................................ CPOs (Dollars) (receive restricted CPOs)....... 7,119,529 2011-2013 U.S.$ 1.2-1.7 CEMEX, Inc. ESOP........................................ 70,481,496 2012 U.S.$ 2.0 14,292,360 2011-2015 U.S.$ 1.0-1.9 As of December 31, 2010, our senior management and directors held the following ESOP options to acquire our securities: Title of security underlying options Number of CPOs or CPO equivalents underlying options Expiration Date Range of exercise prices per CPO or CPO equivalent CPOs (Dollars) (receive restricted CPOs)...... 31,376,637 2012 U.S.$ 2 As of December 31, 2010, our employees and former employees, other than senior management and directors, held the following ESOP options to acquire our securities: Title of security underlying options Number of CPOs or CPO equivalents underlying options Expiration Date Range of exercise prices per CPO or CPO equivalent CPOs (Pesos)..................................................... 2,760,842 2011 Ps 4.5-7.8 CPOs (Dollars) (may be instantly cash-settled) ... 7,119,529 2011-2013 U.S.$ 1.2-1.7 CPOs (Dollars) (receive restricted CPOs)......... 39,104,859 2012 U.S.$ 2 CEMEX, Inc. ESOP.......................................... 14,292,360 2011-2015 U.S.$ 1-1.9 Restricted Stock Incentive Plan (RSIP) Since January 2005, we have been changing our long-term variable compensation programs from stock option grants to restricted stock awards under a Restricted Stock Incentive Plan, or RSIP. Under the terms of the RSIP, eligible employees are allocated a specific number of restricted CPOs as variable compensation to be vested over a four-year period. Before 2006, we distributed annually to a trust an amount in cash sufficient to purchase in the market, on behalf of each eligible employee, 25% of such employee’s allocated number of CPOs. During 2006, in order to reduce the volatility of our RSIP, we began to distribute annually an amount in cash sufficient to purchase 100% of the allocated CPOs for each eligible employee. Although the vesting period of the restricted CPOs and other features of the RSIP did not change as a result of this new policy, the nominal amount of annual compensation received by eligible employees increased in proportion to the additional number of CPOs received as a result of the new policy. The CPOs purchased by the trust were held in a restricted account by the trust on behalf of each employee for four years. At the end of each year during such four-year period, the restrictions lapsed with respect to 25% of the allocated CPOs and such CPOs became freely transferable and subject to withdrawal from the trust. Starting in 2009, we made additional changes to the mechanism for granting the RSIP, but the benefits remained the same as in previous years. First, CPOs are no longer purchased in the open market, but instead CEMEX issues new CPOs to cover the RSIP. Second, CEMEX now issues the RSIP in four blocks of 25% per year. The total number of CEMEX CPOs granted during 2010 was approximately 37 million, of which approximately .8 million were related to senior management and the board of directors. In 2010, approximately 25.7 million CPOs were issued, representing the first 25% of the 2010 program and the second 25% of the 2009 program. Of these 25.7 million CPOs, 1.4 million corresponded to senior management and the board of directors. See note 17 to our consolidated financial statements included elsewhere in this annual report.
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CEMEX 2010 20F REPORT building a ST
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Securities registered or to be regi
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Qualitative and Quantitative Market
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INTRODUCTION CEMEX, S.A.B. de C.V.
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As a result of the foregoing transa
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In the U.S., the recession was long
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The Financing Agreement contains ev
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The Financing Agreement restricts u
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During 2009, we reduced the aggrega
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The instruments governing our debt
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On the legislative front, during th
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Our operations in South America, Ce
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the depositary to vote the CPOs und
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Beginning in 2008, MFRS B-10 has el
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(1) Cost of sales includes deprecia
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Item 4 - Information on the Company
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As a condition to closing the RMC a
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Provide our customers with the best
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In connection with the implementati
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In 2010, as a result of our efforts
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In addition, we are one of the worl
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(2) Our cement raw materials operat
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Our Corporate Structure We are a ho
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Cement in Mexico is sold principall
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Aggregates. Our aggregates operatio
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Beginning on June 30, 2008, Ready M
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Products and Distribution Channels
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On December 26, 2008, we sold our C
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Ready-Mix Concrete. Our ready-mix c
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Aggregates. In 2010, we reduced fix
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Our Operating Network in France Des
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In April 2006, we initiated an expa
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Our Operating Network in Colombia P
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Our Operations in Nicaragua Overvie
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Our Operations in the United Arab E
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Our Trading Operations In 2010, we
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On December 10, 2010, after receivi
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To prevent, control and remediate e
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As required by the directive, each
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For the 2010 fiscal year, CEMEX wil
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Separately, the government of Venez
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and CEMEX was required by August 11
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January 1, 2008, however, under MFR
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foreign subsidiaries. These instrum
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Valuation reserves on accounts rece
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Stage 1. Communication to the organ
Page 95 and 96: Year Ended December 31, 2010 Compar
Page 97 and 98: Geographic Segment 89 Variations in
Page 99 and 100: United Kingdom Our domestic cement
Page 101 and 102: ended December 31, 2010, Africa and
Page 103 and 104: Operating Income. For the reasons m
Page 105 and 106: Our comprehensive financing result
Page 107 and 108: The following tables present select
Page 109 and 110: Mexico Our domestic cement sales vo
Page 111 and 112: As a result of the decreases in dom
Page 113 and 114: For the year ended December 31, 200
Page 115 and 116: South America, Central America and
Page 121 and 122: On August 14, 2009, we entered into
Page 123 and 124: As of December 31, 2010, we had U.S
Page 125 and 126: Our Perpetual Debentures As of Dece
Page 127 and 128: The Financing Agreement, as amended
Page 129 and 130: In 1999, CEMEX entered into an agre
Page 131 and 132: Our Equity Derivative Forward Contr
Page 133 and 134: As of December 31, 2009 and 2010, C
Page 135 and 136: In addition, we have entered into f
Page 137 and 138: Private Cash Tender Offer to Holder
Page 139 and 140: Name, Position (Age) Experience Jai
Page 141 and 142: Name, Position (Age) Experience Ram
Page 143 and 144: Tomás Milmo Santos (46) Has been a
Page 145: Set forth below are the names of th
Page 149 and 150: Item 7 - Major Shareholders and Rel
Page 151 and 152: The following table sets forth the
Page 153 and 154: Item 10 - Additional Information Ar
Page 155 and 156: exempt from registration pursuant t
Page 157 and 158: Our board of directors shall prepar
Page 159 and 160: Under our by-laws, shareholders rep
Page 161 and 162: On June 2, 2008, CEMEX, through one
Page 163 and 164: Exchange Controls See “Item 3 —
Page 165 and 166: The gross amount of any dividends p
Page 167 and 168: We have agreed to pay some of the o
Page 169 and 170: Item 16G - Corporate Governance Sec
Page 171 and 172: Item 17 - Financial Statements Not
Page 173 and 174: 4.17 Debenture Purchase Agreement,
Page 175 and 176: 4.27.3 Amendment No. 1 to U.S.$525,
Page 177 and 178: 4.41.4 Accession Letter, dated Janu
Page 179 and 180: 4.57 Amended and Restated Dealer Ma
Page 181: SIGNATURES CEMEX, S.A.B. de C.V. he
Page 184 and 185: The Board of Directors and Stockhol
Page 186 and 187: CEMEX, S.A.B. DE C.V. AND SUBSIDIAR
Page 188 and 189: CEMEX, S.A.B. DE C.V. AND SUBSIDIAR
Page 190 and 191: 1. DESCRIPTION OF BUSINESS CEMEX, S
Page 192 and 193: C) USE OF ESTIMATES CEMEX, S.A.B. D
Page 194 and 195: J) IMPAIRMENT OF LONG LIVED ASSETS
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Contingencies and commitments (note
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CEMEX, S.A.B. DE C.V. AND SUBSIDIAR
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V) CONCENTRATION OF CREDIT CEMEX, S
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Net sales by product and geographic
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4. CASH AND INVESTMENTS CEMEX, S.A.
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II. Equity forwards in third party
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14. EMPLOYEE BENEFITS Defined contr
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17. EXECUTIVE STOCK-BASED COMPENSAT
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18. EARNINGS (LOSS) PER SHARE CEMEX
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D) CONTRACTUAL OBLIGATIONS CEMEX, S
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Reconciliation of stockholders’ e
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(k) Other U.S. GAAP Adjustments Def
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