building a STRONGER foundation - Cemex

exempt from registration pursuant to Regulation S under the Securities Act, directed to holders of CBs, in order to exchange such CBs
for the Mandatory Convertible Securities. Pursuant to the exchange offer, on December 10, 2009, we issued approximately Ps4.1
billion (approximately U.S.$334 million at the Peso/Dollar CX accounting rate on December 31, 2010) in Mandatory Convertible
Securities in exchange for CBs. On March 30, 2010, we closed the offering of U.S.$715 million of our 4.875% Convertible
Subordinated Notes due 2015.
As of December 31, 2010, our capital stock consisted of 33,433,149,546 issued shares. As of December 31, 2010, Series A
shares represented approximately 67% of our capital stock, or 22,288,766,364 shares, of which 20,043,602,184 shares were subscribed
and paid, 3,415,076 shares were treasury shares, 345,164,180 shares were issued pursuant to our employee stock option plans and
subscribed to by Banamex as trustee thereunder but had not yet been paid (these shares have been and will continue to be gradually
paid upon exercise of the corresponding stock options), 374,960,064 shares that guarantee the conversion of the Mandatory
Convertible Securities and 1,521,624,860 shares that guarantee the conversion of the Optional Convertible Subordinated Notes. As of
December 31, 2010, Series B shares represented approximately 33% of our capital stock, or 11,144,383,182 shares, of which
10,021,801,092 shares were subscribed and paid, 1,707,538 shares were treasury shares, 172,582,090 shares were issued pursuant to
our employee stock option plans and subscribed to by Banamex, as trustee thereunder, but had not yet been paid (these shares have
been and will continue to be gradually paid upon exercise of the corresponding stock options), 187,480,032 shares that guarantee the
conversion of the Mandatory Convertible Securities and 760,812,430 shares that guarantee the conversion of the Optional Convertible
Subordinated Notes. Of the total of our A shares and B shares outstanding as of December 31, 2010, 13,068,000,000 shares
corresponded to the fixed portion of our capital stock and 20,365,149,546 shares corresponded to the variable portion of our capital
stock.
On February 24, 2011, we held an extraordinary shareholders’ meeting in which our shareholders approved an increase in the
variable portion of our capital stock of up to 6 billion shares (equivalent to 2 billion CPOs or 200 million ADSs). Pursuant to the
resolution approved by our shareholders, the subscription and payment of the new shares represented by CPOs may occur through a
public offer of CPOs and/or issuance of convertible bonds and, until then, these shares will be kept in the company’s treasury. In
addition, on February 24, 2011, we held our annual shareholders’ meeting in which our shareholders approved an increase in the
variable portion of our capital stock of up to 60 million shares (equivalent to 20 million CPOs or 2 million ADSs). These shares will
be kept in the company’s treasury and will be used to preserve the rights of note holders pursuant to the company’s issuance of
convertible notes.
We did not declare a cash dividend for fiscal year 2008. At our 2008 annual shareholders’ meeting, held on April 23, 2009, our
shareholders approved a recapitalization of retained earnings. New CPOs issued pursuant to the recapitalization were allocated to
shareholders on a pro-rata basis. As a result, shares equivalent to approximately 334 million CPOs were issued and paid. CPO holders
received one new CPO for each 25 CPOs held and ADS holders received one new ADS for each 25 ADSs held. There was no cash
distribution and no entitlement to fractional shares.
We did not declare a dividend for fiscal year 2009. At our 2009 annual shareholders’ meeting, held on April 29, 2010, our
shareholders approved a recapitalization of retained earnings. New CPOs issued pursuant to the recapitalization were allocated to
shareholders on a pro-rata basis. As a result, shares equivalent to approximately 384 million CPOs were issued and paid. CPO holders
received one new CPO for each 25 CPOs held and ADS holders received one new ADS for each 25 ADS held. There was no cash
distribution and no entitlement to fractional shares.
We did not declare a dividend for fiscal year 2010. At our 2010 annual shareholders’ meeting, held on February 24, 2011, our
shareholders approved a recapitalization of retained earnings. New CPOs issued pursuant to the recapitalization were allocated to
shareholders on a pro-rata basis. As a result, shares equivalent to approximately 401 million CPOs were issued and paid. CPO holders
received one new CPO for each 25 CPOs held, and ADS holders received one new ADS for each 25 ADSs held. There was no cash
distribution and no entitlement to fractional shares.
Changes in Capital Stock and Preemptive Rights
Subject to certain exceptions referred below, our by-laws allow for a decrease or increase in our capital stock if it is approved by
our shareholders at a shareholders’ meeting. Additional shares of our capital stock, having no voting rights or limited voting rights, are
authorized by our by-laws and may be issued upon the approval of our shareholders at a shareholders’ meeting, with the prior approval
of the Mexican securities authority.
Our by-laws provide that, subject to certain exceptions, shareholders have preemptive rights with respect to the class and in
proportion to the number of shares of our capital stock they hold, in connection with any capital increase in the number of outstanding
A shares, B shares, or any other existing series of shares, as the case may be. Subject to certain requirements: (i) under article 53 of the
Mexican securities market law (Ley del Mercado de Valores), this preemptive right to subscribe is not applicable to increases of our
capital through public offers; and (ii) under article 210 bis of the General Law of Negotiable Instruments and Credit Operations (Ley
General de Titulos y Operaciones de Credito), this preemptive right to subscribe is not applicable when issuing shares under
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