building a STRONGER foundation - Cemex

CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements – (Continued)
As of December 31, 2010, 2009 and 2008
(Millions of Mexican pesos)
As of December 31, 2010, CEMEX’s joint ventures with Ready Mix USA have the following prospective changes:
The two joint ventures, which were created in 2005, are comprised of the following assets: a) CEMEX Southeast, LLC, the joint venture
owned at 50.01% and consolidated by CEMEX, owns the Demopolis cement plant in Alabama with an annual installed capacity of 0.9
million tons, the Clinchfield cement plant in Georgia with an annual installed capacity of 0.8 million tons, and 12 cement terminals; and
b) Ready Mix USA LLC, the joint venture owned at 50.01% and consolidated by Ready Mix USA, owns 10 sand and gravel pits, 149
concrete plants and 20 block plants located throughout the states of Arkansas, Mississippi, Tennessee, Alabama, Georgia, and the Florida
Panhandle. Starting on June 30, 2008, Ready Mix USA had the right, but not the obligation, to sell its interest in both entities to
CEMEX.
On September 30, 2010, Ready Mix USA exercised its put option. As a result, upon closing of the transaction, which will take place
upon performance of the obligations by both parties under the put option agreement and is expected on or before September 2011,
CEMEX will acquire its joint venture partner's interests in the two joint ventures. CEMEX’s purchase price for its partner's interests,
including a non-compete agreement, will be approximately US$355. Ready Mix USA will continue to manage the joint venture in which
it has a majority interest (Ready Mix USA LLC) until the closing of the transaction. As of December 31, 2010, CEMEX has not
recognized a liability as the fair value of the net assets exceeds the estimated purchase price. Had the purchase price exceeded the fair
value of the net assets to be acquired, a loss would have been recognized. As of December 31, 2010, Ready Mix USA, LLC had
approximately US$27 (unaudited) in net debt (debt minus cash and cash equivalents), which will be consolidated upon closing of the
transaction.
In addition, on February 22, 2010, Ready Mix USA LLC sold 12 quarries located in Georgia, Tennessee and Virginia and certain other assets
to SPO Partners & Co. for US$420. The assets were deemed non-strategic by CEMEX and Ready Mix USA. The proceeds from the sale were
partly used to reduce debt held by Ready Mix USA LLC, and to effect a cash distribution of approximately US$100 to each joint venture
partner. Furthermore, in January 2008, as part of the joint venture agreements, CEMEX contributed and sold certain assets located also in
Georgia, Tennessee and Virginia to Ready Mix USA, LLC for approximately US$380 of which US$120 represented the sale of assets and
was received in cash. The difference between the US$380 and the fair value of the assets of approximately US$437 was included within
investment in associates.
On April 2010, CEMEX agreed to participate as a minority investor and invest up to US$100 into the share capital of Blue Rock Cement
Holdings (“Blue Rock”) to develop a cement plant in Peru, and is evaluating if it will assist, by agreement with the majority shareholders, in
the development, building, and operation of the plant. The plant is designed to have an initial annual production capacity of 1 million tons and
is expected to be completed in 2013 with a total investment of around US$230. The construction industry in Peru operates in an attractive
market that has seen sustained annual growth of over 10% in the past years. This investment falls under permitted terms under CEMEX’s debt
financing agreements (note 12A). As of December 31, 2010, the project is still in its documentary stage and CEMEX has not made any
investment.
In June 2009, CEMEX sold its 49% interest in an aggregates sector joint venture located in Wyoming to Martin Marietta Materials, Inc., as
well as three quarries located in Nebraska, Wyoming and Utah in the United States, for approximately US$65 and recognized a loss related to
the sale of these assets of approximately US$64.
In March 2008, CEMEX sold 119 million CPOs of AXTEL, S.A.B. de C.V. (“AXTEL”), which represented 9.5% of the equity capital of
AXTEL for approximately Ps2,738, recognizing a net gain of approximately Ps1,463 in 2008 within “Other expenses, net.” The sale
represented nearly 90% of CEMEX's position in AXTEL, which had been part of CEMEX's investments in associates.
9B) OTHER INVESTMENTS AND NON-CURRENT ACCOUNTS RECEIVABLE
As of December 31, 2010 and 2009, other investments and non-current accounts receivable are summarized as follows:
2010 2009
Non-current portion of valuation of derivative financial instruments............................................... Ps 1,615 6,512
Non-current accounts receivable and other assets ............................................................................ 12,842 14,205
Investments in private funds............................................................................................................. 457 532
Ps 14,914 21,249
As of December 31, 2010 and 2009, “Non-current accounts receivable and other assets” include Ps6,203 and Ps6,147, respectively, related to
CEMEX’s net investment in its expropriated assets in Venezuela (note 11A), Ps94 in 2010 and Ps156 in 2009 of an investment in AXTEL’s
CPOs, Ps1,144 in 2010 and Ps916 in 2009 of an investment restricted for acquisitions in cement, concrete and/or aggregates businesses, as
well as Ps726 in 2010 and Ps1,011 in 2009 resulting from the settlement of derivative instruments associated with the perpetual debentures,
which are used to pay coupons under such instruments (notes 12C and 16D). In 2010, CEMEX recognized impairment losses within “Other
expenses, net” for approximately Ps129 related to other assets in the United States.
In 2010, no contributions were made to private funds. In 2009, contributions to private funds were approximately US$5 (Ps65).
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