building a STRONGER foundation - Cemex

Strengthen our capital structure and regain our financial flexibility
In light of the current global economic environment and our substantial amount of indebtedness, we have been focusing, and
expect to continue to focus, on strengthening our capital structure and regaining financial flexibility through reducing our debt,
improving cash flow generation and extending maturities. This ongoing effort has included the following key strategic initiatives:
Global Refinancing. 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 and
provides for a semi-annual amortization schedule, with a final maturity of approximately U.S.$6.8 billion on February 14, 2014. We
have since then successfully completed several capital markets transactions, including: (i) in September 2009, the sale of a total of
1,495 million CPOs, directly or in the form of ADSs in a global offering for approximately U.S.$1.8 billion in net proceeds, (ii) in
December 2009, the issuance of approximately Ps4.1 billion (approximately U.S.$315 million) in mandatory convertible securities, or
the Mandatory Convertible Securities, in exchange for CBs, (iii) in December 2009 and January 2010, the issuance by CEMEX
Finance LLC of U.S.$1,750 million aggregate principal amount of its 9.50% Senior Secured Notes due 2016 and €350 million
aggregate principal amount of its 9.625% Senior Secured Notes due 2017, or together, the December 2009 Notes, (iv) in March 2010,
the issuance of U.S.$715 million of our 4.875% Convertible Subordinated Notes due 2015, or the 2010 Optional Convertible
Subordinated Notes, (v) in May 2010, the issuance by CEMEX España, acting through its Luxembourg branch, of U.S.$1,067,665,000
aggregate principal amount of its 9.25% Senior Secured Notes due 2020 and €115,346,000 aggregate principal amount of its 8.875%
Senior Secured Notes due 2017, or together, the May 2010 Notes, in exchange for a majority in principal amount of our then
outstanding perpetual debentures pursuant to an exchange offer, or the 2010 Exchange Offer, (vi) in January 2011, the issuance of
U.S.$1.0 billion of the January 2011 Notes, (vii) in March 2011, the 2011 Private Exchange, (viii) in March 2011, the issuance of
U.S.$977.5 million aggregate principal amount of 3.25% Convertible Subordinated Notes due 2016 and U.S.$690 million aggregate
principal amount of 3.75% Convertible Subordinated Notes due 2018 and (ix) in April 2011, the issuance of U.S.$800 million
aggregate principal amount of the April 2011 Notes. As of December 31, 2010, after giving pro forma effect to (1) the issuance of the
January 2011 Notes, the 2011 Optional Convertible Subordinated Notes and the April 2011 Notes, (2) the 2011 Prepayments and
(3) the 2011 Private Exchange, the weighted average life of our indebtedness was 4.6 years and we had reduced indebtedness under
the Financing Agreement by approximately U.S.$7.5 billion. We believe that our financial profile and resulting amortization schedule
will enable us to operate in the normal course of business and take advantage of a potential upturn in the business cycle in our core
markets. In addition, we expect that our financial profile will allow us to conduct our planned asset divestitures under better terms and
conditions.
Asset Divestitures. We have continued a process to divest assets in order to reduce our debt and streamline operations, taking
into account our cash liquidity needs and prevailing economic conditions and their impact on the value of the asset or business unit
being divested. In addition to the October 1, 2009 sale of our operations in Australia for approximately $2.02 billion Australian
Dollars (approximately U.S.$1.7 billion), we sold our operations in the Canary Islands and Italy for approximately €310 million
(U.S.$437 million) in 2008, and 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
approximately U.S.$65 million. On August 27, 2010, we completed the sale of seven aggregates quarries, three resale aggregates
distribution centers and one concrete block manufacturing facility in Kentucky to Bluegrass Materials Company, LLC for
approximately U.S.$88 million, which were used to reduce our outstanding debt and to enhance our liquidity position, and were sold
at a loss of U.S.$38 million. These assets were acquired by CEMEX in 2007 as part of the acquisition of Rinker. We considered these
facilities and properties to be non-core assets for our integrated cement, concrete, aggregates and building materials operations
throughout the United States.
Global Cost-Reduction Program. In response to decreased demand in most of our markets as a result of the global economic
recession, in 2008 we identified and began implementing a global cost-reduction program intended to reduce our annual cost structure
to a level consistent with the decline in demand for our products. During 2009, we completed the implementation of the initial stage of
our global cost-reduction program, resulting in approximately U.S.$900 million of estimated annual cost savings. We estimate that
approximately 60% of these cost-reduction savings are sustainable in the long-term; the remainder is short-term cost savings resulting
from the scaling down of our operations in response to reduced demand for our products in the construction industry. Our global costreduction
program encompasses different undertakings, including headcount reductions, capacity closures across the cement value
chain and a general reduction in global operating expenses. During 2010, we continued with our cost-reduction initiatives and
achieved an additional U.S.$150 million in annual cost savings. In addition, we are currently implementing additional initiatives
intended to improve our operating results by approximately U.S.$250 million during 2011. During the first half of 2011, CEMEX
launched a company-wide program aimed at enhancing competitiveness, providing a more agile and flexible organizational structure
and supporting an increased focus on the company’s markets and customers. CEMEX is targeting to generate approximately U.S.$400
million in annualized cost savings intended to improve our operating results by the end of 2012 through the implementation of this
program, which contemplates an improvement in underperforming operations, a reduction in SG&A costs and the optimization of the
company’s organizational structure.
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