Cemex 1999 Annual Report Download - page 38

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36
Relevant financing. During 1999, CEMEX refinanced and restructured
close to US$2.5 billion of its debt, achieving a more solid capital
structure, better terms and conditions, and a smoother maturity
profile that matches cash flow generation. Among the transactions
were:
•US$500 million, 3-year equity swap with Valenciana shares
• US$1.1 billion, 7-year multi-currency syndicated loan
• US$250 million, 3-year Euro Medium-term Note
• 2-year U.S. Commercial Paper Program for US$250 million
•US$200 million, 10-year Euro Medium-term Note with a put
option on year 5
Derivative instruments. CEMEX periodically utilizes hedging instru-
ments designed to reduce its exposure to interest-rate fluctuations,
energy prices, currency exchange rates, and share prices. The eco-
nomic effect of these hedging transactions is reflected in the com-
pany’s cost of sales and comprehensive financing result, or as a part of
stockholders’ equity, as appropriate.
MANAGEMENT AND SHAREHOLDER INTERESTS ALIGNED
Variable Compensation Program. Fifteen hundred executives par-
ticipate in this initiative, which ties annual bonuses to shareholder
value initiatives. A Total Business Return approach is used to focus
executives’ efforts on maximizing the return on capital employed.
Under this program, key senior management receive half of their
variable compensation in restricted stock options, which fully vest if
the 12-month average of the stock price doubles, in dollar terms.
Voluntary Stock Option Plan. In 1998, the company initiated this
program, in which a total of 250 executives elected to purchase five-
year options, of which 22,636,845 remain outstanding.
Employee Stock Option Plan. In 1995, the company started a 10-year
stock option plan. The initiative includes 270 executives and represents
a portion of their annual compensation. In 1998, the company started
a 5-year restricted stock option plan for a group of 50 key executives
as part of their variable compensation. A total of 41,019,922
options remain outstanding.
YEAR 2000 (Y2K) ISSUE
The CEMEX Year 2000 Program was completed according to schedule.
The company achieved its objective of maintaining continuous oper-
ations in all its manufacturing plants, technology platforms, and
information systems.
During the transition period to Y2K, all of our operations performed
normally, and, in the following months, we will continue to moni-
tor the performance of all Y2K-sensitive elements in our worldwide
operations.
The company invested approximately 400,000 hours and approximate-
ly US$36 million in preparation for Y2K. The investment has result-
ed in improved business systems and capabilities that will permit
CEMEX to do business better in 2000 and beyond.
Balance-sheet debt US$ 4.371 billion
Long-term debt (76.4%) 3.341 billion
Short-term debt (23.6%) 1.030 billion
Equity obligations 0.750 billion
Cash 0.326 billion
Net debt 4.794 billion
Denomination of on-balance-sheet debt
Dollars 79.36 %
Euros 14.24 %
Philippine pesos 1.02 %
Egyptian pounds 5.38 %
Average cost of on-balance-sheet debt 8.10%
DEBT INDICATORS AT THE END OF 1999