Cemex 2006 Annual Report Download

Download and view the complete annual report

Please find the complete 2006 Cemex annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

2006฀ANNUAL฀REPORT
TABLE฀OF฀CONTENTS
฀ 2฀ BUILDING
฀ 4฀ TO฀OUR฀STOCKHOLDERS
฀ 8฀ BUILDING฀PEOPLE฀
฀ 10฀ BUILDING฀SUSTAINABILITY฀
฀ 12฀ BUILDING฀KNOWLEDGE฀
฀ 14฀ BUILDING฀RELATIONSHIPS
฀ 16฀ BUILDING฀VALUE
฀ 18฀ SELECTED฀CONSOLIDATED฀
฀ ฀ FINANCIAL฀INFORMATION
฀ 20฀ ฀MANAGEMENT฀DISCUSSION฀AND฀ANALYSIS
฀ 35฀ FINANCIAL฀STATEMENTS
฀ 93฀ TERMS฀WE฀USE
฀ 94฀ BOARD฀OF฀DIRECTORS
฀ 95฀ MANAGEMENT฀TEAM
฀ 96฀ INVESTOR฀AND฀MEDIA฀INFORMATION฀
THE฀YEAR฀2006฀WAS฀IMPORTANT฀FOR฀CEMEX.฀We฀
commemorated฀100฀years฀of฀growth฀and฀the฀people฀
who฀achieved฀it.฀The฀legacy฀of฀all฀of฀that฀hard฀work฀and฀
dedication฀is฀a฀stronger฀and฀more฀solid฀company,฀better฀
prepared฀for฀the฀challenges฀and฀opportunities฀that฀lie฀
ahead.฀As฀we฀look฀forward,฀we฀are฀enthusiastic฀about฀the฀
prospects฀for฀our฀next฀century.฀We฀are฀a฀company฀with฀
an฀impressive฀past,฀but฀an฀even฀more฀promising฀future.
As฀part฀of฀the฀celebration฀of฀its฀100th฀
anniversary,฀CEMEX฀rang฀the฀opening฀bell฀at฀
the฀New฀York฀Stock฀Exchange฀on฀October฀30,฀
2006.฀The฀ceremony฀was฀presided฀over฀by฀
Lorenzo฀H.฀Zambrano,฀Chairman฀and฀CEO฀of฀
CEMEX.
CEMEX฀฀฀2006฀ANNUAL฀REPORT฀฀฀BUILDING฀THE฀NEXT฀100฀YEARS
www.cemex.com

Table of contents

  • Page 1
    2006฀ANNUAL฀REPORT

  • Page 2
    ...USE ฀ 94฀ BOARD฀OF฀DIRECTORS ฀ 95฀ MANAGEMENT฀TEAM ฀ 96฀ INVESTOR฀AND฀MEDIA฀INFORMATION฀ THE฀YEAR฀2006฀WAS฀IMPORTANT฀FOR฀CEMEX...the฀ prospects฀for฀our฀next฀century.฀We฀are฀a฀company฀with฀ an฀impressive฀past,฀but฀an฀even฀more฀...

  • Page 3
    ...฀are฀builders.฀They฀build฀to฀educate,฀to฀ heal,฀to฀shelter฀and฀comfort฀families.฀They฀...are฀a฀vital฀part฀of฀that฀foundation. Our฀products฀are฀everywhere,฀from.... As฀a฀global฀industry฀leader,฀CEMEX฀will฀continue฀ building฀a฀better฀...

  • Page 4
    ...drive฀us฀to฀employ฀cutting-edge฀ technology;฀ensure฀energy฀efficiency฀and฀optimum฀use฀of฀raw฀ materials...culture฀of฀environmental฀awareness,฀safety,฀and฀integral฀health;฀and฀use฀the฀most฀effective฀equipment฀ and฀systems฀to฀protect฀our...

  • Page 5
    ...operations฀even฀better฀by฀identifying,฀sharing,฀ and฀implementing฀best฀practices฀across฀our฀global฀network฀of฀ plants฀and฀facilities. RELATIONSHIPS Our฀business...฀forms฀the฀foundation฀for฀ construction...฀the฀world. ฀ 2006฀฀ 2005฀ % Net...

  • Page 6
    4 I฀am฀proud฀of฀what฀ CEMEX฀has฀achieved,฀ but฀I฀am฀confi ฀dent฀that฀ we฀can฀do฀much฀better.

  • Page 7
    ...฀new฀operations฀in฀Europe฀and฀in฀the฀United฀States,฀delivering฀the฀synergies฀and฀the฀10฀ percent฀return฀on฀capital฀employed฀that฀we฀promised฀when฀we฀acquired฀RMC.฀We฀announced฀important฀ investments฀in฀our฀Mexican฀business,฀as...

  • Page 8
    ...฀October฀we฀made฀an฀offer฀to฀acquire฀Rinker฀Group฀Limited,฀ an฀Australian-based฀building-materials฀company฀whose฀business฀is฀largely฀concentrated฀in฀the฀United฀States.฀Our฀offer฀reï¬,ects฀CEMEX's฀strategic฀commitment฀to฀grow฀ through...

  • Page 9
    ...03 04 05 06 advantage฀of฀these฀programs.฀Moreover,฀the฀expansion฀of฀the฀company฀created฀new฀ career฀opportunities,฀especially฀for฀younger฀CEMEX฀executives,฀considerably฀enlarging฀ our฀pool฀of฀internationally฀experienced฀people.฀ Third,฀we...

  • Page 10
    ...success฀story฀of฀the฀RMC฀integration฀is฀our฀retention฀and฀development฀of฀key฀talent,฀including฀country฀ managers,฀operations฀and฀back-offi ฀ce฀leaders,฀and฀thousands฀of฀employees฀necessary฀to฀grow฀our฀business฀each฀day.฀To฀ further...

  • Page 11
    9 We฀received฀over฀ 2,600฀ideas฀from฀ our฀US฀operations'฀ Your฀Opinion฀Counts฀ campaign฀in฀2006. ฀

  • Page 12
    10 Thanks฀to฀our฀ restoration฀efforts,฀ a฀spent฀quarry฀now฀ produces฀1,000฀ metric฀tons฀of฀fruit฀ per฀year.

  • Page 13
    ...฀cement,฀lightweight฀aggregates,฀and฀special฀additives,฀CEMEX฀lightweight฀concrete฀can฀be฀used฀to฀make฀ ï¬, ฀oating฀decorative฀elements฀for฀ponds,฀children's฀games,฀marinas,฀and฀other฀purposes.฀CEMEX฀translucent฀concrete,฀ which฀is฀made...

  • Page 14
    ...฀integration฀of฀RMC฀Group,฀our฀new฀operations฀are฀reaping฀the฀benefi ฀ts฀of฀CEMEX's฀ shared฀best฀practices.฀For฀example,฀before฀the฀acquisition,฀many฀of฀these฀operations฀had฀conducted฀procurement฀on฀a฀ local฀plant-by-plant฀basis...

  • Page 15
    13 Alternative฀fuels฀now฀ comprise฀25฀percent฀ of฀the฀total฀fuels฀used฀in฀ our฀European฀cement฀ plants.

  • Page 16
    14 Our฀community฀offi ฀ces฀ have฀served฀more฀than฀ 160,000฀families฀ through฀our฀Patrimonio฀ Hoy฀program.

  • Page 17
    ...the฀Rivero฀ family.฀"My฀father฀ran฀the฀company฀until฀1934,฀and฀I฀took฀over฀in฀1941,"฀says฀José฀Rivero,฀the฀great฀grandson฀of฀ Mosaicos฀Rivero's฀founder.฀And฀now฀that฀Rivero฀has฀retired,฀his฀children฀run฀the฀business.฀Together...

  • Page 18
    16 Financial฀highlights฀as of December 31, 2006. Consolidated฀net฀sales (millions of US dollars) 20,000 +19% 3,000 2,500 Operating฀income (millions of US dollars) +18% 15,000 2,000 10,000 1,500 5,000 1,000 96 97 98 99 00 01 02 03 04 05 06 ...

  • Page 19
    ...at฀its฀Broceni฀plant฀in฀Latvia;฀and฀the฀building฀of฀ a฀new฀grinding฀mill฀in฀Dubai,฀United฀Arab฀Emirates.฀ JUNE More฀than฀97฀percent฀of฀CEMEX฀shareholders฀elect฀to฀receive฀stock฀(CPOs฀or฀ADSs)฀ under฀the฀company's฀stock-dividend...

  • Page 20
    ...CEMEX,฀S.A.B.฀DE฀C.V.,฀AND฀SUBSIDIARIES 1996 1997 1998 1999 2000 2001 2002 2003 2004 In millions of US dollars, except ADRs and per-ADR amounts Operating...5,182฀฀ 6,435฀฀ 9.48฀ ฀ ฀฀฀ Property,฀plant,฀and฀equipment,฀net฀฀฀ 23.8%฀ 32.3%฀ 1,087 149...

  • Page 21
    ...฀CEMEX,฀Inc.฀(formerly฀Southdown)฀acquisition.฀...2006฀annual฀report's฀Financial฀Statements). 8.฀The฀number฀of฀ADRs฀outstanding฀represents฀the฀total฀ADR฀equivalent฀units...result฀of฀the฀stock฀split฀approved฀during฀2006฀one฀additional฀ADR฀was...

  • Page 22
    ...฀OPERATIONAL฀RESULTS฀AND฀FINANCIAL฀CONDITION฀OF฀THE฀COMPANY Business CEMEX฀is฀a฀growing฀global฀building-solutions฀company... Integrate฀acquisitions฀quickly฀and฀achieve฀optimal฀operating฀standards FOCUS฀ON฀OUR฀CORE฀BUSINESS฀OF฀CEMENT,฀READY-MIX฀...

  • Page 23
    ...throughout฀the฀ business฀cycle. EBITDA฀distribution฀by฀product (percentage) 11 15 2 â- ฀ Cement â- ฀ Ready-mix â- ฀ Aggregates...businesses,฀which฀improve฀our฀margins฀and/or฀increase฀our฀production฀capacity;฀and฀ 3)฀the฀acquisition฀of฀new฀operations...

  • Page 24
    ... mill฀and฀dry฀mortar฀plant฀at฀the฀Port฀of฀Cartagena฀in฀Spain;฀we฀announced฀the฀construction฀ of฀a฀new฀kiln฀at฀the฀Broceni฀plant฀in฀Latvia;฀and฀we฀began฀building฀a฀new฀grinding฀facility฀ in฀Dubai,฀United฀Arab฀Emirates.฀We...

  • Page 25
    ...our฀ processes,฀and฀extract฀synergies฀from฀our฀global฀operations.฀We฀have฀also฀taken฀various฀steps฀ over฀the...RMC฀was฀a฀success.฀In฀2006,฀we฀reached฀our฀target฀return฀on฀capital฀ employed฀of฀more฀than฀10%฀for฀the฀RMC฀acquisition...

  • Page 26
    ...Sweden. Includes operations in Argentina, Colombia, Costa Rica, the Dominican Republic, Guatemala, Nicaragua, Panama, Puerto Rico, and Venezuela, as well as other operations in the Caribbean region. Includes operations in Egypt, Israel, and the United Arab Emirates. Includes operations in Bangladesh...

  • Page 27
    ...฀from฀ 23.2%฀in฀2005฀to฀22.7%฀in฀2006.฀Higher฀energy฀and฀transportation฀ costs฀were฀partially฀offset฀by฀productivity฀gains฀throughout฀CEMEX,฀ including฀synergies฀from฀the฀RMC฀post-merger฀integration฀and฀better฀ supply-demand฀dynamics...

  • Page 28
    ...United฀States Our฀US฀operations'฀net฀sales฀increased฀3%฀to฀US$4.17฀billion฀in฀2006...operations,฀cement,฀ready-mix฀concrete,฀and฀aggregates฀volumes฀decreased฀1%,฀17%,฀and฀15%,฀respectively,฀for฀2006... United States â- ฀ Spain â- ฀ United Kingdom ...

  • Page 29
    ...business฀investment฀ drove฀industrial-and-commercial฀construction฀spending฀up฀16%฀in฀2006...operations,฀ready-mix฀ volumes฀rose฀9%฀for฀2006.฀ All฀of฀the฀country's฀construction฀sectors฀remained฀strong฀throughout฀2006...United฀Kingdom Our฀UK฀operations...

  • Page 30
    ...฀million฀for฀2006.฀On฀a฀like-to-like฀basis฀from฀our฀continuing฀operations,฀cement฀and฀ ready-mix฀concrete...2006.฀The฀ nonresidential฀sector฀grew฀approximately฀6%฀for฀the฀year,฀as฀a฀result฀of฀the฀more฀favorable฀ economic฀and฀business...

  • Page 31
    ...Sweden. Includes operations in Argentina, Colombia, Costa Rica, the Dominican Republic, Guatemala, Nicaragua, Panama, Puerto Rico, and Venezuela, as well as other operations in the Caribbean region. Includes operations in Egypt, Israel, and the United Arab Emirates. Includes operations in Bangladesh...

  • Page 32
    ...,฀DIVESTITURES,฀ ฀ AND฀OTHER CEMEX฀offers฀to฀acquire฀Rinker ฀relevant฀events฀ On฀October฀27,฀2006,฀CEMEX฀announced฀an฀offer฀to฀acquire฀all฀of฀the฀outstanding฀shares฀of฀ Rinker฀Group฀Limited฀for฀US$13.00฀per฀share.฀The฀offer...

  • Page 33
    ...11,฀2006,฀CEMEX฀announced฀plans฀to฀construct฀a฀new฀grinding฀and฀blending฀mill฀ for฀the฀production฀of฀blended฀cements฀in฀the฀United฀Kingdom,฀at฀the฀Port฀of฀Tilbury฀near฀London.฀ The฀facility,฀which฀will฀have฀an฀annual฀capacity...

  • Page 34
    ...฀reï¬,ect฀its฀previously฀announced฀two-for-one฀stock฀split. In฀connection฀with฀the฀stock฀split,฀which฀was฀approved฀by฀CEMEX's฀stockholders฀on฀April฀ 27,฀2006,฀each฀one฀of฀CEMEX's฀existing฀series฀A฀shares฀was฀exchanged฀for฀two฀new...

  • Page 35
    ...฀฀ construction฀of฀a฀new฀grinding฀facility On฀March฀27,฀2006,฀CEMEX฀announced฀that฀it฀intended฀to฀begin฀construction฀of฀a฀new฀grinding฀facility฀for฀cement฀and฀slag฀in฀Dubai,฀United฀Arab฀Emirates,฀to฀help฀meet฀increased฀local...

  • Page 36
    ...CEMEX's฀continued฀commitment฀to฀the฀environment฀and฀its฀neighboring฀communities,฀including฀the฀use฀of฀the฀latest฀"state-of-the-art"฀emission-control฀units...฀Financial฀Reporting฀Standards฀("...as฀of฀December฀31,฀2006. The฀estimated฀aggregate฀fair...

  • Page 37
    ...the฀reporting฀standards฀used฀and...CEMEX,฀S.A.B.฀de฀C.V.฀and฀CEMEX,฀ S.A.B.฀ de฀ C.V.฀ and฀ subsidiaries฀ as฀ of฀ December฀ 31,฀ 2006฀ and฀ 2005,฀ and฀ the฀ consolidated฀ and฀ parent฀company-only฀results฀of฀their฀operations... Monterrey...

  • Page 38
    36 CONSOLIDATED balance฀sheets ฀CEMEX,฀S.A.B.฀DE฀C.V.฀AND฀SUBSIDIARIES (MILLIONS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2006) DECEMBER 31, 2006 Convenience translation (note 3A) Notes 2006 2005 ฀ ASSETS 4฀ 5฀ 6฀ 7฀ 8฀ ฀ 9A฀ 9B฀ 10฀ 11฀ ฀ ฀ U.S ...

  • Page 39
    37 CONSOLIDATED statements฀of฀income CEMEX,฀S.A.B.฀DE฀C.V.฀AND฀SUBSIDIARIES (MILLIONS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2006, EXCEPT FOR EARNINGS PER SHARE) YEARS ENDED DECEMBER 31, 2006 Convenience translation (note 3A) Notes 2006 2005 2004 Net฀sales฀ ฀ Cost฀...

  • Page 40
    ...CEMEX,฀S.A.B.฀DE฀C.V.฀AND฀SUBSIDIARIES changes฀in฀fi ฀nancial฀position (MILLIONS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2006) YEARS ENDED DECEMBER 31, 2006 Convenience translation (note 3A) Notes 2006 2005 2004 OPERATING...effect฀of฀business฀acquisitions฀ ฀ ...

  • Page 41
    39 balance฀sheets ฀CEMEX,฀S.A.B.฀DE฀C.V. ฀Parent฀Company-Only (MILLIONS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2006) DECEMBER 31, 2006 Convenience translation (note 24B) Note 24 2006 2005 ฀ ASSETS C฀ I฀ ฀ D฀ ฀ I฀ E฀ F฀ ฀ ฀ U.S 69฀ 597฀ 666 748฀...

  • Page 42
    40 statements฀of฀income ฀CEMEX,฀S.A.B.฀DE฀C.V. ฀Parent฀Company-Only (MILLIONS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2006, EXCEPT FOR EARNINGS PER SHARE) YEARS ENDED DECEMBER 31, 2006 Convenience translation (note 24B) Note 24 2006 2005 2004 Equity฀in฀income฀of฀...

  • Page 43
    ...CEMEX,฀S.A.B.฀DE฀C.V. ฀Parent฀Company-Only (MILLIONS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2006) YEARS ENDED DECEMBER 31, 2006 Convenience translation (note 24B) Note 24 2006 2005 2004 OPERATING... ฀ Net฀resources฀provided฀by฀(used฀in)฀investing฀ ฀ ฀ activities...

  • Page 44
    ... DECEMBER 31, 2006) Notes Common stock ฀CEMEX,฀S.A.B.฀DE฀C.V.฀(Parent฀Company-Only)฀AND฀CEMEX,฀S.A.B.฀DE฀C.V.฀AND฀SUBSIDIARIES...instruments฀ Deferred฀income฀taxes฀in฀equity฀ Goodwill฀for฀acquisition฀of฀minority฀interest฀ Net฀income฀ ฀ 16B฀ ...

  • Page 45
    43 Additional paid-in capital Other equity reserves Retained earnings Total majority interest Minority interest Total stockholders' equity 40,921 4,525฀ (1,129 44,317 4,739 49,056 5,745 54,801฀ (83,915)฀ (3,005)฀ 3,568฀ 2,507฀ 747฀ (1,044)฀ -฀ 2,773 3,510)฀ -฀ (...

  • Page 46
    ...2007. 2.฀OUTSTANDING฀EVENTS฀IN฀2006 On฀October฀27,฀2006,฀CEMEX฀announced฀a฀cash฀offer฀to฀acquire฀all฀of฀the฀outstanding฀shares฀of฀the฀Australian฀building฀material฀company,฀Rinker฀ Group฀Limited฀("Rinker"),฀for฀13฀U.S.฀dollars฀per...

  • Page 47
    ...,฀the฀CEMEX฀ accounting฀exchange฀rate฀as฀of฀December฀31,฀2006.฀These฀...Company฀operates฀relative฀to฀the฀Mexican฀peso.฀The฀restatement฀factors฀for฀the฀ Parent฀Company-only฀fi ฀nancial฀statements฀for฀prior฀periods฀were฀calculated฀using...

  • Page 48
    ...฀Plc.฀4฀ ฀ ฀ CEMEX฀Holdings฀(Israel)฀Ltd SIA฀CEMEX฀ ฀ ฀ CEMEX฀Topmix฀LLC,฀Gulf฀Quarries฀Company฀LLC CEMEX฀Supermix฀LLC฀and฀Falcon฀Cement฀LLC฀5฀ 1 1 México฀ Spain฀ Venezuela฀ United฀States฀ Costa฀Rica฀ Egypt฀ Colombia฀ Panama...

  • Page 49
    ...to฀the฀acquisition฀of฀...used฀to฀translate฀the฀fi ฀nancial฀statements฀of฀the฀Company's฀main฀foreign฀subsidiaries฀as฀of฀December฀31,฀2006,฀2005฀ and฀2004,฀are฀as฀follows: Currency 2006 Pesos per 1 unit...exchange฀rate฀used฀by฀CEMEX฀is฀an...

  • Page 50
    ...฀event,฀changes฀in฀the฀operating฀environment฀in฀which฀the฀Company฀operates,฀changes฀in฀projected฀use฀or฀in฀technology,฀as฀well฀ as฀expectations฀of฀operating฀results฀for฀each฀cash฀generating฀unit,฀provide฀elements฀indicating฀that...

  • Page 51
    ...by฀multiple฀cash฀generating฀ units,฀also฀represent฀CEMEX's฀reporting฀units฀for฀purposes฀of฀testing฀goodwill฀for฀impairment.฀Based฀on฀the฀Company's฀management฀analysis,฀it฀ was฀concluded฀that฀the฀operating฀components฀that฀integrate฀the...

  • Page 52
    ...฀value฀ of฀projected฀cash฀ï¬, ฀ows฀or฀through฀mathematical฀valuation฀models.฀The฀estimated฀fair฀values฀of฀derivative฀instruments฀determined฀by฀CEMEX฀and฀ used฀for฀recognition฀and฀disclosure฀purposes฀in฀the฀fi ฀nancial฀statements...

  • Page 53
    ...recognized฀in฀the฀operating฀results฀includes:฀a)฀the...O)฀ INCOME฀TAX,฀BUSINESS฀ASSETS฀TAX,฀EMPLOYEES'฀...฀reporting฀period฀presented,฀using฀Mexican...owners฀and฀distributions฀to฀owners...the฀acquisition฀of฀...CEMEX...฀the฀Parent฀Company's฀treasury,฀as฀...

  • Page 54
    ...฀Company's฀ main฀line฀of฀business...reporting฀date,฀recognizing฀the฀changes฀in฀valuation฀through฀ the฀income฀statement.฀CEMEX฀determines฀the฀estimated฀fair฀value฀of฀options฀using฀the฀binomial฀fi ฀nancial฀option-pricing฀model.฀ The฀Company...

  • Page 55
    ...annual฀review฀period,฀CO2฀emissions฀exceeded฀EUAs฀received,฀CEMEX...are฀acquired฀to฀...Company฀operates.฀No฀single฀customer฀individually฀accounted฀for฀a฀signifi ฀cant฀amount฀of฀the฀Company's฀sales฀in฀2006...business฀activities฀of฀the฀reporting...

  • Page 56
    ...2006฀for฀ U.S.$1,250฀(note฀16F).฀These฀proceeds฀will฀be฀used...history฀and฀risk฀profi ฀le฀of฀each฀customer. As฀of฀December฀31,฀2006...United฀States,฀Spain฀and฀France.฀Under฀these฀ programs,฀CEMEX...฀the฀acquirers฀of฀the... Business฀combinations...

  • Page 57
    ...฀of฀associates฀as฀of฀December฀31,฀2006฀and฀2005฀are฀summarized฀as฀follows: 2006 2005 Book฀value฀at฀acquisition฀date฀ Revaluation฀by฀equity฀method As฀of฀December฀31,฀2006฀and฀2005,฀CEMEX's฀main฀investments฀in฀associates฀are฀as...

  • Page 58
    ...) 179,942 During฀2006,฀2005฀and฀2004,฀impairment฀losses฀of฀fi ฀xed฀assets฀for฀approximately฀$563,฀$181฀and฀$1,182,฀respectively,฀were฀recognized฀within฀other฀ expenses,฀derived฀from฀idle฀assets฀in฀the฀United฀Kingdom,฀Mexico฀and฀the...

  • Page 59
    ...of฀its฀business฀model.฀The฀replacement฀of฀systems฀under฀this฀relevant฀project฀for฀the฀Company฀started฀in฀the฀subsidiaries฀ located฀in฀the฀United฀Kingdom,฀Germany฀and฀France,฀obtained฀through฀the฀acquisition฀of฀RMC฀Grup฀p.l.c.฀in...

  • Page 60
    ...฀world's฀largest฀suppliers฀of฀ready-mix฀ and฀aggregates,฀with฀operations฀in฀22฀countries,฀primarily฀in฀Europe฀and฀the฀United฀States,฀and฀employed฀over฀26,000฀people.฀The฀assets฀acquired฀ included฀13฀cement฀plants฀with฀an฀approximate...

  • Page 61
    ...฀the฀acquisition฀of฀RMC,฀in฀August฀2005,฀ready-mix฀ assets฀were฀sold฀to฀California฀Portland฀Cement฀Company฀in฀the฀area฀of฀Tucson,฀AZ,฀for฀an฀approximate฀amount฀of฀U.S.$16. Divestiture฀of฀Charlevoix฀and฀Dixon฀in฀the฀United฀States...

  • Page 62
    ...,฀prepared฀under฀generally฀accepted฀accounting฀principles฀in฀the฀United฀Kingdom฀("UK฀GAAP")฀and฀include฀ reclassifi ฀cations฀to฀conform฀RMC฀amounts฀to฀CEMEX's฀presentation.฀RMC's฀information฀was฀translated฀into฀pesos฀at฀the฀exchange...

  • Page 63
    ...฀December฀31,฀2006฀and฀2005,฀CEMEX฀did฀not฀recognize฀impairment฀losses฀of฀goodwill,฀considering฀that฀all฀the฀annual฀evaluations฀ presented฀an฀excess฀of฀the฀value฀in฀use฀over฀the฀net฀book฀value฀of฀the฀reporting฀units.฀In฀2004...

  • Page 64
    ... Short-term Floating฀rate฀ Fixed฀rate฀ ฀ ฀ Long-term Fixed฀rate฀ Floating฀rate Debt฀according฀to฀currency฀contracted: Currency Short-term Long-term 2006 Total 10,901฀ 2,613฀ 13,514฀ 36,103฀ 31,824฀ 67,927฀ 81,441฀ 12,884฀ 904฀ 13,788 46,082฀ 49...

  • Page 65
    ...฀ the฀ amounts฀ mentioned฀ above,฀ as฀ of฀ December฀ 31,฀ 2006,฀ CEMEX฀ has฀ committed฀ lines฀ of฀ credit฀ for฀ approximately฀ U.S.$11,200฀ ($120,960)฀that฀would฀be฀used฀for฀future฀business฀combinations. Covenants Certain฀debt฀contracts฀of...

  • Page 66
    ...฀represents฀the฀London฀Interbank฀Offering฀Rate฀used฀in฀international฀markets฀for฀debt฀denominated฀in฀U.S.฀dollars. During฀2006฀and฀2005,฀due฀to฀changes฀in฀the฀interest฀rate฀mix฀of฀CEMEX's฀debt฀portfolio,฀interest฀rate฀swaps฀were...

  • Page 67
    ...used฀in฀international฀markets฀for฀debt฀denominated฀in฀U.S.฀dollars.฀As฀of฀December฀31,฀2006...carrying฀amounts฀of฀CEMEX's฀debt฀as฀of฀December฀31,฀2006฀and฀2005฀...2006฀and฀2005,฀related฀to฀the฀fair฀value฀of฀the฀CCS,฀the฀Company...

  • Page 68
    ...the฀commitment฀to฀acquire฀RMC฀that฀was฀denominated฀in฀pounds฀sterling,฀the฀Company฀negotiated฀foreign฀ exchange...฀and฀use.฀ On฀December฀20,฀2006,฀CEMEX฀sold฀in฀the฀market฀50฀million฀CPOs฀that฀it฀held฀in฀the฀Company's฀treasury฀...

  • Page 69
    ...agreements฀entered฀into฀by฀CEMEX฀for฀the฀acquisition฀of฀ electric฀energy฀(...the฀ reporting฀currency,฀CEMEX฀has฀...฀so,฀on฀December฀ 18,฀2006,฀CEMEX฀entered฀into฀in฀two฀CCS...direct฀measure฀of฀CEMEX's฀exposure฀to฀the฀use฀of฀these฀...

  • Page 70
    ...depreciated฀over฀their฀estimated฀useful฀lives฀and฀charged฀to฀results฀of฀operations.฀ Other฀remediation฀and...฀31,฀2006฀and฀2005,฀the฀most฀signifi ฀cant฀legal฀proceedings฀that฀give฀rise฀to฀the฀carrying฀amounts฀of฀CEMEX's฀other฀non...

  • Page 71
    ...฀ts฀in฀2006,฀2005฀and฀2004฀are฀summarized฀as฀follows: 2006 Pensions 2005 2004 2006 Other benefits 2005 2004 2006 Total 2005 2004...inï¬, ฀ation฀effects฀ Addition฀through฀business฀combinations฀ Employer฀contributions฀ Employee฀contributions฀ Settlements฀and...

  • Page 72
    ...,฀2006฀and฀2005,฀the฀Company฀...used฀in฀the฀determination฀of฀the฀net฀periodic฀cost,฀which฀are฀agreed฀with฀external฀actuaries,฀ are฀summarized฀as฀follows: Mexico United States 2006 United Kingdom Other countries 1 Mexico United States 2005 United Kingdom...

  • Page 73
    ...used฀in฀2006฀to฀determine฀the฀PBO฀of฀these฀benefi ฀ts฀was฀3.0%฀in฀Mexico,฀9.0%฀in฀Puerto฀Rico,฀11.5%฀in฀the฀United฀States฀ and฀6.9%฀in฀the฀United฀Kingdom.฀ 15.฀ INCOME฀ TAX฀ (IT),฀ BUSINESS...ESPS CEMEX฀...฀parent฀company฀in฀...

  • Page 74
    ...2006,฀$1,688฀in฀2005฀and฀$1,419฀in฀2004.฀Tax฀loss฀carryforwards฀related฀to฀Mexican฀operations...2006,฀there฀had฀not฀been฀any฀offi ฀cial฀ communication.฀CEMEX...Less฀-฀Deferred฀IT฀of฀acquired฀subsidiaries฀at฀acquisition฀date฀ Total฀effect...

  • Page 75
    ...tax฀rates฀in฀the฀countries฀where฀CEMEX฀operates. 16.฀STOCKHOLDERS'฀EQUITY On฀April฀27,฀2006,฀the฀annual฀extraordinary฀stockholders'฀meeting฀approved฀a฀new฀stock฀split,฀which฀became฀effective฀on฀July฀17,฀2006.฀In฀connection฀ with฀the...

  • Page 76
    ...held฀in฀the฀ Company's฀treasury.฀The฀amounts฀of฀CPOs฀and฀other฀prices฀per฀share฀related฀to฀the฀annual฀ordinary฀stockholders'฀meeting฀held฀on฀April฀27,฀2006฀were฀ not฀adjusted฀to฀retroactively฀reï¬, ฀ect฀the฀stock฀split฀of฀July...

  • Page 77
    ... used฀by฀the฀executives฀to฀acquire฀CPOs฀in฀the฀market.฀The฀expense฀recognized฀through฀the฀income฀statements฀during฀2006฀and฀2005฀arising฀from฀ these฀bonuses฀was฀$397฀and฀$334,฀respectively.฀Pursuant฀to฀an฀agreement฀between฀CEMEX...

  • Page 78
    ...2006฀1,฀2฀ Options฀exercise฀in฀the฀year฀1,฀2฀ Options฀outstanding฀at฀the฀end฀of฀2006฀1,฀2฀ Average฀useful...and฀the฀sale฀restriction,฀CEMEX฀paid฀in฀ 2004...the฀stock฀splits฀of฀2005฀and฀2006),฀increasing฀annually฀at฀a฀5.5%฀rate...

  • Page 79
    ...฀PROGRAM From฀June฀2001฀through฀June฀2005,฀the฀Company's฀subsidiary฀in฀the฀United฀States฀granted฀to฀a฀group฀of฀its฀employees฀a฀stock฀option฀program฀to฀ purchase฀CEMEX฀ADSs.฀The฀options฀granted฀have฀a฀fi ฀xed฀exercise฀price...

  • Page 80
    ...operations฀in฀the฀United฀Arab฀Emirates฀and฀Israel,฀acquired฀from฀RMC.฀In฀addition,฀the฀ segment฀"Rest฀of฀Asia"฀in฀2004฀includes฀the฀operations฀in฀Thailand฀and฀Bangladesh;฀and฀in฀2006฀and฀2005,฀the฀operations฀in฀Malaysia฀acquired...

  • Page 81
    ...America Mexico฀ United฀States฀ Europe Spain฀ United฀Kingdom฀ Rest฀of฀Europe฀ Central฀and฀South฀America฀and฀the฀Caribbean Venezuela฀ Colombia฀ Rest฀of฀Central฀and฀South฀America฀and฀ ฀ the฀Caribbean฀ Africa฀and฀Middle฀East Egypt฀ Rest฀of...

  • Page 82
    ...฀and฀$109,732฀in฀2005.฀Of฀such฀debt,฀approximately฀42%฀in฀2006฀and฀36%฀in฀2005฀ was฀in฀the฀Parent฀Company,฀1%฀and฀7%฀in฀the฀United฀States,฀33%฀and฀32%฀in฀Spain,฀9%฀and฀7%฀in฀a฀Dutch฀subsidiary,฀guaranteed฀by฀certain...

  • Page 83
    ...31,฀2006,฀2005฀and฀2004฀is฀as฀follows: North฀America Mexico฀ $฀ United฀States฀ ฀ Europe Spain฀ ฀ United฀Kingdom฀...฀Middle฀East Egypt฀ ฀ Asia Philippines฀ ฀ Rest฀of฀Asia฀ ฀ Others฀ ฀ Total฀Consolidated฀ $฀ 2004 2005 2006 Cement Concrete ...

  • Page 84
    ...Company's฀Mexican฀operations฀denominated฀in฀foreign฀currencies฀during฀2006,฀2005฀and฀2004฀are฀summarized฀as฀follows: U.S. dollars millions 2006...equity฀forwards฀on฀CEMEX's฀CPOs฀ ฀ ...฀the฀stock฀splits฀of฀July฀2005฀and฀July฀2006. The฀difference...

  • Page 85
    ...฀in฀the฀table฀above,฀CEMEX฀has฀entered฀into฀various฀operating฀leases,฀primarily฀for฀operating฀facilities,฀cement฀storage฀and฀distribution฀ facilities฀and฀certain฀transportation฀and฀other฀equipment,฀under฀which฀annual฀rental฀payments฀are...

  • Page 86
    ...companies฀in฀respect฀of฀the฀2005฀tax฀year฀ pursuant฀to฀these฀amendments฀will฀be฀due฀upon฀fi ฀ling฀their฀annual฀tax฀returns฀in฀2006.฀CEMEX...,฀CEMEX฀has฀used฀all฀available฀legal฀resources฀to฀revoke฀the฀order฀from฀the฀United฀...

  • Page 87
    ...acquisition฀of฀RMC,฀the฀Company฀assumed฀environmental฀remediation฀liabilities฀in฀the฀United฀Kingdom,฀for฀which,฀as฀of฀ December฀31,฀2006,฀CEMEX...฀public฀transportation฀system฀in฀Bogotá฀using฀ready-mix฀concrete฀supplied฀by฀CEMEX฀Colombia...

  • Page 88
    ...December฀31,฀2006,฀was฀chief฀executive฀offi ฀cer฀ and฀chairman฀of฀the฀board฀of฀directors฀of฀Empresas฀ICA,฀S.A.B฀de฀C.V.,฀or฀Empresas฀ICA,฀a฀large฀Mexican฀construction฀company.฀In฀the฀ordinary฀ course฀of฀business,฀CEMEX฀extends...

  • Page 89
    ...the฀fi ฀nancial฀statements฀have฀been฀adjusted฀to฀give฀retroactive฀effect฀to฀the฀new฀stock฀split. The฀terms฀"CEMEX,฀S.A.B.฀de฀C.V."฀or฀"the฀Parent฀Company"฀used฀in฀these฀accompanying฀notes฀to฀the฀fi ฀nancial฀statements฀refer฀to...

  • Page 90
    ...2006฀and฀2005,฀goodwill฀and฀deferred฀charges฀are฀summarized฀as฀follows: Intangible฀assets฀of฀indefi ฀nite฀useful฀...payable฀and฀accrued฀expenses฀of฀the฀Parent฀Company฀as฀of฀December฀31,฀2006฀and฀2005฀consist฀of: Accounts฀payable฀and...

  • Page 91
    ... $฀ 29,597 In฀the฀Parent฀Company's฀balance฀sheet฀at฀December฀31,฀2006฀and฀2005,฀there฀were฀short-term฀...CEMEX฀Irish฀Investments฀Company฀Limited฀ CEMEX฀UK฀Limited฀ CEMEX฀Venezuela,฀S.A.C.A.฀ LAI,฀Ltd.฀ Others฀ ฀ ฀ The฀main฀operations...

  • Page 92
    ...December฀31,฀2006,฀was฀chief฀executive฀offi ฀cer฀ and฀chairman฀of฀the฀board฀of฀directors฀of฀Empresas฀ICA,฀S.A.B฀de฀C.V.,฀or฀Empresas฀ICA,฀a฀large฀Mexican฀construction฀company.฀In฀the฀ordinary฀ course฀of฀business,฀CEMEX฀extends...

  • Page 93
    ...assets฀and฀liabilities฀in฀the฀Parent฀Company฀have฀been฀offset.฀As฀of฀December฀31,฀2006฀and฀2005,฀the฀IT฀effects฀of...conditions฀change,฀and฀it฀is฀determined฀ that฀future฀operations฀would฀not฀generate฀enough฀taxable฀income,฀or฀that...

  • Page 94
    ... future฀estimated฀cash฀ï¬, ฀ows,฀the฀Parent฀Company฀used฀the฀interest฀rates฀applicable฀under฀such฀contracts฀as฀of฀December฀31,฀2006฀and฀2005. O.฀ TAX฀ASSESSMENTS฀AND฀LEGAL฀PROCEEDINGS CEMEX,฀S.A.B.฀de฀C.V.฀has฀been฀notifi ฀ed฀by...

  • Page 95
    ...operating฀income฀minus฀taxes฀and฀profi ฀t฀sharing,฀ divided฀by฀the฀sum฀of฀average฀net฀debt฀and฀ consolidated฀stockholders'฀equity.฀฀ ฀฀฀WE฀USE Aggregates฀are฀sand฀and฀gravel,฀which฀are฀ mined฀from฀quarries.฀They฀give฀ready...

  • Page 96
    94 Board฀ ฀฀฀ ฀ ฀฀OF฀DIRECTORS Alternate฀directors Jorge฀García฀Segovia Eduardo฀Brittingham฀Sumner฀ Independent฀member Luis฀Santos฀de฀la฀Garza฀ Independent฀member Fernando฀Ruiz฀Arredondo฀ Independent฀member Directors Lorenzo฀H.฀Zambrano ...

  • Page 97
    ...฀United฀Kingdom฀and...company฀in฀1985,฀holds฀a฀degree฀in฀mechanical฀engineering฀and฀ business฀administration฀from฀Tecnológico฀de฀Monterrey฀and฀an฀ M.B.A.฀from฀the฀University฀of฀Texas.฀He฀is฀responsible฀for฀managing฀ CEMEX's฀operations...

  • Page 98
    ...317-6047฀ NYSE฀ticker฀symbol฀ CX฀ Media฀relations฀contact฀ [email protected]฀ Phone:฀(52-81)฀8888-4334฀ Fax:฀(52-81)฀8888-4417฀ Web฀address www.cemex.com Investor฀relations฀contact [email protected]฀ From฀the฀US:฀1฀877฀7CX฀NYSE฀ From฀other฀countries...

  • Page 99
    ...฀in฀raw฀material฀and฀energy฀prices;฀changes฀ in฀business฀strategy;฀and฀various฀other฀factors.฀Should฀one฀or฀more...reported฀rates฀of฀inï¬,ation,฀ exchange฀rates,฀and฀information฀relating฀to฀the฀countries฀in฀which฀CEMEX฀ operates.฀CEMEX...

  • Page 100
    www.cemex.com