================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
_______________________
Date of Report: October 21, 2005
CEMEX, S.A. de C.V.
-------------------
(Exact name of Registrant as specified in its charter)
CEMEX Corp.
-----------
(Translation of Registrant's name into English)
United Mexican States
---------------------
(Jurisdiction of incorporation or organization)
Av. Ricardo Margain Zozaya #325, Colonia Valle del Campestre
Garza Garcia, Nuevo Leon, Mexico 66265
------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F _X_ Form 40-F ___
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes ____ No _X_
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
N/A
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Contents
1. Press release, dated October 21, 2005, announcing CEMEX's results
for the third quarter of 2005 (attached hereto as exhibit 1).
2. CEMEX's 2005 third quarter earnings report (attached hereto as
exhibit 2).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
CEMEX, S.A. de C.V. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CEMEX, S.A. de C.V.
-----------------------------------
(Registrant)
Date: October 21, 2005 By: /s/ Rafael Garza
------------------------------
Name: Rafael Garza
Title: Chief Comptroller
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Press release, dated October 21, 2005, announcing
CEMEX's results for the third quarter of 2005.
2. CEMEX's 2005 third quarter earnings report.
Exhibit 1
Media Relations Investor Relations Analyst Relations
Jorge Perez Abraham Rodriguez Ricardo Sales
(52 81) 8888-4334 (52 81) 8888-4262 (212) 317-6008
CEMEX
Building the futures(TM)
[Logo Graphic Omitted]
CEMEX'S THIRD QUARTER 2005 SALES INCREASE 110%;
OPERATING INCOME UP 56%
MONTERREY, MEXICO, October 21, 2005 - CEMEX, S.A. de C.V. (NYSE: CX) announced
today that consolidated net sales in the third quarter of 2005 grew 110% to
US$4.3 billion compared to the same quarter of 2004. This increase is primarily
a result of the effect of the incorporation of RMC into CEMEX's consolidated
results.
CEMEX Consolidated Third-Quarter Financial and Operational Highlights
- ---------------------------------------------------------------------
o Sales increased in the majority of CEMEX's markets due to higher cement,
ready mix and aggregates volume. Infrastructure spending remains one of
the main drivers of cement and ready-mix demand throughout CEMEX's
markets, as was residential construction, driven largely by the
prevailing low interest rate environment worldwide.
o CEMEX's consolidated cement volume increased 27% to 22 million metric
tons, while consolidated ready-mix volume grew 225% to 20.2 million cubic
meters. The Company's consolidated aggregates volume increased 289% to 48
million metric tons, over the third quarter of 2004.
o Operating income for the third quarter increased 56% to US$771 million.
o Free cash flow was US$679 million, up 51% versus US$451 million in the
same quarter of 2004.
o EBITDA (operating income plus depreciation and amortization) increased to
US$1 billion, up 54% over the third quarter of 2004, mainly due to the
acquisition of RMC.
Hector Medina, Executive Vice President of Planning and Finance, said: "Our
business showed continued strength in the third-quarter as we achieved
significant increases in net sales and operating income. The results for the
quarter reflect continued underlying growth in our core markets, as well as
contributions from the recently integrated RMC operations. We are pleased to
report the achievement of a 2.6 times net debt to EBITDA ratio only seven
months after we completed the acquisition of RMC, one quarter ahead of
schedule."
Consolidated Corporate Results
- ------------------------------
Cost of goods sold and selling, general, and administrative expenses (SG&A)
increased 117% and 155%, respectively, versus the third quarter of 2004 due
mainly to the acquisition of RMC.
Majority net income for the third quarter of 2005 rose 87%, to US$675 million
from US$361 million in third quarter of 2004, and has increased 99% during the
first nine months of 2005, reaching US$1,855 million.
Net debt at the end of the third quarter 2005 was US$8.9 billion, a reduction
of US$724 million during the quarter. The net-debt-to-EBITDA ratio improved to
2.6 from 2.9 at the end of second quarter 2005. Interest coverage remained
unchanged from second quarter 2005 at 6.5, decreasing from 6.7 one year prior.
During the quarter, free cash flow of US$679 million plus US$91.5 million in
proceeds from the additional assets contributed to the joint venture with Ready
Mix USA were primarily used to reduce net debt by US$687 million (when
expressed in US dollars, net debt was further reduced by US$37 million due
mainly to the depreciation of the euro, British pound and yen versus the US
dollar during the quarter), and for investments in connection with the post
merger integration of RMC.
Completion of Non-Dilutive Equity Offering
- ------------------------------------------
On October 3, 2005, CEMEX announced that a total of 30,993,340 ADSs were sold
in a non-dilutive equity offering, which included the sale of 27,000,000 ADSs,
plus an additional 3,993,340 ADSs to cover over-allotments. The 30,993,340 ADSs
were sold in the form of both ADSs and CPOs, comprised of 22,943,340 ADSs and
80,500,000 CPOs with one ADS representing ten CPOs. The ADSs were offered to
the public at a price of US$49.50 per ADS, and the CPOs were offered to the
public at a price of MXN53.89 per CPO. The aggregate proceeds of the offering,
including proceeds from the exercise of the over-allotment option, were
approximately US$1.5 billion, after underwriting discounts and commissions.
Approximately US$1.3 billion of these proceeds were used to unwind all of the
forward contracts entered into between CEMEX and certain banks, with the
remaining approximately US$200 million paid to CEMEX on October 3, 2005. The
transaction did not increase the number of shares outstanding.
Joint Venture with Ready Mix USA
- --------------------------------
On September 1, 2005, CEMEX announced the signing of an agreement to expand the
scope of the recently formed joint venture with Ready Mix USA. As part of the
expansion of the joint venture, CEMEX contributed 27 additional ready-mix
plants and 4 additional block facilities that are located in the Atlanta,
Georgia metropolitan area and operated under the Allied Ready Mix name. In
return for the contribution of these assets CEMEX received from the joint
venture a net amount of approximately US$91.5 million .
Major Markets Third-Quarter Highlights
- --------------------------------------
Net sales in CEMEX's Mexican operations increased 10% to US$782 million
compared to US$709 million the same quarter of 2004 and EBITDA grew 2% over the
prior year period to US$310 million. Cement volumes in Mexico increased 1%
during the quarter versus the third quarter of 2004, while ready-mix volumes
increased 14% over the same period. The main drivers of demand in the Mexican
cement market continue to be in the residential construction and infrastructure
sectors.
In the United States, net sales for the quarter were US$1.2 billion, up 116%
over the third quarter of 2004, while EBITDA increased 121% to US$329 million.
U.S. operations cement volumes increased 2% versus the same period a year ago
and ready-mix volumes increased 212% due in large part to the consolidation of
RMC operations. Cement demand continues to be driven primarily by a strong
infrastructure sector, particularly in street and highway construction, as well
as a growing industrial and commercial sector and a healthy residential sector.
CEMEX's operations in Spain reported net sales of US$376 million in the third
quarter of 2005, up 19% versus the third quarter of 2004. EBITDA increased 10%
to US$107 million in the quarter. Domestic cement volume decreased 2% over the
third quarter 2004, ready-mix volume increased 59% over the previous year
period. For the first nine months of the year, cement and ready-mix volumes
increased 5% and 56%, respectively, versus the first nine months of 2004. In
Spain, the main drivers of cement and ready-mix demand continue to be
infrastructure spending and residential construction but growth has moderated
versus the first half of the year.
Net sales and EBITDA of the Company's operations in the United Kingdom were
US$480 million and US$50 million respectively. Cement sales in the UK decreased
4% for the third quarter and ready-mix volumes decreased 3% versus the same
periods in 2004. The public, residential, industrial and commercial sectors
remain the primary growth drivers in the UK although they are growing slower
due to reduced spending on infrastructure and decreased demand from the repair,
maintenance and improvement sectors
Other European Markets
- ----------------------
During the third quarter of 2005, net sales in the other European markets was
US$855 million and EBITDA was US$128 million.
In France, ready-mix volumes increased 8% in the third quarter. The increase in
ready-mix demand is mainly due to a strong housing sector, driven by low
interest rates and tax incentives aimed at promoting housing construction.
In Germany, the economic environment continues to be plagued with high
unemployment, low consumer confidence and an overall weak business environment.
Spending in infrastructure, which remains depressed due to high levels of
public debt and limited investments, has offset the nonresidential sector,
which has grown slightly due to a rise in commercial building construction.
Cement sales volumes for the quarter declined 13% versus the comparable period
of 2004.
South/Central America and the Caribbean
- ---------------------------------------
CEMEX operations in South/Central America and the Caribbean reported net sales
of US$358 million during the second quarter of 2005, an increase of 16% over
the third quarter of 2004. EBITDA decreased 16% to US$103 million versus the
prior year period. Domestic cement volumes in the region increased 16% in the
quarter versus third quarter 2004.
The Venezuelan economy continues to recover spurring construction spending. The
main factors contributing to increased cement demand are the residential (both
self-construction and government-sponsored housing) and infrastructure sectors
fueled by increased oil revenues. For the quarter, cement volumes in Venezuela
increased 38% versus third quarter 2004.
In Colombia, cement volumes grew 30% during the quarter mainly due to high
demand from the self-construction sector and infrastructure spending.
Africa and Middle East
- ----------------------
Third-quarter net sales in Africa and the Middle East were US$155, up 200% as
compared to the same quarter of 2004. EBITDA increased 69% to US$43 million.
Construction activity in the Middle East remains at a high level with housing
requirements and oil revenues driving public and private investments.
Asia
- ----
Operations in Asia reported an increase in net sales of 53% over the third
quarter of 2004, or US$76 million, while EBITDA was US$13 million, down 2% over
the previous year period. Cement volumes in the region decreased 3% during the
quarter.
CEMEX is a growing global building solutions company that provides products of
consistently high quality and reliable service to customers and communities in
more than 50 countries throughout the world. The company improves the
well-being of those it serves through its relentless focus on continuous
improvement and efforts to promote a sustainable future. For more information,
visit www.cemex.com.
###
Exhibit 2
2005
CEMEX THIRD QUARTER RESULTS
- --------------------------------- ---------------------------------------------------------------------------------
|
Stock Listing Information |
| Third quarter (1) Third quarter (1)
NYSE (ADR) | ------------------------ --------------------
Ticker: CX | 2005 2004 % Var. 2005 2004
| ---------------------------------------------------------------------------------
MEXICAN STOCK EXCHANGE | Net sales 4,298 2,047 110% % of Net Sales
Ticker: CEMEX.CPO | ---------------------------------------------------------------------------------
| Gross profit 1,808 902 101% 42.1% 44.0%
Ratio of CEMEX.CPO to CX= 10:1 | ---------------------------------------------------------------------------------
| Operating income 771 495 56% 17.9% 24.2%
| ---------------------------------------------------------------------------------
| Majority net income 675 361 87% 15.7% 17.6%
| ---------------------------------------------------------------------------------
| EBITDA 1,011 656 54% 23.5% 32.1%
| ---------------------------------------------------------------------------------
| Free cash flow 679 451 51% 15.8% 22.0%
| ---------------------------------------------------------------------------------
|
|
| --------------------------------------------------
| Net debt 8,900 4,679 90%
| --------------------------------------------------
| Net debt/EBITDA 2.6 2.0
| --------------------------------------------------
| Interest coverage 6.5 6.7
| --------------------------------------------------
| Quarterly earnings per ADR 1.92 1.07 80%
| --------------------------------------------------
| Average ADRs outstanding 352.1 339.0 4%
| ---------------------------------------------------------------------------------
|
| In millions of US dollars, except ratios and per-ADR amounts.
| Average ADRs outstanding are presented in millions of ADRs.
|
|
| Consolidated net sales grew to US$4,298 million, representing an increase of
| 110% over those of third quarter 2004, mainly as a result of the RMC
| acquisition. Sales increased in most of our markets due to higher cement,
| ready-mix and aggregates volumes and a better pricing environment.
| Infrastructure spending has been one of the main drivers of cement and
| ready-mix demand throughout our markets, as has residential construction,
| driven by the prevailing low interest rate environment worldwide.
|
| Cost of goods sold and selling, general, and administrative expenses (SG&A)
| increased 117% and 155%, respectively, versus the third quarter of last year
| due mainly to the acquisition of RMC. We are in the preliminary stages of
| implementing CEMEX's standardized practices aimed at reducing costs and
| expenses in the newly acquired operations. Our long-term energy-management
| program has helped us mitigate the effect of higher oil prices worldwide. The
| aggregate cost of energy and electricity per ton of cement produced for our
| portfolio has increased 14% for the first nine months of the year versus the
| same period last year.
|
| EBITDA reached US$1,011 million, representing an increase of 54% over that of
| third quarter 2004, due mainly to the acquisition of RMC. EBITDA margin
| decreased from 32.1% in third quarter 2004 to 23.5% in third quarter 2005, and
| increased versus 22.6% in second quarter 2005. The margin was positively
| affected by higher average volumes and better pricing conditions - compensating
| for higher energy costs - but was more than offset by the change in product mix
| as a result of the RMC acquisition.
|
| Foreign exchange gain (loss) for the quarter was a loss of US$40 million,
| arising mainly from dollar-denominated debt held at some of our subsidiaries.
|
| Gain (loss) on financial instruments for the quarter was a gain of US$94
| million, resulting mainly from our cross currency and interest rate swaps - due
| to the increase in interest rates - and gains from our equity forwards, which
| were terminated during the quarter.
|
Investor Relations | Majority net income for the quarter rose 87%, to US$675 million from US$361
| million in third quarter 2004, and has increased 99% year to date, reaching
In the United States | US$1,855 million for the first nine months of the year. Higher volumes, pricing
1 877 7CX NYSE | recovery, our continuing efficiency programs, and gains on our financial
| instruments have positively impacted our majority net income during the year.
In Mexico |
52 (81) 8888 4292 | Net debt at the end of the third quarter was US$8,900 million, a reduction of
| US$724 million during the quarter, and US$1,535 million since the end of the
E-Mail | first quarter 2005. The net-debt-to-EBITDA ratio improved to 2.6 times from 2.9
ir@cemex.com | times at the end of second quarter 2005. Interest coverage decreased to 6.5
| from 6.7 times a year ago, but remained unchanged from second quarter 2005.
www.cemex.com |
| (1) Results for third quarter 2004 do not include the effect of the RMC acquisition.
|
|
- ---------------------------------
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 1
CEMEX
EBITDA and Free Cash Flow(1)
===============================================================================
Third quarter January - September
------------------------ -----------------------------
2005 2004 % Var. 2005 2004 % Var.
- ---------------------------------------------------------------------------------------------------------
Operating income 771 495 56% 1,967 1,376 43%
- ---------------------------------------------------------------------------------------------------------
+ Depreciation and operating amortization 240 161 672 497
- ---------------------------------------------------------------------------------------------------------
EBITDA 1,011 656 54% 2,639 1,873 41%
- ---------------------------------------------------------------------------------------------------------
- - Net financial expense 127 78 370 246
- ---------------------------------------------------------------------------------------------------------
- - Capital expenditures 209 103 473 243
- ---------------------------------------------------------------------------------------------------------
- - Change in working capital (35) (31) 7 68
- ---------------------------------------------------------------------------------------------------------
- - Taxes paid 29 28 108 67
- ---------------------------------------------------------------------------------------------------------
- - Other cash items (net) 2 27 8 43
- ---------------------------------------------------------------------------------------------------------
Free cash flow 679 451 51% 1,673 1,206 39%
- ---------------------------------------------------------------------------------------------------------
In millions of US dollars.
Results for third quarter and first nine months of 2004 do not include the effect of the RMC acquisition.
During the quarter, free cash flow of US$679 million plus US$91 million in
proceeds from the additional assets contributed to the joint venture with Ready
Mix USA were primarily used to reduce net debt by US$687 million (when
expressed in US dollars, net debt was further reduced by US$37 million due
mainly to the depreciation of the euro, British pound and yen versus the US
dollar during the quarter), and for investments in connection with the post
merger integration of RMC.
Debt-Related Information
===============================================================================
Third quarter Second quarter Third quarter
------------------------ -------------- ----------------
2005 2004 % Var. 2005 2005 2004
- -------------------------------------------------------------------------------- -----------------------------------------
Total debt (2) 9,596 5,730 67% 11,036 Currency denomination
- -------------------------------------------------------------------------------- -----------------------------------------
Short-term 13% 23% 15% US dollar 69% 71%
- -------------------------------------------------------------------------------- -----------------------------------------
Long-term 87% 77% 85% Euro 22% 15%
- -------------------------------------------------------------------------------- -----------------------------------------
Cash and cash equivalents 512 1,051 (51%) 1,265 British pound 3% 0%
- -------------------------------------------------------------------------------- -----------------------------------------
Fair value of cross-currency swaps (2) 184 N/A 147 Yen 6% 13%
- -------------------------------------------------------------------------------- -----------------------------------------
Net debt (2) 8,900 4,679 9,624 Other 0% 1%
- -------------------------------------------------------------------------------- -----------------------------------------
- -------------------------------------------------------------------------------
Interest expense 141 84 68% 153 Interest rate
- -------------------------------------------------------------------------------- -----------------------------------------
Interest coverage 6.5 6.7 6.5 Fixed 64% 65%
- -------------------------------------------------------------------------------- -----------------------------------------
Net debt/EBITDA 2.6 2.0 2.9 Variable 36% 35%
- -------------------------------------------------------------------------------- -----------------------------------------
In millions of US dollars, except ratios.
(1) EBITDA and free cash flow (calculated as set forth above) are presented herein because CEMEX believes that they are
widely accepted as financial indicators of its ability to internally fund capital expenditures and to service or
incur debt. EBITDA and free cash flow should not be considered as indicators of CEMEX's financial performance, as
alternatives to cash flow, as measures of liquidity, or as being comparable to other similarly titled measures of
other companies. EBITDA is reconciled above to operating income, which CEMEX considers to be the most comparable
measure as determined under generally accepted accounting principles in Mexico (Mexican GAAP). Free cash flow is
reconciled to EBITDA. CEMEX is not required to prepare a statement of cash flows under Mexican accounting
principles and, as such, does not have such Mexican-GAAP cash-flow measures to present as comparable to EBITDA or
free cash flow.
(2) During 2004, the Mexican Institute of Public Accountants issued Bulletin C-10, "Derivative Financial Instruments
and Hedging Activities", which became effective beginning January 1, 2005. Bulletin C-10 details and supplements
issues related to the accounting of derivative financial instruments. Among other aspects, Bulletin C-10 precludes
the presentation of two financial instruments as If they were a single instrument (synthetic presentation). For
this reason, beginning this year, CEMEX recognizes the assets and liabilities resulting from the fair value of
cross-currency swaps ("CCS") separately from the financial debt, and such debt is presented in the currencies
originally negotiated. Starting in 2001, CEMEX has effectively changed the original profile of interest rates and
currencies of financial debt associated to CCS, and accordingly, until December 31, 2004, financial debt subject to
these instruments was presented in the currencies negotiated in the CCS, through the recognition within debt, of a
portion of the assets or liabilities resulting from the fair value of such CCS. This reclassification has no impact
on stockholders' equity or net income. For presentation purposes in the table above, net debt includes the fair
value of CCS associated with debt.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 2
CEMEX
Equity-Related Information
================================================================================
One CEMEX ADR represents ten CEMEX CPOs. The following amounts are expressed in
CPO terms and reflect the 2 for 1 stock split effective July 1, 2005.
Beginning-of-quarter CPO-equivalent units outstanding 3,518,706,245
- ------------------------------------------------------------------------------
Exercise of stock options not hedged 251,756
Less increase (decrease) in the number
of CPOs held insubsidiaries (3,934,652)
End-of-quarter CPO-equivalent units outstanding 3,522,892,653
- ------------------------------------------------------------------------------
Outstanding units equal total shares issued by CEMEX less
shares held in subsidiaries.
Employee long-term compensation plans (1)
As of September 30, 2005, executives had outstanding options on a total of
60,593,200 CPOs, with a weighted average strike price of US$3.14 per CPO
(equivalent to US$31.40 per ADR). The total amount of CPO-equivalent units
outstanding increased 0.12% during the quarter as we sold shares in
subsidiaries to cover the exercise of dilutive stock options. Starting in 2005,
CEMEX began offering executives a stock-ownership program. The plan's goal is
to move CEMEX's long-term incentives from stock options to programs based on
restricted stock. As of September 30, 2005, our executives held 108,568,124
restricted CPOs, representing 3.08% of our total CPOs outstanding.
Derivative Instruments
================================================================================
CEMEX periodically utilizes derivative financial instruments such as
interest-rate and currency swaps, currency forwards and options, and equity
derivatives in order to execute its corporate financing strategy and to hedge
other obligations as they arise. The following table shows the notional amount
for each type of derivative instrument and the aggregate fair market value for
all of CEMEX's derivative instruments as of the last day of each quarter
presented.
Third quarter (2) Second quarter
----------------- --------------
Notional amounts 2005 2004 2005
================================================================================
Equity(1) 0 1,179 1,280
Foreign-exchange 4,106 5,953 3,643
Interest-rate 3,487 2,120 3,489
- --------------------------------------------------------------------------------
Estimated aggregate fair market value 304 (197) 149
================================================================================
In millions of US dollars.
The estimated aggregate fair market value represents the approximate settlement
result as of the valuation date, based upon quoted market prices and estimated
settlement costs, which fluctuate over time. Fair market values and notional
amounts do not represent amounts of cash currently exchanged between the
parties; cash amounts will be determined upon termination of the contracts
considering the notional amounts and quoted market prices as well as other
derivative items as of the settlement date. Fair market values should not be
viewed in isolation but rather in relation to the fair market values of the
underlying hedge transactions and the overall reduction in CEMEX's exposure to
the risks being hedged.
Note: Mexican GAAP ("Bulletin C-2") requires companies to recognize all
derivative financial instruments in the balance sheet as assets or liabilities,
at their estimated fair market value, with changes in such fair market values
recorded on the income statement. The exceptions to the general rule until
December 31, 2004, as they pertained to CEMEX, occurred when transactions were
entered into for cash-flow hedging purposes. In such cases, changes in the fair
market value of the related derivative instruments were recognized temporarily
in equity and were reclassified into earnings as the inverse effects of the
underlying hedged items flowed through the income statement. Beginning in 2005,
new Bulletin C-10, "Derivative Financial Instruments and Hedging Activities",
establishes the framework for hedge accounting and overrides Bulletin C-2 in
this respect; however, in respect to cash-flow hedges, the new rules are the
same as those applied by CEMEX since 2001. CEMEX has recognized increases in
assets and liabilities, which resulted in a net asset of US$304 million, arising
from the fair market value recognition of its derivatives portfolio as of
September 30, 2005. This net asset does not include the liability related to our
stock-option programs of approximately US$208.8 million as of September 30, 2005
(see footnote #1 below). The notional amounts of derivatives substantially match
the amounts of underlying assets, liabilities, or equity transactions on which
the derivatives are being entered into.
_____________________________
(1) Until September 27, 2005, the date of pricing of our non-dilutive equity
offering and the liquidation of the equity forward contracts that hedged
our executive options programs, CEMEX accrued a liability representing the
intrinsic value of the stock options. Resulting from the elimination of
the economic hedge and given that the potential future appreciation of the
stock options is currently not hedged through equity forwards, CEMEX has
decided, for purposes of determining its obligations under the
stock-option programs, to move from intrinsic value to fair value. As of
September 30, 2005, CEMEX had accrued a liability of approximately
US$208.8 million arising from the valuation of its stock options, of which
approximately US$92.8 million correspond to the time value of the stock
options.
(2) Notional amounts and fair market values at the end of third quarter 2004
do not include the effect of the RMC acquisition.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 3
CEMEX
Other Activities
================================================================================
CEMEX completes non-dilutive equity offering
On October 3, 2005, CEMEX announced that a total of 30,993,340 ADSs were sold
in a non-dilutive equity offering, which includes the sale of 27,000,000 ADSs,
plus an additional 3,993,340 ADSs to cover over-allotments. The underwriters
fully exercised their option to purchase the additional ADSs to cover
over-allotments.
The 30,993,340 ADSs were sold in the form of both ADSs and CPOs, comprised of
22,943,340 ADSs and 80,500,000 CPOs. One ADS represents ten CPOs. The ADSs were
offered to the public at a price of US$49.50 per ADS, and the CPOs were offered
to the public at a price of MXN53.89 per CPO.
The aggregate proceeds of the offering, including proceeds from the exercise of
the over-allotment option, were approximately US$1.5 billion, after
underwriting discounts and commissions. Approximately US$1.3 billion of these
proceeds were used to unwind all of the forward contracts entered into between
CEMEX and certain banks, with the remaining approximately US$200 million paid
to CEMEX on October 3, 2005.
This transaction did not increase the number of shares outstanding and thus did
not dilute the equity of existing shareholders.
CEMEX contributes additional assets to joint venture with Ready Mix USA.
On September 1, 2005, CEMEX announced the signing of an agreement to expand the
scope of the recently formed joint venture with Ready Mix USA. Under the
initial arrangement that was completed on July 1, 2005, CEMEX Inc. contributed
to the joint venture two cement plants (Demopolis, Alabama and Clinchfield,
Georgia), eleven cement terminals, and its ready-mix aggregates and block
assets in the Florida Panhandle and Southern Georgia. Ready Mix USA contributed
all of its ready-mix and aggregates operations in Alabama, Georgia, the Florida
Panhandle, and Tennessee, as well as its block operations in Arkansas,
Tennessee, Mississippi, Florida, and Alabama. The cement assets of the joint
venture are being managed by CEMEX, and the ready-mix, aggregates and block
assets are being managed by Ready Mix USA.
As a part of the expansion of the joint venture, CEMEX contributed 27
additional ready-mix plants and 4 additional block facilities, all of which are
located in the Atlanta, Georgia metropolitan area and were operating under the
Allied Ready Mix name. In return for the contribution of these additional
assets, CEMEX received from the joint venture approximately US$91.5 million.
Ready Mix USA will manage these newly contributed assets.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 4
CEMEX
Operating Results
================================================================================
Mexico
Our Mexican operations' cement volumes increased 1% during the quarter versus
third quarter 2004, while ready-mix volumes increased 14% over the same period.
For the first nine months of the year, cement volumes decreased 1% versus the
same period in 2004, while ready-mix volumes increased 15% over the same
period. Cement prices were 8% higher in US-dollar terms during the quarter
versus the same period a year ago and have increased 5% year to date versus the
first nine months of 2004. Ready-mix prices, in US-dollar terms, were 5% higher
during the first nine months of the year versus the same period in 2004.
The main drivers of demand during the year have been government infrastructure
spending and residential construction, the latter supported by increased credit
availability from commercial banks, and non-commercial sources such as
INFONAVIT. Cement demand from the self-construction sector remains weak,
despite increased disposable income, primarily because the formal sector has
attracted customers through increased financing availability.
United States
In CEMEX's US operations, cement volumes increased 2% in third quarter 2005
versus the same period a year ago. For the first nine months of the year,
cement volumes increased 5%. On a like-to-like basis for the ongoing
operations, cement volumes increased 7% both for the quarter and for the first
nine months of the year versus the comparable periods of last year. Ready-mix
volumes increased 212% during the quarter and 175% for the first nine months of
the year due to the consolidation of RMC operations. On a like-to-like basis
for the ongoing operations, ready-mix volumes for the quarter and first nine
months of the year increased 7% and 5%, respectively, versus the same periods
of last year. Aggregates volume, on a like-to-like basis for the ongoing
operations, increased 6% and 12% for the third quarter and first nine months of
the year, respectively, over last year's periods.
Cement prices have increased 18% for the first nine months of the year, while
ready-mix prices increased 26% during the same period. Aggregates prices have
increased 19% year to date versus the same period last year.
Construction spending for the first eight months of the year is up 9% versus
last year's period. Cement demand continues to be driven mainly by a strong
infrastructure sector, particularly streets and highway construction; a growing
industrial and commercial sector, with construction spending up 7% for the
first eight months of the year; and a healthy residential sector, with
construction spending up 11% for the first eight months of the year.
Spain
Domestic cement volume decreased 2% over that of third quarter 2004 while
ready-mix volume increased 59%. For the first nine months of the year, cement
and ready-mix volumes increased 5% and 56%, respectively, versus the first nine
months of 2004. The main drivers of cement and ready-mix demand continue to be
infrastructure spending and residential construction, with housing starts up 4%
for the first seven months of the year. Although the residential sector remains
at record high levels of construction, it has moderated its growth rate versus
that seen in the first half of the year. Prices in US dollars for domestic
cement increased 7% and 9% for third quarter and first nine months of the year,
respectively, versus the comparable periods in 2004.
United Kingdom
Cement sales volumes in the UK decreased 4% for the third quarter and decreased
2% for the first nine months of the year versus the comparable periods in 2004.
Ready-mix volumes decreased 3% and 1% for the quarter and the first nine months
of the year, respectively, versus the same periods in 2004. Cement and
ready-mix prices increased 8% and 5%, respectively, in dollar terms during the
first nine months of the year versus the same period in 2004, offsetting higher
fuel and electricity costs.
The UK economy has weakened during the past months, which in turn has lowered
cement and ready-mix consumption. The decline in national consumption of cement
and ready mix is due mostly to decreased demand from the repair, maintenance,
and improvement sector, as well as lower spending in infrastructure. Although
growing at a lower pace from last year, the public, residential, and industrial
and commercial sectors remain the primary drivers of growth.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 5
CEMEX
Operating Results
================================================================================
Rest of Europe
In France, ready-mix volumes increased 8% in the third quarter and 5% during
the first nine months of the year versus the same periods of 2004. Aggregates
volumes decreased 1% in third quarter and remained flat year to date. Prices of
ready-mix in US dollars increased 6% during the first nine months of the year
versus the same period in 2004. The increase in ready-mix demand is mainly due
to a strong housing sector, which is expected to reach a 20-year high this
year, driven by low interest rates and tax incentives aimed at promoting
housing construction.
In Germany, the economic environment remains unfavorable, with high
unemployment, low consumer confidence, and an overall weak business climate.
The public works sector, which remains depressed due to high public debt and
limited investments, has offset the nonresidential sector, which has grown
slightly due to a rise in commercial building construction. Cement sales
volumes for the quarter and for the first nine months of the year declined 13%
and 16%, respectively, versus the comparable periods of 2004. Ready-mix volumes
in Germany have declined 13% during the first nine months of the year versus
the same period of 2004. Cement prices in Germany have increased 27% in US
dollars for the first nine months of the year versus the same period in 2004.
For the rest of our portfolio in Europe, aggregate domestic cement volume has
increased 3% and ready-mix volumes have decreased 1% for the first nine months
of the year versus the comparable period of 2004. Weighted-average cement and
ready-mix prices in US dollars have both increased 10% year to date versus the
same period last year.
South/Central America and Caribbean
Domestic cement volumes in the region increased 16% in the quarter and 14%
during the first nine months of the year versus the same periods of last year.
The Venezuelan economy continues to recover, and with it construction spending.
The main sectors contributing to increased cement demand are the infrastructure
- - fueled by increased oil revenues - and residential (both self-construction
and government-sponsored housing) sectors. For the quarter, cement volumes in
Venezuela increased 38% versus third quarter 2004.
In Colombia, cement volumes grew 30% during the quarter due mainly to high
demand from the self-construction sector, as unemployment has declined and
wages have increased. Infrastructure spending has also been a significant
contributor to cement demand.
Africa and Middle East
Construction activity in the Middle East is currently running at a high level,
with increased housing requirements and oil revenues driving public and private
investments. Our operations in Egypt have increased their cement volumes
throughout the year supported mainly by a strong infrastructure sector driven
by private investment, and healthy residential and self-construction sectors.
Overall, the region's domestic cement volumes during the quarter increased 33%
versus the same period in 2004, while average prices in US-dollar terms
increased 20%.
Asia
In aggregate, our cement volumes in the region decreased 3% during the quarter
and increased 2% for the first nine months of the year, versus the same periods
of last year. Cement demand in the Philippines declined during the quarter due
to lower public and private spending related to the political uncertainty in
the country, as well as the scarcity of government resources to fund
infrastructure projects. In Thailand, the volume of cement sold decreased
versus last year's level due to intensified competition in the country, while
cement volumes in Bangladesh increased significantly during the quarter due to
the expansion of the markets covered by our operations in that country. Average
cement prices in the region increased 9% in US dollars during the third quarter
versus the same period in 2004.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 6
CONSOLIDATED INCOME STATEMENT & BALANCE SHEET
Includes the results of RMC begining March 1, 2005. Results for 2004 do not
include RMC
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of U.S. Dollars, except per ADR amounts)
January - September Third quarter
INCOME STATEMENT 2005 2004 % Var. 2005 2004 % Var.
- ----------------------------------------------------------------------------------------------------------------------------------
Net Sales 11,284,293 5,885,220 92% 4,298,068 2,047,409 110%
Cost of Sales (6,628,575) (3,300,649) 101% (2,489,581) 1,145,732) 117%
- ----------------------------------------------------------------------------------------------------------------------------------
Gross Profit 4,655,718 2,584,571 80% 1,808,487 901,678 101%
Selling, General and Administrative Expenses (2,688,759) (1,208,502) 122% (1,037,494) (406,410) 155%
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income 1,966,958 1,376,069 43% 770,993 495,268 56%
Financial Expenses (400,265) (262,513) 52% (140,861) (83,846) 68%
Financial Income 30,073 16,199 86% 13,989 5,548 152%
Exchange Gain (Loss), Net (97,651) (58,778) 66% (40,145) 23,582 N/A
Monetary Position Gain (Loss) 306,351 271,805 13% 111,389 63,537 75%
Gain (Loss) on Financial Instruments 365,087 (1,556) N/A 93,595 9,890 846%
Total Comprehensive Financing (Cost) Income 203,594 (34,843) N/A 37,967 18,710 103%
Other Expenses, Net (35,826) (279,388) (87%) (25,233) (109,381) (77%)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 2,134,727 1,061,838 101% 783,727 404,597 94%
Income Tax (268,974) (125,896) 114% (98,748) (48,040) 106%
Employees' Statutory Profit Sharing (8,135) (7,459) 9% (2,933) (2,827) 4%
Total Income Tax & Profit Sharing (277,109) (133,356) 108% (101,682) (50,867) 100%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 1,857,618 928,482 100% 682,045 353,730 93%
Participation in Unconsolidated Subsidiaries 43,104 25,149 71% 16,079 13,289 21%
Consolidated Net Income 1,900,722 953,631 99% 698,124 367,019 90%
Net Income Attributable to Min. Interest 45,236 22,286 103% 23,426 5,812 303%
MAJORITY INTEREST NET INCOME 1,855,486 931,345 99% 674,698 361,207 87%
- ----------------------------------------------------------------------------------------------------------------------------------
EBITDA 2,638,854 1,873,102 41% 1,010,617 656,290 54%
Earnings per ADR 5.40 2.82 92% 1.92 1.07 80%
- ----------------------------------------------------------------------------------------------------------------------------------
As of September 30
BALANCE SHEET 2005 2004 % Var.
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets 25,282,248 16,767,007 51%
Cash and Temporary Investments 512,486 1,051,209 (51%)
Trade Accounts Receivables 1,795,423 426,042 321%
Other Receivables 726,536 334,324 117%
Inventories 1,109,255 644,450 72%
Other Current Assets 181,720 89,827 102%
Current Assets 4,325,420 2,545,851 70%
Fixed Assets 13,228,426 9,030,870 46%
Other Assets 7,728,402 5,190,285 49%
- ----------------------------------------------------------------------------------------------------
Total Liabilities 15,244,059 9,301,105 64%
Current Liabilities 4,627,631 2,934,340 58%
Long-Term Liabilities 8,311,286 4,404,380 89%
Other Liabilities 2,305,142 1,962,384 17%
- ----------------------------------------------------------------------------------------------------
Consolidated Stockholders' Equity 10,038,189 7,465,902 34%
Stockholders' Equity Attributable to Minority Interest 535,188 368,597 45%
Stockholders' Equity Attributable to Majority Interest 9,503,001 7,097,304 34%
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 7
CONSOLIDATED INCOME STATEMENT & BALANCE SHEET
Includes the results of RMC begining March 1, 2005. Results for 2004 do not
include RMC
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of Mexican Pesos in real terms as of September 31, 2005
except per ADR amounts)
January - September Third quarter
INCOME STATEMENT 2005 2004 % Var. 2005 2004 % Var.
- ----------------------------------------------------------------------------------------------------------------------------------
Net Sales 121,418,987 66,109,841 84% 46,247,209 22,998,954 101%
Cost of Sales (71,323,464) (37,076,845) 92% (26,787,889) (12,870,231) 108%
- ----------------------------------------------------------------------------------------------------------------------------------
Gross Profit 50,095,524 29,032,995 73% 19,459,319 10,128,723 92%
Selling, General and Administrative Expenses (28,931,046) (13,575,338) 113% (11,163,440) (4,565,280) 145%
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income 21,164,478 15,457,657 37% 8,295,880 5,563,443 49%
Financial Expenses (4,306,853) (2,948,865) 46% (1,515,660) (941,862) 61%
Financial Income 323,582 181,969 78% 150,522 62,320 142%
Exchange Gain (Loss), Net (1,050,729) (660,268) 59% (431,958) 264,897 N/A
Monetary Position Gain (Loss) 3,296,342 3,053,238 8% 1,198,544 713,723 68%
Gain (Loss) on Financial Instruments 3,928,331 (17,476) N/A 1,007,082 111,095 807%
Total Comprehensive Financing (Cost) Income 2,190,674 (391,402) N/A 408,530 210,172 94%
Other Expenses, Net (385,492) (3,138,422) (88%) (271,506) (1,228,694) (78%)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 22,969,659 11,927,833 93% 8,432,903 4,544,921 86%
Income Tax (2,894,161) (1,414,219) 105% (1,062,531) (539,646) 97%
Employees' Statutory Profit Sharing (87,528) (83,792) 4% (31,564) (31,757) (1%)
Total Income Tax & Profit Sharing (2,981,689) (1,498,010) 99% (1,094,095) (571,404) 91%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 19,987,970 10,429,823 92% 7,338,808 3,973,517 85%
Participation in Unconsolidated Subsidiaries 463,799 282,501 64% 173,010 149,277 16%
Consolidated Net Income 20,451,769 10,712,324 91% 7,511,818 4,122,794 82%
Net Income Attributable to Min. Interest 486,735 250,343 94% 252,067 65,284 286%
MAJORITY INTEREST NET INCOME 19,965,034 10,461,981 91% 7,259,751 4,057,510 79%
- ----------------------------------------------------------------------------------------------------------------------------------
EBITDA 28,394,076 21,040,930 35% 10,874,242 7,372,233 48%
Earnings per ADR 58.10 32.09 81% 20.66 12.18 70%
- ----------------------------------------------------------------------------------------------------------------------------------
As of September 30
BALANCE SHEET 2005 2004 % Var.
- ---------------------------------------------------------------------------------------------------------------------------------
Total Assets 272,036,988 188,347,104 44%
Cash and Temporary Investments 5,514,351 11,808,443 (53%)
Trade Accounts Receivables 19,318,748 4,785,810 304%
Other Receivables 7,817,528 3,755,528 108%
Inventories 11,935,581 7,239,231 65%
Other Current Assets 1,955,308 1,009,042 94%
Current Assets 46,541,516 28,598,053 63%
Fixed Assets 142,337,863 101,445,551 40%
Other Assets 83,157,609 58,303,500 43%
- -----------------------------------------------------------------------------------------------------
Total Liabilities 164,026,075 104,481,153 57%
Current Liabilities 49,793,314 32,962,027 51%
Long-Term Liabilities 89,429,434 49,475,277 81%
Other Liabilities 24,803,327 22,043,848 13%
- -----------------------------------------------------------------------------------------------------
Consolidated Stockholders' Equity 108,010,922 83,865,952 29%
Stockholders' Equity Attributable to Minority Interest 5,758,624 4,140,529 39%
Stockholders' Equity Attributable to Majority Interest 102,252,289 79,725,423 28%
- -----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 8
OPERATING SUMMARY PER COUNTRY
Includes the results of RMC begining March 1, 2005. Results for 2004 do not
include RMC
In thousands of U.S. dollars
January - September Third quarter
--------------------------- ---------------------
NET SALES 2005 2004 % Var. 2005 2004 % Var.
- -------------------------------------------------------------------------------------------------------------------------------
Mexico 2,297,502 2,109,107 9% 781,908 708,746 10%
U.S.A. 2,997,188 1,455,914 106% 1,189,399 551,816 116%
Spain 1,132,933 939,036 21% 376,293 316,911 19%
United Kingdom 1,142,230 N/A N/A 479,748 N/A N/A
Rest of Europe 1,949,209 N/A N/A 855,110 N/A N/A
South / Central America and Caribbean 1,002,261 913,240 10% 357,521 308,947 16%
Africa and Middle East 388,628 140,779 176% 154,868 51,704 200%
Asia 214,634 145,969 47% 76,308 49,975 53%
- ------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 159,708 181,175 (12%) 26,912 59,309 (55%)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL 11,284,293 5,885,220 92% 4,298,068 2,047,409 110%
- ------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT
- ------------------------------------------------------------------------------------------------------------------------------
Mexico 1,254,007 1,205,765 4% 419,106 397,541 5%
U.S.A. 1,146,612 478,763 139% 476,806 194,814 145%
Spain 423,337 344,790 23% 136,945 117,170 17%
United Kingdom 402,633 N/A N/A 139,621 N/A N/A
Rest of Europe 833,048 N/A N/A 430,270 N/A N/A
South / Central America and Caribbean 339,945 413,757 (18%) 120,811 136,758 (12%)
Africa and Middle East 163,089 73,908 121% 74,600 28,148 165%
Asia 70,525 62,310 13% 24,864 21,000 18%
- ------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 22,522 5,279 327% (14,537) 6,246 N/A
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL 4,655,718 2,584,571 80% 1,808,487 901,678 101%
- ------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Mexico 819,689 827,902 (1%) 273,081 265,978 3%
U.S.A. 589,331 215,358 174% 275,104 110,411 149%
Spain 276,335 231,959 19% 87,678 77,770 13%
United Kingdom 72,965 N/A N/A 31,150 N/A N/A
Rest of Europe 191,492 N/A N/A 95,540 N/A N/A
South / Central America and Caribbean 188,722 290,645 (35%) 70,408 94,950 (26%)
Africa and Middle East 80,257 44,402 81% 32,117 17,974 79%
Asia 28,817 22,295 29% 8,651 7,114 22%
- ------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (280,650) (256,491) 9% (102,736) (78,929) 30%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL 1,966,958 1,376,069 43% 770,993 495,268 56%
==============================================================================================================================
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 9
OPERATING SUMMARY PER COUNTRY
Includes the results of RMC begining March 1, 2005. Results for 2004 do not
include RMC
EBITDA in thousands of US dollars. EBITDA margin as a percentage of net sales
January - September Third quarter
-------------------------- ------------------------
EBITDA 2005 2004 % Var. 2005 2004 % Var.
- -----------------------------------------------------------------------------------------------------------------------
Mexico 935,294 941,614 (1%) 309,866 303,582 2%
U.S.A. 744,948 332,536 124% 329,428 149,206 121%
Spain 335,768 291,662 15% 107,194 97,396 10%
United Kingdom 123,347 N/A N/A 50,414 N/A N/A
Rest of Europe 267,582 N/A N/A 128,264 N/A N/A
South / Central America and Caribbean 286,128 375,365 (24%) 103,010 122,739 (16%)
Africa and Middle East 110,726 66,627 66% 42,917 25,346 69%
Asia 44,122 42,301 4% 13,272 13,557 (2%)
- -----------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (209,061) (177,002) 18% (73,748) (55,536) 33%
- -----------------------------------------------------------------------------------------------------------------------
TOTAL 2,638,854 1,873,102 41% 1,010,617 656,290 54%
=======================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------
EBITDA MARGIN
- -----------------------------------------------------------------------------------------------------------------------
Mexico 40.7% 44.6% 39.6% 42.8%
U.S.A. 24.9% 22.8% 27.7% 27.0%
Spain 29.6% 31.1% 28.5% 30.7%
United Kingdom 10.8% N/A 10.5% N/A
Rest of Europe 13.7% N/A 15.0% N/A
South / Central America and Caribbean 28.5% 41.1% 28.8% 39.7%
Africa and Middle East 28.5% 47.3% 27.7% 49.0%
Asia 20.6% 29.0% 17.4% 27.1%
- -----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED MARGIN 23.4% 31.8% 23.5% 32.1%
=======================================================================================================================
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 10
VOLUME SUMMARY
Includes the results of RMC begining March 1, 2005. Results for 2004
do not include RMC
Consolidated volume summary
Cement and aggregates: Thousands of metric tons
Ready-mix: Thousands of cubic meters
January - September Third quarter
------------------------ ----------------------
2005 204 % Var. 2005 2004 % Var.
- --------------------------------------------------------------------------------------------------------------------------
Consolidated cement volume 59,870 49,492 21% 21,684 17,030 27%
Consolidated ready-mix volume 50,930 17,900 185% 20,250 6,229 225%
Consolidated aggregates volume 117,798 34,089 246% 47,518 12,208 289%
- --------------------------------------------------------------------------------------------------------------------------
Per-country volume summary (1)
January - September Third quarter
------------------- ------------------ Third quarter 2005 Vs.
DOMESTIC CEMENT VOLUME 2005 Vs. 2004 2005 Vs. 2004 Second quarter 2005
- -----------------------------------------------------------------------------------------------------------------
Mexico (1%) 1% (3%)
U.S.A. 5% 2% 1%
Spain 5% (2%) (13%)
United Kingdom N/A N/A (5%)
Rest of Europe N/A N/A 9%
South / Central America and Caribbean 14% 16% (1%)
Africa and Middle East 20% 33% 17%
Asia 2% (3%) (11%)
- -----------------------------------------------------------------------------------------------------------------
READY-MIX VOLUME
- -----------------------------------------------------------------------------------------------------------------
Mexico 15% 14% 4%
U.S.A. 175% 212% (5%)
Spain 56% 59% (10%)
United Kingdom N/A N/A (2%)
Rest of Europe N/A N/A (5%)
South / Central America and Caribbean 24% 44% 23%
Africa and Middle East N/A N/A N/A
Asia N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------
AGGREGATES VOLUME
- -----------------------------------------------------------------------------------------------------------------
Mexico 1% (4%) (13%)
U.S.A. 110% 119% (7%)
Spain 67% 64% (9%)
United Kingdom N/A N/A (3%)
Rest of Europe N/A N/A (1%)
South / Central America and Caribbean 22% 23% 9%
Africa and Middle East N/A N/A N/A
Asia N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------
1) Includes only the month of March in first quarter 2005 for RMC operations.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 11
PRICE SUMMARY
Includes the results of RMC begining March 1, 2005. Results for 2004 do not
include RMC
Variation in US Dollars (1)
January - September Third quarter
------------------- ------------------ Third quarter 2005 Vs.
DOMESTIC CEMENT PRICE 2005 Vs. 2004 2005 Vs. 2004 Second quarter 2005
- --------------------------------------------------------------------------------------------------------------------
Mexico 5% 8% 1%
U.S.A. 18% 18% 4%
Spain 9% 7% (2%)
United Kingdom N/A N/A (4%)
Rest of Europe (2) N/A N/A (0%)
South / Central America and Caribbean (2) (11%) (14%) (0%)
Africa and Middle East (2) 22% 20% 8%
Asia (2) 12% 9% (2%)
- --------------------------------------------------------------------------------------------------------------------
READY-MIX PRICE
- --------------------------------------------------------------------------------------------------------------------
Mexico 5% 6% 3%
U.S.A. 26% 23% 6%
Spain 7% 5% (4%)
United Kingdom N/A N/A (5%)
Rest of Europe (2) N/A N/A (4%)
South / Central America and Caribbean (2) 5% 3% 2%
Africa and Middle East (2) N/A N/A N/A
Asia (2) N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
AGGREGATES PRICE
- --------------------------------------------------------------------------------------------------------------------
Mexico (5%) (5%) 22%
U.S.A. 19% 19% 11%
Spain 22% 27% (3%)
United Kingdom N/A N/A (3%)
Rest of Europe (2) N/A N/A (3%)
South / Central America and Caribbean (2) 5% 6% 7%
Africa and Middle East (2) N/A N/A N/A
Asia (2) N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
1) Includes only the month of March in first quarter 2005 for RMC operations.
2) Volume weighted-average price.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 12
PRICE SUMMARY
Includes the results of RMC begining March 1, 2005. Results for 2004 do not
include RMC
Variation in Local Currency (1)
January - September Third quarter
------------------- ------------------ Third quarter 2005 Vs.
DOMESTIC CEMENT PRICE 2005 Vs. 2004 2005 Vs. 2004 Second quarter 2005
- ----------------------------------------------------------------------------------------------------------
Mexico (2) (3%) (2%) (1%)
U.S.A. 18% 18% 4%
Spain 6% 7% 1%
United Kingdom N/A N/A 0%
- ----------------------------------------------------------------------------------------------------------
READY-MIX PRICE
- ----------------------------------------------------------------------------------------------------------
Mexico (2) (3%) (4%) 0%
U.S.A. 26% 23% 6%
Spain 5% 5% (1%)
United Kingdom N/A N/A (1%)
- ----------------------------------------------------------------------------------------------------------
AGGREGATES PRICE
- ----------------------------------------------------------------------------------------------------------
Mexico (2) (12%) (14%) 19%
U.S.A. 19% 19% 11%
Spain 20% 28% (0%)
United Kingdom N/A N/A 1%
- ----------------------------------------------------------------------------------------------------------
1) Includes only the month of March in first quarter 2005 for RMC operations.
2) In constant Mexican pesos as of June 30, 2005
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 13
CEMEX
Definition of Terms and Disclosures
================================================================================
Methodology for consolidation and presentation of results
CEMEX consolidates its results in Mexican pesos under Mexican generally
accepted accounting principles (GAAP). For the reader's convenience, US dollar
amounts for the consolidated entity are calculated by converting the constant
Mexican peso amounts at the end of each quarter using the period-end MXN/USD
exchange rate for each quarter. The exchange rates used to convert results for
third quarter 2005, second quarter 2005, and third quarter 2004 are 10.76,
10.75, and 11.38 Mexican pesos per US dollar, respectively. CEMEX's
weighted-average inflation factor between September 30, 2004, and September 30,
2005, was -1.29%.
Per-country/region figures are presented in US dollars for the reader's
convenience. In the consolidation process, each country's figures (except those
of CEMEX Mexico) are converted to US dollars and then to Mexican pesos under
Mexican GAAP. Figures presented in US dollars for Mexico, Spain, and the United
Kingdom as of September 30, 2005, and September 30, 2004, can be converted into
their original local currency amount by multiplying the US-dollar figure by the
corresponding exchange rate provided below.
To convert September 30, 2004, US-dollar figures for Mexico to constant Mexican
pesos as of September 30, 2005, it is necessary to first convert the September
30, 2004, US-dollar figure to Mexican pesos using the exchange rate provided
below, and then multiply the resulting amount by 1.0362, the inflation-rate
factor between September 30, 2004, and September 30, 2005.
September 30
----------------------------
Exchange rate 2005 2004
- ----------------------------------------------------
Mexican Peso 10.76 11.38
Euro 0.83 0.80
British Pound 0.57 0.55
- ----------------------------------------------------
Amounts provided in units of local currency per US dollar.
Breakdown of regions
The South/Central America and Caribbean region includes CEMEX's operations in
Argentina, Colombia, Costa Rica, the Dominican Republic, Jamaica, Nicaragua,
Panama, Puerto Rico, and Venezuela, as well as our trading operations in the
Caribbean region.
Rest of Europe includes operations in Austria, Croatia, Czech Republic, Denmark,
Finland, France, Germany, Hungary, Ireland, Latvia, Lithuania, Norway, Poland,
Portugal, and Sweden.
Africa and Middle East includes operations in Egypt, Israel, and the United Arab
Emirates.
The Asia region includes operations in Bangladesh, Malaysia, the Philippines,
Taiwan, and Thailand.
Definition of terms
EBITDA equals operating income plus depreciation and operating amortization.
Free cash flow equals EBITDA minus net interest expense, capital expenditures,
change in working capital, taxes paid, and other cash items (net other expenses
less proceeds from the disposal of obsolete and/or substantially depleted
operating fixed assets that are no longer in operation).
Capital expenditures consist of maintenance and expansion spending on our
cement, ready-mix, and other core businesses in existing markets.
Working capital equals operating accounts receivable (including other current
assets received as payment in kind) plus historical inventories minus operating
payables.
Net debt equals total debt minus the fair value of cross-currency swaps
associated with debt minus cash and cash equivalents (please refer to footnote 2
on the second page of this report for further details).
Interest coverage is calculated by dividing EBITDA for the last twelve months by
interest expense for the last twelve months.
Net debt/EBITDA is calculated by dividing net debt at the end of the quarter by
EBITDA for the last twelve months. This ratio includes CEMEX's EBITDA for the
last twelve months plus the estimated EBITDA of RMC for the last twelve months
(please refer to footnote 2 on the second page of this report for further
details).
Earnings per ADR
The number of average ADRs outstanding used for the calculation of earnings per
ADR was 352.1 million for the third quarter 2005 and 343.8 million for the first
nine months of 2005, 339.0 million for third quarter 2004 and 330.8 million for
the first nine months of 2004.
- --------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 14
CEMEX
Definition of Terms and Disclosures
================================================================================
Effect of the purchase of RMC on our financial statements
The acquisition of RMC was concluded on March 1, 2005. The processes to allocate
the purchase price paid for RMC's shares of approximately US$4.1 billion, not
including other direct purchase costs, to the fair values of the assets acquired
and liabilities assumed, substantially began during March 2005 concurrent with
the assumption of control by CEMEX; consequently, as of September 30, 2005,
CEMEX is in a preliminary stage in terms of determining the fair values of the
net assets of RMC, including acquired intangible assets. Therefore, as of
September 30, 2005, the difference between the purchase price paid and the book
value of RMC as of March 1, 2005, was fully allocated to goodwill for an amount
of approximately U.S.$2.2 billion.
In subsequent periods, as we move forward in our determination of the fair
values of RMC's assets and liabilities, the amount of initial goodwill will be
adjusted against the corresponding balance-sheet accounts. Under Mexican GAAP,
entities have up to a one-year period after the purchase to conclude the
purchase-price allocation.
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Please refer to the end of this report for definitions of terms,
US dollar translation methodology, and other important disclosures. Page 15