building a STRONGER foundation - Cemex

In connection with the implementation of our cost-reduction program, and as part of our ongoing efforts to eliminate
redundancies at all levels and streamline corporate structures to increase our efficiency and reduce operating expenses, we have
reduced our global headcount by approximately 24%, from 61,545 employees as of December 31, 2007 to 46,533 employees as of
December 31, 2010. Both figures exclude personnel from our operations in Australia sold in October 2009 and our operations in
Venezuela, which were expropriated in 2008.
In addition, during 2009, we temporarily shut down (for a period of at least two months) several cement production lines in
order to rationalize the use of our assets and reduce the accumulation of our inventories. On January 22, 2010, we announced the
permanent closure of our Davenport cement plant located in northern California, which had an installed cement production capacity of
approximately 0.9 million tons per annum. The plant had been closed on a temporary basis since March 2009 due to economic
conditions. We have been serving our customers in the region through our extensive network of terminals in northern California,
which are located in Redwood City, Richmond, West Sacramento and Sacramento. Since March 2009, our state-of-the-art cement
facility in Victorville, California has provided and will continue to provide cement to this market more efficiently than the Davenport
plant. Similar actions were taken in our ready-mix concrete and aggregates businesses. Such rationalizations included, among others,
our operations in Mexico, the United States, Spain and the United Kingdom. Opened in 1906, Davenport was the least efficient of our
14 plants in the United States. We have no other set plans for the Davenport facility at this time. During the first quarter of 2011, due
to the low levels of construction activity and increased costs, we have implemented a minimum margin strategy in our Arizona
operations, through the closure of under-utilized facilities, the reduction of headcount, among other actions pursuing improvement in
the profitability of our operations in the region.
Furthermore, we reduced our energy costs by actively managing our energy contracting and sourcing, and by increasing the use
of alternative fuels. We believe that these cost-reduction measures better position us to quickly adapt to potential increases in demand
and thereby benefit from the operating leverage we have built into our cost structure going forward.
Lower Capital Expenditures. In light of the continued weak demand for our products throughout most of our markets, we
reduced (as agreed with our creditors under the Financing Agreement) capital expenditures related to maintenance and expansion of
our operations to approximately U.S.$555 million during 2010, from approximately U.S.$636 million during 2009, and approximately
U.S.$2.2 billion during 2008. This reduction in capital expenditures has been implemented to maximize our free cash flow generation
available for debt service and debt reduction, consistent with our ongoing efforts to strengthen our capital structure, improve our
conversion of operating EBITDA to free cash flow and regain our financial flexibility. Pursuant to the Financing Agreement, we
cannot make aggregate capital expenditures in excess of U.S.$800 million for the year ending December 31, 2011 and for each year
thereafter until the debt under the Financing Agreement has been repaid in full. We believe that these restrictions in capital
expenditures do not affect our world-class operating and quality standards.
Having completed our initial refinancing process and several capital markets transactions to reduce our outstanding
indebtedness under the Financing Agreement, implemented our initial cost-reduction measures and executed significant divestitures,
we continue to focus on reducing existing indebtedness.
Recruit, retain and cultivate world-class managers
Our senior management team has a strong track record operating diverse businesses throughout the cement value chain in
emerging and developed economies globally.
We will continue to focus on recruiting and retaining motivated and knowledgeable professional managers. We encourage
managers to regularly review our processes and practices, and to identify innovative management and business approaches to improve
our operations. By rotating our managers from one country to another and from one area of our operations to another, we can increase
their diversity of experience and knowledge of our business.
Foster our sustainable development
Our priorities include sustainable construction, low-income housing and infrastructure, carbon strategy, environmental and
biodiversity management, strengthen local communities, partnership with key stakeholders and health and safety.
Lead in Sustainable Construction. We aim to take the lead in sustainable construction, which involves developing better
building products and solutions that can be more sustainably produced, facilitate more efficient construction processes, and contribute
to the overall sustainability of buildings and other infrastructure. Moreover, we support the design and transformation of buildings to
consume significantly less energy, water, and other resources in their use, maintenance, renovation, and dismantling. In 2010, we
introduced a carbon footprint tool —first of its kind in the building materials industry—that allows the company to measure the
greenhouse gas emissions of all of our cement, ready-mix concrete, and aggregates products. It has been implemented in sites
representing 58% of our total worldwide production.
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