=============================================================================== 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: January 20, 2004 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 del Valle Campestre Garza Garcia, Nuevo Leon, Mexico 64000 ------------------------------------------------------------ (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 ============================================================================== Contents 1. Press release announcing CEMEX's results for the fourth quarter of 2003 (attached hereto as exhibit 1). 2. 2003 fourth quarter earnings release (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: January 20, 2004 By: /s/Rafael Garza ---------------------------------- Name: Rafael Garza Title: Chief Comptroller EXHIBIT INDEX EXHIBIT NO. DESCRIPTION ----------- ----------- 1 Press release announcing CEMEX's results for the fourth quarter of 2003. 2. 2003 fourth quarter earnings release. 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 LOGO OMITTED] Building the future(TM) CEMEX'S FOURTH QUARTER 2003 SALES INCREASE 10%; EBITDA GROWS 22% MONTERREY, MEXICO, January 20, 2003 - CEMEX, S.A. de C.V. (NYSE: CX) announced today that its consolidated net sales for the fourth quarter of 2003 were US$1.8 billion, up 10% in dollar terms compared with the same period of 2002. The growth in sales was due to the overall improvement in economic conditions during the second half of the year. Our operations in Mexico, the United States and Spain, our three largest markets, saw increased public spending in infrastructure and housing. In real peso terms, net sales grew 8%, to MXP20.1 billion. Our consolidated cement sales volume during the quarter was 16.3 million metric tons, up 4% compared with the fourth quarter of 2002, while ready-mix volumes were 11% higher at 5.5 million cubic meters. Free cash flow for the fourth quarter decreased 19% in dollar terms compared with the same quarter of 2002, reaching US$247 million. EBITDA (operating income plus depreciation and amortization) grew 22% to US$509 million. Our consolidated EBITDA margin grew to 29% in the fourth quarter of 2003 from 26% during the same period of last year. The three percentage-point increase is due mainly to higher sales volumes and lower SG&A expenses. In real peso terms, EBITDA was MXP5.7 billion, up 19% compared with the same quarter of 2002. Hector Medina, Executive Vice President of Planning and Finance, said "Twelve months ago, we faced a global economy burdened by uncertainty and volatility, offering few visible growth opportunities and subject to important downside risks. The reality was, however, better than expected. Demand in markets such as the United States, whose outlook was negative a year ago, grew significantly during the second half of 2003. Led by the U.S. economic expansion, the global economic environment has also moderately improved and offers better prospects for the year ahead. For example, Mexico and Spain, our other two major markets, grew at twice the rate of GDP growth or more. In fact, visibility has improved for most of the markets in our portfolio. These are growth markets on the upswing, and we feel that we are well prepared to capitalize on their accelerating development during 2004. For all of these reasons I've just mentioned, we approach 2004 with optimism.". Fourth-quarter operating income increased 33% in dollar terms, to US$342 million. In real peso terms, operating income grew 31% to MXP3.8 billion. Our selling, general and administrative (SG&A) expenses decreased 1% versus the fourth quarter of 2002, but remained flat for the full year. As a percentage of net sales, SG&A decreased 2.6 percentage points versus the same period in 2002 and 2.1 percentage points for the full year versus 2002. The improved SG&A and SG&A margin is due to our ongoing cost-reduction initiatives which lowered costs significantly at the corporate and plant levels. Other net expenses for the quarter were US$188 million, versus US$109 million in the fourth quarter of 2002. Of the US$188 million, US$17 million were cash expenses. The increase in the non-cash portion of these expenses was due mainly to the impairment of some assets in Asia. Majority net income for the fourth quarter was US$91 million (US$0.28 per ADR), versus US$166 million in the year-ago quarter. The decrease was due mainly to losses in foreign exchange and marketable securities, as well as higher other non-cash charges. In real peso terms, majority net income decreased 46% to MXP1.03 billion. At the end of the quarter, our net debt was US$5,641 million, representing a reduction of 8% versus the fourth quarter of 2002. Free cash flow in the amount of US$150 million was used to reduce debt during the quarter; when expressed in dollar terms, however, net debt decreased by US$35 million due to the appreciation of the yen and the euro versus the U.S. dollar during the quarter Our net debt to EBITDA ratio reached 2.7 times, versus 3.2 times at the end of the 2002. CEMEX's interest coverage (EBITDA divided by interest expense plus preferred dividends, all for the last twelve months) was 5.3 times, versus 5.2 times a year ago. CEMEX's Mexican operations reported net sales of US$664 million in the fourth quarter, a 5% growth versus the same period of 2002. EBITDA was down 1%, to US$275 million. Domestic cement sales volumes increased 2% for the quarter and 4% for the full year 2003 versus comparable periods of last year. The industrial and commercial sectors of the economy remain stable, with infrastructure projects and social housing driving most of the demand growth. In constant Mexican Pesos, CEMEX Mexico's net sales were MXP 6.96 billion, down 6% versus fourth quarter 2002. For the full year, net sales were MXP 29.54 billion, up 4% versus 2002. Gross profit was down 8% for the quarter at MXP 4.0 billion, and up 1% at MXP 17.0 billion for the full year. Operating income reached MXP 2.51 billion, down 8% from fourth quarter 2002, and MXP 17.04 billion for the full year, an increase of 1% versus 2002. In the United States, CEMEX's net sales were US$446 million, an increase of 14% compared to the year-earlier period. Quarterly EBITDA was 15% higher year-over-year, reaching US$99 million. Cement sales volumes increased 10% during the fourth quarter of 2003 and 2% for the full year, compared to the year-earlier periods. The public works - particularly streets and highways - and residential sectors were particularly strong in the second half of 2003, while the industrial and commercial sector reversed its downward trend and is now stable. Ready-mix volumes increased 1% for the quarter. In constant Mexican Pesos, our CEMEX U.S. operations posted net sales of MXP 4.83 billion, up 5% versus fourth quarter 2002. For the full year, net sales were MXP 19.47 billion, down 3% versus 2002. Gross profit was up 12% for the quarter at MXP 1.65 billion, and down 11% at MXP 6.23 billion for the full year. Operating income reached MXP 660 million, up 24% from fourth quarter 2002, and MXP 2.30 billion for the full year, a decrease of 26% versus 2002. In Spain, CEMEX's net sales and EBITDA for the fourth quarter grew 18% and 13%, reaching US$275 and US$79 million, respectively, compared with the same quarter of 2002. Domestic cement and ready-mix volumes increased 4% for the quarter versus the year-earlier period, and 5% for the full year 2003. Residential construction activity was high during the quarter, while spending in public works remained strong due to Spain's infrastructure program. In constant Mexican Pesos, CEMEX Spain's net sales were MXP 3.89 billion, up 17% versus fourth quarter 2002. For the full year, net sales were MXP 13.65 billion, up 21% versus 2002. Gross profit was up 10% for the quarter at MXP 1.40 billion, and up 13% at MXP 4.86 billion for the full year. Operating income reached MXP 819 million, up 10% from fourth quarter 2002, and MXP 2.98 billion for the full year, an increase of 13% versus 2002. CEMEX Venezuela reported a 26% growth in sales, reaching US$84 million. EBITDA increased to US$38 million, 22% higher compared with the same period of 2002. Domestic cement volumes increased 30%, while ready-mix volumes grew 36%. The level of economic activity increased during the fourth quarter, and the government increased its spending on infrastructure projects. Economic activity during December of this year was significantly stronger than December of 2002 due to the general strike in Venezuela at the end of 2002. In constant Mexican Pesos, CEMEX Venezuela's net sales were MXP 1.03 billion, up 1% versus fourth quarter 2002. For the full year, net sales were MXP 3.58 billion, up 3% versus 2002. Gross profit was down 5% for the quarter at MXP 486 million, and down 2% at MXP 1.67 billion for the full year. Operating income reached MXP 346 million, up 6% from fourth quarter 2002, and MXP 1.20 billion for the full year, an increase of 6% versus 2002. CEMEX Colombia's net sales were US$57 million, up 3% versus the year-ago period. EBITDA, at US$34 million, decreased 4%. Cement volume was down 6% versus the fourth quarter of 2002, while ready-mix volume grew 32%. Spending on infrastructure during the quarter was weaker than previous periods as many projects came to an end at the end of the year. In constant Mexican Pesos, CEMEX Colombia's net sales were MXP 699 million, up 7% versus fourth quarter 2002. For the full year, net sales were MXP 2.48 billion, up 12% versus 2002. Gross profit was up 14% for the quarter at MXP 417 million, and up 13% at MXP 1.38 billion for the full year. Operating income reached MXP 321 million, up 12% from fourth quarter 2002, and MXP 1.03 billion for the full year, an increase of 11% versus 2002. Our operations in Central America and the Caribbean reported quarterly net sales of US$135 million, down 5% vis-a-vis the fourth quarter of 2002. EBITDA grew 15%, reaching US$33 million. Both cement and ready-mix sales volumes for the quarter decreased 9%. In constant Mexican Pesos, CEMEX's operations in Central America and the Caribbean reported net sales of MXP 1.55 billion, flat versus fourth quarter 2002. For the full year, net sales were MXP 6.67 billion, up 16% versus 2002. Gross profit was up 14% for the quarter at MXP 515 million, and flat at MXP 2.11 billion for the full year. Operating income reached MXP 287 million, up 29% from fourth quarter 2002, and MXP 1.18 billion for the full year, an increase of 9% versus 2002. CEMEX Egypt's sales increased 12% while domestic cement volumes decreased 22% versus the fourth quarter of 2002. Investment in infrastructure during the quarter was stronger than expected, and remains as the main driver of demand. EBITDA grew 81% reached US$16 million. In constant Mexican Pesos, CEMEX Egypt's net sales were MXP 436 million, up 1% versus fourth quarter 2002. For the full year, net sales were MXP 1.51 billion, down 12% versus 2002. Gross profit was up 123% for the quarter at MXP 226 million, and up 14% at MXP 691 million for the full year. Operating income reached MXP 105 million, up from a loss of 3 million in fourth quarter 2002, and MXP 334 million for the full year, an increase of 51% versus 2002. Our Asian operations, which include the Philippines, Thailand, Taiwan and Bangladesh, posted net sales of US$45 million, 4% higher than the same quarter of 2002. Domestic cement volumes declined 10%. Activity in the construction sector in the Philippines remains at a low level, driven mainly by decreased government spending in infrastructure. In constant Mexican Pesos, CEMEX's operations in Asia reported net sales of MXP 473 million, down 4% versus fourth quarter 2002. For the full year, net sales were MXP 2.08 billion, up 3% versus 2002. Gross profit was up 21% for the quarter at MXP 153 million, and up 7% at MXP 606 million for the full year. Operating income reached MXP 20 million, up from a loss of 89 million in fourth quarter 2002, and a loss of MXP 77 million for the full year, a decrease of 13% versus 2002. CEMEX is a leading global producer and marketer of cement and ready-mix products, with operations concentrated in the world's most dynamic cement markets across four continents. CEMEX combines a deep knowledge of the local markets with its global network and information technology systems to provide world-class products and services to its customers, from individual homebuilders to large industrial contractors. For more information, visit www.cemex.com. ---------------------------------------------------- EBITDA is defined as operating income plus depreciation and amortization. Free Cash Flow is defined as EBITDA minus net interest expense, capital expenditures, change in working capital, taxes paid, dividends on preferred equity and other cash items. Net debt is defined as total debt plus equity obligations minus cash and cash equivalents. All of the above items are presented under generally accepted accounting principles in Mexico. EBITDA and Free Cash Flow (as defined above) are presented herein because CEMEX believes that they are widely accepted as financial indicators of CEMEX's ability to internally fund capital expenditures and 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. EXHIBIT 2 [CEMEX GRAPHIC OMITTED] Stock Listing Information NYSE (ADR) Ticker: CX MEXICAN STOCK EXCHANGE Ticker: CEMEX.CPO Ratio of CEMEX.CPO to CX=5:1 Investor Relations In the United States 1 877 7CX NYSE In Mexico 52 (81) 8888 4292 E-Mail ir@cemex.com www.cemex.com 2003 FOURTH QUARTER RESULTS Fourth quarter Fourth quarter ------------------------- ----------------------- 2003 2002 % Var. 2003 2002 ---------------------------------------------------------------------------------------------------- Net sales 1,787 1,621 10% % of Net Sales ---------------------------------------------------------------------------------------------------- Gross profit 757 675 12% 42.4% 41.7% ---------------------------------------------------------------------------------------------------- Operating income 342 256 33% 19.1% 15.8% ---------------------------------------------------------------------------------------------------- Majority net income 91 166 (45%) 5.1% 10.2% ---------------------------------------------------------------------------------------------------- EBITDA 509 417 22% 28.5% 25.8% ---------------------------------------------------------------------------------------------------- Free cash flow 247 304 (19%) 13.8% 18.8% ---------------------------------------------------------------------------------------------------- ------------------------------------------------------- Net debt 5,641 6,122 (8%) ------------------------------------------------------- Net debt/EBITDA 2.7 3.2 ------------------------------------------------------- Interest coverage 5.3 5.2 ------------------------------------------------------- Quarterly earnings per ADR 0.28 0.54 (48%) ------------------------------------------------------- Average ADRs outstanding 323.9 304.2 6% ---------------------------------------------------------------------------------------------------- In millions of U.S. dollars, except ratios and per-ADR amounts. Average ADRs outstanding presented in millions of ADRs. Consolidated net sales increased 10% over fourth quarter 2002 to US$1,787 million. Most of our major markets increased cement sales volumes as the global economy expanded during the second half of the year. Our operations in Spain, the United States and Mexico, our three largest markets, saw increased public spending in infrastructure and housing. Cost of goods sold as a percentage of net sales decreased 0.7 percentage points versus fourth quarter 2002, but increased by 1.8 percentage points for the full year, due mainly to overall higher energy, electricity, insurance, and transportation costs. Selling, general and administrative expenses (SG&A) decreased 1% versus fourth quarter 2002, but remained flat for the full year. As a percentage of net sales, SG&A decreased 2.6 percentage points versus the same period in 2002 and 2.1 percentage points for the full year versus 2002. The improved SG&A and SG&A margin is due to our ongoing cost-reduction initiatives which lowered costs significantly at the corporate and plant levels. EBITDA increased to US$509 million, representing an increase of 22% over fourth quarter 2002, and our consolidated EBITDA margin increased to 29% from 26% in the same period in 2002. The three percentage-point increase is due mainly to higher sales volumes and lower SG&A. Foreign exchange gain (loss) for the quarter was a loss of US$29 million, versus a loss of US$5 million in fourth quarter 2002. The loss was mainly due to the depreciation of the Mexican peso against the U.S. dollar. Marketable securities gain (loss) for the quarter was a loss of US$25 million, versus a gain of US$7 million in fourth quarter 2002. The loss is due to the decrease in value of some of our currency swaps and interest-rate derivatives, a portion of which is recognized in our income statement. Other net expenses for the quarter were US$188 million, versus US$109 million in fourth quarter 2002. Of the US$188 million, US$17 million were cash expenses. The increase in the non-cash portion of these expenses was due mainly to the impairment of some assets in Asia. Majority net income for the quarter was US$91 million, versus US$166 million in the fourth quarter of 2002. The decrease was due mainly to losses in foreign exchange and marketable securities, as well as higher other non-cash charges. Net debt at the end of the fourth quarter was US$5,641 million, a decrease of 8% compared to that at the end of 2002. The ratio of net debt to EBITDA reached 2.7 times, versus 3.2 times at the end of 2002. Free cash flow in the amount of US$150 million was used to reduce debt during the quarter; when expressed in dollar terms, however, net debt decreased by US$35 million due to the appreciation of the yen and the euro versus the U.S. dollar during the quarter. Please refer to the end of this report for definition of terms, U.S. dollar transaction methodology and other important disclosures. EBITDA and Free Cash Flow --------------------------------------------------------------------------------------------------------------------------- Fourth quarter January-December ------------------------ -------------------------- 2003 2002 % Var. 2003 2002 % Var. --------------------------------------------------------------------------------------------------------------------------- Operating income 342 256 33% 1,455 1,310 11% --------------------------------------------------------------------------------------------------------------------------- + Depreciation and operating amortization 167 161 653 607 --------------------------------------------------------------------------------------------------------------------------- EBITDA 509 417 22% 2,108 1,917 10% --------------------------------------------------------------------------------------------------------------------------- - Net financial expense 91 81 364 288 --------------------------------------------------------------------------------------------------------------------------- - Capital expenditures 132 132 393 416 --------------------------------------------------------------------------------------------------------------------------- - Change in working capital 8 (161) 61 (2) --------------------------------------------------------------------------------------------------------------------------- - Taxes paid 16 33 73 165 --------------------------------------------------------------------------------------------------------------------------- - Preferred dividend payments (2) 7 19 34 --------------------------------------------------------------------------------------------------------------------------- - Other cash items 17 22 55 68 --------------------------------------------------------------------------------------------------------------------------- Free cash flow 247 304 (19%) 1,143 948 21% --------------------------------------------------------------------------------------------------------------------------- In millions of U.S. dollars. During the quarter, US$247 million of free cash flow was used as follows: US$150 million to reduce debt; however, net debt was reduced by US$35 million during the quarter as a result of foreign exchange movements in the amount of US$115 million; US$75 million to exercise an option to terminate an asset-based financing transaction; and US$22 million in other investments. 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 (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 GAAP cash flow measures to present as comparable to EBITDA or free cash flow. Debt-Related Information ------------------------------------------------------------------------------- Fourth quarter Third quarter Fourth quarter ------------------------- ----------------- -------------------- 2003 2002 % Var. 2003 2003 2002 --------------------------------------------------------------------------- ---------------------------------------------- Total debt 5,866 5,767 2% 5,368 Currency denomination --------------------------------------------------------------------------- Short term 23% 24% 21% --------------------------------------------------------------------------- ---------------------------------------------- Long term 77% 76% 79% U.S. dollar 68% 72% --------------------------------------------------------------------------- ---------------------------------------------- Equity obligations 66 716 (91%) 716 Yen 13% 13% --------------------------------------------------------------------------- ---------------------------------------------- Cash & cash equivalents 291 361 (19%) 409 Euro 18% 11% --------------------------------------------------------------------------- ---------------------------------------------- Net debt 5,641 6,122 (8%) 5,676 Other 1% 4% --------------------------------------------------------------------------- ---------------------------------------------- --------------------------------------------------------------------------- Interest expense 94 87 94 Interest rate --------------------------------------------------------------------------- Preferred dividends (2) 7 7 --------------------------------------------------------------------------- ---------------------------------------------- Interest coverage 5.3 5.2 5.0 Fixed 61% 39% --------------------------------------------------------------------------- ---------------------------------------------- Net debt/EBITDA 2.7 3.2 2.8 Variable 39% 36% --------------------------------------------------------------------------- ----------------------------------------------- Capitalization ratio 46.7% 47.5% 44.4% Fixed deferred 0% 25% --------------------------------------------------------------------------- ----------------------------------------------- In millions of U.S. dollars, except ratios. Other developments During the fourth quarter we closed through one of our subsidiaries in Europe a new two and three-year multi-tranche loan in euros, dollars and yens. The transaction was over-subscribed and totaled the equivalent of US$1.15 billion. The proceeds were used to repurchase the remaining US$650 million in preferred equity and to refinance US$400 million outstanding under a Revolving Credit Facility, both of which were scheduled to mature in 2004. Please refer to the end of this report for definition of terms, U.S. dollar transaction methodology and other important disclosures. Equity-Related Information ------------------------------------------------------------------------------- One CEMEX ADR represents five CEMEX CPOs. The following amounts are expressed in CPO terms. Beginning-of-quarter CPO-equivalent units outstanding 1,619,029,837 ------------------------------------------------------- ---------------------- Exercise of stock options not hedged 1,165,702 Change in the number of CPOs held in subsidiaries 16,970 End-of-quarter CPO-equivalent units outstanding 1,620,212,509 ------------------------------------------------------- ---------------------- Outstanding units equal total shares issued by CEMEX less shares held in subsidiaries. Employee stock-option plans As of December 31, 2003, directors, officers and other employees under our employee stock-option plans had outstanding options to acquire 150,502,054 CEMEX CPOs. Of the total options outstanding, 96.2% are hedged through equity forward agreements and will not dilute existing shares when exercised. The total amount of these options programs represents 9.3% of total CPOs outstanding. Derivative Instruments ------------------------------------------------------------------------------- CEMEX periodically utilizes derivative financial instruments such as interest-rate and currency swaps, currency and equity forward contracts, options and futures in order to execute its corporate financing strategy and to hedge its stock-option plans and other equity-related obligations. 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. Fourth quarter Third quarter Notional amounts 2003 2002 2003 ----------------------------------------------------------------------------------------------------- Equity * 1,085 1,452 1,532 Foreign-exchange 2,893 3,174 3,090 Interest-rate 2,224 3,644 3,233 ----------------------------------------------------------------------------------------------------- Estimated aggregate fair market value (233) (415) (162) ----------------------------------------------------------------------------------------------------- In millions of U.S. 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 the other derivative items as of the settlement date. Fair market values should not be viewed in isolation but rather in relation to the fair values of the underlying hedge transactions and the overall reduction in the company's exposure to the risks being hedged. * The aggregate weighted-average exercise price on December 31, 2003 for CEMEX's outstanding stock options, warrants and the CEMEX Asia Holdings obligation described in prior quarterly reports was US$25.54 per ADR. On that same date, the aggregate weighted-average strike price of CEMEX's equity forward agreements put in place to hedge its obligations under the abovementioned stock options was US$26.76 per ADR. Under Mexican GAAP ("Bulletin C-2"), companies are required 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 values recorded on the income statement. The exceptions to the rule, as they pertain to CEMEX, are presented when transactions are entered for hedging purposes. In such cases, the related derivative financial instruments should be valued using the same valuation criteria applied to the hedged asset, liability or equity instrument. CEMEX has recognized increases in assets and liabilities, which resulted in a net liability of US512 million, arising from the fair value recognition of its derivatives portfolio as of December 31, 2003. The notional amounts of derivatives substantially match the amounts of underlying assets, liabilities or equity transactions on which the derivatives are being entered into. Please refer to the end of this report for definition of terms, U.S. dollar transaction methodology and other important disclosures. Other Activities ------------------------------------------------------------------------------- CEMEX successfully completes non-dilutive equity offering On October 29, 2003, CEMEX announced that a total of 29.325 million ADSs were sold by it and certain selling ADS holders in the non-dilutive equity offering, which included the sale of 25.5 million ADSs completed on October 21, 2003, and the sale of an additional 3.825 million ADSs to cover over-allotments completed on October 29, 2003. The underwriters fully exercised their option to purchase the additional 3.825 million ADSs from CEMEX and the selling ADSs holders to cover over-allotments. The 29.325 million ADSs were sold in the form of both ADSs and CPOs, comprised of 23.325 million ADSs and 30 million CPOs. One ADS represents five CPOs. The ADSs were offered to the public at a price of US$23.15 per ADS, and the CPOs were offered to the public at a price of MXP 52.07 per CPO. The aggregate proceeds of the offering, including proceeds from the exercise of the over-allotment option, received by CEMEX and the selling ADS holders were approximately US$660 million, after underwriting discounts and commissions. Approximately US$538 million of these proceeds were used to unwind several forward contracts entered into between certain subsidiaries of CEMEX and certain banks, including the selling ADS holders, with the remaining approximately US$122 million, before expenses of the offering, paid to CEMEX. The net proceeds to CEMEX were primarily used to reduce CEMEX's derivatives position, and for debt reduction. This transaction did not increase the number of shares outstanding and thus did not dilute shareholders. Please refer to the end of this report for definition of terms, U.S. dollar transaction methodology and other important disclosures. Operating Results - Mexico ------------------------------------------------------------------------------- In Mexico, net sales were US$664 million, an increase of 5% versus fourth quarter 2002. Domestic gray cement volume increased 2% versus fourth quarter 2002, and for the full year rose 4%. Ready-mix volume increased 11% versus the same period in 2002 and 13% for the full year. The industrial and commercial sectors of the economy remain stable, with infrastructure projects and social housing driving most of the demand growth. CEMEX's average realized gray cement price in Mexico increased 2% in constant pesos versus fourth quarter 2002, and decreased 3% in dollar terms. For the full year 2003, gray cement prices increased 2% in constant pesos and decreased 4% in dollar terms versus 2002. The average ready-mix price increased 1% in constant pesos and decreased 4% in dollar terms compared to fourth quarter 2002. For the full year 2003, ready mix prices decreased 2% in constant pesos and 8% in dollar terms versus 2002. The average cash cost of goods sold per metric ton decreased 3% in dollar terms versus fourth quarter 2002, and 5% for the full year. The decrease in these costs in dollar terms is due mainly to the depreciation of the Mexican peso between December 2002 and December 2003. United States ------------------------------------------------------------------------------- Net sales for CEMEX's U.S. operations were US$446 million, an increase of 14% compared to fourth quarter 2002. Domestic cement volume increased 10% compared to fourth quarter 2002 and 2% for the full year. Ready-mix volume increased 9% versus fourth quarter 2002 and 4% for the full year. The public works - particularly streets and highways - and residential sectors were particularly strong in the second half of 2003, while the industrial and commercial sector reversed its downward trend and is now more stable. The average realized cement price decreased 1% versus fourth quarter 2002 and 2% for the full year, while the average ready-mix price increased 1% over the same period in 2002 and remained flat for the full year. The average cash cost of goods sold per metric ton decreased 3% versus fourth quarter 2002, due mainly to lower energy costs. For the full year, cash costs per metric ton decreased 1%. Spain ------------------------------------------------------------------------------- Net sales for CEMEX Spain were US$275 million, representing an increase of 18% versus fourth quarter 2002. Domestic cement volume increased 4% compared to fourth quarter 2002 and 5% for the full year. Ready-mix volume increased 4% versus the same period in 2002 and 5% for the full year 2003. Residential construction activity was high during the quarter, while spending in public works remained strong due to Spain's infrastructure program. The average domestic cement price remained flat in euros and increased 19% in dollar terms compared to fourth quarter 2002. For the full year, cement prices were 1% lower in euros and 18% higher in dollar terms versus 2002. The average ready-mix price increased 2% in euros and 21% in dollar terms versus fourth quarter 2002. For the full year, prices remained flat in euros and were 20% higher in dollar terms. The average cash cost of goods sold per metric ton increased 28% in dollar terms versus fourth quarter 2002 and 30% for the full year. The increase in cash costs, when expressed in dollar terms, is due mainly to the appreciation of the euro versus the U.S. dollar between December 2002 and December 2003. Please refer to the end of this report for definition of terms, U.S. dollar transaction methodology and other important disclosures. Venezuela ------------------------------------------------------------------------------- Domestic cement volume for CEMEX's Venezuelan operations increased 30% compared to fourth quarter 2002 and decreased 13% for the full year versus 2002. Ready-mix volume increased 36% over fourth quarter 2002 but decreased 6% for the full year compared to 2002. The level of economic activity increased compared to the fourth quarter of 2002, and the government increased its spending on infrastructure projects. Economic activity during December of this year was significantly stronger than in December 2002 because of the general strike in Venezuela at the end of 2002. Export volume from CEMEX's Venezuelan operations increased 17% compared to fourth quarter 2002 and was up 17% for the full year. The North America and Caribbean regions accounted for 80% and 20%, respectively, of CEMEX Venezuela's fourth quarter exports. Domestic cement prices decreased 6% in constant bolivar terms and increased 2% in dollar terms compared to fourth quarter 2002. For the full year, cement prices were 3% higher in constant bolivars and 1% lower in dollar terms. The average ready-mix price increased 3% in constant bolivar terms, and 12% in dollar terms compared to fourth quarter 2002. For the full year, ready-mix prices were 6% higher in constant bolivars and flat in dollar terms. The average cash cost of goods sold per metric ton increased 15% in dollar terms compared to fourth quarter 2002. For the full year, cash costs per metric ton were down 3% in dollar terms. Colombia ------------------------------------------------------------------------------- Domestic cement volume for CEMEX's Colombian operations decreased 6% compared to fourth quarter 2002, while for the full year 2003, volume rose 1% compared to 2002. Ready-mix volume increased 32% versus fourth quarter 2002 and 34% for the full year. Spending on infrastructure was weaker than in previous periods because many projects were concluded at the end of the year. CEMEX's average realized cement price in Colombia was flat in Colombian pesos and 1% lower in dollar terms versus fourth quarter 2002. For the full year 2003, cement prices were 6% higher in Colombian pesos and 7% lower in dollar terms versus 2002. The average ready-mix price increased 7% in Colombian pesos and 6% in dollar terms versus fourth quarter 2002. For the full year, ready-mix prices were 4% higher in Colombian pesos and 8% lower in dollar terms versus 2002. The average cash cost of goods sold per metric ton increased 12% in dollar terms versus fourth quarter 2002. During 2003, cash costs per metric ton were 11% higher in dollar terms versus 2002. Other Operations ------------------------------------------------------------------------------- Net sales for our Central American and Caribbean operations decreased 5% versus fourth quarter 2002. The decline was due mainly to lower sales volumes in Puerto Rico, Costa Rica, and the Dominican Republic. For the full year, net sales increased 15% versus 2002. Domestic cement volume decreased 9% versus fourth quarter 2002 and rose 5% for the full year, while Ready-mix volume dropped 9% versus fourth quarter 2002 and grew 72% for the full year. The full-year increase in ready mix volume is due mainly to the acquisition of Puerto Rican Cement Company, which has sizeable ready-mix operations and was included in our 2002 consolidated results for only five months. Our ready mix-operations in Panama, Costa Rica, and the Dominican Republic also contributed positively to the increased ready-mix volume for the year. In Egypt, net sales increased 12%, while domestic cement volume fell 22% versus fourth quarter 2002. Investment in infrastructure, although lower than that during fourth quarter 2002, was stronger than expected and remains the main driver of demand. Domestic cement prices were 55% higher in Egyptian pounds and 17% higher in dollar terms versus fourth quarter 2002. Our Asian operations, which include the Philippines, Thailand, Taiwan and Bangladesh, increased net sales by 4% versus fourth quarter 2002, as our Philippine and Thai operations experienced an improvement in sales. Domestic cement volume for the region decreased 10% compared to fourth quarter 2002 and 2% for the full year. Our weighted-average domestic cement prices in the region increased 25% in dollar terms versus the same period in 2002, and were 2% higher for the full year. Activity in the construction sector in the Philippines remains at a low level, driven mainly by decreased government infrastructure spending. Please refer to the end of this report for definition of terms, U.S. dollar transaction methodology and other important disclosures. Consolidated Income Statement & Balance Sheet CEMEX S.A. de C.V. AND SUBSIDIARIES (Thousands of U.S. Dollars, except per ADR amounts) January - December Fourth quarter INCOME STATEMENT 2003 2002 % Var. 2003 2002 % Var. ---------------------------- ------------------------------ ------------------------------------------------------------------------------------------------------------------------------- Net Sales 7,164,384 6,543,087 9% 1,786,908 1,620,644 10% Cost of Sales (4,130,046) (3,655,500) 13% (1,029,487) (945,212) 9% ------------------------------------------------------------------------------------------------------------------------------- Gross Profit 3,034,338 2,887,587 5% 757,421 675,432 12% Selling, General and Administrative Expenses (1,579,134) (1,577,191) 0% (415,859) (419,052) (1%) ------------------------------------------------------------------------------------------------------------------------------- ----------------- Operating Income 1,455,204 1,310,396 11% 341,562 256,380 33% Financial Expenses (380,648) (332,522) 14% (93,723) (86,950) 8% Financial 16,691 44,605 (63%) 2,502 6,067 (59%) Income Exchange Gain (Loss), Net (171,589) (77,100) 123% (29,080) (5,263) 453% Monetary Position Gain (Loss) 327,667 352,145 (7%) 90,424 97,585 (7%) Gain (Loss) on Marketable Securities (59,570) (316,480) (81%) (24,649) 6,930 N/A Total Comprehensive Financing (Cost) Income (267,449) (329,353) (19%) (54,525) 18,369 N/A Other Expenses, Net (456,737) (389,276) 17% (187,672) (109,170) 72% ------------------------------------------------------------------------------------------------------------------------------- Net Income Before Income Taxes 731,017 591,768 24% 99,365 165,578 (40%) Income Tax (89,612) (54,837) 63% (13,301) (5,084) 162% Employees' Statutory Profit Sharing (16,989) (10,299) 65% (9,148) (1,452) 530% Total Income Tax & Profit Sharing (106,601) (65,136) 64% (22,448) (6,536) 243% ------------------------------------------------------------------------------------------------------------------------------- Net Income Before Participation of Uncons. Subs. and Ext. Items 624,416 526,631 19% 76,917 159,042 (52%) Participation in Unconsolidated Subsidiaries 34,768 30,703 13% 17,346 9,355 85% Consolidated Net Income 659,184 557,334 18% 94,262 168,397 (44%) Net Income Attributable to Min. Interest 30,412 37,063 (18%) 2,929 2,786 5% MAJORITY INTEREST NET INCOME 628,772 520,272 21% 91,333 165,611 (45%) ------------------------------------------------------------------------------------------------------------------------------- EBITDA 2,108,028 1,917,064 10% 508,524 417,464 22% Earnings per ADR 1.99 1.74 15% 0.28 0.54 (48%) ------------------------------------------------------------------------------------------------------------------------------- As of December 31 BALANCE SHEET 2003 2002 % Var. ------------------------------------------------------------------------------------------------------------------------------- Total Assets 16,015,780 15,934,483 1% Cash and Temporary Investments 291,382 361,155 (19%) Trade Accounts Receivables 469,534 400,854 17% Other Receivables 404,217 404,070 0% Inventories 594,580 706,743 (16%) Other Current Assets 66,684 79,855 (16%) Current Assets 1,826,396 1,952,677 (6%) Fixed Assets 9,265,408 8,963,135 3% Other Assets 4,923,975 5,018,671 (2%) ----------------------------------------------------------------------------------- Total Liabilities 9,249,638 8,983,384 3% Current Liabilities 2,829,344 2,954,064 (4%) Long-Term Liabilities 4,536,828 4,373,888 4% Other Liabilities 1,883,465 1,655,431 14% ----------------------------------------------------------------------------------- Consolidated Stockholders' Equity 6,766,142 6,951,099 (3%) Stockholders' Equity Attributable to Minority Interest 531,965 1,206,785 (56%) Stockholders' Equity Attributable to Majority Interest 6,234,177 5,744,314 9% ------------------------------------------------------------------------------------------------------------------------------- Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 7 and other important disclosures. Consolidated Income Statement & Balance Sheet CEMEX S.A. de C.V. AND SUBSIDIARIES (Thousands of Mexican Pesos in real terms as of December 31, 2003 except per ADR amounts) January - December Fourth quarter INCOME STATEMENT 2003 2002 % Var. 2003 2002 % Var. ----------------------------- ------------------------------ ------------------------------------------------------------------------------------------------------------------------------- Net Sales 80,527,677 75,042,021 7% 20,084,845 18,586,890 8% Cost of Sales (46,421,722) (41,924,570) 11% (11,571,430) (10,840,480) 7% ------------------------------------------------------------------------------------------------------------------------------- Gross Profit 34,105,955 33,117,451 3% 8,513,414 7,746,410 10% Selling, General and Administrative Expenses (17,749,464) (18,088,647) (2%) (4,674,259) (4,806,035) (3%) ------------------------------------------------------------------------------------------------------------------------------- Operating Income 16,356,491 15,028,803 9% 3,839,155 2,940,374 31% Financial Expenses (4,278,480) (3,813,668) 12% (1,053,442) (997,211) 6% Financial 187,606 511,573 (63%) 28,128 69,581 (60%) Income Exchange Gain (Loss), Net (1,928,665) (884,277) 118% (326,862) (60,352) 442% Monetary Position Gain (Loss) 3,682,977 4,038,703 (9%) 1,016,370 1,119,184 (9%) Gain (Loss) on Marketable Securities (669,569) (3,629,737) (82%) (277,056) 79,482 N/A Total Comprehensive Financing (Cost) Income (3,006,131) (3,777,406) (20%) (612,863) 210,685 N/A Other Expenses, Net (5,133,726) (4,464,558) 15% (2,109,430) (1,252,048) 68% ------------------------------------------------------------------------------------------------------------------------------- Net Income Before Income Taxes 8,216,635 6,786,839 21% 1,116,862 1,899,009 (41%) Income Tax (1,007,244) (628,907) 60% (149,501) (58,311) 156% Employees' Statutory Profit Sharing (190,956) (118,123) 62% (102,818) (16,650) 518% Total Income Tax & Profit Sharing (1,198,200) (747,030) 60% (252,319) (74,961) 237% ------------------------------------------------------------------------------------------------------------------------------- Net Income Before Participation of Uncons. Subs. and Ext. Items 7,018,435 6,039,810 16% 864,544 1,824,050 (53%) Participation in Unconsolidated Subsidiaries 390,794 352,128 11% 194,965 107,286 82% Consolidated Net Income 7,409,229 6,391,938 16% 1,059,509 1,931,335 (45%) Net Income Attributable to Min. Interest 341,834 425,051 (20%) 32,920 31,953 3% MAJORITY INTEREST NET INCOME 7,067,395 5,966,888 18% 1,026,588 1,899,383 (46%) ------------------------------------------------------------------------------------------------------------------------------- EBITDA 23,694,237 21,986,547 8% 5,715,812 4,787,838 19% Earnings per ADR 18.05 24% 5.65 (44%) 22.42 3.17 ------------------------------------------------------------------------------------------------------------------------------- As of December 31 BALANCE SHEET 2003 2002 % Var. ------------------------------------------------------------------------------------------------------------------------------- Total Assets 180,017,367 182,750,383 (1%) Cash and Temporary Investments 3,275,131 4,142,035 (21%) Trade Accounts Receivables 5,277,561 4,597,340 15% Other Receivables 4,543,395 3,641,689 25% Inventories 6,683,083 8,105,542 (18%) Other Current Assets 749,525 1,908,378 (61%) Current Assets 20,528,695 22,394,981 (8%) Fixed Assets 104,143,188 102,796,955 1% Other Assets 55,345,484 57,558,447 (4%) ------------------------------------------------------------------------------------ Total Liabilities 103,965,928 103,029,193 1% Current Liabilities 31,801,830 33,879,756 (6%) Long-Term Liabilities 50,993,951 50,163,523 2% Other Liabilities 21,170,146 18,985,913 12% ------------------------------------------------------------------------------------ Consolidated Stockholders' Equity 76,051,440 79,721,191 (5%) Stockholders' Equity Attributable to Minority Interest 5,979,292 13,840,448 (57%) Stockholders' Equity Attributable to Majority Interest 70,072,148 65,880,743 6% ------------------------------------------------------------------------------------------------------------------------------- Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 8 and other important disclosures. Operating Summary per Country In thousands of U.S. dollars January - December Fourth quarter --------------------------- -------------------------- NET SALES 2003 2002 % Var. 2003 2002 % Var. ---------------------------------------------------------------------------------------------------------------------------- Mexico 2,628,544 2,483,061 6% 663,625 634,698 5% U.S.A. 1,718,265 1,735,539 (1%) 445,625 391,521 14% Spain 1,195,432 964,756 24% 275,068 232,166 18% Venezuela 318,894 303,602 5% 83,840 66,710 26% Colombia 217,234 189,159 15% 57,323 55,504 3% Egypt 132,288 145,978 (9%) 39,300 35,135 12% Central America & the Caribbean region 562,301 490,104 15% 134,731 141,783 (5%) Asia region 187,204 180,572 4% 45,273 43,413 4% ---------------------------------------------------------------------------------------------------------------------------- Others and intercompany eliminations 204,222 50,316 306% 42,123 19,714 114% ---------------------------------------------------------------------------------------------------------------------------- TOTAL 7,164,384 6,543,087 9% 1,786,908 1,620,644 10% ---------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT ---------------------------------------------------------------------------------------------------------------------------- Mexico 1,516,616 1,474,069 3% 381,105 374,465 2% U.S.A. 549,817 605,107 (9%) 152,212 126,005 21% Spain 425,234 366,908 16% 98,792 88,578 12% Venezuela 148,358 148,152 0% 39,446 33,798 17% Colombia 121,124 104,002 16% 34,454 31,210 10% Egypt 60,491 51,166 18% 20,350 7,956 156% Central America & the Caribbean region 179,995 157,486 14% 45,324 40,693 11% Asia region 53,657 46,123 16% 14,453 10,659 36% ---------------------------------------------------------------------------------------------------------------------------- Others and intercompany eliminations (20,955) (65,427) (68%) (28,714) (37,933) (24%) ---------------------------------------------------------------------------------------------------------------------------- TOTAL 3,034,338 2,887,587 5% 757,421 675,432 12% ---------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME ---------------------------------------------------------------------------------------------------------------------------- Mexico 1,023,738 985,331 4% 237,487 244,370 (3%) U.S.A. 219,998 275,813 (20%) 59,331 47,881 24% Spain 255,770 231,084 11% 53,904 52,417 3% Venezuela 103,465 99,634 4% 26,361 21,307 24% Colombia 87,750 80,112 10% 25,011 24,767 1% Egypt 28,611 19,047 50% 8,708 (556) N/A Central America & the Caribbean region 97,073 92,668 5% 23,800 19,823 20% Asia region (11,815) (13,713) (14%) (3,106) (6,453) (52%) ---------------------------------------------------------------------------------------------------------------------------- Others and intercompany eliminations (349,386) (459,580) (24%) (89,934) (147,177) (39%) ---------------------------------------------------------------------------------------------------------------------------- TOTAL 1,455,204 1,310,396 11% 341,562 256,380 33% ---------------------------------------------------------------------------------------------------------------------------- EBITDA ---------------------------------------------------------------------------------------------------------------------------- Mexico 1,166,338 1,113,772 5% 274,875 276,527 (1%) U.S.A. 369,937 419,171 (12%) 99,286 86,069 15% Spain 339,055 291,658 16% 78,635 69,824 13% Venezuela 152,680 143,743 6% 38,110 31,331 22% Colombia 129,597 116,689 11% 34,197 35,628 (4%) Egypt 57,844 57,538 1% 16,284 9,001 81% Central America & the Caribbean region 133,699 120,106 11% 33,426 29,071 15% Asia region 19,265 17,223 12% 4,377 1,003 336% ---------------------------------------------------------------------------------------------------------------------------- Others and intercompany eliminations (260,386) (362,836) (28%) (70,666) (120,988) (42%) ---------------------------------------------------------------------------------------------------------------------------- TOTAL 2,108,028 1,917,064 10% 508,524 417,464 22% ---------------------------------------------------------------------------------------------------------------------------- Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 9 and other important disclosures. Operating Summary per Country As a percentage of net sales January - December Fourth quarter ------------------------- ------------------------- OPERATING INCOME MARGIN 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------ Mexico 38.9% 39.7% 35.8% 38.5% U.S.A. 12.8% 15.9% 13.3% 12.2% Spain 21.4% 24.0% 19.6% 22.6% Venezuela 32.4% 32.8% 31.4% 31.9% Colombia 40.4% 42.4% 43.6% 44.6% Egypt 21.6% 13.0% 22.2% (1.6%) Central America & the Caribbean region 17.3% 18.9% 17.7% 14.0% Asia region (6.3%) (7.6%) (6.9%) (14.9%) ------------------------------------------------------------------------------------------------------------------ CONSOLIDATED MARGIN 20.3% 20.0% 19.1% 15.8% ------------------------------------------------------------------------------------------------------------------ EBITDA MARGIN ------------------------------------------------------------------------------------------------------------------ Mexico 44.4% 44.9% 41.4% 43.6% U.S.A. 21.5% 24.2% 22.3% 22.0% Spain 28.4% 30.2% 28.6% 30.1% Venezuela 47.9% 47.3% 45.5% 47.0% Colombia 59.7% 61.7% 59.7% 64.2% Egypt 43.7% 39.4% 41.4% 25.6% Central America & the Caribbean region 23.8% 24.5% 24.8% 20.5% Asia region 10.3% 9.5% 9.7% 2.3% ----------------------------------------------------------------------------------------------------------------- CONSOLIDATED MARGIN 29.4% 29.3% 28.5% 25.8% ------------------------------------------------------------------------------------------------------------------ Please refer to the end of this report for definition of terms, U.S. dollar translation methodology and other important disclosures. Volume Summary Consolidated volume summary Cement: Thousands of metric tons Ready-mix: Thousands of cubic meters January - December Fourth quarter ----------------------------- --------------------------- 2003 2002 % Var. 2003 2002 % Var. ---------------------------------------------------------------------------------------------------------------------------------- Consolidated cement volume 64,650 61,823 5% 16,273 15,610 4% Consolidated ready-mix volume 21,669 19,224 13% 5,460 4,902 11% ---------------------------------------------------------------------------------------------------------------------------------- Per-country volume summary January - December Fourth quarter Fourth quarter 2003 Vs. DOMESTIC CEMENT VOLUME 2003 Vs. 2002 2003 Vs. 2002 Third quarter 2003 ---------------------------------------------------------------------------------------------------------------------------------- Mexico 4% 2% 2% U.S.A. 2% 10% (10%) Spain 5% 4% (0%) Venezuela (13%) 30% 8% Colombia 1% (6%) (4%) Egypt (12%) (22%) (11%) Central America & the Caribbean region 5% (9%) (6%) Asia Region (2%) (10%) 7% ---------------------------------------------------------------------------------------------------------------------------------- READY-MIX VOLUME ---------------------------------------------------------------------------------------------------------------------------------- Mexico 13% 11% 1% U.S.A. 4% 9% 2% Spain 5% 4% (8%) Venezuela 3% 56% 2% Colombia 34% 32% (0%) Central America & the Caribbean region 72% (9%) (20%) Asia Region N/A N/A N/A ---------------------------------------------------------------------------------------------------------------------------------- EXPORT CEMENT VOLUME ---------------------------------------------------------------------------------------------------------------------------------- Mexico (24%) (14%) (3%) Spain (21%) (26%) 4% Venezuela 17% 17% (10%) ---------------------------------------------------------------------------------------------------------------------------------- Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 11 and other important disclosures. Price Summary Fourth quarter 2003 Vs. Fourth quarter 2003 Vs. 2002 Third quarter 2003 -------------------------------------- --------------------------------- % Var. % Var. % Var. % Var. DOMESTIC CEMENT PRICE U.S. dollar Local currency U.S. dollar Local currency ---------------------------------------------------------------------------------------------------------------------------------- Mexico (1) (3%) 2% (3%) (2%) U.S.A. (1%) (1%) (1%) (1%) Spain 19% (0%) 6% (0%) Venezuela (1) 2% (6%) 1% (4%) Colombia (1%) (0%) (1%) (2%) Egypt 17% 55% 4% 4% Central America & the Caribbean region (2) 6% N/A (1%) N/A Asia Region (2) 25% N/A 4% N/A ---------------------------------------------------------------------------------------------------------------------------------- READY-MIX PRICE ---------------------------------------------------------------------------------------------------------------------------------- Mexico (1) (4%) 1% (3%) (2%) U.S.A. 1% 1% 0% 0% Spain 21% 2% 9% 3% Venezuela (1) 12% 3% (1%) (5%) Colombia 6% 7% 3% 2% Central America & the Caribbean region (2) (1%) N/A 3% N/A Asia Region (2) (2%) N/A 1% N/A ---------------------------------------------------------------------------------------------------------------------------------- 1) Local currency price variation for Mexico and Venezuela is presented in constant currency terms as of December 31, 2003. 2) Volume weighted-average price. Please refer to the end of this report for definition of terms, U.S. dollar translation methodology and other important disclosures. 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. For the convenience of the reader, U.S. dollar amounts for the consolidated entity are calculated by converting the constant-Mexican peso amounts at the end of each quarter using the end of period Mexican peso/U.S. dollar exchange rate for each quarter. The exchange rates used to convert results for the third quarter of 2003, second quarter of 2003 and third quarter of 2002 are 11.00, 10.46 and 10.22 Mexican pesos per 1 U.S. dollar, respectively. CEMEX's weighted average inflation factor between September 30, 2002 and September 30, 2003 was 7.66%. Per-country figures are presented in U.S. dollars for the convenience of the reader. In the consolidation process, each country's figures are converted to U.S. dollars (except CEMEX Mexico) and then to Mexican pesos under Mexican generally accepted accounting principles. Each country's figures presented in U.S. dollars at September 30, 2003 and September 30, 2002 can be converted to its original local currency amount by multiplying the U.S. dollar figure by the corresponding exchange rate provided below. To convert September 30, 2002 U.S. dollar figures for Mexico and Venezuela to constant pesos and bolivars, respectively, as of September 30, 2003 it is necessary to first convert the September 30, 2002 U.S. dollars to the corresponding local currency (using the exchange rates provided below), and then multiply the resulting amount by the inflation rate factor provided in the table below. September 30 ---------------------------- Exchange rate 2003 2002 Inflation rate factor ------------------------------------------------------------------------------------------ Mexico 11.00 10.22 1.040 Spain 0.86 1.01 Venezuela 1,600 1,474 1.290 Colombia 2,889 2,828 Egypt 6.16 4.64 ------------------------------------------------------------------------------------------ The Central America & Caribbean region includes CEMEX's operations in Costa Rica, the Dominican Republic, Panama, Nicaragua and Puerto Rico, as well as our trading operations in the Caribbean region. The Asia region includes CEMEX's operations in the Philippines, Taiwan, Thailand and Bangladesh. CEMEX's quarterly reports before 2003 consolidated CEMEX's operations in Panama and the Dominican Republic into Venezuela. Beginning in 2003, CEMEX's Venezuelan operations do not include Panama and the Dominican Republic for presentation purposes, but are now consolidated into the Central America & Caribbean region. For comparison purposes, Venezuela's and Central America & Caribbean region's figures for 2002 were restated to make them comparable with the new disclosure procedures. 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, dividends on preferred equity, and other cash items. Capital expenditures. Maintenance spending on our cement and ready mix businesses, and expansion of current facilities of cement and ready mix. Equity obligations. Equal the outstanding US$650 million balance of preferred equity plus the outstanding US$66 million of preferred capital securities. Net debt. Equals total debt plus equity obligations, minus cash and cash equivalents. Interest plus preferred dividend coverage. Is calculated by dividing EBITDA for the last twelve months by the sum of interest expense and preferred dividend payments for the last twelve months (all amounts in constant currency terms). Net debt/EBITDA. Is calculated by dividing net debt at the end of the quarter by EBITDA for the last twelve months (EBITDA in constant currency terms). Capitalization ratio. Is calculated by dividing the sum of total debt, the US$66 million outstanding preferred capital securities, and the present value of the forward agreements put in place to hedge our warrant obligations by the sum of total debt, the US$66 million outstanding preferred capital securities, the present value of the forward agreements put in place to hedge our warrant obligations and consolidated stockholders' equity. Earnings per ADR For the calculation of earnings per ADR, the number of average ADRs outstanding used was as follows: 323.3 million for the third quarter of 2003 and 304.2 million for the third quarter of 2002; 312.3 million for the first nine months of 2003, and 297.5 million for the first nine months of 2002.