UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F
   (Mark One)
   |_|      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
             SECURITIES EXCHANGE ACT OF 1934
                                 OR
   |X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended
            December 31, 2006
                                 OR
   |_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
                                 OR
   |_|      SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell
            company report______________
   Commission file number  1-14946
                          ------------------------------------------------------

                              CEMEX, S.A.B. de C.V.
-------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                                CEMEX CORPORATION
-------------------------------------------------------------------------------
                 (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)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

                                                        NAME OF EACH EXCHANGE
      TITLE OF EACH CLASS                               ON WHICH REGISTERED
American Depositary Shares, or
ADSs, each ADS representing ten                         New York Stock Exchange
Ordinary Participation Certificates
(Certificados de Participacion
Ordinarios), or CPOs, each CPO
representing two Series A shares
and one Series B share
---------------------------------                       -----------------------

Securities registered or to be registered pursuant to Section 12(g) of the Act.

                                      None
--------------------------------------------------------------------------------
                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

         9.625% Notes due 2009 guaranteed by CEMEX Mexico, S.A. de C.V.
                  and Empresas Tolteca de Mexico, S.A. de C.V.
--------------------------------------------------------------------------------
                                (Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

   7,647,280,773  CPOs
   15,778,133,836 Series A shares (including Series A shares underlying CPOs)
   7,889,066,918 Series B shares (including Series B shares underlying CPOs)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes___ |X| No
If this report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934. Yes___ No |X|
Note--Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
from their obligations under those sections.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No___
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act. (Check one):
   Large accelerated filer |X|   Accelerated filer__  Non-accelerated filer__
Indicate by check mark which financial statement item the registrant has elected
to follow.
         Item 17 _____     Item 18   |X|
If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).
         Yes          No   |X|






                                             TABLE OF CONTENTS

                                                                                                               Page
                                                                                                           

PART I ...........................................................................................................4

         Item 1 -  Identity of Directors, Senior Management and Advisors..........................................4

         Item 2 -  Offer Statistics and Expected Timetable........................................................4

         Item 3 -  Key Information................................................................................4
                  Risk Factors....................................................................................4
                  Mexican Peso Exchange Rates....................................................................11
                  Selected Consolidated Financial Information....................................................12

         Item 4 -  Information on the Company....................................................................16
                  Business Overview..............................................................................16
                  Geographic Breakdown of Our 2006 Net Sales.....................................................20
                  Rinker Business Overview.......................................................................20
                  Our Production Processes.......................................................................21
                  User Base......................................................................................21
                  Our Business Strategy..........................................................................22
                  Our Corporate Structure........................................................................24
                  North America..................................................................................27
                  Europe.........................................................................................37
                  South America, Central America and the Caribbean.................................................
                  Africa and the Middle East.....................................................................54
                  Asia...........................................................................................55
                  Our Trading Operations...........................................................................
                  Description of Rinker Operations...............................................................57
                  Regulatory Matters and Legal Proceedings.......................................................59
                  Recent Developments............................................................................68

         Item 4A -  Unresolved Staff Comments....................................................................69

         Item 5 -  Operating and Financial Review and Prospects..................................................70
                  Cautionary Statement Regarding Forward Looking Statements......................................70
                  Overview.......................................................................................70
                  Critical Accounting Policies...................................................................71
                  Results of Operations..........................................................................75
                  Liquidity and Capital Resources...............................................................103
                  Research and Development, Patents and Licenses, etc...........................................109
                  Trend Information.............................................................................110
                  Summary of Material Contractual Obligations and Commercial Commitments........................112
                  Off-Balance Sheet Arrangements................................................................113
                  Qualitative and Quantitative Market Disclosure................................................114
                  Investments, Acquisitions and Divestitures....................................................118
                  U.S. GAAP Reconciliation......................................................................120
                  Newly Issued Accounting Pronouncements Under U.S. GAAP........................................121

         Item 6 - Directors, Senior Management and Employees....................................................122

                  Board Practices...............................................................................127
                  Compensation of Our Directors and Members of Our Senior Management............................129
                  Employees.....................................................................................132
                  Share Ownership...............................................................................134

         Item 7 - Major Shareholders and Related Party Transactions.............................................134
                  Major Shareholders............................................................................134
                  Related Party Transactions....................................................................135

                                                        i



         Item 8 - Financial Information.........................................................................135
                  Consolidated Financial Statements and Other Financial Information.............................135
                  Legal Proceedings.............................................................................135
                  Dividends.....................................................................................135
                  Significant Changes...........................................................................137

         Item 9 - Offer and Listing.............................................................................135
                  Market Price Information......................................................................137

         Item 10 - Additional Information.......................................................................138
                  Articles of Association and By-laws...........................................................138
                  Material Contracts............................................................................146
                  Exchange Controls.............................................................................148
                  Taxation......................................................................................148
                  Documents on Display..........................................................................152

         Item 11 - Quantitative and Qualitative Disclosures About Market Risk...................................152

         Item 12 - Description of Securities Other than Equity Securities.......................................152

PART II ........................................................................................................153

         Item 13 - Defaults, Dividend Arrearages and Delinquencies..............................................153

         Item 14 - Material Modifications to the Rights of Security Holders and Use of Proceeds.................153

         Item 15 - Controls and Procedures......................................................................153

         Item 16A - Audit Committee Financial Expert............................................................154

         Item 16B - Code of Ethics..............................................................................154

         Item 16C - Principal Accountant Fees and Services......................................................154

         Item 16D - Exemptions from the Listing Standards for Audit Committees..................................155

         Item 16E - Purchases of Equity Securities by the Issuer and Affiliated Purchasers......................155

PART III........................................................................................................156

         Item 17 - Financial Statements.........................................................................156

         Item 18 - Financial Statements.........................................................................156

         Item 19 - Exhibits.....................................................................................156

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES .......................................................F-1

SCHEDULE I - Parent Company Only Financial Statements ..........................................................S-2

SCHEDULE II - Valuation and Qualifying Accounts ................................................................S-9



                                                    ii



                                  INTRODUCTION

         CEMEX, S.A.B. de C.V. is incorporated as a publicly traded stock
corporation with variable capital (sociedad anonima bursatil de capital
variable) organized under the laws of the United Mexican States, or Mexico.
Except as the context otherwise may require, references in this annual report to
"CEMEX," "we," "us" or "our" refer to CEMEX, S.A.B. de C.V., its consolidated
subsidiaries and, except for accounting purposes, its non-consolidated
affiliates. For accounting purposes, references in this annual report to
"CEMEX," "we," "us" or "our" refer solely to CEMEX, S.A.B. de C.V. and its
consolidated subsidiaries. See note 1 to our consolidated financial statements
included elsewhere in this annual report.

                      PRESENTATION OF FINANCIAL INFORMATION

         Our consolidated financial statements included elsewhere in this annual
report have been prepared in accordance with Mexican financial reporting
standards, or Mexican FRS, which differ in significant respects from generally
accepted accounting principles in the United States, or U.S. GAAP. We are
required, pursuant to Mexican FRS, to present our financial statements in
constant Pesos representing the same purchasing power for each period presented.
Accordingly, unless otherwise indicated, all financial data presented in this
annual report are stated in constant Pesos as of December 31, 2006. See note 24
to our consolidated financial statements included elsewhere in this annual
report for a description of the principal differences between Mexican FRS and
U.S. GAAP as they relate to us. Non-Peso amounts included in those statements
are first translated into Dollar amounts, in each case at a commercially
available or an official government exchange rate for the relevant period or
date, as applicable. Those Dollar amounts are then translated into Peso amounts
at the CEMEX accounting rate, described under Item 3 -- "Key Information --
Mexican Peso Exchange Rates," as of the relevant period or date, as applicable.

         On April 27, 2006, our shareholders approved a stock split. In
connection with the stock split, each of our existing series A shares was
surrendered in exchange for two new series A shares, and each of our existing
series B shares was surrendered in exchange for two new series B shares.
Concurrent with this stock split, our shareholders authorized the amendment of
the CPO trust agreement pursuant to which our CPOs are issued to provide for the
substitution of two new CPOs for each of our existing CPOs, with each new CPO
representing two new series A shares and one new series B share. In connection
with the stock split and at our request, Citibank, N.A., as depositary for the
ADSs, distributed one additional ADS for each ADS outstanding as of the record
date for the stock split. The ratio of CPOs to ADSs did not change as a result
of the stock split, each ADS representing ten new CPOs. The proportional equity
interest participation of existing shareholders did not change as a result of
the stock split. The financial data set forth in this annual report have been
adjusted to reflect the stock split.

         References in this annual report to "U.S.$" and "Dollars" are to U.S.
Dollars, references to "(euro)" are to Euros, references to "(pound)" and
"Pounds" are to British Pounds, references to "(Y)" and "Yen" are to Japanese
Yen, and, unless otherwise indicated, references to "Ps," "Mexican Pesos" and
"Pesos" are to constant Mexican Pesos as of December 31, 2006. The Dollar
amounts provided in this annual report and the financial statements included
elsewhere in this annual report, unless otherwise indicated, are translations of
constant Peso amounts, at an exchange rate of Ps10.80 to U.S.$1.00, the CEMEX
accounting rate as of December 31, 2006. However, in the case of transactions
conducted in Dollars, we have presented the Dollar amount of the transaction and
the corresponding Peso amount that is presented in our consolidated financial
statements. These translations have been prepared solely for the convenience of
the reader and should not be construed as representations that the Peso amounts
actually represent those Dollar amounts or could be converted into Dollars at
the rate indicated. See Item 3 -- "Key Information -- Selected Consolidated
Financial Information."

         The noon buying rate for Pesos on December 30, 2006 was Ps10.80 to
U.S.$1.00 and on May 31, 2007 was Ps10.74 to U.S.$1.00.

                                       1




                            INFORMATION ABOUT RINKER

         All information about Rinker Group Limited, or Rinker, as presented in
this annual report, has been derived from public information provided by Rinker,
including its annual report for its fiscal year ended March 31, 2006, as filed
with the U.S. Securities and Exchange Commission on May 23, 2006. We have not
independently verified this information and cannot guarantee its accuracy or
completeness.


                                       2



                                   GUARANTORS

         CEMEX Mexico, S.A. de C.V., or CEMEX Mexico, and Empresas Tolteca de
Mexico, S.A. de C.V., or Empresas Tolteca de Mexico, are wholly-owned
subsidiaries of ours that have provided a corporate guarantee guaranteeing
payment of our 9.625% Notes due 2009. These subsidiaries, which we refer to as
our guarantors, together with their subsidiaries, account for substantially all
of our revenues and operating income. See Item 4 -- "Information on the Company
-- North America -- Our Mexican Operations." Pursuant to Rule 12h-5 under the
Securities Exchange Act of 1934, as amended, or the Exchange Act, the guarantors
are exempt from reporting under the Exchange Act, and no separate financial
statements or other disclosures concerning the guarantors other than the
narrative disclosures and financial information set forth in note 24(s) to our
consolidated financial statements have been presented in this annual report.



                                       3




                                     PART I


ITEM 1 -  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
          -----------------------------------------------------
         Not applicable.

ITEM 2 -  OFFER STATISTICS AND EXPECTED TIMETABLE
          ---------------------------------------
         Not applicable.

ITEM 3 -  KEY INFORMATION
          ---------------

RISK FACTORS

         Many factors could have an effect on our financial condition, cash
flows and results of operations. We are subject to various risks resulting from
changing economic, environmental, political, industry, business, financial and
climate conditions. The principal factors are described below.

WE ARE CONTINUALLY ANALYZING POSSIBLE ACQUISITIONS OF NEW OPERATIONS, SOME OF
WHICH MAY HAVE A MATERIAL IMPACT ON OUR FINANCIAL POSITION. WE MAY NOT BE ABLE
TO REALIZE THE EXPECTED BENEFITS FROM OUR ACQUISITION OF RINKER OR THE EXPECTED
BENEFITS FROM ANY FUTURE ACQUISITIONS.

         A key element of our growth strategy is to acquire new operations and
integrate such operations with our existing operations. Our ability to realize
the expected benefits from these acquisitions depends, in large part, on our
ability to integrate the new operations with existing operations and to apply
our business practices in the new operations in a timely and effective manner.
These efforts may not be successful. Furthermore, our growth strategy depends on
our ability to identify and acquire suitable assets at desirable prices. We
cannot assure you that we will be successful in identifying or purchasing
suitable assets in the future. If we fail to make further acquisitions, we may
not be able to continue to grow in the long term at our historic rate.

         On June 7, 2007, our public offer to acquire all outstanding shares of
Rinker became unconditional. As a result, we obtained the right to vote
approximately 50.3% of Rinker's outstanding shares. Our offer was originally
scheduled to conclude on June 22, 2007, but has been extended until July 16,
2007. As of June 25, 2007, we had been tendered a total of approximately 81% of
Rinker's outstanding shares. The enterprise value of Rinker is approximately
U.S.$15.3 billion, which includes approximately U.S.$1.1 billion of debt,
Rinker's reported debt as of March 31, 2007. Rinker is a leading international
producer and supplier of cement, ready-mix concrete and aggregates. Rinker,
which is headquartered in Australia, has significant operations in Australia and
the United States, as well as operations in China. As of the date of this annual
report, we expect to achieve approximately U.S.$130 million of annual savings by
2010 through cost-saving synergies. See Item 4 -- "Information on the Company --
Our Business Strategy." Our success in realizing these cost savings and deriving
significant benefits from this acquisition will depend on our ability to
standardize management processes, capitalize on trading network benefits,
consolidate logistics and improve global procurement and energy efficiency.
Rinker's operations are concentrated in regions of the United States that have
recently faced a downturn in the housing and construction sectors, which may
have an adverse effect on Rinker's operations and on ours.

         In addition, although we have substantially realized our expected
benefits from acquisitions in the past, additional acquisitions may present
formidable integration challenges. See Item 4 -- "Information on the Company --
Our Business Strategy."

         As a result of our acquisition of Rinker, we are required by the
Consent Decree that we entered into with the Antitrust Division of the United
States Department of Justice, or the Antitrust Division, to divest certain
Rinker and CEMEX assets. If we are not able to complete the required
divestitures on or before October 17, 2007, the U.S. District Court for the
District of Columbia will be entitled to appoint a trustee to effect the
divestitures. See Item 4 -- "Information on the Company -- Recent Developments
-- Rinker Acquisition."

                                       4



         In addition, under a joint venture we entered into with Ready Mix USA,
Inc., we are contractually required to contribute to the Ready Mix USA joint
venture any ready-mix concrete, concrete block and aggregates assets we acquire
from Rinker that are located inside the joint venture region. See Item 4 --
"Information on the Company -- North America -- Our U.S. Operations." We cannot
assure you that we will be able to obtain a desirable price for either the
assets to be divested pursuant to the Consent Decree signed with the Antitrust
Division, or the assets to be contributed to the Ready Mix USA joint venture.

OUR ABILITY TO PAY DIVIDENDS AND REPAY DEBT DEPENDS ON OUR SUBSIDIARIES' ABILITY
TO TRANSFER INCOME AND DIVIDENDS TO US.


         We are a holding company with no significant assets other than the
stock of our wholly-owned and non-wholly-owned subsidiaries and our holdings of
cash and marketable securities. Our ability to pay dividends and repay debt
depends on the continued transfer to us of dividends and other income from our
wholly-owned and non-wholly-owned subsidiaries. The ability of our subsidiaries
to pay dividends and make other transfers to us is limited by various
regulatory, contractual and legal constraints that affect our subsidiaries.

WE HAVE INCURRED AND WILL CONTINUE TO INCUR DEBT, WHICH COULD HAVE AN ADVERSE
EFFECT ON THE PRICE OF OUR CPOS AND ADSS, RESULT IN US INCURRING INCREASED
INTEREST COSTS AND LIMIT OUR ABILITY TO DISTRIBUTE DIVIDENDS, FINANCE
ACQUISITIONS AND EXPANSIONS AND MAINTAIN FLEXIBILITY IN MANAGING OUR BUSINESS
ACTIVITIES.


         We have incurred and will continue to incur significant amounts of
debt, particularly in connection with financing acquisitions, which could have
an adverse effect on the price of our Ordinary Participation Certificates, or
CPOs, and American Depositary Shares, or ADSs. Our indebtedness may have
important consequences, including increased interest costs if we are unable to
refinance existing indebtedness on satisfactory terms. In addition, the debt
instruments governing a substantial portion of our indebtedness contain various
covenants that require us to maintain financial ratios, restrict asset sales and
restrict our ability to use the proceeds from a sale of assets. Consequently,
our ability to distribute dividends, finance acquisitions and expansions and
maintain flexibility in managing our business activities could be limited. As of
December 31, 2006, we had outstanding debt equal to Ps81.4 billion (U.S.$7.5
billion).

         We may incur up to approximately U.S.$15.3 billion of debt in
connection with the Rinker acquisition, including our assumption of Rinker's
debt. As of December 31, 2006, we had not incurred any debt in connection with
the Rinker acquisition. For a description of our financing of the Rinker
acquisition, see Item 5 -- "Operating and Financial Review and Prospects --
Liquidity and Capital Resources -- Our Indebtedness."

         We and our subsidiaries have sought and obtained waivers and amendments
to several of our debt instruments relating to a number of financial ratios,
including in connection with our financing of the Rinker acquisition. Such
waivers are typically requested and granted for limited periods, after which
either a further waiver is requested or compliance makes a further waiver
unnecessary. In the case of the Rinker acquisition, we have obtained financial
ratio covenant waivers through December 31, 2007, and we expect to take such
actions as may be necessary to enable us to satisfy such financial covenants by
such date. We believe that we and our subsidiaries have good relations with our
lenders, and nothing has come to our attention that would lead us to believe
that future waivers, if required, would not be forthcoming. However, we cannot
assure you that future waivers, if requested, would be forthcoming. If we or our
subsidiaries are unable to comply with the provisions of our debt instruments,
and are unable to obtain a waiver or amendment, the indebtedness outstanding
under such debt instruments could be accelerated. Acceleration of these debt
instruments would have a material adverse effect on our financial condition.

WE HAVE TO SERVICE OUR DOLLAR-DENOMINATED DEBT WITH REVENUES GENERATED IN PESOS
OR OTHER CURRENCIES, AS WE DO NOT GENERATE SUFFICIENT REVENUE IN DOLLARS FROM
OUR OPERATIONS TO SERVICE ALL OUR DOLLAR-DENOMINATED DEBT. THIS COULD ADVERSELY
AFFECT OUR ABILITY TO SERVICE OUR DEBT IN THE EVENT OF A DEVALUATION OR
DEPRECIATION IN THE VALUE OF THE PESO, OR ANY OF THE OTHER CURRENCIES OF THE
COUNTRIES IN WHICH WE OPERATE, COMPARED TO THE DOLLAR.

         A substantial portion of our outstanding debt is denominated in
Dollars; as of March 31, 2007, our Dollar-denominated debt represented
approximately 49% of our total debt (after giving effect to our currency-related
derivatives as of such date). Our existing Dollar-denominated debt, however,
must be serviced by funds generated from sales by our subsidiaries. As of the
date of this annual report, we do not generate sufficient revenue in Dollars

                                       5



from our operations to service all our Dollar-denominated debt. Consequently, we
have to use revenues generated in Pesos, Euros, Pounds or other currencies to
service our Dollar-denominated debt. See Item 5 -- "Operating and Financial
Review and Prospects -- Qualitative and Quantitative Market Disclosure --
Interest Rate Risk, Foreign Currency Risk and Equity Risk -- Foreign Currency
Risk." A devaluation or depreciation in the value of the Peso, Euro, Pound or
any of the other currencies of the countries in which we operate, compared to
the Dollar, could adversely affect our ability to service our Dollar-denominated
debt. During 2006, Mexico, Spain, the United Kingdom and the Rest of Europe
region, our main non-Dollar-denominated operations, together generated
approximately 57% of our total net sales (approximately 18%, 9%, 10% and 20%,
respectively), before eliminations resulting from consolidation. In 2006,
approximately 21% of our sales were generated in the United States, with the
remaining 22% of our sales being generated in several countries. During 2006,
the Peso depreciated approximately 2% against the Dollar, while the Euro and the
Pound appreciated approximately 10% and 12%, respectively, against the Dollar.
Although we have foreign exchange forward contracts and cross currency swap
contracts in place to mitigate our currency-related risks and expect to enter
into future currency hedges, they may not be effective in covering all our
currency-related risks. Furthermore, although the acquisition of Rinker has
increased our U.S. assets substantially, we nonetheless will continue to rely on
our non-U.S. assets to generate revenues to service our Dollar-denominated debt.

         As of March 31, 2007, our Euro-denominated debt represented
approximately 51% of our total debt (after giving effect to our currency-related
derivatives as of such date). We cannot guarantee that we will generate
sufficient revenues in Euros from our operations in Spain and the Rest of Europe
region to service these obligations. As of March 31, 2007, we had no material
amounts of Pound-denominated debt or Yen-denominated debt outstanding (after
giving effect to our currency-related derivatives as of such date).

WE ARE DISPUTING SOME TAX CLAIMS, AN ADVERSE RESOLUTION OF WHICH MAY RESULT IN A
SIGNIFICANT ADDITIONAL TAX EXPENSE.

         As of December 31, 2006, we and some of our Mexican subsidiaries have
been notified by the Mexican tax authorities of several tax assessments related
to several tax periods for a total amount of approximately Ps4,000 million
(U.S.$370 million). The tax assessments are based primarily on: (i) disallowed
restatement of tax loss carryforwards in the same period in which they occurred,
(ii) disallowed determination of tax loss carryforwards, and (iii) investments
made in entities incorporated in foreign countries with preferential tax regimes
(currently known as Regimenes Fiscales Preferentes). We have filed an appeal for
each of these tax claims before the Mexican federal tax court, and the appeals
are pending resolution. If we do not elect in 2007 to enter Mexico's tax amnesty
program or if we fail to obtain favorable rulings on appeal, these tax claims
may have a material impact on us.

         In addition, we are also challenging the constitutionality of several
amendments to the Mexican income tax legislation that became effective in 2005
and that would increase taxes we pay on passive income from some of our foreign
operations. We believe these amendments are contrary to Mexican constitutional
principles, and on August 8, 2005 and March 20, 2006, we filed motions with the
Mexican federal court challenging the constitutionality of these amendments. On
December 23, 2005 and June 29, 2006, we obtained favorable rulings from the
Mexican federal court that the amendments were unconstitutional; however, the
Mexican tax authority has appealed these rulings. If the final ruling is not
favorable to us, these amendments may have a material impact on us. See Item 4
-- "Information on the Company -- Regulatory Matters and Legal Proceedings --
Tax Matters."

         We also have received notices from tax authorities in the Philippines
of tax claims in respect of several prior tax years for a total amount of
approximately U.S.$40 million, including interest and penalties through December
31, 2006. We believe that these claims will not have a material adverse effect
on our net income. See Item 4 -- "Information on the Company --Regulatory
Matters and Legal Proceedings -- Tax Matters."

OUR OPERATIONS ARE SUBJECT TO ENVIRONMENTAL LAWS AND REGULATIONS.

         Our operations are subject to laws and regulations relating to the
protection of the environment in the various jurisdictions in which we operate,
such as regulations regarding the release of cement into the air or emissions of
greenhouse gases. Stricter laws and regulations, or stricter interpretation of
existing laws or regulations, may impose new liabilities on us or result in the
need for additional investments in pollution control equipment, either of which
could result in a material decline in our profitability in the short term.

                                       6



         In addition, our operations in the United Kingdom, Spain and the Rest
of Europe are subject to binding caps on carbon dioxide emissions imposed by
Member States of the European Union as a result of the European Union's
directive implementing the Kyoto Protocol on climate change. Under this
directive, companies receive from the relevant Member States allowances that set
limitations on the levels of carbon dioxide emissions from their industrial
facilities. These allowances are tradable so as to enable companies that manage
to reduce their emissions to sell their excess allowances to companies that are
not reaching their emissions objectives. Failure to meet the emissions caps is
subject to significant penalties. In 2005 and 2006, we had a surplus of
allowances of carbon dioxide. Based on our consolidated production forecasts, we
expect to have a surplus of allowances of carbon dioxide for 2007 as well. For
the next allocation period comprising 2008 through 2012, however, we expect a
reduction in the allowances granted by the Member States, which may result in a
consolidated deficit in our carbon dioxide allowances during that period. As of
May 29, 2007, all European countries in which we have operations have submitted
their National Allocations Plan, or NAP, to the European Commission. However,
only the United Kingdom has published its allocations per facility. As of today,
we are unable to predict if all our facilities will be allocated sufficient
allowances to cover their production forecasts. Therefore, we may have to
purchase a significant amount of allowances in the market, the cost of which may
have an impact on our operating results. See Item 4 -- "Information on the
Company -- Regulatory Matters and Legal Proceedings -- Environmental Matters."

         In the United States, certain states, counties and cities have enacted
or are in the process of enacting mandatory greenhouse gas emission
restrictions, and regulations at the federal level may occur in the future which
could influence our operations.

         Permits relating to some of Rinker's largest quarries in Florida, which
represent a significant part of Rinker's business, are being challenged. A loss
of these permits could adversely affect Rinker's business. See Item 4 --
"Information on the Company -- Regulatory Matters and Legal Proceedings --
Environmental Matters."

WE ARE SUBJECT TO RESTRICTIONS DUE TO MINORITY INTERESTS IN OUR CONSOLIDATED
SUBSIDIARIES.

         We conduct our business through subsidiaries. In some cases,
third-party shareholders hold minority interests in these subsidiaries. Various
disadvantages may result from the participation of minority shareholders whose
interests may not always coincide with ours. Some of these disadvantages may,
among other things, result in our inability to implement organizational
efficiencies and transfer cash and assets from one subsidiary to another in
order to allocate assets most effectively. For example, the continued existence
of a significant public minority in Rinker may inhibit our ability to implement
certain initiatives regarding the integration of Rinker into our operations.

HIGHER ENERGY AND FUEL COSTS MAY HAVE A MATERIAL ADVERSE AFFECT ON OUR OPERATING
RESULTS.

         Our operations consume significant amounts of energy and fuel, the cost
of which has significantly increased worldwide in recent years. To mitigate high
energy and fuel costs and volatility, we have implemented the use of alternative
fuels such as petcoke and tires, which has resulted in reduced energy and fuel
costs and less vulnerability to potential price spikes. We have also implemented
technical improvements in several facilities and entered into long term supply
contracts of petcoke and electricity to mitigate price volatility. Despite these
measures, we cannot assure you that our operations would not be materially
adversely affected in the future if prevailing conditions remain for a long
period of time or if energy and fuel costs continue to increase.

OUR OPERATIONS CAN BE AFFECTED BY ADVERSE WEATHER CONDITIONS.

         Construction activity, and thus demand for our products, decreases
substantially during periods of cold weather, when it snows or when heavy or
sustained rainfalls occur. Consequently, demand for our products is
significantly lower during the winter in temperate countries and during the
rainy season in tropical countries. Winter weather in our European and North
American operations significantly reduces our first quarter sales volumes,
and to a lesser extent our fourth quarter sales volumes. Sales volumes in
these and similar markets generally increase during the second and third
quarters because of normally better weather conditions. However, high levels
of rainfall can adversely affect our operations during these periods as well.
Such adverse weather conditions can adversely affect our results of
operations and profitability if they occur with unusual intensity, during
abnormal periods, or last longer than usual in our major markets, especially
during peak construction periods. With the


                                       7



acquisition of Rinker, particularly its operations in parts of the United
States where we had no prior operations, our operations will be exposed to
additional weather seasonality.

WE ARE AN INTERNATIONAL COMPANY AND ARE EXPOSED TO RISKS IN THE COUNTRIES IN
WHICH WE HAVE SIGNIFICANT OPERATIONS OR INTERESTS.

         We are dependent, in large part, on the economies of the countries in
which we market our products. The economies of these countries are in different
stages of socioeconomic development. Consequently, like many other companies
with significant international operations, we are exposed to risks from changes
in foreign currency exchange rates, interest rates, inflation, governmental
spending, social instability and other political, economic or social
developments that may materially reduce our net income.

         As of and for the year ended December 31, 2006, we had operations in
Mexico, the United States, the United Kingdom, Spain, the Rest of Europe region
(including Germany and France), South America, Central America and the Caribbean
(including Venezuela and Colombia), Africa and the Middle East and Asia. As of
December 31, 2006, our U.S. operations represented approximately 17% of our
total assets, our Mexican operations approximately 14% of our total assets, our
United Kingdom operations approximately 15% of our total assets, our Spanish
operations approximately 7% of our total assets, our Rest of Europe operations
approximately 11% of our total assets, our South America, Central America and
the Caribbean operations approximately 8% of our total assets, our Africa and
the Middle East operations approximately 3% of our total assets, our Asia
operations approximately 2% of our total assets, and our other operations
approximately 23% of our total assets. For the year ended December 31, 2006,
before eliminations resulting from consolidation, our U.S. operations
represented approximately 21% of our net sales, our Mexican operations
approximately 18% of our net sales, our United Kingdom operations approximately
10% of our net sales, our Spanish operations approximately 9% of our net sales,
our Rest of Europe operations approximately 20% of our net sales, our South
America, Central America and the Caribbean operations approximately 8% of our
net sales, our Africa and the Middle East operations approximately 4% of our net
sales, our Asia operations approximately 2% of our net sales and our other
operations approximately 8% of our net sales. Adverse economic conditions in any
of these countries or regions may produce a negative impact on our net income
from our operations in that country or region. For a geographic breakdown of our
net sales for the year ended December 31, 2006, please see Item 4 --
"Information on the Company -- Geographic Breakdown of Our 2006 Net Sales."

         If the Mexican economy experiences a recession or if Mexican inflation
and interest rates increase significantly, our net income from our Mexican
operations may decline materially because construction activity may decrease,
which may lead to a decrease in sales of cement and ready-mix concrete. The
Mexican government does not currently restrict the ability of Mexicans or others
to convert Pesos to Dollars, or vice versa. The Mexican Central Bank has
consistently made foreign currency available to Mexican private sector entities
to meet their foreign currency obligations. Nevertheless, if shortages of
foreign currency occur, the Mexican Central Bank may not continue its practice
of making foreign currency available to private sector companies, and we may not
be able to purchase the foreign currency we need to service our foreign currency
obligations without substantial additional cost.

         Although economic activity is recovering in Europe, some European
countries could potentially face important decelerations in construction
activity growth. In Spain, even though most analysts still expect a soft landing
scenario in construction activity, a sharper than expected decline should not be
ruled out given the strength in construction during the last years. In the
United Kingdom, recent increases in official interest rates, and as a result in
mortgage rates, could impact housing activity harder than expected. In Germany,
the current recovery of the construction sector could turn out to be only
temporary. In Eastern Europe, including Poland, the Czech Republic, Hungary,
Latvia and Lithuania, strong economic activity could be accompanied by increases
in government budget deficits and international trade deficits, causing further
delays in the adoption of the Euro by these countries, resulting in increased
exchange rate volatility. This volatility could pose a risk to these countries'
financial systems and housing markets, as mortgages in these countries are
typically denominated in currencies other than their respective national
currency.

         Our operations in South America, Central America and the Caribbean are
faced with several risks that are more significant than in other countries.
These risks include political instability and economic volatility. For


                                       8



example, in recent years, Venezuela has experienced volatility and depreciation
of its currency, high interest rates, political instability, increased
inflation, fluctuations in its gross domestic product and labor unrest,
including a general strike. In response to this situation, and in an effort to
strengthen the economy and control inflation, Venezuelan authorities have
imposed foreign exchange and price controls on specified products, including
cement. On January 31, 2007, the Venezuelan National Assembly passed an enabling
law, granting President Hugo Chavez the power to govern by decree with the force
of law for 18 months. President Chavez has recently indicated that cement
producers in Venezuela may be nationalized in the future. Any such
nationalization or similar action could affect CEMEX Venezuela, S.A.C.A., or
CEMEX Venezuela, our operating subsidiary in Venezuela, which also serves as the
holding company for our interests in the Dominican Republic, Panama and
Trinidad, and could adversely affect our operations. Upon a nationalization, we
might not be compensated at market prices for our assets, thus affecting our
profitability. Any significant political instability or political instability
and economic volatility in the countries in South America, Central America and
the Caribbean in which we have operations may have an impact on cement prices
and demand for cement and ready-mix concrete, which may adversely affect our
results of operations.

         Our operations in Africa and the Middle East have faced rising
instability as a result of, among other things, civil unrest, extremism, the
continued deterioration of Israeli-Palestinian relations and the war in Iraq.
There can be no assurance that political turbulence in the Middle East will
abate at any time in the near future or that neighboring countries, including
Egypt, Israel and the United Arab Emirates, will not be drawn into the conflict
or experience instability.

         There have been terrorist attacks in the United States, Spain and the
United Kingdom, countries in which we maintain operations, and ongoing threats
of future terrorist attacks in the United States and abroad. Although it is not
possible at this time to determine the long-term effect of these terrorist
threats, there can be no assurance that there will not be other attacks or
threats in the United States or abroad that will lead to economic contraction in
the United States or any other of our major markets. Economic contraction in the
United States or any of our major markets could affect domestic demand for
cement and have a material adverse effect on our operations.

         With the acquisition of Rinker, our geographic diversity has increased.
Rinker has operations in Australia, the United States and China. As in the case
of Mexico and other countries, adverse economic conditions in any of these
countries may have a negative impact on our net income from our operations in
that country.

YOU MAY BE UNABLE TO ENFORCE JUDGMENTS AGAINST US.

         You may be unable to enforce judgments against us. We are a publicly
traded stock corporation with variable capital (sociedad anonima bursatil de
capital variable), organized under the laws of Mexico. Substantially all our
directors and officers and some of the experts named in this annual report
reside in Mexico, and all or a significant portion of the assets of those
persons may be, and the majority of our assets are, located outside the United
States. As a result, it may not be possible for investors to effect service of
process within the United States upon those persons or to enforce judgments
against them or against us in U.S. courts, including judgments predicated upon
the civil liability provisions of the U.S. federal securities laws. We have been
advised by Lic. Ramiro G. Villarreal, General Counsel of CEMEX, that it may not
be possible to enforce, in original actions in Mexican courts, liabilities
predicated solely on the U.S. federal securities laws and it may not be possible
to enforce, in Mexican courts, judgments of U.S. courts obtained in actions
predicated upon the civil liability provisions of the U.S. federal securities
laws.

PREEMPTIVE RIGHTS MAY BE UNAVAILABLE TO ADS HOLDERS.

         ADS holders may be unable to exercise preemptive rights granted to our
shareholders, in which case ADS holders could be substantially diluted. Under
Mexican law, whenever we issue new shares for payment in cash or in kind, we are
generally required to grant preemptive rights to our shareholders. However, ADS
holders may not be able to exercise these preemptive rights to acquire new
shares unless both the rights and the new shares are registered in the United
States or an exemption from registration is available.

         We cannot assure you that we would file a registration statement in
the United States at the time of any rights offering. In addition, while the
depositary is permitted, if lawful and feasible at that time, to sell those
rights

                                       9



and distribute the proceeds of that sale to ADS holders who are entitled to
those rights, current Mexican law does not permit sales of that kind.

                                       10



MEXICAN PESO EXCHANGE RATES

         Mexico has had no exchange control system in place since the dual
exchange control system was abolished on November 11, 1991. The Mexican Peso has
floated freely in foreign exchange markets since December 1994, when the Mexican
Central Bank (Banco de Mexico) abandoned its prior policy of having an official
devaluation band. Since then, the Peso has been subject to substantial
fluctuations in value. The Peso depreciated against the Dollar by approximately
13% and 8% in 2002 and 2003, respectively, appreciated against the Dollar by
approximately 1% and 5% in 2004 and 2005, respectively, and depreciated against
the Dollar by approximately 2% in 2006. These percentages are based on the
exchange rate that we use for accounting purposes, or the CEMEX accounting rate.
The CEMEX accounting rate represents the average of three different exchange
rates that are provided to us by Banco Nacional de Mexico, S.A., or Banamex. For
any given date, the CEMEX accounting rate may differ from the noon buying rate
for Pesos in New York City published by the U.S. Federal Reserve Bank of New
York.

         The following table sets forth, for the periods and dates indicated,
the end-of-period, average and high and low points of the CEMEX accounting rate
as well as the noon buying rate for Pesos, expressed in Pesos per U.S.$1.00.




                                       CEMEX Accounting Rate                               Noon Buying Rate
                             ------------------------------------------    --------------------------------------------
                             End of                                         End of
Year ended December 31,      Period     Average(1)      High      Low      Period     Average(1)      High        Low
                                                                                         
2002......................    10.38        9.76        10.35     9.02       10.43        9.66        10.43       9.00
2003......................    11.24       10.84        11.39     10.10      11.24        10.85       11.41       10.11
2004......................    11.14       11.29        11.67     10.81      11.15        11.29       11.64       10.81
2005......................    10.62       10.85        11.38     10.42      10.63        10.89       11.41       10.41
2006......................    10.80       10.91        11.49     10.44      10.80        10.90       11.46       10.43
Monthly (2006-2007)
  November................    10.99         --         11.10     10.80      11.00          --        11.05       10.75
  December................    10.80         --         10.93     10.78      10.80          --        10.99       10.77
  January.................    11.01         --         11.10     10.77      11.04          --        11.09       10.77
  February................    11.17         --         11.20     10.92      11.16          --        11.16       10.92
  March...................    11.04         --         11.21     10.99      11.04          --        11.18       11.01
  April...................    10.95         --         11.02     10.92      10.93          --        11.03       10.92
  May.....................    10.74         --         10.93     10.74      10.74          --        10.93       10.74


(1)  The average of the CEMEX accounting rate or the noon buying rate for Pesos,
as applicable, on the last day of each full month during the relevant period.


         On May 31, 2007, the noon buying rate for Pesos was Ps10.74 to
U.S.$1.00 and the CEMEX accounting rate was Ps10.74 to U.S.$1.00.

         For a discussion of the financial treatment of our operations conducted
in other currencies, see Item 3 -- "Key Information -- Selected Consolidated
Financial Information."


                                       11




SELECTED CONSOLIDATED FINANCIAL INFORMATION

         The financial data set forth below as of and for each of the five years
ended December 31, 2006 have been derived from our audited consolidated
financial statements. The financial data set forth below as of December 31, 2006
and 2005 and for each of the three years ended December 31, 2006, have been
derived from, and should be read in conjunction with, and are qualified in their
entirety by reference to, the consolidated financial statements and the notes
thereto included elsewhere in this annual report. These financial statements
were approved by our shareholders at the 2006 annual general meeting, which took
place on April 26, 2007.

         The audited consolidated financial statements for the year ended
December 31, 2005 include RMC's results of operations for the ten-month period
ended December 31, 2005, and the audited consolidated financial statements for
the year ended December 31, 2006 include RMC's results of operations for the
entire year ended December 31, 2006, while the audited consolidated financial
statements for each of the three years ended December 31, 2004 do not include
RMC's results of operations. As a result, the financial data for the years ended
December 31, 2005 and December 31, 2006 are not comparable to the prior periods.

         Our consolidated financial statements included elsewhere in this annual
report have been prepared in accordance with Mexican FRS, which differ in
significant respects from U.S. GAAP. We are required, pursuant to Mexican FRS,
to present our financial statements in constant Pesos representing the same
purchasing power for each period presented. Accordingly, unless otherwise
indicated, all financial data presented below and elsewhere in this annual
report are stated in constant Pesos as of December 31, 2006. See note 24 to our
consolidated financial statements included elsewhere in this annual report for a
description of the principal differences between Mexican FRS and U.S. GAAP as
they relate to us.

         Non-Peso amounts included in the financial statements are first
translated into Dollar amounts, in each case at a commercially available or an
official government exchange rate for the relevant period or date, as
applicable, and those Dollar amounts are then translated into Peso amounts at
the CEMEX accounting rate, described under Item 3 -- "Key Information -- Mexican
Peso Exchange Rates," as of the relevant period or date, as applicable.

         Under Mexican FRS, each time we report results for the most recently
completed period, the Pesos previously reported in prior periods should be
adjusted to Pesos of constant purchasing power as of the most recent balance
sheet by multiplying the previously reported Pesos by a weighted average
inflation index. This index is calculated based upon the inflation rates of the
countries in which we operate and the changes in the exchange rates of each of
these countries, weighted according to the proportion that our assets in each
country represent of our total assets. The following table reflects the factors
that have been used to restate the originally reported Pesos to Pesos of
constant purchasing power as of December 31, 2006:
                                                             Cumulative Weighted
                                         Annual Weighted     Average Factor to
                                         Average Factor       December 31, 2006
                                         --------------       -----------------

    2002...................                   1.1049                1.2273
    2003...................                   1.0624                1.1107
    2004...................                   0.9590                1.0455
    2005...................                   1.0902                1.0902

         The Dollar amounts provided below and, unless otherwise indicated,
elsewhere in this annual report are translations of constant Peso amounts at an
exchange rate of Ps10.80 to U.S.$1.00, the CEMEX accounting rate as of December
31, 2006. However, in the case of transactions conducted in Dollars, we have
presented the Dollar amount of the transaction and the corresponding Peso amount
that is presented in our consolidated financial statements. These translations
have been prepared solely for the convenience of the reader and should not be
construed as representations that the Peso amounts actually represent those
Dollar amounts or could be converted into Dollars at the rate indicated. The
noon buying rate for Pesos on December 31, 2006 was Ps10.80 to U.S.$1.00 and on
May 31, 2007 was Ps10.74 to U.S.$1.00. From December 31, 2006 through May 31,
2007, the Peso appreciated by approximately 1% against the Dollar, based on the
noon buying rate for Pesos.

                                       12





                                          CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
                                        Selected Consolidated Financial Information

                                                                AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                              ----------------------------------------------------------------------------------
                                               2002           2003          2004          2005           2006             2006
                                               ----           ----          ----          ----           ----             ----
                                                         (in millions of constant Pesos as of December 31, 2006 and Dollars,
                                                                   except ratios and share and per share amounts)
                                                                                                      
INCOME STATEMENT INFORMATION:
Net sales..................................  Ps 83,352    Ps 89,445     Ps 94,915     Ps 177,385     Ps 197,093     U.S.$ 18,249
Cost of sales(1)...........................   (46,568)     (51,562)      (53,417)      (107,341)      (125,804)         (11,649)
Gross profit...............................     36,784       37,883        41,498         70,044         71,289            6,600
Operating expenses.........................   (20,091)     (19,715)      (19,931)       (41,253)       (39,475)          (3,655)
Operating income...........................     16,693       18,168        21,567         28,791         31,814            2,945
Comprehensive financing result (2).........    (4,195)      (3,339)         1,552          2,836          (466)             (44)
Other expense, net.........................    (4,960)      (5,702)       (5,635)        (3,676)          (369)             (34)
Income before income tax, employees'
    statutory profit sharing and
    equity in income of affiliates.........      7,538        9,127        17,484         27,951         30,979            2,867
Minority interest..........................        472          379           244            638          1,191              110
Majority interest net income...............      6,627        7,851        15,224         24,450         25,682            2,378
Basic earnings per share(3)(4).............       0.37         0.42          0.76           1.18           1.19             0.11
Diluted earnings per share(3)(4)...........       0.37         0.40          0.76           1.17           1.19             0.11
Dividends per share(3)(5)(6)...............       0.22         0.21          0.45           0.25           0.27             0.03
Number of shares outstanding(3)(7).........     18,248       19,444        20,372         21,144         21,987           21,987
BALANCE SHEET INFORMATION:
Cash and temporary investments.............      4,601        3,637         3,987          6,963         17,051            1,579
Net working capital investment(8)..........      8,911        7,188         6,116         14,678          9,579              887
Property, machinery and equipment, net.....    114,181      115,677       111,967        179,942        185,714           17,196
Total assets...............................    202,989      199,952       202,433        309,866        323,698           29,972
Short-term debt............................     17,750       16,592        12,157         13,788         13,514            1,252
Long-term debt.............................     55,719       56,641        56,916         95,944         67,927            6,290
Minority interest(9)(10)...................     15,373        6,641         4,530          6,119         20,731            1,920
Stockholders' equity (excluding
  minority interest)(11)...................     73,176       77,833        91,203        113,757        138,878           12,859
Book value per share(3)(7)(12).............       4.01         4.00          4.48           5.38           6.32             0.58
OTHER FINANCIAL INFORMATION:
Operating margin...........................      20.0%        20.3%         22.7%          16.2%          16.1%            16.1%
EBITDA(13).................................     24,422       26,319        29,563         41,185         44,686            4,137
Ratio of EBITDA to interest expense,
    capital securities dividends and              5.23         5.27          6.82           6.76           8.38             8.38
    preferred equity dividends(13)........
Investment in property, machinery and
  equipment, net...........................      5,401        4,917         5,055          9,093         14,814            1,372
Depreciation and amortization..............      9,749       10,297         9,985         12,637         12,872            1,192
Net resources provided by operating
  activities(14)...........................     21,193       19,555        25,738         39,914         44,111            4,084
Basic earnings per CPO(3)(4)...............       1.11         1.26          2.28           3.54           3.57             0.33




                                                                AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                              ----------------------------------------------------------------------------------
                                               2002           2003          2004          2005           2006             2006
                                               ----           ----          ----          ----           ----             ----
                                                    (in millions of constant Pesos as of December 31, 2006 and Dollars,
                                                                      except per share amounts)
U.S. GAAP(15):
INCOME STATEMENT INFORMATION:
Majority net sales.........................  Ps 78,953    Ps 90,100     Ps 96,329     Ps 166,024     Ps 195,865     U.S.$ 18,136
Operating income...........................     12,761       15,373        17,701         25,714         31,502            2,917
Majority net income........................      6,627        9,351        19,260         23,017         25,374            2,349
Basic earnings per share...................       0.37         0.49          0.97           1.11           1.18             0.11
Diluted earnings per share.................       0.37         0.48          0.96           1.10           1.18             0.11
BALANCE SHEET INFORMATION:
Total assets...............................    198,979      210,481       221,222        305,728        338,456           31,339
Perpetual debentures(10)...................         --           --            --             --         13,500            1,250
Long-term debt(10).........................     48,375       50,604        46,783         85,980         66,720            6,178
Shares subject to mandatory redemption(16).         --          838            --             --             --               --
Minority interest..........................      6,099        6,122         4,863          5,963          7,291              675
Other mezzanine items(16)..................     15,363           --            --             --             --               --
Total majority stockholders' equity........     60,667       80,354        99,305        115,925        147,374           13,646

                                                                                                        (footnotes on next page)



                                       13


______________________________
(1)  Cost of sales includes depreciation.
(2)  Comprehensive financing result includes financial expenses, financial
     income, results from valuation and liquidation of financial instruments,
     including derivatives and marketable securities, foreign exchange result,
     net and monetary position result. See Item 5 -- "Operating and Financial
     Review and Prospects."
(3)  Our capital stock consists of series A shares and series B shares. Each of
     our CPOs represents two series A shares and one series B share. As of
     December 31, 2006, approximately 96.9% of our outstanding share capital was
     represented by CPOs. On April 27, 2006, our shareholders approved a stock
     split, which became effective on July 17, 2006. In connection with the
     stock split, each of our existing series A shares was surrendered in
     exchange for two new series A shares, each of our existing series B shares
     was surrendered in exchange for two new series B shares, and each of our
     existing CPOs was surrendered in exchange for two new CPOs, with each new
     CPO representing two new series A shares and one new series B share. The
     number of our outstanding ADSs did not change as a result of the stock
     split; instead the ratio of CPOs to ADSs was modified so that each ADS now
     represents ten new CPOs. The proportional equity interest participation of
     existing shareholders did not change as a result of the stock split. All
     share and per share amounts set forth in the table above have been adjusted
     to give retroactive effect to this stock split.
(4)  Earnings per share are calculated based upon the weighted average number of
     shares outstanding during the year, as described in note 20 to the
     consolidated financial statements included elsewhere in this annual report.
     Basic earnings per CPO is determined by multiplying the basic earnings per
     share for each period by three (the number of shares underlying each CPO).
     Basic earnings per CPO is presented solely for the convenience of the
     reader and does not represent a measure under Mexican FRS.
(5)  Dividends declared at each year's annual shareholders' meeting are
     reflected as dividends of the preceding year.
(6)  In recent years, our board of directors has proposed, and our shareholders
     have approved, dividend proposals, whereby our shareholders have had a
     choice between stock dividends or cash dividends declared in respect of the
     prior year's results, with the stock issuable to shareholders who receive
     the stock dividend being issued at a 20% discount from then current market
     prices. The dividends declared per share or per CPO in these years,
     expressed in constant Pesos as of December 31, 2006, were as follows: 2002,
     Ps0.64 per CPO (or Ps0.21 per share); 2003, Ps0.67 per CPO (or Ps0.22 per
     share); 2004, Ps0.64 per CPO (or Ps0.21 per share); 2005, Ps1.36 per CPO
     (or Ps0.45 per share); and 2006, Ps0.75 per CPO (or Ps0.25 per share). As a
     result of dividend elections made by shareholders, in 2002, Ps286 million
     in cash was paid and approximately 256 million additional CPOs were issued
     in respect of dividends declared for the 2001 fiscal year; in 2003, Ps74
     million in cash was paid and approximately 396 million additional CPOs were
     issued in respect of dividends declared for the 2002 fiscal year; in 2004,
     Ps176 million in cash was paid and approximately 300 million additional
     CPOs were issued in respect of dividends declared for the 2003 fiscal year;
     in 2005, Ps414 million in cash was paid and approximately 266 million
     additional CPOs were issued in respect of dividends declared for the 2004
     fiscal year; and in 2006, Ps148 million in cash was paid and approximately
     212 million additional CPOs were issued in respect of dividends declared
     for the 2005 fiscal year. For purposes of the table, dividends declared at
     each year's annual shareholders' meeting for each period are reflected as
     dividends for the preceding year. At our 2006 annual shareholders' meeting,
     which was held on April 26, 2007, our shareholders approved a dividend for
     the 2006 fiscal year of the Peso equivalent of U.S.$0.0745 per CPO
     (U.S.$0.02483 per share) or Ps0.80 (Ps0.27 per share), based on the
     Peso/Dollar exchange rate in effect for May 31, 2007 of Ps10.7873 to
     U.S.$1.00, as published by the Mexican Central Bank. Holders of our series
     A shares, series B shares and CPOs are entitled to receive the dividend in
     either stock or cash consistent with our past practices; however, under the
     terms of the deposit agreement pursuant to which our ADSs are issued, we
     instructed the depositary for the ADSs not to extend the option to elect to
     receive cash in lieu of the stock dividend to the holders of ADSs. As a
     result of dividend elections made by shareholders, in June 2007,
     approximately Ps140 million in cash was paid and approximately 189 million
     additional CPOs were issued in respect of dividends declared for the 2006
     fiscal year.
(7)  Based upon the total number of shares outstanding at the end of each
     period, expressed in millions of shares, and includes shares subject to
     financial derivative transactions, but does not include shares held by our
     subsidiaries.
(8)  Net working capital investment equals trade receivables plus inventories
     less trade payables.
(9)  In connection with a preferred equity transaction relating to the financing
     of our acquisition of Southdown,  Inc., now named CEMEX,  Inc., the balance
     sheet item  minority  interest  at December  31,  2002  includes a notional
     amount of U.S.$650  million (Ps7.5  billion) of preferred  equity issued in
     November 2000 by our Dutch subsidiary. In October 2003, we redeemed all the
     U.S.$650  million of preferred equity  outstanding.  The balance sheet item
     minority  interest at December 31, 2003  includes an aggregate  liquidation
     amount  of  U.S.$66  million  (Ps769  million)  of  9.66%  Putable  Capital
     Securities,  which were initially  issued by one of our subsidiaries in May
     1998 in an aggregate liquidation amount of U.S.$250 million. In April 2002,
     approximately  U.S.$184  million in aggregate  liquidation  amount of these
     capital securities were tendered to, and accepted by, us in a tender offer.
     In November  2004,  we  exercised a purchase  option and  redeemed  all the
     outstanding  capital  securities.  Until  January 1, 2004,  for  accounting
     purposes  under  Mexican  FRS,  this  transaction  was recorded as minority
     interest in our balance sheet, and dividends paid on the capital securities
     were  recorded as  minority  interest  net income in our income  statement.
     Accordingly,  minority  interest  net income  includes  capital  securities
     dividends in the amount of approximately  U.S.$23.2 million (Ps289 million)
     in 2002 and  U.S.$12.5  million  (Ps160  million) in 2003. As of January 1,
     2004, as a result of new accounting  pronouncements under Mexican FRS, this
     transaction  was recorded as debt in our balance sheet,  and dividends paid
     on the capital  securities  during 2004,  which  amounted to  approximately
     U.S.$5.6  million  (Ps70  million),  were  recorded  as part  of  financial
     expenses in our income statement.
(10) Minority interest includes U.S.$1,250 million (Ps13,500 million), that
     represents the nominal amount of the fixed-to-floating rate callable
     perpetual debentures issued by C5 Capital (SPV) Limited and C10 Capital
     (SPV) Limited on December 18, 2006. In accordance with Mexican FRS, these
     securities qualify as equity due to their perpetual nature and the option
     to defer the coupons. However, for purposes of our U.S. GAAP
     reconciliation, we record these debentures as debt and coupon payments
     thereon as part of financial expenses in our income statement.
(11) In December 1999, we entered into forward contracts with a number of banks
     covering 21,000,000 ADSs. In December 2002, we agreed with the banks to
     settle those forward contracts for cash and simultaneously entered into new
     forward contracts with the same banks on similar terms to the original
     forward transactions. Under the new forward contracts the banks retained
     the ADSs underlying the original forward contracts, which had increased to
     25,457,378 ADSs as a result of stock dividends through June 2003. As a
     result of this net settlement, we recognized in December 2002 a decrease of
     approximately U.S.$98.3 million (Ps1,145 million) in our stockholders'
     equity, arising from changes in the valuation of the ADSs. In October 2003,
     in connection with an offering of all the ADSs underlying those forward
     contracts, we agreed with the banks to settle those forward contracts for
     cash. As a result of the final settlement in October 2003, we recognized an
     increase of approximately U.S.$18.1 million (Ps210 million) in our
     stockholders' equity, arising from changes in the valuation of the ADSs
     from December 2002 through October 2003. During the life of these forward
     contracts, the underlying ADSs were considered to have been owned by the
     banks and the forward contracts were treated as equity transactions, and,
     therefore, changes in the fair value of the ADSs were not recorded until
     settlement of the forward contracts.

                                       14


(12) Book value per share is calculated by dividing stockholders' equity
     (excluding minority interest) by the number of shares outstanding.
(13) EBITDA equals operating income before amortization expense and
     depreciation. Under Mexican FRS, amortization of goodwill, until December
     31, 2004, was not included in operating income, but instead was recorded in
     other income (expense). EBITDA and the ratio of EBITDA to interest expense,
     capital securities dividends and preferred equity dividends are presented
     herein because we believe that they are widely accepted as financial
     indicators of our ability to internally fund capital expenditures and
     service or incur debt and preferred equity. EBITDA and such ratios should
     not be considered as indicators of our 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
     below to operating income under Mexican FRS before giving effect to any
     minority interest, which we consider to be the most comparable measure as
     determined under Mexican FRS. We are not required to prepare a statement of
     cash flows under Mexican FRS and therefore do not have such Mexican FRS
     cash flow measures to present as comparable to EBITDA. Interest expense
     does not include coupon payments on and issuance costs of the perpetual
     debentures issued by C5 Capital (SPV) Limited and C10 Capital (SPV) Limited
     of approximately U.S.$13 million (Ps137 million) for the portion of the
     year ended December 31, 2006 that such securities were outstanding (from
     December 18, 2006 to December 31, 2006).




                                                                     FOR THE YEAR ENDED DECEMBER 31,
                                          --------------------------------------------------------------------------------------
                                               2002            2003           2004           2005           2006          2006
                                               ----            ----           ----           ----           ----          ----
                                                   (in millions of constant Pesos as of December 31, 2006 and Dollars)
                                                                                                        
RECONCILIATION OF EBITDA TO
OPERATING INCOME EBITDA................   Ps  24,422     Ps  26,319      Ps  29,563     Ps  41,185    Ps  44,686     U.S.$4,137
Less:
     Depreciation and
     amortization expense..............        7,729          8,151           7,996         12,394        12,872          1,192
  Operating income.....................       16,693         18,168          21,567         28,791        31,814          2,945



(14) Net resources provided by operating activities equals majority interest net
     income plus items not affecting cash flow plus investment in working
     capital excluding effects from acquisitions.
(15) We have restated the information at and for the years ended December 31,
     2002, 2003, 2004 and 2005 under U.S. GAAP using the inflation factor
     derived from the national consumer price index, or NCPI, in Mexico, as
     required by Regulation S-X under the Exchange Act, instead of using the
     weighted average restatement factors used by us according to Mexican FRS
     and applied to the information presented under Mexican FRS of prior years.
     See note 24 to our consolidated financial statements included elsewhere in
     this annual report for a description of the principal differences between
     Mexican FRS and U.S. GAAP as they relate to CEMEX.
(16) For financial reporting under U.S. GAAP, until December 31, 2002, elements
     that did not meet either the definition of equity, or the definition of
     debt, were presented under a third group, commonly referred to as
     "mezzanine items." As of December 31, 2002, these elements, as they related
     to us, included our preferred equity and our putable capital securities
     described in note 9 above and our obligation under the forward contracts
     described in note 11 above. As of December 31, 2003, as a result of the
     adoption of SFAS 150 "Accounting for Certain Financial Instruments with
     Characteristics of both Liabilities and Equity," these elements were
     presented as a separate line item within liabilities. For purposes of our
     U.S. GAAP reconciliation, we record the perpetual debentures issued by C5
     Capital (SPV) Limited and C10 Capital (SPV) Limited as debt and coupon
     payments thereon as part of financial expenses in our income statement.


                                       15



ITEM 4 -  INFORMATION ON THE COMPANY
          --------------------------

         Unless otherwise indicated, references in this annual report to our
sales and assets, including percentages, for a country or region are calculated
before eliminations resulting from consolidation, and thus include intercompany
balances between countries and regions. These intercompany balances are
eliminated when calculated on a consolidated basis.

BUSINESS OVERVIEW

         We are a publicly traded stock corporation with variable capital, or
sociedad anonima bursatil de capital variable, organized under the laws of the
United Mexican States, or Mexico, with our principal executive offices in Av.
Ricardo Margain Zozaya #325, Colonia Valle del Campestre, Garza Garcia, Nuevo
Leon, Mexico 66265. Our main phone number is (011-5281) 8888-8888. CEMEX's agent
for service, exclusively for actions brought by the Securities and Exchange
Commission pursuant to the requirements of the United States Federal securities
laws, is CEMEX, Inc., located at 840 Gessner Road, Suite 1400, Houston, Texas
77024.

         CEMEX was founded in 1906 and was registered with the Mercantile
Section of the Public Register of Property and Commerce in Monterrey, N.L.,
Mexico, on June 11, 1920 for a period of 99 years. At our 2002 annual
shareholders' meeting, this period was extended to the year 2100. As of July 3,
2006, CEMEX's full legal and commercial name is CEMEX, Sociedad Anonima Bursatil
de Capital Variable, or CEMEX, S.A.B. de C.V. The change in our corporate name,
which means that we are now called a publicly traded stock corporation (sociedad
anonima bursatil), was made to comply with the requirements of the new Mexican
Securities Law enacted on December 28, 2005, which became effective on June 28,
2006.

         As of December 31, 2006, we were the third largest cement company in
the world, based on installed capacity of approximately 93.2 million tons. As of
December 31, 2006, we were the largest ready-mix concrete company in the world
with annual sales volumes of approximately 74 million cubic meters, and one of
the largest aggregates companies in the world with annual sales volumes of
approximately 166 million tons, in each case based on our annual sales volumes
in 2006. We are also one of the world's largest traders of cement and clinker,
having traded approximately 16 million tons of cement and clinker in 2006. We
are a holding company primarily engaged, through our operating subsidiaries, in
the production, distribution, marketing and sale of cement, ready-mix concrete,
aggregates and clinker.

         With the acquisition of Rinker, our installed capacity of cement has
increased by approximately three million tons, our annual ready-mix concrete
sales volumes by approximately 20.5 million cubic meters, and our annual
aggregates sales volumes by approximately 118 million tons, based on March 31,
2006 (fiscal year-end) numbers for Rinker.

         We are a global cement manufacturer with operations in North America,
Europe, South America, Central America, the Caribbean, Africa, the Middle East,
Oceania and Asia. As of December 31, 2006, we had total assets of approximately
Ps324 billion (U.S.$30.0 billion) (without giving effect to the Rinker
acquisition) and an equity market capitalization of approximately Ps268 billion
(U.S.$24.8 billion).

         As of December 31, 2006, our main cement production facilities were
located in Mexico, the United States, Spain, the United Kingdom, Germany,
Poland, Croatia, Latvia, Venezuela, Colombia, Costa Rica, the Dominican
Republic, Panama, Nicaragua, Puerto Rico, Egypt, the Philippines and Thailand.
As of December 31, 2006, our assets, cement plants and installed capacity, on an
unconsolidated basis by region, were as set forth below. Installed capacity,
which refers to theoretical annual production capacity, represents gray cement
equivalent capacity, which counts each ton of white cement capacity as
approximately two tons of gray cement capacity. The table below also includes
our proportional interest in the installed capacity of companies in which we
hold a minority interest.

                                       16




                                                                                 AS OF DECEMBER 31, 2006
                                                                -----------------------------------------------
                                                                 Assets after                    Installed
                                                                 eliminations      Number of     Capacity
                                                                (in billions of     Cement       (millions of
                                                                constant Pesos)     Plants      tons per annum)
                                                                ---------------     ------      ---------------
                                                                                          
North America
      Mexico.................................................    Ps 58                15           27.2
      United States..........................................       75                12           13.3
Europe
      Spain..................................................       33                 8           11.0
      United Kingdom.........................................       26                 3            2.8
      Rest of Europe.........................................       42                 9           12.1
South America, Central America and the Caribbean.............       33                14           15.5
Africa and the Middle East...................................       11                 1            5.0
Asia.........................................................        9                 4            6.3
Cement and Clinker Trading Assets and Other Operations.......       37                --             --



         The information in the above table does not give effect to our
acquisition of Rinker. In the above table, "Rest of Europe" includes our
subsidiaries in Germany, France, Ireland, Austria, Poland, Croatia, the Czech
Republic, Hungary, Latvia and other assets in the European region, and, for
purposes of the columns labeled "Assets" and "Installed Capacity," includes our
34% interest, as of December 31, 2006, in a Lithuanian cement producer that
operated one cement plant with an installed capacity of 1.3 million tons as of
December 31, 2006. In addition, "Rest of Europe" includes our Mersmann cement
plant in Germany for purposes of the columns labeled "Number of Cement Plants"
and "Installed Capacity." The Mersmann plant, with an installed capacity of 0.6
million tons as of December 31, 2006, has ceased cement production, although
grinding and packaging activities remain operational. In the above table, "South
America, Central America and the Caribbean" includes our subsidiaries in
Venezuela, Colombia, Costa Rica, the Dominican Republic, Panama, Nicaragua,
Puerto Rico, Guatemala, Argentina and other assets in the Caribbean region. In
the above table, "Africa and the Middle East" includes our subsidiaries in
Egypt, the United Arab Emirates and Israel. In the above table, "Asia" includes
our subsidiaries in the Philippines, Thailand, Malaysia, Bangladesh and other
assets in the Asian region.

         During the last two decades, we embarked on a major geographic
expansion program to diversify our cash flows and enter markets whose economic
cycles within the cement industry largely operate independently from that of
Mexico and which offer long-term growth potential. We have built an extensive
network of marine and land-based distribution centers and terminals that give us
marketing access around the world. The following have been our most significant
acquisitions over the last five years, the two most significant being our recent
acquisition of Rinker and our acquisition in 2005 of RMC:

         o    On June 7, 2007, our public offer to acquire all outstanding
              shares of Rinker became unconditional. As a result, we obtained
              the right to vote approximately 50.3% of Rinker's outstanding
              shares. Our offer was originally scheduled to conclude on June 22,
              2007, but has been extended until July 16, 2007. As of June 25,
              2007, we had been tendered a total of approximately 81% of
              Rinker's outstanding shares. The enterprise value of Rinker is
              approximately U.S.$15.3 billion, which includes approximately
              U.S.$1.1 billion of debt, Rinker's reported debt as of March 31,
              2007.

         o    On March 2, 2006, we acquired two companies engaged in the
              ready-mix concrete and aggregates business in Poland from Unicon
              A/S, a subsidiary of Cementir Group, an Italian cement producer,
              for approximately (euro)12 million. As part of the transaction, we
              sold 4K Beton A/S, our Danish subsidiary, which operated 18
              ready-mix concrete plants in Denmark, to Unicon A/S, for
              approximately (euro)22 million. We received net cash proceeds of
              approximately (euro)6 million, after cash and debt adjustments,
              from this transaction.

         o    In January 2006, we acquired a grinding mill with a grinding
              capacity of 500,000 tons per year in Guatemala for approximately
              U.S.$17.4 million. We entered into an agreement to purchase these
              operations in September 2005 and completed the acquisition on
              January 1, 2006.

                                       17


         o    In July 2005, we acquired 15 ready-mix concrete plants through the
              purchase of Concretera Mayaguezana, a ready-mix concrete producer
              located in Puerto Rico, for approximately U.S.$28 million.

         o    On September 27, 2004, in connection with a public offer to
              purchase the outstanding shares of RMC Group plc, or RMC, we
              acquired approximately 18.8% of RMC's outstanding shares. On March
              1, 2005, we purchased the remaining 81.2% of RMC's outstanding
              shares, completing our acquisition of RMC. The transaction value
              of this acquisition, including our assumption of approximately
              U.S.$2.2 billion of RMC's debt, was approximately U.S.$6.5
              billion. RMC, headquartered in the United Kingdom at that time,
              was a leading international producer and supplier of cement,
              ready-mix concrete and aggregates with significant operations in
              the United Kingdom, Germany, France and the United States, as well
              as operations in other European countries and globally.

         o    In August and September 2003, we acquired 100% of the outstanding
              shares of Mineral Resource Technologies Inc., and the cement
              assets of Dixon-Marquette Cement for a combined purchase price of
              approximately U.S.$100 million. Located in Dixon, Illinois, the
              single cement plant has an annual production capacity of 560,000
              tons. This cement plant was sold on March 31, 2005 as part of the
              U.S. asset sale described below.

         o    In July and August 2002, through a tender offer and subsequent
              merger, we acquired 100% of the outstanding shares of Puerto Rican
              Cement Company, Inc. The aggregate value of the transaction was
              approximately U.S.$281 million, including approximately U.S.$100.8
              million of assumed net debt. In July 2005, Puerto Rican Cement
              Company, Inc., changed its legal name to CEMEX de Puerto Rico,
              Inc.

         o    In July 2002, we purchased, through a wholly-owned indirect
              subsidiary, the remaining 30% economic interest in the Philippine
              cement company Solid Cement Corporation, or Solid, for
              approximately U.S.$95 million.

         As part of our strategy, we periodically review and reconfigure our
operations in implementing our post-merger integration process, and we sometimes
divest assets that we believe are less important to our strategic objectives.
The following have been our most significant divestitures and reconfigurations
over the last five years:

         o    On July 27, 2006, we divested a 24.9% interest in PT Semen Gresik
              to Indonesia-based Rajawali Group for approximately U.S.$337
              million. We have subsequently divested our remaining interest in
              Gresik.

         o    On March 2, 2006, we sold 4K Beton A/S, our Danish subsidiary, as
              described above.

         o    On December 22, 2005, we terminated our 50/50 joint ventures with
              Lafarge Asland in Spain and Portugal, which we acquired in the RMC
              acquisition. The Spanish joint venture operated 122 ready-mix
              concrete plants and 12 aggregates, and the Portuguese joint
              venture operated 31 ready-mix concrete plants and five aggregates
              quarries. Under the terms of the termination agreement, Lafarge
              Asland received a 100% interest in both joint ventures and we
              received (euro)50 million in cash, as well as 29 ready-mix
              concrete plants and five aggregates quarries in Spain.

         o    On July 1, 2005, we and Ready Mix USA, Inc., a privately-owned
              ready-mix concrete producer with operations in the southeastern
              United States, established two jointly-owned limited liability
              companies, CEMEX Southeast, LLC, a cement company, and Ready Mix
              USA, LLC, a ready-mix concrete company, to serve the construction
              materials market in the southeast region of the United States.
              Under the terms of the limited liability company agreements and
              related asset contribution agreements, we contributed two cement
              plants (Demopolis, Alabama and Clinchfield, Georgia) and 11 cement
              terminals to CEMEX Southeast, LLC, representing approximately 98%
              of its contributed capital, while Ready Mix USA contributed cash
              to CEMEX Southeast, LLC representing approximately 2% of its
              contributed capital. In addition, we contributed our ready-mix
              concrete, aggregates and concrete block



                                       18


              assets in the Florida panhandle and southern Georgia to Ready Mix
              USA, LLC, representing approximately 9% of its contributed
              capital, while Ready Mix USA contributed all its ready-mix
              concrete and aggregate operations in Alabama, Georgia, the Florida
              panhandle and Tennessee, as well as its concrete block operations
              in Arkansas, Tennessee, Mississippi, Florida and Alabama to Ready
              Mix USA, LLC, representing approximately 91% of its contributed
              capital. We own a 50.01% interest, and Ready Mix USA owns a 49.99%
              interest, in the profits and losses and voting rights of CEMEX
              Southeast, LLC, while Ready Mix USA owns a 50.01% interest, and we
              own a 49.99% interest, in the profits and losses and voting rights
              of Ready Mix USA, LLC. CEMEX Southeast, LLC is managed by us, and
              Ready Mix USA, LLC is managed by Ready Mix USA. In a separate
              transaction, on September 1, 2005, we sold 27 ready-mix concrete
              plants and four concrete block facilities located in the Atlanta,
              Georgia metropolitan area to Ready Mix USA, LLC for approximately
              U.S.$125 million.

         o    As a condition to closing the RMC acquisition, we agreed with the
              U.S. Federal Trade Commission, or FTC, to divest several ready-mix
              concrete and related assets in the Tucson, Arizona area. Following
              FTC approval, we sold RMC's operations in the Tucson area to
              California Portland Cement Company for a purchase price of
              approximately U.S.$16 million on August 29, 2005.

         o    On April 26, 2005, we divested our 11.9% interest in Cementos Bio
              Bio, S.A., a cement company in Chile, for approximately U.S.$65
              million.

         o    On March 31, 2005, we sold our Charlevoix, Michigan and Dixon,
              Illinois cement plants and several distribution terminals located
              in the Great Lakes region to Votorantim Participacoes S.A, a
              cement company in Brazil, for an aggregate purchase price of
              approximately U.S.$389 million. The combined capacity of the two
              cement plants sold was approximately two million tons per year. On
              June 1, 2005, we sold a cement terminal adjacent to the Detroit
              river to the City of Detroit for a purchase price of approximately
              U.S.$24 million.

         See Item 4 -- "Information on the Company -- Recent Developments --
Rinker Acquisition" and Item 4 -- "Information on the Company -- North America
-- Our U.S. Operations" for a description of certain divestitures and
contributions to Ready Mix USA, LLC that we are required to make as a result of
our acquisition of Rinker.

                                       19


GEOGRAPHIC BREAKDOWN OF OUR 2006 NET SALES

         The following chart indicates the geographic breakdown of our net
sales, before eliminations resulting from consolidation, for the year ended
December 31, 2006:

                              [PIE CHART OMITTED]



         For a description of a breakdown of total revenues by geographic
markets for each of the years ended December 31, 2004, 2005 and 2006, please see
Item 5 -- "Operating and Financial Review and Prospects."

RINKER BUSINESS OVERVIEW

         Rinker is a leading international producer and supplier of materials,
products and services used primarily in the construction industry. As of March
31, 2006, it had operating units in three countries, primarily in the United
States and Australia, and employed over 14,350 people worldwide. The geographic
distribution of Rinker's major operations is shown in the following table:



                                                    AS OF MARCH 31, 2006
                      -----------------------------------------------------------------------------------
                      Number of Quarries,       Number of       Number of Concrete,    Number of Concrete
                           Sand and              Cement         Concrete  Block and       Pipe and
                      Aggregates Plants          Plants          Asphalt Plants         Product Plants
                      -----------------       -----------      - -----------------      ------------------
                                                                                  
United States.....            89                     2                   222                  49
Australia.........            84                     -                   243                  17
China.............             -                     -                     4                   -


         Rinker is one of the world's largest suppliers of ready-mix concrete
and aggregates. For its fiscal year ended March 31, 2006, Rinker sold
approximately 3.8 million tons of cement (including imports), approximately 20.5
million cubic meters of ready-mix concrete and approximately 118 million tons of
aggregates. As of March 31, 2006, Rinker's total annual cement capacity was
approximately three million tons. CEMEX and Rinker both have operations in the
U.S., with Rinker's primary businesses being located in Florida, Arizona and
Nevada.

         The revenue information set forth below with respect to Rinker's
operations for the twelve-month period ended March 31, 2007 has been derived
from Rinker's audited annual financial statements for that period. Rinker's
financial statements were prepared by Rinker in accordance with Australian
International Financial Reporting Standards, or A-IFRS, which differ in
significant respects from Mexican FRS.

         For the twelve-month period ended March 31, 2007, Rinker's revenues
from continuing operations, before revenues from unconsolidated joint ventures
and associated entities, were approximately U.S.$5.3 billion, based on

                                       20


information submitted by Rinker to the Australian Securities Exchange.
Approximately U.S.$4.1 billion of these revenues were generated in the United
States, and approximately U.S.$1.2 billion in Australia and China.

         For further description of Rinker's operations, see Item 4 --
"Information on the Company -- North America -- Our U.S. Operations" and Item 4
-- "Information on the Company -- Description of Rinker Operations."

OUR PRODUCTION PROCESSES

         Cement is a binding agent, which, when mixed with sand, stone or other
aggregates and water, produces either ready-mix concrete or mortar. Mortar is
the mixture of cement with finely ground limestone, and ready-mix concrete is
the mixture of cement with sand, gravel or other aggregates and water.

         Aggregates are naturally occurring sand and gravel or crushed stone
such as granite, limestone and sandstone. Aggregates are used to produce
ready-mix concrete, roadstone, concrete products, lime, cement and mortar for
the construction industry, and are obtained from land based sources such as sand
and gravel pits and rock quarries or by dredging marine deposits.

Cement Production Process

         We manufacture cement through a closely controlled chemical process,
which begins with the mining and crushing of limestone and clay, and, in some
instances, other raw materials. The clay and limestone are then pre-homogenized,
a process which consists of combining different types of clay and limestone. The
mix is typically dried, then fed into a grinder which grinds the various
materials in preparation for the kiln. The raw materials are calcined, or
processed, at a very high temperature in a kiln, to produce clinker. Clinker is
the intermediate product used in the manufacture of cement.

         There are two primary processes used to manufacture cement: the dry
process and the wet process. The dry process is more fuel efficient. As of
December 31, 2006, 55 of our 66 operative production plants used the dry
process, nine used the wet process and two used both processes. Our production
plants that use the wet process are located in Venezuela, Colombia, Nicaragua,
the Philippines, the United Kingdom, Germany and Latvia. As of March 31, 2006,
Rinker's two cement plants both used the dry process. In the wet process, the
raw materials are mixed with water to form slurry, which is fed into a kiln.
Fuel costs are greater in the wet process than in the dry process because the
water that is added to the raw materials to form slurry must be evaporated
during the clinker manufacturing process. In the dry process, the addition of
water and the formation of slurry are eliminated, and clinker is formed by
calcining the dry raw materials. In the most modern application of this dry
process technology, the raw materials are first blended in a homogenizing silo
and processed through a pre-heater tower that utilizes exhaust heat generated by
the kiln to pre-calcine the raw materials before they are calcined to produce
clinker.

         Clinker and gypsum are fed in pre-established proportions into a cement
grinding mill where they are ground into an extremely fine powder to produce
finished cement.

Ready-Mix Concrete Production Process

         Ready-mix concrete is a combination of cement, fine and coarse
aggregates, and admixtures (which control properties of the concrete including
plasticity, pumpability, freeze-thaw resistance, strength and setting time). The
concrete hardens due to the chemical reaction when water is added to the mix,
filling voids in the mixture and turning it into a solid mass.

USER BASE

         Cement is the primary building material in the industrial and
residential construction sectors of most of the markets in which we operate. The
lack of available cement substitutes further enhances the marketability of our
product. The primary end-users of cement in each region in which we operate vary
but usually include, among others, wholesalers, ready-mix concrete producers,
industrial customers and contractors in bulk. The end-users of


                                       21


ready-mix concrete generally include homebuilders, commercial and industrial
building contractors and road builders. Major end-users of aggregates include
ready-mix concrete producers, mortar producers, general building contractors and
those engaged in roadbuilding activity, asphalt producers and concrete product
producers.

OUR BUSINESS STRATEGY

         We seek to continue to strengthen our global leadership by growing
profitably through our integrated positions along the cement value chain and
maximizing our overall performance by employing the following strategies:

FOCUS ON AND VERTICALLY INTEGRATE OUR CORE BUSINESS OF CEMENT,
READY-MIX CONCRETE AND AGGREGATES

         We plan to continue focusing on our core businesses, the production and
sale of cement, ready-mix concrete and aggregates, and the vertical integration
of these businesses. We believe that managing our cement, ready-mix concrete and
aggregates operations as an integrated business can make them more efficient and
more profitable than if they were run separately. We believe that this strategic
focus has enabled us to grow our existing businesses and to expand our
operations internationally.

GEOGRAPHICALLY DIVERSIFY OUR OPERATIONS AND ALLOCATE CAPITAL EFFECTIVELY BY
EXPANDING INTO SELECTED NEW MARKETS

         Subject to economic conditions that may affect our ability to complete
acquisitions, we intend to continue adding assets to our existing portfolio.

         We intend to continue to geographically diversify our cement, ready-mix
concrete and aggregates operations and to vertically integrate in new and
existing markets by investing in, acquiring and developing complementary
operations along the cement value chain.

         We believe that it is important to diversify selectively into markets
that have long-term growth potential. By participating in these markets, and by
purchasing operations that benefit from our management and turnaround expertise
and assets that further integrate into our existing portfolio, in most cases, we
have been able to increase our cash flow and return on capital employed.

         We evaluate potential acquisitions in light of our three primary
investment principles:

         o    The potential for increasing the acquired entity's value should be
              principally driven by factors that we can influence, particularly
              the application of our management and turnaround expertise;

         o    The acquisition should not compromise our financial strength; and

         o    The acquisition should offer a higher long-term return on our
              investment than our cost of capital and should offer a minimum
              return on capital employed of at least ten percent.

         In order to minimize our capital commitments and maximize our return on
capital, we will continue to analyze potential capital raising sources available
in connection with acquisitions, including sources of local financing and
possible joint ventures. We normally consider opportunities for, and routinely
engage in preliminary discussions concerning acquisitions.

IMPLEMENT PLATFORMS TO ACHIEVE OPTIMAL OPERATING STANDARDS AND
QUICKLY INTEGRATE ACQUISITIONS

         By continuing to produce cement at a relatively low cost, we believe
that we will continue to generate cash flows sufficient to support our present
and future growth. We strive to reduce our overall cement production related
costs and corporate overhead through strict cost management policies and through
improving efficiencies. We have implemented several worldwide standard platforms
as part of this process. These platforms were designed to develop efficiencies
and better practices, and we believe they will further reduce our costs,
streamline our processes and extract synergies from our global operations. In
addition, we have implemented centralized management


                                       22


information systems throughout our operations, including administrative,
accounting, purchasing, customer management, budget preparation and control
systems, which are expected to assist us in lowering costs.

         With each international acquisition, we have refined the implementation
of both the technological and managerial processes required to rapidly integrate
acquisitions into our existing corporate structure. The implementation of the
platforms described above has allowed us to integrate our acquisitions more
rapidly and efficiently.

         As of December 31, 2006, we believe we have achieved approximately
U.S.$360 million of annual savings from the RMC acquisition through cost-saving
synergies. In the case of the Rinker acquisition, we similarly expect to achieve
significant cost savings in the acquired operations by optimizing the production
and distribution of ready-mix concrete and aggregates, reducing costs in the
cement manufacturing facilities, partly by implementing CEMEX operating
standards at such facilities, reducing raw materials and energy costs by
centralizing procurement processes and reducing other operational costs by
centralizing technological and managerial processes. We expect to realize annual
savings of approximately U.S.$130 million through cost-saving synergies between
the date of this annual report and 2010.

         We plan to continue to eliminate redundancies at all levels, streamline
corporate structures and centralize administrative functions to increase our
efficiency and lower costs. In addition, in the last few years, we have
implemented various procedures to improve the environmental impact of our
activities as well as our overall product quality.

         Through a worldwide import and export strategy, we will continue to
optimize capacity utilization and maximize profitability by directing our
products from countries experiencing downturns in their respective economies to
target export markets where demand may be greater. Our global trading system
enables us to coordinate our export activities globally and to take advantage of
demand opportunities and price movements worldwide.

PROVIDE THE BEST VALUE PROPOSITION TO OUR CUSTOMERS

         We believe that by pursuing our objective of integrating our business
along the cement value chain we can improve and broaden the value proposition
that we provide to our customers. We believe that by offering integrated
solutions we can provide our customers more reliable sourcing as well as higher
quality services and products.

         We continue to focus on developing new competitive advantages that will
differentiate us from our competitors. In addition, we are strengthening our
commercial and corporate brands in an effort to further enhance the value of our
products and our services for our customers. Our relatively lower cost combined
with our high quality service has allowed us to make significant inroads in
these areas.

         We believe our Construrama branding and our other marketing strategies
in Mexico have strengthened our distribution network, fostered greater loyalty
among distributors and further fortified our commercial network. With
Construrama, we have enhanced the operating and service standards of our
distributors, providing them with training, a standard image and national
publicity. We are also utilizing our Construrama strategy in our Venezuelan
operations and may introduce this branding strategy in other markets, depending
on market conditions and brand competition. Another strategy we have implemented
in Mexico, which we call "Multiproductos," helps our distributors offer a wider
array of construction materials and reinforces the subjective value of our
products.

         In Spain, we have implemented several initiatives to increase the value
of our services to our clients such as mobile access to account information,
24-hour bulk cement dispatch capability, night delivery of ready-mix concrete,
and a customer loyalty incentive program.

STRENGTHEN OUR FINANCIAL STRUCTURE

         We believe our strategy of cost-cutting initiatives, increased value
proposition and geographic expansion will translate into growing operating cash
flows. Our objective is to strengthen our financial structure by:


                                       23


         o    Optimizing our borrowing costs and debt maturities;

         o    Increasing our access to various capital sources; and

         o    Maintaining the financial flexibility needed to pursue future
              growth opportunities.

         We intend to continue monitoring our credit risk while maintaining the
flexibility to support our business strategy.

FOCUS ON ATTRACTING, RETAINING AND DEVELOPING A DIVERSE, EXPERIENCED AND
MOTIVATED MANAGEMENT TEAM

         We will continue to focus on recruiting and retaining motivated and
knowledgeable professional managers. Our senior management encourages managers
to continually 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 increase their diversity of experience.

         We provide our management with ongoing training throughout their
careers. In addition, through our stock-based compensation program, our senior
management has a stake in our financial success.

         The implementation of our business strategy demands effective dynamics
within our organization. Our corporate infrastructure is based on internal
collaboration and global management platforms. We will continue to strengthen
and develop this infrastructure to effectively support our strategy.

OUR CORPORATE STRUCTURE

         We are a holding company, and operate our business through subsidiaries
that, in turn, hold interests in our cement and ready-mix concrete operating
companies, as well as other businesses. The following chart summarizes our
corporate structure as of December 31, 2006. The chart also shows, for each
company, our approximate direct or indirect percentage equity or economic
ownership interest. The chart has been simplified to show only our major holding
companies in the principal countries in which we operate and does not include
our intermediary holding companies and our operating company subsidiaries. The
chart does not take into account our acquisition of Rinker.

                                       24


ORG CHART


                                                          Footnotes on next page


                                       25


     (1)  Centro Distribuidor de Cemento S.A. de C.V. indirectly holds 100% of
          New Sunward Holdings B.V. through other intermediate subsidiaries.
     (2)  Includes CEMEX Espana's 90% interest and Gestion Francazal
          Enterprises' 10% interest.
     (3)  Formerly RMC Group Limited.
     (4)  EMBRA is the holding company for operations in Finland, Norway and
          Sweden.
     (5)  Formerly Rizal Cement Co., Inc. Includes CEMEX Asia Holdings' 70%
          economic interest and 30% interest by CEMEX Espana.
     (6)  Represents CEMEX Asia Holdings' economic interest.
     (7)  Represents our economic interest in four UAE companies: RMC Topmix
          LLC, RMC Supermix LLC, Gulf Quarries Company and Falcon Cement LLC. We
          own a 49% equity interest in each of these companies, and we have
          purchased the remaining 51% of the economic benefits through
          agreements with other shareholders.
     (8)  Includes CEMEX (Costa Rica) S.A.'s 98% interest and CEMEX Espana
          S.A.'s 2% indirect interest.


                                       26



NORTH AMERICA

         For the year ended December 31, 2006, our business in North America,
which includes our operations in Mexico and the United States, represented
approximately 39% of our net sales. As of December 31, 2006, our business in
North America represented approximately 43% of our total installed capacity and
approximately 31% of our total assets. As a result of our acquisition of Rinker,
our North American operations have recently increased significantly.

OUR MEXICAN OPERATIONS

Overview

         Our Mexican operations represented approximately 18% of our net sales
in constant Peso terms, before eliminations resulting from consolidation, for
the year ended December 31, 2006.

         As of December 31, 2006, we owned 100% of the outstanding capital stock
of CEMEX Mexico. CEMEX Mexico is a direct subsidiary of CEMEX and is both a
holding company for some of our operating companies in Mexico and an operating
company involved in the manufacturing and marketing of cement, plaster, gypsum,
groundstone and other construction materials and cement by-products in Mexico.
CEMEX Mexico, indirectly, is also the holding company for our international
operations. CEMEX Mexico, together with its subsidiaries, accounts for a
substantial part of the revenues and operating income of our Mexican operations.

         In March 2006, we announced a plan to construct a new kiln at our Yaqui
cement plant in Sonora, Mexico in order to increase our cement production
capacity to support strong regional demand due to the continued growth of the
housing market in the Northwest region. The current production capacity of the
Yaqui cement plant is approximately 1.6 million tons of cement per year. The
construction of the new kiln, which is designed to increase our total production
capacity in the Yaqui cement plant to approximately 3.0 million tons of cement
per year, is expected to be completed in 2008. We expect our total capital
investment in the construction of this new kiln over the course of two years
will be approximately U.S.$170 million, including approximately U.S.$84 million
during 2007. We expect that this investment will be fully funded with free cash
flow generated during the two-year construction period.

         In September 2006, we announced a plan to construct a new kiln at our
Tepeaca cement plant in Puebla, Mexico. The current production capacity of the
Tepeaca cement plant is approximately 3.2 million tons of cement per year. The
construction of the new kiln, which is designed to increase our total production
capacity in the Tepeaca cement plant to approximately 7.6 million tons of cement
per year, is expected to be completed in 2009. We expect our total capital
investment in the construction of this new kiln over the course of three years
will be approximately U.S.$460 million, including approximately U.S.$125 million
during 2007. We expect that this investment will be fully funded with free cash
flow generated during the three-year construction period.

         During the second quarter of 2002, the production operations at our
oldest cement plant (Hidalgo) were suspended. However, as a result of an
expected increase in regional demand, we resumed production operations at this
plant during May 2006.

         In 2001, we launched the Construrama program, a registered brand name
for construction material stores. Through the Construrama program, we offer to
an exclusive group of our Mexican distributors the opportunity to sell a variety
of products under the Construrama brand name, a concept that includes the
standardization of stores, image, marketing, products and services. As of
December 31, 2006, more than 730 independent concessionaries with close to 2,100
stores were integrated into the Construrama program, with nationwide coverage.

The Mexican Cement Industry

         According to the Instituto Nacional de Estadistica, Geografia e
Informatica, total construction output in Mexico increased 6.9% in 2006 compared
to 2005. The increase in total construction output in 2006 was primarily


                                       27


driven by the commercial and industrial housing and infrastructure
segments, while the retail (self-construction) market increased 3.7%.

         Cement in Mexico is sold principally through distributors, with the
remaining balance sold through ready-mix concrete producers, manufacturers of
pre-cast concrete products and construction contractors. Cement sold through
distributors is mixed with aggregates and water by the end user at the
construction site to form concrete. Ready-mix concrete producers mix the
ingredients in plants and deliver it to local construction sites in mixer
trucks, which pour the concrete. Unlike more developed economies, where
purchases of cement are concentrated in the commercial and industrial sectors,
retail sales of cement through distributors in 2006 accounted for approximately
66% of Mexico's demand. Individuals who purchase bags of cement for
self-construction and other basic construction needs are a significant component
of the retail sector. We estimate that as much as 45% of total demand in Mexico
comes from individuals who address their own construction needs. We believe that
this large retail sales base is a factor that significantly contributes to the
overall performance of the Mexican cement market.

         The retail nature of the Mexican cement market also enables us to
foster brand loyalty, which distinguishes us from other worldwide producers
selling primarily in bulk. We own the registered trademarks for our major brands
in Mexico, such as "Monterrey," "Tolteca" and "Anahuac." We believe that these
brand names are important in Mexico since cement is principally sold in bags to
retail customers who may develop brand loyalty based on differences in quality
and service. In addition, we own the registered trademark for the "Construrama"
brand name for construction material stores.

Competition

         In the early 1970s, the Mexican cement industry was regionally
fragmented. However, over the last 30 years, cement producers in Mexico have
increased their production capacity and the Mexican cement industry has
consolidated into a national market, thus becoming increasingly competitive. The
major cement producers in Mexico are CEMEX; Holcim Apasco, an affiliate of
Holcim; Sociedad Cooperativa Cruz Azul, a Mexican operator; Cementos Moctezuma,
an associate of Ciments Molins; Grupo Cementos Chihuahua, a Mexican operator in
which we own a 49% interest; and Lafarge.

         Potential entrants into the Mexican cement market face various
impediments to entry, including:

         o    the time-consuming and expensive process of establishing a retail
              distribution network and developing the brand identification
              necessary to succeed in the retail market, which represents the
              bulk of the domestic market;

         o    the lack of port infrastructure and the high inland transportation
              costs resulting from the low value-to-weight ratio of cement;

         o    the distance from ports to major consumption centers and the
              presence of significant natural barriers, such as mountain ranges,
              which border Mexico's east and west coasts;

         o    the extensive capital investment requirements; and

         o    the length of time required for construction of new plants, which
              is approximately two years.


                                       28


Our Mexican Operating Network


                               [GRAPHIC OMITTED]



_______________________
(1) In 2002, production operations at the Hidalgo cement plant were suspended,
but were resumed during May 2006.


         Currently, we operate 15 plants (including Hidalgo, which resumed
operations during May 2006) and 93 distribution centers (including eight marine
terminals) located throughout Mexico. We operate modern plants on Mexico's
Atlantic and Pacific coasts, allowing us to take advantage of low-cost maritime
transportation to the Asian, Caribbean, Central and South American and U.S.
markets.

Products and Distribution Channels

         Cement. Our cement operations represented approximately 59% of our
Mexican operations' net sales in 2006. Our domestic cement sales volume
represented approximately 91% of our total Mexican cement sales volume in 2006.
As a result of the retail nature of the Mexican market, our Mexican operations
are not dependent on a limited number of large customers. In 2006, our Mexican
operations sold approximately 60% of their cement sales volume through more than
5,600 distributors throughout the country, most of whom work on a regional
basis. The five most important distributors in the aggregate accounted for
approximately 6% of our Mexican operations' total sales by volume for 2006.

         Ready-Mix Concrete. Our ready-mix concrete operations represented
approximately 25% of our Mexican operations' net sales in 2006. Our ready-mix
concrete operations in Mexico purchase all of their cement requirements from our
Mexican cement operations. Ready-mix concrete is sold through our own internal
sales force, which is divided into national accounts that cater to large
construction companies and local representatives that support medium- and
small-sized construction companies.

         Exports. Our Mexican operations export a portion of their cement
production. Exports of cement and clinker by our Mexican operations represented
approximately 9% of our total Mexican cement sales volume in 2006. In 2006,
approximately 89% of our cement and clinker exports from Mexico were to the
United States, 9% to Central America and the Caribbean and 2% to South America.

         Our Mexican operations' cement and clinker exports to the U.S. are
marketed through wholly-owned subsidiaries of CEMEX Corp., the holding company
of CEMEX, Inc. All transactions between CEMEX and the subsidiaries of CEMEX
Corp., which act as our U.S. importers, are conducted on an arm's-length basis.

                                       29


         Since 1990, exports of cement and clinker to the U.S. from Mexico have
been subject to U.S. anti-dumping duties. In March 2006, the Mexican and U.S.
governments entered into an agreement to eliminate U.S. anti-dumping duties on
Mexican cement imports following a three-year transition period beginning in
2006. In 2006, Mexican cement imports into the U.S. were subject to volume
limitations of three million tons per year. During the second and third year of
the transition period, this amount may be increased in response to market
conditions, subject to a maximum increase per year of 4.5%. For the second year
of the transition period, the amount was increased by 2.7%. Quota allocations to
Mexican companies that import cement into the U.S. are made on a regional basis.
The transitional anti-dumping duty during the three-year transition period was
lowered to U.S.$3.00 per ton, effective as of April 3, 2006, from the previous
amount of approximately U.S.$26.00 per ton. For a more detailed description of
the terms of the agreement between the Mexican and U.S. governments, please see
"Regulatory Matters and Legal Proceedings -- Anti-Dumping."

Production Costs

         Our Mexican operations' cement plants primarily utilize petcoke, but
several are designed to switch to fuel oil and natural gas with minimum
downtime. We have entered into two 20-year contracts, one commencing in 2002 and
the other in 2003, with Petroleos Mexicanos, or PEMEX, pursuant to which PEMEX
agreed to supply us with a total of 1,750,000 tons of petcoke per year. Petcoke
is petroleum coke, a solid or fixed carbon substance that remains after the
distillation of hydrocarbons in petroleum and that may be used as fuel in the
production of cement. The PEMEX petcoke contracts have reduced the volatility of
our fuel costs. In addition, since 1992, our Mexican operations have begun to
use alternate fuels, to further reduce the consumption of residual fuel oil and
natural gas. These alternate fuels represented approximately 2.2% of the total
fuel consumption for our Mexican operations in 2006, and we expect to increase
this percentage to approximately 5% or 6% by the end of 2007.

         In 1999, we reached an agreement with ABB Alstom Power and Sithe
Energies, Inc. (currently Excelon Generation Company LLC) for the financing,
construction and operation of "Termoelectrica del Golfo," a 230 megawatt energy
plant in Tamuin, San Luis Potosi, Mexico and to supply electricity to us for a
period of 20 years. We entered into this agreement in order to reduce the
volatility of our energy costs. The total cost of the project was approximately
U.S.$360 million. The power plant commenced commercial operations on May 1,
2004. In February 2007, ABB Alstom Power and Excelon Generation Company LLC sold
their participations in the project to a subsidiary of The AES Corporation. As
of December 31, 2006, after 32 months of operation, the power plant has supplied
electricity to 10 of our cement plants in Mexico covering approximately 77% of
their needs for electricity and has represented a decrease of approximately 34%
in our cost of electricity at these plants.

         In April 2007, we announced that we had entered into an agreement to
purchase power generated by a wind-driven power plant to be located in Oaxaca,
Mexico, and to be built by Spanish construction company Acciona S.A. This
agreement is subject to several conditions, which had not been fulfilled as of
the date of this annual report. The power plant, which has not yet been
constructed, is expected to generate up to 250 megawatts of electricity per year
and supply one-third of our current power needs in Mexico. The power plant,
which is expected to be financed by Acciona S.A., is estimated to cost
approximately U.S.$400 million.

         We have, from time to time, purchased hedges from third parties to
reduce the effect of volatility in energy prices in Mexico. See Item 5 -
"Operating and Financial Review and Prospects - Liquidity and Capital
Resources."

Description of Properties, Plants and Equipment

         As of December 31, 2006, we had 15 wholly-owned cement plants located
throughout Mexico, with a total installed capacity of 27.2 million tons per
year. As described above, production operations at our Hidalgo cement plant had
been suspended since 2002, but were resumed during May 2006. Our Mexican
operations' most significant gray cement plants are the Huichapan, Tepeaca and
Barrientos plants, which serve the central region of Mexico, the Monterrey,
Valles and Torreon plants, which serve the northern region of Mexico, and the
Guadalajara and Yaqui plants, which serve the Pacific region of Mexico. We have
exclusive access to limestone quarries and clay reserves near each of our plant
sites in Mexico. We estimate that these limestone and clay reserves have an
average remaining life of more than 60 years, assuming 2006 production levels.
As of December 31, 2006, all our production plants in Mexico utilized the dry
process.

                                       30



         As of December 31, 2006, we had a network of 85 land distribution
centers in Mexico, which are supplied through a fleet of our own trucks and rail
cars, as well as leased trucks and rail facilities and eight marine terminals.
In addition, we had 293 ready-mix concrete plants throughout 78 cities in
Mexico, more than 2,388 ready-mix concrete delivery trucks and 19 aggregates
quarries.

Capital Investments

         We made capital expenditures of approximately U.S.$90 million in 2004,
U.S.$102 million in 2005, and U.S.$353 million in 2006 in our Mexican
operations. We currently expect to make capital expenditures of approximately
U.S.$395 million in our Mexican operations during 2007, including those related
to the expansion of the Yaqui and Tepeaca cement plants described above.

OUR U.S. OPERATIONS

Overview

         Our U.S. operations represented approximately 21% of our net sales in
constant Peso terms, before eliminations resulting from consolidation, for the
year ended December 31, 2006. In addition, Rinker's U.S. operations are
described below.

         As of December 31, 2006, we held 100% of CEMEX, Inc., our operating
subsidiary in the United States.

         As of December 31, 2006, we had a cement manufacturing capacity of
approximately 13.3 million tons per year in our U.S. operations, including
nearly 0.7 million tons in proportional interests through minority holdings. As
of December 31, 2006, we operated a geographically diverse base of 12 cement
plants located in Alabama, California, Colorado, Florida, Georgia, Kentucky,
Ohio, Pennsylvania, Tennessee and Texas. As of that date, we also had 48 rail or
water served active cement distribution terminals in the United States. As of
December 31, 2006, we had 238 ready-mix concrete plants located in the
Carolinas, Florida, Georgia, Texas, New Mexico, Nevada, Arizona and California
and aggregates facilities in North Carolina, Arizona, California, Florida, New
Mexico, Nevada and Texas, not including the assets we contributed to Ready Mix
USA, LLC, as described below.

         As of March 31, 2006, Rinker operated, through its Rinker Materials
subsidiary, 89 quarries, sand and aggregates plants in the U.S., principally in
the southeast (Florida, Georgia, Tennessee and Kentucky) and the western U.S.
states (Arizona, Nevada, Oregon, Washington state and northern California). In
total, Rinker supplied approximately 92 million tons of aggregates in the U.S.
during the twelve-month-period ended March 31, 2006. As of that date, Rinker
also operated two cement plants and two cement terminals in Florida, and
operated more than 220 concrete, concrete block and asphalt plants, located
mainly in Florida, Arizona and Nevada. In total, Rinker produced about 13.6
million cubic meters of concrete in the U.S. in the twelve-month period ended
March 31, 2006, as well as about 200 million units of concrete block. As of
March 31, 2006, Rinker also operated 49 concrete pipe and product plants in the
U.S., as well as 30 gypsum supply outlets.

         For the 12-month period ended March 31, 2007, Rinker's operations in
the United States generated revenues of approximately U.S.$4.1 billion, based on
information submitted by Rinker to the Australian Securities Exchange.

         On July 1, 2005, we and Ready Mix USA, Inc., or Ready Mix USA, a
privately-owned ready-mix concrete producer with operations in the southeastern
United States, established two jointly-owned limited liability companies, CEMEX
Southeast, LLC, a cement company, and Ready Mix USA, LLC, a ready-mix concrete
company, to serve the construction materials market in the southeast region of
the United States. Under the terms of the limited liability company agreements
and related asset contribution agreements, we contributed two cement plants
(Demopolis, Alabama and Clinchfield, Georgia) and eleven cement terminals to
CEMEX Southeast, LLC, representing approximately 98% of its contributed capital,
while Ready Mix USA contributed cash to CEMEX Southeast, LLC representing
approximately 2% of its contributed capital. In addition, we contributed our
ready-mix concrete, aggregates and concrete block assets in the Florida
panhandle and southern Georgia to Ready Mix USA, LLC, representing approximately
9% of its contributed capital, while Ready Mix USA contributed all its ready-mix

                                       31


concrete and aggregate operations in Alabama, Georgia, the Florida panhandle and
Tennessee, as well as its concrete block operations in Arkansas, Tennessee,
Mississippi, Florida and Alabama to Ready Mix USA, LLC, representing
approximately 91% of its contributed capital. We own a 50.01% interest, and
Ready Mix USA owns a 49.99% interest, in the profits and losses and voting
rights of CEMEX Southeast, LLC, while Ready Mix USA owns a 50.01% interest, and
we own a 49.99% interest, in the profits and losses and voting rights of Ready
Mix USA, LLC. CEMEX Southeast, LLC is managed by us, and Ready Mix USA, LLC is
managed by Ready Mix USA. In a separate transaction, on September 1, 2005, we
sold 27 ready-mix plants and four concrete block facilities located in the
Atlanta, Georgia metropolitan area to Ready Mix USA, LLC for approximately
U.S.$125 million.

         After the third anniversary of the formation of these companies, Ready
Mix USA will have the option, but not the obligation, to require us to purchase
Ready Mix USA's interest in the two companies at a purchase price equal to the
greater of the book value of the companies' assets or a formula based on the
companies' earnings. This option will expire on the twenty-fifth anniversary of
the formation of these companies.

         Under the Ready Mix USA, LLC joint venture, we are required to
contribute to the Ready Mix USA joint venture any ready-mix concrete and
concrete block assets we acquire inside the joint venture region, while any
aggregates assets acquired inside the region may be added to the Ready Mix USA
joint venture at the option of the non-acquiring member. Building materials,
pipe, transport and storm water treatment assets are not subject to the
contribution clause under the Ready Mix USA joint venture. Upon contribution of
the assets, the non-acquiring member may, subject to certain conditions, elect
among the following financing methods: (i) to make a capital contribution in
cash to the joint venture for an amount equivalent to the determined value of
the assets, (ii) to have the joint venture borrow from a third party the funds
necessary to purchase the assets from us, (iii) to have the joint venture issue
debt to the contributing member in an amount equal to such value or (iv) to
accept dilution of its interest in the joint venture. The value of the
contributed assets is to be determined by the Ready Mix USA joint venture board
within 30 days of the asset acquisition, and is based on a formula based on the
last fiscal year earnings of the assets. The non-acquiring member has 30 days to
elect the financing method for the contributed assets following board approval
of the valuation, and if no option is elected within 30 days the right to select
the option is transferred to the contributing member. Following the financing
election, the contribution or sale of the assets to the joint venture must be
completed within 180 days. If not completed within that period, the
non-acquiring member has the right for 365 days to require the ready-mix
concrete and concrete block assets to be sold to a third party. Aggregates
assets may be retained by the acquiring member if the non-acquiring member
elects not to have the aggregates assets contributed to the joint venture.

         In addition, as a result of our acquisition of Rinker, we are required
by the Consent Decree that we entered into with the Antitrust Division to divest
certain Rinker and CEMEX assets. These divestitures must occur on or before
October 17, 2007, unless the U.S. Department of Justice grants one or more
extensions which may not exceed a total of 60 calendar days.. For a description
of the assets to be divested, see " -- Recent Developments -- Rinker
Acquisition."

         In February 2006, we announced a plan to construct a second kiln at our
Balcones cement plant in New Braunfels, Texas in order to increase our cement
production capacity to support strong demand amidst a shortfall in regional
supplies of cement. The current production capacity of the Balcones cement plant
is approximately 1.1 million tons per year. The construction of the new kiln,
which is designed to increase our total production capacity in the Balcones
cement plant to approximately 2.2 million tons per year, is expected to be
completed in 2008. We expect our total capital investment in the construction of
this new kiln over the course of three years will be approximately U.S.$250
million, including U.S.$27 million in 2006 and an expected U.S.$180 million
during 2007. We expect that this investment will be fully funded with free cash
flow generated during the three-year construction period.

         With the acquisition of Mineral Resource Technologies, Inc. in August
2003, we believe that we achieved a competitive position in the growing fly ash
market. Fly ash is a mineral residue resulting from the combustion of powdered
coal in electric generating plants. Fly ash has the properties of cement and may
be used in the production of more durable concrete. Mineral Resource
Technologies, Inc. is one of the four largest fly ash companies in the United
States, providing fly ash to customers in 25 states. We also own regional pipe
and precast businesses, along with concrete block and paver plants in the
Carolinas and Florida, which we acquired from RMC.

                                       32


The Cement Industry in the United States

         According to the U.S. Census Bureau, total construction spending in the
U.S. increased 4.7% in 2006 compared to 2005. The increase in total construction
spending in 2006 was primarily driven by increased demand from the public sector
and a recovery in industrial and commercial construction, partially offset by
weak demand from the residential sector.

         Demand for cement is derived from the demand for ready-mix concrete and
concrete products which, in turn, is dependent on the demand for construction.
The construction industry is composed of three major sectors, namely, the
residential sector, the industrial-and-commercial sector, and the public sector.
The public sector is the most cement intensive sector, particularly for
infrastructure projects such as streets, highways and bridges.

         Since the early 1990s, cement demand has become less vulnerable to
recessionary pressures than in previous cycles, due to the growing importance of
the generally counter-cyclical public sector. In 2006, according to our
estimates, public sector spending accounted for approximately 47% of the total
cement consumption in the U.S. Strong cement demand over the past decade has
driven industry capacity utilization up to maximum levels. According to the
Portland Cement Association, average domestic capacity utilization has been
close to 92.2% in the last three years.

Competition

         As a result of the lack of product differentiation and the commodity
nature of cement, the cement industry in the U.S. is highly competitive. We
compete with national and regional cement producers in the U.S. Our principal
competitors in the United States are Holcim, Lafarge, Buzzi-Unicem, Heidelberg
Cement and Ash Grove Cement.

         The independent U.S. ready-mix concrete industry is highly fragmented,
and few producers other than vertically integrated producers have annual sales
in excess of U.S.$6 million or have a fleet of more than 20 mixers. Given that
the concrete industry has historically consumed approximately 75% of all cement
produced annually in the U.S., many cement companies choose to be vertically
integrated.

         Aggregates are widely used throughout the U.S. for all types of
construction because they are the most basic materials for building activity.
The U.S. aggregates industry is highly fragmented and geographically dispersed.
According to the 2006 U.S. Geological Survey, approximately 3,800 companies
operated approximately 6,000 quarries and pits.


                                       33


Our United States Cement Operating Network

         The map below reflects our cement plants and cement terminals in the
United States as of December 31, 2006.


                           [U.S. MAP GRAPHIC OMITTED]


                                       34



         The map below reflects Rinker's assets in the United States as of March
31, 2006. As of March 31, 2006, Rinker in the United States operated two cement
plants located in Florida with an installed capacity of 1.9 million tons of
cement, as well as two cement terminals, 172 ready-mix concrete plants, 29
concrete block plants, 21 asphalt plants and 49 concrete pipe and concrete
products plants.


                           [U.S. MAP GRAPHIC OMITTED]



                                       35





         The map below intends to provide an approximate overview of our future
U.S. operations if the integration of Rinker's U.S. assets is executed as
currently planned and if the divestitures of certain of our and Rinker's assets
are completed as required by the Antitrust Division.


                          [U.S. MAP GRAPHIC OMITTED]




Products and Distribution Channels

         Cement. Our cement operations represented approximately 40% of our U.S.
operations' net sales in 2006. We deliver a substantial portion of cement by
rail. Occasionally, these rail shipments go directly to customers. Otherwise,
shipments go to distribution terminals where customers pick up the product by
truck or we deliver the product by truck. The majority of our cement sales are
made directly to users of gray Portland and masonry cements, generally within a
radius of approximately 200 miles of each plant.

         Ready-Mix Concrete. Our ready-mix concrete operations represented
approximately 37% of our U.S. operations' net sales in 2006. Our ready-mix
concrete operations in the U.S. purchase most of their cement requirements from
our U.S. cement operations and roughly half of their aggregates requirements
from our U.S. aggregates operations. In addition, Ready Mix USA, LLC, an entity
in which Ready Mix USA owns a 50.01% interest and we own a 49.99% interest,
purchases most of its cement requirements from our U.S. cement operations. Our
ready-mix products are mainly sold to residential, commercial and public
contractors and to building companies.

         Aggregates. Our aggregates operations represented approximately 11% of
our U.S. operations' net sales in 2006. At 2006 production levels, and based on
45 active locations, it is anticipated that approximately 64% of our
construction aggregates reserves in the U.S. will last for 10 years or more. Our
aggregates are consumed mainly by our internal operations and by our trade
customers in the ready-mix, concrete products and asphalt industries. Ready Mix
USA, LLC purchases most of its aggregates requirements from third parties.

                                       36


Production Costs

         The largest cost components of our plants are electricity and fuel,
which accounted for approximately 41% of our U.S. operations' total production
costs in 2006. We are currently implementing an alternative fuels program to
gradually replace coal with more economic fuels such as petcoke and tires, which
has resulted in reduced energy costs. By retrofitting our cement plants to
handle alternative energy fuels, we have gained more flexibility in supplying
our energy needs and have become less vulnerable to potential price spikes. In
2006, the use of alternative fuels offset the effect on our fuel costs of a
significant increase in coal prices. Power costs in 2006 represented
approximately 19% of our U.S. operations' cash manufacturing cost, which
represents production cost before depreciation. We have improved the efficiency
of our U.S. operations' electricity usage, concentrating our manufacturing
activities in off-peak hours and negotiating lower rates with electricity
suppliers.

Description of Properties, Plants and Equipment

         As of December 31, 2006, we operated 12 cement manufacturing plants in
the U.S., with a total installed capacity of 13.3 million tons per year,
including nearly 0.7 million tons in proportional interests through minority
holdings. As of that date, we operated a distribution network of 48 cement
terminals, eight of which are deep-water terminals. All our cement production
facilities in 2006 were wholly-owned except for the Louisville, Kentucky plant,
which is owned by Kosmos Cement Company, a joint venture in which we own a 75%
interest and a subsidiary of Dyckerhoff AG owns a 25% interest, and the
Demopolis, Alabama and Clinchfield, Georgia plants, which are owned by CEMEX
Southeast, LLC, an entity in which we own a 50.01% interest and Ready Mix USA
owns a 49.99% interest. On March 20, 2006, we agreed to terminate the lease on
the Balcones cement plant prior to expiration and purchased the Balcones cement
plant for approximately U.S.$61 million.

         As of December 31, 2006, we had 238 wholly-owned ready-mix concrete
plants and 45 aggregates quarries, and we also have interests in 161 ready-mix
concrete plants, 13 aggregates quarries and 20 block plants in the Florida
panhandle and southern Georgia, which are owned by Ready Mix USA, LLC, an entity
in which Ready Mix USA owns a 50.01% interest and we own a 49.99% interest.

         As of December 31, 2006, we distributed fly ash through 16 terminals
and 15 third-party-owned utility plants, which operate both as sources of fly
ash and distribution terminals. As of that date, we also owned 32 concrete
block, paver, pipe and precast facilities, and had interests in 20 concrete
block, paver, pipe and precast facilities, which are owned by Ready Mix USA,
LLC.

         As of March 31, 2006, Rinker operated, through its Rinker Materials
subsidiary, 89 quarries, sand and aggregates plants in the U.S., as well as two
cement plants, two cement terminals, more than 220 concrete, concrete block and
asphalt plants, 49 concrete pipe and product plants, and 30 gypsum supply
outlets.

Capital Investments

         We made capital expenditures of approximately U.S.$111 million in 2004,
U.S.$160 million in 2005, and U.S.$344 million in 2006 in our U.S. operations.
We currently expect to make capital expenditures of approximately U.S.$363
million in our U.S. operations during 2007, including those related to the
expansion of the Balcones cement plant described above, but excluding those
related to Rinker's U.S. operations. We do not expect to be required to
contribute any funds in respect of the assets of the companies jointly-owned
with Ready Mix USA as capital expenditures during 2007.

EUROPE

         For the year ended December 31, 2006, our business in Europe, which
includes our operations in Spain, the United Kingdom and our Rest of Europe
segment, as described below, represented approximately 39% of our net sales. As
of December 31, 2006, our business in Europe represented approximately 28% of
our total installed capacity and approximately 33% of our total assets.


                                       37


OUR SPANISH OPERATIONS

Overview

         Our Spanish operations represented approximately 9% of our net sales in
constant Peso terms, before eliminations resulting from consolidation, for the
year ended December 31, 2006.

         As of December 31, 2006, we held 99.7% of CEMEX Espana, S.A., or CEMEX
Espana, our operating subsidiary in Spain. Our cement activities in Spain are
conducted by CEMEX Espana itself and Cementos Especiales de las Islas, S.A., or
CEISA, a joint venture 50%-owned by CEMEX Espana and 50%-owned by Tudela Veguin,
a Spanish cement producer. Our ready-mix concrete activities in Spain are
conducted by Hormicemex, S.A., a subsidiary of CEMEX Espana, and our aggregates
activities in Spain are conducted by Aricemex S.A., a subsidiary of CEMEX
Espana. CEMEX Espana is also a holding company for most of our international
operations.

         In March 2006, we announced a plan to invest approximately (euro)47
million in the construction of a new cement mill and dry mortar production plant
in the Port of Cartagena in Murcia, Spain, including approximately (euro)11
million in 2006 and an expected (euro)21 million during 2007. The new
facilities, which are designed to have a production capacity of nearly one
million tons of cement and 200,000 tons of dry mortar per year, are expected to
be completed in 2008.

         Additionally, during the course of 2007 we will be increasing our
installed capacity for white cement at our Bunol plant, located in the Valencia
region, through the installation of a new production line.

         In February 2007, we announced that Cementos Andorra, a joint venture
between us and the Burgos family, intends to build a new cement production
facility in Teruel, Spain. The new cement plant is expected to have an annual
capacity in excess of 650,000 tons and be completed in the first quarter of
2009. Our investment in the construction of the plant is expected to be
approximately (euro)84 million, including approximately (euro)27 million during
2007. We will hold a 70% interest in Cementos Andorra and the Burgos family will
hold a 30% interest.

The Spanish Cement Industry

         According to the Spanish National Institute of Statistics, in 2006, the
construction sector of the Spanish economy increased 5.8% compared to 2005,
primarily as a result of the growth of construction in the residential sector.
According to the Asociacion de Fabricantes de Cemento de Espana, or OFICEMEN,
the Spanish cement trade organization, cement consumption in Spain in 2006
increased an estimated 8.2% compared to 2005. OFICEMEN modified the percentage
increase of cement consumption in 2005 compared to 2004 from 5.1% to 7.3% as a
result of a change in the applied methodology.

         During the past several years, the level of cement imports into Spain
has been influenced by the strength of domestic demand and fluctuations in the
value of the Euro against other currencies. According to OFICEMEN, cement
imports decreased 3.4% in 2004, and increased 12.4% in 2005 and 3% in 2006.
Clinker imports have been significant, with increases of 6.3% in 2004, 25% in
2005 and 19.7% in 2006. In any case, imports primarily had an impact on coastal
zones, since transportation costs make it less profitable to sell imported
cement in inland markets. OFICEMEN modified the percentage change of cement
imports for 2005 compared to 2004 from a decrease of 1.4% to an increase of
12.4% as a result of a change in the applied methodology. The percentage
increase of clinker imports was also modified for 2005 from a previous increase
of 18.3%.

         In the past, Spain has traditionally been one of the leading exporters
of cement in the world exporting up to 6 million tons per year. Our Spanish
operations' cement and clinker export volumes decreased 23% in 2004 and 40% in
2005, but increased 25% in 2006, primarily as a result of cement demand in
Africa.

Competition

         According to OFICEMEN, as of December 31, 2006, approximately 60% of
installed capacity for production of clinker and cement in Spain was owned by
five multinational groups, including CEMEX.

                                       38


         Competition in the ready-mix concrete industry is particularly intense
in large urban areas. Our subsidiary Hormicemex has achieved a relevant market
presence in areas such as the Baleares islands, the Canarias islands, Levante
(includes the Castellon, Valencia, Alicante and Murcia regions),and Aragon
(includes the Huesca, Zaragoza and Teruel regions). In other areas, such as
central Spain and Cataluna (includes the Barcelona, Lleida and Tarragona
regions), our market share is smaller due to greater competition in the
relatively larger urban areas. The overall high degree of competition in the
Spanish ready-mix concrete industry has in the past led to weak pricing. The
distribution of ready-mix concrete remains a key component of CEMEX Espana's
business strategy.

         Our Spanish Operating Network

                       [MAP OF SPAIN GRAPHIC OMITTED]


Products and Distribution Channels

         Cement. Our cement operations represented approximately 53% of our
Spanish operations' net sales in 2006. CEMEX Espana offers various types of
cement, targeting specific products to specific markets and users. In 2006,
approximately 13% of CEMEX Espana's domestic sales volumes consisted of bagged
cement through distributors, and the remainder of CEMEX Espana's domestic sales
volumes consisted of bulk cement, primarily to ready-mix concrete operators,
which include CEMEX Espana's own subsidiaries, as well as industrial customers
that use cement in their production processes and construction companies.

         Ready-Mix Concrete. Our ready-mix concrete operations represented
approximately 23% of our Spanish operations' net sales in 2006. Our ready-mix
concrete operations in Spain in 2006 purchased over 80% of their cement
requirements from our Spanish cement operations, and approximately 41% of their
aggregates requirements from our Spanish aggregates operations. Ready-mix
concrete sales for public works represented 14% of our total ready-mix concrete
sales, and sales for residential and non-residential buildings represented 86%
of our total ready-mix concrete sales in 2006.

         Aggregates. Our aggregates operations represented approximately 5% of
our Spanish operations' net sales in 2006.

         Exports. Exports of cement by our Spanish operations represented
approximately 1% of our Spanish operations' net sales in 2006. Export prices are
usually lower than domestic market prices, and costs are usually higher for
export sales. Of our total exports from Spain in 2006, 88% consisted of white
cement and 12% consisted


                                       39


of gray cement. In 2006, 37% of our exports from Spain were to the United
States, 50% to Africa and 13% to Europe.

Production Costs

         We have improved the profitability of our Spanish operations by
introducing technological improvements that have significantly reduced our
energy costs, including the use of alternative fuels, in accordance with our
cost reduction efforts. In 2006, we burned meal flour, organic waste, tires and
plastics as fuel, achieving in 2006 a 5.1% substitution rate for petcoke. During
2007, we expect to increase the quantity of those alternative fuels.

Description of Properties, Plants and Equipment

         As of December 31, 2006, our Spanish operations operated eight cement
plants located in Spain, with an installed cement capacity of 11.0 million tons,
including 1.4 million tons of white cement. As of that date, we also owned three
cement mills, one of which is held through CEISA, 28 distribution centers,
including 10 land and 18 marine terminals, and 12 mortar plants, including one
which is held through CEISA and another in which we also hold a 50%
participation. In addition, as of such date, we owned 115 ready-mix concrete
plants, including five through CEISA, and 24 aggregates quarries.

         As of December 31, 2006, we owned nine limestone quarries located in
close proximity to our cement plants, which have useful lives ranging from 10 to
30 years, assuming 2006 production levels. Additionally, we have rights to
expand those reserves to 50 years of limestone reserves, assuming 2006
production levels.

Capital Investments

         We made capital expenditures of approximately U.S.$55 million in 2004,
U.S.$66 million in 2005, and U.S.$162 million in 2006 in our Spanish operations.
We currently expect to make capital expenditures of approximately U.S.$185
million in our Spanish operations during 2007, including those related to the
construction of the new cement mill and dry mortar production plant in the Port
of Cartagena, the construction of a new production line for white cement at our
Bunol plant, and the construction of the new cement production facility in
Teruel, described above.

OUR U.K. OPERATIONS

Overview

         Our U.K. operations represented approximately 10% of our net sales in
constant Peso terms, before eliminations resulting from consolidation, for the
year ended December 31, 2006.

         As of December 31, 2006, we held 100% of CEMEX Investments Limited
(formerly RMC Group Limited), our operating subsidiary in the United Kingdom. We
are a leading provider of building materials in the United Kingdom with
vertically integrated cement, ready-mix concrete, aggregates and asphalt
operations. We are also an important provider of concrete and pre-cast materials
solutions such as concrete blocks, concrete block paving, roof tiles, flooring
systems and sleepers for rail infrastructure.

The U.K. Cement Industry

         According to the U.K.'s Department of Trade and Industry, the annual
GDP growth rate for the U.K. was 2.7% during 2006. Total construction output
grew by 1.3% in 2006, recovering from a decline of 0.9% in 2005 as compared to
the prior year. The private housing sector grew by approximately 2%, and the
public housing sector grew by approximately 23% in 2006, while the total public
construction sector continued its declining trend. Infrastructure construction
declined by 6.3% while public works other than public housing declined by 4% in
2006. Commercial and industrial construction activity continued to grow by 13.3%
and 11.3%, respectively, in 2006. Repair and maintenance activity recovered in
the last quarter of 2006 but declined 2.8% over the full year.

                                       40


Competition

         Our primary competitors in the United Kingdom are Lafarge, Heidelberg,
Hanson, Tarmac and Aggregate Industries (a subsidiary of Holcim), each with
varying regional and product strengths.

Our U.K. Cement Operating Network

                           [U.K. MAP - GRAPHIC OMITTED]




Products and Distribution Channels

         Cement. Our cement operations represented approximately 12% of our U.K.
operations' net sales in 2006. About 90% of our cement sales were of bulk
cement, with the remaining 10% in bags. Our bulk cement is mainly sold to
ready-mix concrete, concrete block and pre-cast product customers and
contractors. Our bagged cement is primarily sold to national builders' merchants
and to "do-it-yourself" superstores. During 2006, we imported 0.2 million tons
of cement, a decrease of 31% compared to our 2005 imports. This decrease was due
to an increase in local production in our three cement plants.

         Ready-Mix Concrete. Our ready-mix concrete operations represented
approximately 31% of our U.K. operations' net sales in 2006. Special products,
including self-compacting concrete, fiber-reinforced concrete, high strength
concrete, flooring concrete and filling concrete, represented 9.4% of our sales
volume. Our ready-mix concrete operations in the U.K. in 2006 purchased
approximately 57% of their cement requirements from our U.K. cement operations
and approximately 66% of their aggregates requirements from our U.K. aggregates
operations. Our ready-mix concrete products are mainly sold to residential,
commercial and public contractors.

         Aggregates. Our aggregates operations represented approximately 24% of
our U.K. operations' net sales in 2006. In 2006, our U.K. aggregates sales were
divided as follows: 47% were sand and gravel, 43% limestone and 10% hard stone.
In 2006, 11% of our aggregates were obtained from marine sources along the U.K.
coast. In 2006, approximately 47% of our U.K. aggregates production was consumed
by our own ready-mix concrete operations as well as our asphalt, concrete block
and pre-cast operations. We also sell aggregates to main contractors to build
roads and other infrastructure projects.

                                       41


Production Costs

         Cement. Overall capacity utilization for the U.K. was 83% during 2006.
Our South Ferriby plant achieved record production levels for cement and
clinker. We continued to implement our cost reduction programs, which resulted
in a reduction of maintenance costs by 12.6% in 2006 as compared to 2005. We
also increased the usage of alternative fuels to 12% from 10% in 2005.

         Ready-Mix Concrete. In 2006, we increased the productivity of our
ready-mix concrete plants by 6% based on volume produced. We also increased the
utilization of our ready-mix concrete trucks, reducing the need to hire costly
third party trucks. In addition, we reduced our maintenance and other fixed
costs in our ready-mix concrete operations by 6% compared to 2005.

         Aggregates. In 2006, we increased the productivity of our quarries by
12% based on volume. In addition, we reduced our maintenance and other fixed
costs in our aggregates operations by 11% compared to 2005.

Description of Properties, Plants and Equipment

         As of December 31, 2006, we operated three cement plants and a clinker
grinding facility in the United Kingdom, with an installed cement capacity of
2.8 million tons per year, an upward adjustment of 0.1 million tons compared to
2005, resulting from the application of standardized capacity calculation
methods. As of that date, we also owned six cement import terminals and operated
269 ready-mix concrete plants and 78 aggregates quarries in the United Kingdom.
In addition, we had operating units dedicated to the asphalt, concrete blocks,
concrete block paving, roof tiles, sleepers, flooring and other pre-cast
businesses in the United Kingdom.

         In January 2007, we announced our plan to construct a new grinding mill
and blending facility at the Port of Tilbury, located on the Thames river east
of London, with an annual capacity of approximately 1.2 million tons per year.
We expect our total capital investment in the construction of this new grinding
mill over the course of two years to be approximately U.S.$51 million, including
U.S.$36 million during 2007.

Capital Investments

         We made capital expenditures of approximately U.S.$115 million in 2006
in our U.K. operations. We currently expect to make capital expenditures of
approximately U.S.$148 million in our U.K. operations during 2007, including
those related to the new grinding mill and blending facility at the Port of
Tilbury, described above.

OUR REST OF EUROPE OPERATIONS

         Our operations in the Rest of Europe, which, as of December 31, 2006,
consisted of our operations in Germany, France, Ireland, Austria, Poland,
Croatia, the Czech Republic, Hungary, Latvia and Italy, as well as our other
European assets and our minority interest in a Lithuanian company, represented
approximately 20% of our 2006 net sales in constant Peso terms, before
eliminations resulting from consolidation.

Our German Operations

         Overview

         As of December 31, 2006, we held 100% of CEMEX Deutschland AG, our
operating subsidiary in Germany. We are a leading provider of building materials
in Germany, with vertically integrated cement, ready-mix concrete, aggregates
and concrete products operations (consisting mainly of prefabricated concrete
ceilings and walls). We maintain a nationwide network for ready-mix concrete and
aggregates in Germany.

         The German Cement Industry

         According to Euroconstruct, total construction in Germany increased by
1.6% in 2006. Data from the Federal Statistical Office indicate an increase in
construction investments by 4.2% for 2006, driven by increases in

                                       42


the residential, non-residential and civil engineering sectors of 4.0%, 4.4% and
4.0%, respectively. According to the German Cement Association, total cement
consumption in Germany increased by 6% to 28.6 millions tons in 2006. The
concrete and aggregates markets showed similar growth with increases of 7% and
6%, respectively.

         Competition

         Our primary competitors in the German cement market are Heidelberg,
Dyckerhoff (a subsidiary of Buzzi-Unicem), Lafarge, Holcim and Schwenk, a local
German competitor. The ready-mix concrete and aggregates markets in Germany are
more fragmented, with more participation of local competitors.

         Our German Operating Network

                       [MAP OF GERMANY - GRAPHIC OMITTED]


(1)  In 2006, we closed the kiln at the Mersmann cement plant, but grinding and
     packing activities remain operational. We do not anticipate resuming kiln
     operations at this plant in 2007.


         Description of Properties, Plants and Equipment

         As of December 31, 2006, we operated two cement plants in Germany (not
including the Mersmann plant). As of December 31, 2006, our installed cement
capacity in Germany was 6.0 million tons per year (including the Mersmann plant
capacity of 0.6 million tons). As of that date, we also operated three cement
grinding mills, 195 ready-mix concrete plants (including two mobile plants), 42
aggregates quarries and four land distribution centers in Germany.

         Capital Investments

         We made capital expenditures of approximately U.S.$50 million in 2006
in our German operations, and we currently expect to make capital expenditures
of approximately U.S.$80 million in our German operations during 2007.

Our French Operations

         Overview

         As of December 31, 2006, we held 100% of RMC France SAS, our operating
subsidiary in France. We are a leading ready-mix concrete producer and a leading
aggregates producer in France. We distribute the majority of our materials by
road and a significant quantity by waterways, seeking to maximize the use of
this efficient and sustainable alternative.

                                       43


         The French Cement Industry

         According to Euroconstruct, total construction output in France grew by
4.5% in 2006. The increase was primarily driven by an increase of 5.1% in the
residential construction sector. According to the French cement producers
association, total cement consumption in France reached 23.9 million tons in
2006, an increase of 5.9% compared to 2005.

         Competition

         Our main competitors in the ready-mix concrete market in France include
Lafarge, Holcim, Italcementi and Vicat. Our main competitors in the aggregates
market in France include Lafarge, Italcementi, Colas (Bouygues) and Eurovia
(Vinci). Many of our major competitors in ready-mix concrete are subsidiaries of
French cement producers, while we must rely on sourcing cement from third
parties.

         Description of Properties, Plants and Equipment

         As of December 31, 2006, we operated 230 ready-mix concrete plants in
France, one maritime cement terminal located in LeHavre, on the northern coast
of France, and 44 aggregates quarries. As of that date, we also participated in
15 aggregates quarries through joint ventures.

         Capital Investments

         We made capital expenditures of approximately U.S.$33 million in 2006
in our French operations, and we currently expect to make capital expenditures
of approximately U.S.$48 million in our French operations during 2007.

Our Irish Operations

         As of December 31, 2006, we held 61.7% of Readymix Plc, our operating
subsidiary in the Republic of Ireland. Our operations in Ireland produce and
supply sand, stone and gravel as well as ready-mix concrete, mortar and concrete
products (blocks, pipes, roof tiles, flooring and paving stones). We are also
involved in the production and distribution of pre-cast, pre-stressed and
architectural pre-cast products for distribution throughout Ireland. As of
December 31, 2006, we operated 42 ready-mix concrete plants, 23 aggregates
quarries, 19 block plants and seven concrete products facilities located in the
Republic of Ireland, Northern Ireland, Scotland, Wales and the Isle of Man. As
of that date, we also operated three maritime terminals for cement importation
for the Republic of Ireland, Northern Ireland and the Isle of Man. We have a
joint venture with Lafarge for the importation and distribution of cement in the
Isle of Man.

         According to DKM Economic Consultants, total construction output in the
Republic of Ireland is estimated to have increased by 14% in 2006. The expected
increase was driven by an increase of 12.8% in the residential sector, 22% in
the non-residential sector and 13.9% in the infrastructure sector. According to
our estimates, total cement consumption in the Republic of Ireland and Northern
Ireland reached 6.5 million tons in 2006, an increase of 5.2%.

         Our main competitors in the ready-mix concrete and aggregates markets
in Ireland are CRH and Kilsaran.

         We made capital expenditures of approximately U.S.$21 million in 2006
in our Irish operations, and we currently expect to make capital expenditures of
approximately U.S.$25 million in our Irish operations during 2007.

Our Austrian Operations

         As of December 31, 2006, we held 100% of CEMEX Austria plc, our
operating subsidiary in Austria. We are a leading participant in the concrete
and aggregates markets in Austria, and also produce admixtures. As of December
31, 2006, we operated 40 ready-mix concrete plants and 30 aggregates quarries in
Austria.

                                       44


         According to Euroconstruct, total construction output in Austria grew
by 4% in 2006. The increase was primarily driven by an increase of 5.4% in
public infrastructure construction in 2006, after an increase of 1.5% in 2005.
Demand for new housing construction and renovation also increased 4.3% due to
economic upswings and demographic changes as a result of immigration. According
to Euroconstruct, total cement consumption in Austria increased 2% in 2006.

         Our main competitors in the ready-mix concrete and aggregates markets
in Austria are Asamer, Wopfinger and Lafarge.

         We made capital expenditures of approximately U.S.$23 million in 2006
in our Austrian operations, and we currently expect to make capital expenditures
of approximately U.S.$8 million in our Austrian operations during 2007. In 2006,
we also sold our precast operations, as we were not vertically integrated in
this business, in order to focus all our resources on our aggregates and
ready-mix concrete operations.

Our Polish Operations

         As of December 31, 2006, we held 100% of CEMEX Polska sp. z.o.o., our
operating subsidiary in Poland. We are a leading provider of building materials
in Poland serving the cement, ready-mix concrete and aggregates markets. On
March 2, 2006, we acquired two companies engaged in the ready-mix concrete and
aggregates business in Poland from Unicon A/S, a subsidiary of Cementir Group,
an Italian cement producer, for approximately (euro)12 million. As of December
31, 2006, we operated two cement plants in Poland, with a total installed cement
capacity of 2.8 million tons per year, a downward adjustment of 0.3 million tons
compared to 2005, resulting from the application of standardized capacity
calculation methods. As of that date, we also operated one grinding mill, 40
ready-mix concrete plants and nine aggregates quarries in Poland, including one
in which we have a 50.1% interest. As of that date, we also operated 11 land
distribution centers and two maritime terminals in Poland.

         According to Central Statistical Office in Poland, total construction
output in Poland increased by 17.5% in 2006. In addition, according to the
Polish Cement Association, total cement consumption in Poland reached 14.4
million tons in 2006, an increase of 21.4% compared to 2005.

         Our primary competitors in the Polish cement, ready-mix concrete and
aggregates markets are Heidelberg, Lafarge, CRH and Dyckerhoff.

         We made capital expenditures of approximately U.S.$13 million in 2006
in our Polish operations, and we currently expect to make capital expenditures
of approximately U.S.$48 million in our Polish operations during 2007.

Our Balkan Operations

         As of December 31, 2006, we held 99.2% of Dalmacijacement d.d., our
operating subsidiary in Croatia. We are the largest cement producer in Croatia
based on installed capacity as of December 31, 2006, according to our estimates.
As of December 31, 2006, we operated three cement plants in Croatia, with an
installed capacity of 2.4 million tons per year, a downward adjustment of 0.2
million tons compared to 2005, resulting from the application of standardized
capacity calculation methods. As of that date, we also operated 12 land
distribution centers, three maritime cement terminals, two ready-mix concrete
facilities and one aggregates quarry in the Croatia, Bosnia and Montenegro
region.

         According to the Croatian Cement Association, total cement consumption
in Croatia reached 2.8 million tons in 2006, an increase of 8.1% compared to
2005.

         Our primary competitors in the Croatian cement market are Nexe and
Holcim.

         We made capital expenditures of approximately U.S.$12 million in 2006
in our Croatian operations, and we currently expect to make capital expenditures
of approximately U.S.$25 million in our Croatian operations during 2007.

                                       45


Our Czech Republic Operations

         As of December 31, 2006, we held 100% of CEMEX Czech Republic, s.r.o.,
our operating subsidiary in the Czech Republic. We are a leading producer of
ready-mix concrete and aggregates in the Czech Republic. We also distribute
cement in the Czech Republic. As of December 31, 2006, we operated 47 ready-mix
concrete plants and seven aggregates quarries in the Czech Republic. As of that
date, we also operated one cement grinding mill and one cement terminal in the
Czech Republic.

         According to Euroconstruct, total construction output in the Czech
Republic increased by 10.4% in 2006. The increase was primarily driven by growth
in the residential construction sector. According to Euroconstruct, total cement
consumption in the Czech Republic reached 4.6 million tons in 2006, an increase
of 7.2% compared to 2005.

         Our main competitors in the cement, ready-mix concrete and aggregates
markets in the Czech Republic are Heidelberg, Dyckerhoff, Holcim and Lafarge.

         We made capital expenditures of approximately U.S.$5 million in 2006 in
our Czech Republic operations, and we currently expect to make capital
expenditures of approximately U.S.$7 million in our Czech Republic operations
during 2007.

Our Hungarian Operations

         As of December 31, 2006, we held 100% of Danubiousbeton Betonkeszito
Kft, our operating subsidiary in Hungary. As of December 31, 2006, we operated
36 ready-mix concrete plants and eight aggregates quarries in Hungary.

         According to the Hungarian Statistical Office, total construction
output in Hungary decreased by 1.6% in 2006. The decrease was primarily driven
by a reduction of public infrastructure construction. Total cement consumption
in Hungary remained unchanged at 4.1 million tons in 2006 compared to 2005.

         Our main competitors in the ready-mix concrete and aggregates markets
in Hungary are Holcim, Heidelberg, Strabag and Lasselsberger.

         We made capital expenditures of approximately U.S.$7 million in 2006 in
our Hungarian operations, and we currently expect to make capital expenditures
of approximately U.S.$7 million in our Hungarian operations during 2007.

Our Latvian Operations

         As of December 31, 2006, we held 100% of SIA CEMEX, our operating
subsidiary in Latvia. We are the only cement producer and a leading ready-mix
producer and supplier in Latvia. As of December 31, 2006, we operated one cement
plant in Latvia with an installed cement capacity of 0.5 million tons per year,
an upward adjustment of 0.1 million tons compared to 2005, resulting from the
application of standardized capacity calculation methods. As of that date, we
also operated two ready-mix concrete plants in Latvia.

         In April 2006, we initiated a plan to expand our cement plant in Latvia
in order to increase our cement production capacity by one million tons per year
to support strong demand in the country. The construction is expected to be
completed in 2008. We expect our total capital investment in the capacity
expansion over the course of three years will be approximately U.S.$258 million,
which includes U.S.$11 million invested during 2006 and an expected U.S.$140
million during 2007.

         We made capital expenditures of approximately U.S.$19 million in 2006
in our Latvian operations, and we currently expect to make capital expenditures
of approximately U.S.$154 million in our Latvian operations during 2007,
including those related to the expansion of our cement plant described above.

                                       46


Our Lithuanian Equity Investment

         As of December 31, 2006, we owned a 34% interest in Akmenes Cementas
AB, a Lithuanian cement producer, which operates one cement plant in Lithuania
with an installed cement capacity of 1.3 million tons per year, a downward
adjustment of 1.3 million tons compared to 2005, resulting from the application
of standardized capacity calculation methods.

Our Italian Operations

         As of December 31, 2006, we held 100% of Cementilce S.R.L., the holding
company for our Italian operations. As of that date, we had three grinding mills
in Italy. The first mill started operations at the end of the third quarter of
2005, and has an installed capacity of 450,000 tons. The second mill began
operations in the second quarter of 2006, and has an installed capacity of
750,000 tons per year. The third mill began operations in the last quarter of
2006, and has an installed capacity of approximately 420,000 tons per year. Our
total investment in the third mill is approximately U.S.$29 million, including
approximately U.S.$4 million in capital investments. We are also in the process
of building a fourth mill in Italy, with an expected installed capacity of
750,000 tons per year. This mill is expected to be completed in the third
quarter of 2007. Our operations in Italy enhance our trading operations in the
Mediterranean region.

         We made capital investments of approximately U.S.$33 million during
2004, approximately U.S.$33 million during 2005, and approximately U.S.$26
million in 2006 in our Italian operations. We currently expect to make capital
investments of approximately U.S.$40 million in our Italian operations during
2007, including those related to the building of our fourth mill.

Our Other European Operations

         As of December 31, 2006, we operated 10 marine cement terminals in
Finland, Norway and Sweden through Embra AS, a leading bulk-cement importer in
the Nordic region.

         We made capital investments of approximately U.S.$5 million during 2006
in our other European operations. We currently expect to make capital
expenditures of approximately U.S.$1 million in our other European operations
during 2007.

SOUTH AMERICA, CENTRAL AMERICA AND THE CARIBBEAN

         For the year ended December 31, 2006, our business in South America,
Central America and the Caribbean, which includes our operations in Venezuela,
Colombia, Argentina, Costa Rica, the Dominican Republic, Panama, Nicaragua,
Puerto Rico and Jamaica, as well as other assets in the Caribbean, represented
approximately 8% of our net sales. As of December 31, 2006, our business in
South America, Central America and the Caribbean represented approximately 17%
of our total installed capacity and approximately 8% of our total assets.

Our Venezuelan Operations

         Overview

         As of December 31, 2006, we held a 75.7% interest in CEMEX Venezuela,
S.A.C.A., or CEMEX Venezuela, our operating subsidiary in Venezuela, which is
listed on the Caracas Stock Exchange. CEMEX Venezuela also serves as the holding
company for our interests in the Dominican Republic, Panama and Trinidad. As of
December 31, 2006, CEMEX Venezuela was the largest cement producer in Venezuela,
based on an installed capacity of 4.6 million tons.

         In March 2004, we launched the Construrama program in Venezuela.
Through the Construrama program, we offer to a group of our Venezuelan
distributors the opportunity to sell a variety of products under the Construrama
brand name, a concept that includes the standardization of stores, image,
marketing, products and services. As of December 31, 2006, 103 stores were
integrated into the Construrama program in Venezuela.

                                       47


         The Venezuelan Cement Industry

         According to the Venezuelan Cement Producer Association, cement
consumption in Venezuela grew approximately 30.5% in 2006, as the Venezuelan
economy continued to recover from Venezuela's political and economic turmoil
during 2003. In February 2003, Venezuelan authorities imposed foreign exchange
controls and implemented price controls on many products, including cement. In
2006, the annual inflation rate in Venezuela increased to 17%, the Venezuelan
Bolivar maintained its parity against the Dollar at 2,150 Bs/Dollar, and gross
domestic product increased 10.3%. In 2005, a major government housing plan began
and continued throughout 2006. On January 31, 2007, the Venezuelan National
Assembly passed an enabling law, granting President Hugo Chavez the power to
govern by decree with the force of law for 18 months. President Chavez has
recently indicated that cement producers in Venezuela may be nationalized in the
future.

         Competition

         As of December 31, 2006, the Venezuelan cement industry included five
cement producers, with a total installed capacity of approximately 10.1 million
tons, according to our estimates. Our global competitors, Holcim and Lafarge,
own controlling interests in Venezuela's second and third largest cement
producers, respectively.

         In 2006, the ready-mix concrete market accounted for only about 8% of
cement consumption in Venezuela, according to our estimates. We believe that
Venezuela's construction companies, which typically prefer to install their own
ready-mix concrete plants on-site, are the most significant barrier to
penetration of the ready-mix concrete sector, with the result that on-site
ready-mix concrete mixing represents a high percentage of total ready-mix
concrete production.

         Other than CEMEX Venezuela, the ready-mix concrete market in Venezuela
is concentrated in two companies, Premezclado Caribe, which is owned by Holcim,
and Premex, which is owned by Lafarge. The rest of the ready-mix concrete sector
in Venezuela is highly fragmented.

         As of December 31, 2006, CEMEX Venezuela was the leading Venezuelan
domestic supplier of cement, based on our estimates of sales of gray and white
cement in Venezuela. In addition, CEMEX Venezuela was the leading domestic
supplier of ready-mix concrete in 2006 with 33 ready-mix concrete production
plants throughout Venezuela.

                                       48


         Our Venezuelan Operating Network

         As shown below, CEMEX Venezuela's three cement plants and one grinding
facility are located near the major population centers and the coast of
Venezuela.

                      [MAP OF VENEZUELA - GRAPHIC OMITTED]


         Distribution Channels

         Transport by land is handled partially by CEMEX Venezuela. During 2006,
approximately 38% of CEMEX Venezuela's total domestic sales were transported
through its own fleet of trucks. CEMEX Venezuela also serves a significant
number of its retail customers directly through its wholly-owned distribution
centers. CEMEX Venezuela's cement is transported either in bulk or in bags.

         Exports

         During 2006, exports from Venezuela represented approximately 26% of
CEMEX Venezuela's net sales. CEMEX Venezuela's main export markets historically
have been the Caribbean and the east coast of the United States. In 2006, 40% of
our exports from Venezuela were to the United States, and 60% were to South
America, Central America and the Caribbean.

         Description of Properties, Plants and Equipment

         As of December 31, 2006, CEMEX Venezuela operated three wholly-owned
cement plants, Lara, Mara and Pertigalete, with a combined installed cement
capacity of approximately 4.6 million tons. As of that date, CEMEX Venezuela
also operated the Guayana grinding facility with a cement capacity of 375,000
tons. As of December 31, 2006, CEMEX Venezuela owned 33 ready-mix concrete
production facilities, one dry mortar plant, 13 land distribution centers and
seven limestone quarries with reserves sufficient for over 100 years at 2006
production levels.

         The Lara and Mara plants and one production line at the Pertigalete
plant use the wet process; the other production line at the Pertigalete plant
uses the dry process. All the plants use primarily natural gas as fuel, but a
small percentage of diesel fuel is also used at the Lara plant. CEMEX Venezuela
has its own electricity generating facilities, which are powered by natural gas
and diesel fuel.

         As of December 31, 2006, CEMEX Venezuela owned and operated four port
facilities, three marine terminals and one river terminal. One port facility is
located at the Pertigalete plant, one at the Mara plant, one at


                                       49


the Catia La Mar terminal on the Caribbean Sea near Caracas, and one at the
Guayana Plant on the Orinoco River in the Guayana Region.

         Capital Investments

         We made capital expenditures of approximately U.S.$14 million in 2004,
U.S.$23 million in 2005, and U.S.$41 million in 2006 in our Venezuelan
operations. We currently expect to make capital expenditures of approximately
U.S.$41 million in our Venezuelan operations during 2007.

Our Colombian Operations

         Overview

         As of December 31, 2006, we owned approximately 99.7% of CEMEX
Colombia, S.A., or CEMEX Colombia, our operating subsidiary in Colombia. As of
December 31, 2006, CEMEX Colombia was the second-largest cement producer in
Colombia, based on installed capacity according to the Colombian Institute of
Cement Producers.

         CEMEX Colombia has a significant market share in the cement and
ready-mix concrete market in the "Urban Triangle" of Colombia comprising the
cities of Bogota, Medellin and Cali. During 2006, these three metropolitan areas
accounted for approximately 46% of Colombia's cement consumption. CEMEX
Colombia's Ibague plant, which uses the dry process and is strategically located
in the Urban Triangle, is Colombia's largest and had an installed capacity of
3.2 million tons as of December 31, 2006. CEMEX Colombia, through its
Bucaramanga and Cucuta plants, is also an active participant in Colombia's
northeastern market. CEMEX Colombia's strong position in the Bogota ready-mix
concrete market is largely due to its access to a ready supply of aggregates
deposits in the Bogota area.

         The Colombian Cement Industry

         According to the Colombian Institute of Cement Producers, the installed
capacity for cement in Colombia in 2006 was 15.9 million tons. According to that
organization, total cement consumption in Colombia reached 8.0 million tons
during 2006, an increase of 2.2%, while cement exports from Colombia reached 2.4
million tons. We estimate that close to 50% of cement in Colombia is consumed by
the self-construction sector, while the housing sector accounts for 28% of total
cement consumption and has been growing in recent years. The other construction
segments in Colombia, including the public works and commercial sectors, account
for the balance of cement consumption in Colombia.

         Competition

         The "Grupo Empresarial Antioqueno," or Argos, owns or has interests in
11 of Colombia's 18 cement plants. Argos has established a leading position in
the Colombian coastal markets through Cementos Caribe in Barranquilla, Compania
Colclinker in Cartagena and Tolcemento in Tolu. The other principal cement
producer is Holcim Colombia.

                                       50



         Our Colombian Operating Network

                       [MAP OF COLOMBIA - GRAPHIC OMITTED]



         Description of Properties, Plants and Equipment

         As of December 31, 2006, CEMEX Colombia owned six cement plants and one
grinding mill, having a total installed capacity of 4.8 million tons per year.
Three of these plants utilize the wet process and three plants utilize the dry
process. CEMEX Colombia also has an internal electricity generating capacity of
24.7 megawatts through a leased facility. As of December 31, 2006, CEMEX
Colombia owned seven land distribution centers, one mortar plant, 32 ready-mix
concrete plants, one concrete products plant and four aggregates operations. As
of that date, CEMEX Colombia also owned five limestone quarries with minimum
reserves sufficient for over 60 years at 2006 production levels.

         Capital Investments

         We made capital expenditures of approximately U.S.$9 million in 2004,
U.S.$7 million in 2005 and U.S.$31 million in 2006 in our Colombian operations.
We currently expect to make capital investments of approximately U.S.$14 million
in our Colombian operations during 2007.

Our Costa Rican Operations

         As of December 31, 2006, we owned a 99.1% interest in CEMEX (Costa
Rica), S.A., or CEMEX (Costa Rica), our operating subsidiary in Costa Rica and a
leading cement producer in the country. As of December 31, 2006, CEMEX (Costa
Rica) operated one cement plant in Costa Rica, with an installed capacity of 0.9
million tons. As of that date, CEMEX (Costa Rica) also operated a grinding mill
in the capital San Jose. As of December 31, 2006, CEMEX Costa Rica operated
seven ready-mix concrete plants, one aggregates quarry, and one land
distribution center.

         During 2006, exports of cement by our Costa Rican operations
represented approximately 8% of our total cement production in Costa Rica. In
2006, 7% of our exports from Costa Rica were to Nicaragua, 84% to El Salvador
and 9% to Guatemala.

         Approximately 1.3 million tons of cement were sold in Costa Rica during
2006, according to Camara de la Construccion de Costa Rica, the Costa Rican
construction industry association. The Costa Rican cement market is a
predominantly retail market, and we estimate that over three quarters of cement
sold is bagged cement.

                                       51


         The Costa Rican cement industry includes two producers, CEMEX (Costa
Rica) and Holcim Costa Rica.

         We made capital expenditures of approximately U.S.$3 million in 2004,
U.S.$5 million in 2005 and U.S.$7 million in 2006 in our Costa Rican operations.
We currently expect to make capital expenditures of approximately U.S.$8 million
in our Costa Rican operations during 2007.

Our Dominican Republic Operations

         As of December 31, 2006, we held, through CEMEX Venezuela, 99.9% of
CEMEX Dominicana, S.A. (formerly Cementos Nacionales, S.A.), or CEMEX
Dominicana, our operating subsidiary in the Dominican Republic and a leading
cement producer in the country. CEMEX Dominicana's sales network covers the
country's main consumption areas, which are Santo Domingo, Santiago de los
Caballeros, La Vega, San Pedro de Macoris, Azua and Bavaro. CEMEX Dominicana
also has an 18-year lease arrangement with the Dominican Republic government
related to the mining of gypsum, which enables CEMEX Dominicana to supply all
local and regional gypsum requirements.

         In June 2003, CEMEX Dominicana announced a U.S.$130 million investment
plan to install a new kiln for producing clinker with an annual capacity of 1.6
million tons of clinker. This new kiln, which increased our total cement
production capacity in the Dominican Republic to 2.6 million tons per year,
began operations at the end of 2005.

         In 2006, Dominican Republic cement consumption reached 3.8 million
tons. Our principal competitors in the Dominican Republic are Domicen, an
Italian cement producer that started cement production in 2005, Cementos Cibao,
a local competitor, Cemento Colon, an affiliate of Holcim and Cementos Andinos,
a Colombian cement producer.

         As of December 31, 2006, CEMEX Dominicana operated one cement plant in
the Dominican Republic, with an installed capacity of 2.6 million tons per year,
and held a minority interest in one grinding mill. As of that date, CEMEX
Dominicana also operated eight ready-mix concrete plants, one aggregates quarry,
six land distribution centers and two marine terminals.

         We made capital expenditures of approximately U.S.$56 million in 2004,
U.S.$87 million in 2005, and U.S.$27 million in 2006 in our Dominican Republic
operations. We currently expect to make capital investments of approximately
U.S.$10 million in our Dominican Republic operations during 2007.

Our Panamanian Operations

         As of December 31, 2006, we held, through CEMEX Venezuela, a 99.3%
interest in Cemento Bayano, S.A., or Cemento Bayano, our operating subsidiary in
Panama and a leading cement producer in the country. As of December 31, 2006,
Cemento Bayano operated one cement plant in Panama, with an installed capacity
of 0.5 million tons per year. As of that date, Cemento Bayano also owned and
operated 11 ready-mix concrete plants, two aggregates quarries and three land
distribution centers.

         Approximately 1.1 million cubic meters of ready-mix concrete were sold
in Panama during 2006, according to the General Comptroller of the Republic of
Panama (Contraloria General de la Republica de Panama). Panamanian cement
consumption increased 11% in 2006, according to our estimates. The Panamanian
cement industry includes two cement producers, Cemento Bayano and Cemento
Panama, an affiliate of Holcim and Colombian Cementos Argos.

         On February 6, 2007, we announced that we intend to build a new kiln at
our Bayano plant in Panama. The new kiln is expected to increase the Bayano
plant's annual clinker production capacity by approximately 1.15 million tons to
approximately 1.6 million tons of clinker per year. Cement production capacity
is expected to increase to 1.4 million tons per year. Construction of the new
kiln is expected to be completed in 2009 with an investment of approximately
U.S.$200 million.

                                       52


         We made capital expenditures of approximately U.S.$6 million in 2004,
U.S.$5 million in 2005, and U.S.$26 million in 2006 in our Panamanian
operations. We currently expect to make capital expenditures of approximately
U.S.$47 million in our Panamanian operations during 2007, including those
related to the construction of the new kiln described above.

Our Nicaraguan Operations

         As of December 31, 2006, we owned 100% of CEMEX Nicaragua, S.A., or
CEMEX Nicaragua, our operating subsidiary in Nicaragua. As of that date, CEMEX
Nicaragua leased and operated one cement plant with an installed capacity of 0.5
million tons. Since March 2003, CEMEX Nicaragua has also leased a 100,000 ton
milling plant in Managua, which has been used exclusively for petcoke milling.

         According to our estimates, approximately 0.7 million tons of cement
were sold in Nicaragua during 2006. Two market participants compete in the
Nicaraguan cement industry: CEMEX Nicaragua and Holcim.

         In the first half of 2006, we added two ready-mix concrete plants to
our ready-mix concrete business in Nicaragua. We now operate one fixed ready-mix
concrete plant and three mobile plants in the country. According to our
estimates, approximately 110,000 cubic meters of ready-mix concrete were sold in
Nicaragua during 2006. At the end of 2006, we also bought an aggregates quarry.

         We made capital expenditures of approximately U.S.$3 million in 2004,
U.S.$7 million in 2005 and U.S.$6 million in 2006 in our Nicaraguan operations.
We currently expect to make capital expenditures of approximately U.S.$4 million
in our Nicaraguan operations during 2007.

Our Puerto Rican Operations

         As of December 31, 2006, we owned 100% of CEMEX de Puerto Rico, Inc.
(formerly Puerto Rican Cement Company, Inc.), or CEMEX Puerto Rico, our
operating subsidiary in Puerto Rico. As of December 31, 2006, CEMEX Puerto Rico
operated one cement plant, with an installed cement capacity of approximately
1.1 million tons per year. As of that date, CEMEX Puerto Rico also owned and
operated 20 ready-mix concrete plants, one aggregates quarry that was acquired
in November 2006 for approximately U.S.$13 million, and two land distribution
centers.

         In 2006, Puerto Rican cement consumption reached 1.8 million tons. The
Puerto Rican cement industry in 2006 was comprised of two cement producers,
CEMEX Puerto Rico, and San Juan Cement Co., an affiliate of Italcementi, and
Antilles Cement Co., an independent importer.

         We made capital expenditures of approximately U.S.$8 million in 2004,
U.S.$10 million in 2005, and U.S.$33 million in 2006 in our Puerto Rican
operations, including the acquisition of the aggregates quarry described above.
We currently expect to make capital investments of approximately U.S.$19 million
in our Puerto Rican operations during 2007.

Our Guatemalan Operations

         In January 2006, we acquired a controlling stake (51%) in a grinding
mill with an installed capacity of 500,000 tons per year in Guatemala for
approximately U.S.$17.4 million. As of December 31, 2006, we also owned and
operated three land distribution centers and a clinker silo close to a maritime
terminal.

Our Other South America, Central America and the Caribbean Operations

         As of December 31, 2006, we held 100% of Readymix Argentina S.A., which
operates four ready-mix concrete plants in Argentina.

         We believe that the Caribbean region holds considerable strategic
importance because of its geographic location. As of December 31, 2006, we
operated a network of eight marine terminals in the Caribbean region, which

                                       53


facilitated exports from our operations in several countries, including Mexico,
Venezuela, Costa Rica, Puerto Rico, Spain, Colombia and Panama. Three of our
marine terminals are located in the main cities of Haiti, two are in the
Bahamas, one is in Bermuda, one is in Manaus, Brazil and one is in the Cayman
Islands.

         As of December 31, 2006, we had minority positions in Trinidad Cement
Limited, with cement operations in Trinidad and Tobago, Barbados and Jamaica, as
well as a minority position in Caribbean Cement Company Limited in Jamaica,
National Cement Ltd. in the Cayman Island and Bermuda Cement Co. in Bermuda. As
of December 31, 2006, we also hold a 100% interest in Rugby Jamaica Lime &
Minerals Limited, which operates a calcinated lime plant in Jamaica with a
capacity of 120,000 tons per year.

         We made capital expenditures in our other operations in South America,
Central America and the Caribbean of approximately U.S.$2 million in 2006.

AFRICA AND THE MIDDLE EAST

         For the year ended December 31, 2006, our business in Africa and the
Middle East, which includes our operations in Egypt, the United Arab Emirates
and Israel, represented approximately 4% of our net sales. As of December 31,
2006, our business in Africa and the Middle East represented approximately 5% of
our total installed capacity and approximately 3% of our total assets.

Our Egyptian Operations

         As of December 31, 2006, we had a 95.8% interest in Assiut Cement
Company, or Assiut, our operating subsidiary in Egypt. As of December 31, 2006,
we operated one cement plant in Egypt, with an installed capacity of
approximately 5.0 million tons, an upward adjustment of 0.1 million tons
compared to 2005, resulting from the implementation of process and equipment
optimization procedures in our Egyptian operations. This plant is located
approximately 200 miles south of Cairo and serves the upper Nile region of
Egypt, as well as Cairo and the delta region, Egypt's main cement market. In
addition, as of that date we operated three ready-mix concrete plants and six
land distribution centers in Egypt.

         According to our estimates, the Egyptian market consumed approximately
30 million tons of cement during 2006. Cement consumption increased by 7.3% in
2006, due to an economic recovery in Egypt and the positive effect of government
reforms.

         As of December 31, 2006, the Egyptian cement industry had a total of
nine cement producers, with an aggregate annual installed cement capacity of
approximately 42 million tons. According to the Egyptian Cement Council, during
2006, Holcim (minority shareholder in Egyptian Cement Company), Lafarge
(Alexandria Portland Cement and Beni Suef Cement), CEMEX (Assiut) and
Italcementi (Suez Cement, Tourah Cement and Helwan Portland Cement), four of the
largest cement producers in the world, represented approximately 73% of the
total installed capacity in Egypt. Other significant competitors in the Egyptian
market are Ameriyah (Cimpor), National, Sinai, Misr Beni Suef and Misr Quena
Cement Companies.

         We made capital expenditures of approximately U.S.$9 million in 2004,
U.S.$9 million in 2005, and U.S.$16 million in 2006 in our Egyptian operations.
We currently expect to make capital expenditures of approximately U.S.$29
million in our Egyptian operations during 2007.

Our United Arab Emirates (UAE) Operations

         As of December 31, 2006, we held a 49% equity interest in four UAE
companies: CEMEX Topmix LLC and CEMEX Supermix LLC, two ready-mix holding
companies, Gulf Quarries Company, an aggregates company, and CEMEX Falcon
LLC, which specializes in trading. We are not allowed to have a majority
interest in these companies since UAE law requires 51% ownership by UAE
nationals. However, through agreements with other shareholders in these
companies, we have purchased the remaining 51% of the economic benefits in
each of the companies. As a result, we own a 100% economic interest in all
four companies. As of December 31, 2006, we


                                       54


operated 12 ready-mix concrete plants in the UAE, serving the markets of Dubai,
Abu Dhabi, Ras Al Khaimah and Sharjah, together with our investment in an
aggregates quarry in the UAE.

         In March 2006, we announced a plan to invest approximately U.S.$50
million in the construction of a new grinding facility for cement and slag in
Dubai. The new facility, which is designed to increase our total grinding
capacity in the region to approximately 1.6 million tons per year, is expected
to be completed in 2007.

         We made capital expenditures of approximately U.S.$24 million in 2006
in our UAE operations, including those related to the construction of the new
grinding facility in Dubai described above. We currently expect to make capital
expenditures of approximately U.S.$62 million in our UAE operations during 2007,
including those related to the new grinding facility.

Our Israeli Operations

         As of December 31, 2006, we held 100% of CEMEX Holdings (Israel) Ltd.,
our operating subsidiary in Israel. We are a leading producer and supplier of
raw materials for the construction industry in Israel. In addition to ready-mix
concrete products, we produce a diverse range of building materials and
infrastructure products in Israel. As of December 31, 2006, we operated 59
ready-mix concrete plants, one concrete products plant and one admixtures plant
in Israel.

         As of December 31, 2006, we also held a 50% interest in Lime & Stone
(L&S) Ltd., a leading aggregates producer in Israel and an important supplier of
lime, asphalt and marble. As of December 31, 2006, through Lime & Stone (L&S)
Ltd., we operated 12 aggregates quarries, two asphalt plants, one lime factory
and one marble facility.

         We made capital expenditures of approximately U.S.$7 million in 2006 in
our Israeli operations, and we currently expect to make capital expenditures of
approximately U.S.$5 million in our Israeli operations during 2007.

ASIA

         For the year ended December 31, 2006, our business in Asia, which
includes our operations in the Philippines, Thailand and Malaysia, as well as
our other assets in Asia, represented approximately 2% of our net sales. As of
December 31, 2006, our business in Asia represented approximately 7% of our
total installed capacity and approximately 2% of our total assets. In July and
August, 2006, we sold our 25.5% interest in PT Semen Gresik, an Indonesian
cement producer, for approximately U.S.$346 million (Ps3,737 million).

Our Philippine Operations

         As of December 31, 2006, on a consolidated basis through various
subsidiaries, we held 100% of the economic benefits of our two operating
subsidiaries in the Philippines, Solid and APO Cement Corporation, or APO.

         According to Cement Manufacturers' Association of the Philippines
(CEMAP), cement consumption in the Philippine market, which is primarily retail,
totaled 11.7 million tons during 2006. Philippine demand for cement decreased by
approximately 0.6% in 2006. Domestic cement consumption in the Philippines has
declined during seven of the last 10 years.

         As of December 31, 2006, the Philippine cement industry had a total of
18 cement plants. Annual installed clinker capacity is 22 million tons,
according to CEMAP. Major global cement producers own approximately 93% of this
capacity. As of December 31, 2006, our major competitors in the Philippine
cement market were Holcim, which had interests in five local cement plants, and
Lafarge, which had interests in seven local cement plants.

         As of December 31, 2006, our Philippine operations included three
cement plants with a total capacity of 5.6 million tons per year, one aggregates
quarry, six land distribution centers and three marine distribution terminals.

                                       55


         We made capital expenditures of approximately U.S.$2 million in 2004,
U.S.$4 million in 2005, and U.S.$11 million in 2006 in our Philippine
operations. We currently expect to make capital expenditures of approximately
U.S.$15 million in our Philippine operations during 2007.

Our Thai Operations

         As of December 31, 2006, we held, on a consolidated basis, 100% of the
economic benefits of CEMEX (Thailand) Co. Ltd., or CEMEX (Thailand), our
operating subsidiary in Thailand. As of December 31, 2006, CEMEX (Thailand)
owned one cement plant in Thailand, with an installed capacity of approximately
0.7 million tons.

         According to our estimates, at December 31, 2006, the cement industry
in Thailand had a total of 14 cement plants, with an aggregate annual installed
capacity of approximately 55.5 million tons. We estimate that there are five
major cement producers in Thailand, four of which represent 96% of installed
capacity and 94% of the market. Our major competitors in the Thai market, which
have a significantly larger presence than CEMEX (Thailand), are Siam Cement,
Holcim, TPI Polene and Italcementi.

         We made capital expenditures of approximately U.S.$3 million in 2004,
U.S.$4 million in 2005, and U.S.$4 million in 2006 in our Thai operations. We
currently expect to make capital expenditures of approximately U.S.$4 million in
our Thai operations during 2007.

Our Malaysian Operations

         As of December 31, 2006, we held 100% of RMC Industries (Malaysia) Sdn
Bhd, our operating subsidiary in Malaysia. We are a leading ready-mix concrete
producer in Malaysia, with a significant share in the country's major urban
centers. As of December 31, 2006, we operated 21 ready-mix concrete plants, five
asphalt plants and three aggregates quarries in Malaysia.

         Our main competitors in the ready-mix concrete and aggregates markets
in Malaysia are YTL, Lafarge and Hanson.

         We made capital expenditures of approximately U.S.$1 million in 2005
and approximately U.S.$2 million in 2006 in our Malaysian operations. We
currently expect to make capital expenditures of approximately U.S.$2 million in
our Malaysian operations during 2007.

Other Asian Investments

         Since April 2001, we have been operating a grinding mill near Dhaka,
Bangladesh. As of December 31, 2006, this mill had a production capacity of
550,000 tons per year. A majority of the supply of clinker for the mill is
produced by our operations in the region. In addition, since June 2001, we have
also operated a cement terminal in the port of Taichung located on the west
coast of Taiwan.

         We made capital expenditures in our other Asian investments of
approximately U.S.$1 million in 2006, and we currently expect to make capital
expenditures of approximately U.S.$9 million in 2007.

OUR TRADING OPERATIONS

         We traded approximately 16 million tons of cement and clinker in 2006,
in line with our 2005 trading volume. Approximately 48% of the volume we traded
in 2006 consisted of exports from our operations in Costa Rica, Croatia, Egypt,
Germany, Mexico, the Philippines, Poland, Puerto Rico, Spain and Venezuela.
Approximately 52% was purchased from third parties in countries such as Belgium,
China, Egypt, France, India, Indonesia, Israel, Japan, Lithuania, South Korea,
Taiwan, Thailand and Turkey. As of December 31, 2006, we had trading activities
in 108 countries. This broad geographic coverage allows us to competitively
serve markets worldwide.

                                       56


         Beginning in 2005, we gained an important presence in slag cement
trading markets, particularly in Europe and the Middle East, having traded
approximately 1.5 million tons of slag cement in 2005. Slag cement (also called
ground granulated blast furnace slag) is a hydraulic cement produced during the
reduction of iron ore to iron in a blast furnace. In 2006, we continued to gain
presence in slag trading markets, having traded approximately 1.8 million tons
of slag cement, a 20% increase over 2005.

         Our trading network enables us to maximize the capacity utilization of
our facilities worldwide while reducing our exposure to the inherent cyclicality
of the cement industry. We are able to distribute excess capacity to regions
around the world where there is demand. In addition, our worldwide network of
strategically located marine terminals allows us to coordinate maritime
logistics on a global basis and minimize transportation expenses. Our trading
operations also enable us to explore new markets without significant initial
capital investment.

DESCRIPTION OF RINKER OPERATIONS

         Set forth below is a brief description of Rinker's worldwide
operations, which include significant operations in the United States and
Australia, as well as operations in China. As described above, our public offer
to acquire Rinker became unconditional on June 7, 2007. As a result, we obtained
the right to vote approximately 50.3% of Rinker's outstanding shares. Our offer
was originally scheduled to conclude on June 22, 2007, but has been extended
until July 16, 2007. As of June 25, 2007, we had been tendered a total of
approximately 81% of Rinker's outstanding shares.

         For the twelve-month period ended March 31, 2007, Rinker's revenues
from continuing operations, before revenues from unconsolidated joint ventures
and associated entities, were approximately U.S.$5,337 million. This revenue
information has been derived from Rinker's annual financial statements for that
period as submitted by Rinker to the Australian Securities Exchange. Rinker's
financial statements were prepared by Rinker in accordance with A-IFRS, which
differ in significant respects from Mexican FRS.

         As of the date of this annual report, we had not yet finalized our
budget for expected capital expenditures related to Rinker's operations for
2007.

United States

         For a description of Rinker's operations in the United States, see
" -- North America -- Our U.S. Operations" above.

Australia

         Overview

         In Australia, Rinker, through its Readymix subsidiary, operates a
vertically integrated heavy building materials business with leading market
positions, based on Rinker's knowledge of the industry. As of March 31, 2006,
Readymix had 344 operating plants including 84 quarries and sand mines, 243
concrete plants and 17 concrete pipe and product plants. Concrete pipe and
products are produced by Readymix's Humes business. As of March 31, 2006,
Readymix also holds a 25% interest in Australia's largest cement manufacturer,
the Cement Australia joint venture, which had the capacity to produce over three
million tons of cement a year from three plants in Gladstone, Queensland;
Railton, Tasmania; and Kandos, New South Wales.

         For the twelve-month period ended March 31, 2007, Rinker's operations
in Australia and China generated revenues of approximately U.S.$1,198 million.
This revenue information has been derived from Rinker's annual financial
statements for that period as submitted by Rinker to the Australian Securities
Exchange.

         The Australian Cement Industry

         Based on estimates by the Australian Bureau of Statistics, total
Australian construction and building market spending increased by an annual
growth rate of 5.4% between the years ended December 31, 1995 and December 31,

                                       57


2005. For the year ended December 31, 2005, the Australian Bureau of Statistics
estimated that total construction spending by segment was about 40% for
residential, 21% for commercial and 39% for civil. For the year ended December
31, 2005, there was a slight increase in spending in the residential segment;
however, spending across the commercial and civil segments increased
significantly. Total construction spending increased by 12.8% for the year ended
December 31, 2005 compared to the previous year. Residential spending was up by
1.8%, commercial by 17.2% and civil by 24.3%.

         Competition

         As of March 31, 2006, Rinker's major competitors in the Australian
aggregates and cement markets were Boral and Hanson Australia. Its main
competitor in the concrete pipe market was Rocla Pipeline Products, and there
were also small companies who competed in individual regional sectors of that
market. As of March 31, 2006, Rinker's main competitors in the Australian cement
market were Blue Circle Southern Cement (a 100% owned Boral subsidiary),
Adelaide Brighton Limited and importers of cement.

         Rinker's Australian Operating Network


                       [MAP OF AUSTRALIA - GRAPHIC OMITTED]



         Description of Properties, Plants and Equipment

         As of March 31, 2006, Rinker operated 84 quarries and sand mines, 243
concrete plants, 17 concrete pipe and product plants in Australia, and held a
25% interest in the Cement Australia joint venture, which operated three cement
plants and eight cement terminals.

China

         As of March 31, 2006, Rinker, through its Australian Readymix
subsidiary, operated four concrete plants in China, located in the northern
cities of Tianjin and Qingdao.

                                       58


REGULATORY MATTERS AND LEGAL PROCEEDINGS

         A description of material regulatory and legal matters affecting us is
provided below.

TARIFFS

         The following is a discussion of tariffs on imported cement in our
major markets.

Mexico

         Mexican tariffs on imported goods vary by product and have been as high
as 100%. In recent years, import tariffs have been substantially reduced and
currently range from none at all for raw materials to over 20% for finished
products, with an average weighted tariff of approximately 3.7%. As a result of
the North American Free Trade Agreement, or NAFTA, as of January 1, 1998, the
tariff on cement imported into Mexico from the United States or Canada was
eliminated. However, a tariff in the range of 7% ad valorem will continue to be
imposed on cement produced in all other countries unless tariff reduction
treaties are implemented or the Mexican government unilaterally reduces that
tariff. While the reduction in tariffs could lead to increased competition from
imports in our Mexican markets, we anticipate that the cost of transportation
from most producers outside Mexico to central Mexico, the region of highest
demand, will remain an effective barrier to entry.

United States

         There are no tariffs on cement imported into the United States from any
country, except Cuba and North Korea.

Europe

         Member countries of the European Union are subject to the uniform
European Union commercial policy. There is no tariff on cement imported into a
country that is a member of the European Union from another member country or on
cement exported from a European Union country to another member country. For
cement imported into a member country from a non-member country, the tariff is
currently 1.7% of the customs value. Any country with preferential treatment
with the European Union is subject to the same tariffs as members of the
European Union. Most Eastern European producers exporting cement into European
Union countries currently pay no tariff.

ENVIRONMENTAL MATTERS

         We are subject to a broad range of environmental laws and regulations
in each of the jurisdictions in which we operate. These laws and regulations
impose increasingly stringent environmental protection standards regarding,
among other things, air emissions, wastewater discharges, the use and handling
of hazardous waste or materials, waste disposal practices and the remediation of
environmental damage or contamination. These standards expose us to the risk of
substantial environmental costs and liabilities, including liabilities
associated with divested assets and past activities, even where conducted by
prior owners or operators and, in some jurisdictions, without regard to fault or
the lawfulness of the original activity.

         To prevent, control and remediate environmental problems and maintain
compliance with regulatory requirements, we maintain an environmental policy
designed to monitor and control environmental matters. Our environmental policy
requires each subsidiary to respect local laws and meet our own internal
standards to minimize the use of non-renewable resources and the generation of
hazardous and other wastes. We use processes that are designed to reduce the
impact of our operations on the environment throughout all the production stages
in all our operations worldwide. We believe that we are in substantial
compliance with all material environmental laws applicable to us.

         We regularly incur capital expenditures that have an environmental
component or that are impacted by environmental regulations. However, we do not
keep separate accounts for such mixed capital and environmental expenditures.
Environmental expenditures that extend the life, increase the capacity, improve
the safety or


                                       59


efficiency of assets or are incurred to mitigate or prevent future environmental
contamination may be capitalized. Other environmental costs are expensed when
incurred. For the years ended December 31, 2004, 2005 and 2006, our
environmental capital expenditures and remediation expenses were not material.
However, our environmental expenditures may increase in the future. As of March
31, 2007, our environmental capital expenditures and remediation expenses are
not material.

         The following is a discussion of the environmental regulation and
matters in our major markets.

Mexico

         We were one of the first industrial groups in Mexico to sign an
agreement with the Secretaria del Medio Ambiente y Recursos Naturales, or
SEMARNAT, the Mexican government's environmental ministry, to carry out
voluntary environmental audits in our 15 Mexican cement plants under a
government-run program. In 2001, the Mexican environmental protection agency in
charge of the voluntary environmental auditing program, the Procuraduria Federal
de Proteccion al Ambiente, or PROFEPA, which is part of SEMARNAT, completed
auditing our 15 cement plants and awarded all our plants, including our Hidalgo
plant, a Certificado de Industria Limpia, Clean Industry Certificate, certifying
that our plants are in full compliance with environmental laws. The Clean
Industry Certificates are strictly renewed every two years. As of the date of
this annual report, 14 of the cement plants have a Clean Industry Certificate.
The Certificates for Atotonilco, Huichapan, Merida, Yaqui, Hermosillo, Tamuin,
Valles, Zapotiltic and Torreon were renewed at the end of 2006; the Certificates
for Barrientos, Tepeaca and Guadalajara are valid until the end of 2007; and the
Certificates for Monterrey and Ensenada are valid until 2008. Now that
operations at the Hidalgo plant have resumed, we carried out a voluntary
environmental audit by PROFEPA in September 2006, which granted the Clean
Industry Certificate. We expect the Clean Industry Certificate for such plant
will be issued at the end of 2007.

         For over a decade, the technology for recycling used tires into an
energy source has been employed in our Ensenada and Huichapan plants. Our
Monterrey and Hermosillo plants started using tires as an energy source in
September 2002 and November 2003, respectively. In 2004, our Yaqui, Tamuin,
Guadalajara and Barrientos plants also started using tires as an energy source,
and as of the end of 2006, all our cement plants in Mexico used tires as an
alternative fuel. Municipal collection centers in Tijuana, Mexicali, Ensenada,
Mexico City, Reynosa, Nuevo Laredo and Guadalajara currently enable us to
recycle an estimated 10,000 tons of tires per year. Overall, approximately 1.75%
of the total fuel used in our 15 operating cement plants in Mexico during 2006
was comprised of alternative substituted fuels.

         Between 1999 and 2006, our Mexican operations have invested
approximately U.S.$36.2 million in the acquisition of environmental protection
equipment and the implementation of the ISO 14001 environmental management
standards of the International Organization for Standardization, or ISO. The
audit to obtain the renewal of the ISO 14001 certification took place during
April 2006. As of March 31, 2007, all our operating cement plants in Mexico and
an aggregates plant in Monterrey had obtained the renewal of the ISO 14001
certification for environmental management systems. Certification ISO 9001-2000
for the Hidalgo plant was approved in March 2007.

United States

         CEMEX, Inc. is subject to a wide range of U.S. Federal, state and local
laws, regulations and ordinances dealing with the protection of human health and
the environment. These laws are strictly enforced and can lead to significant
monetary penalties for noncompliance. These laws regulate water discharges,
noise, and air emissions, including dust, as well as the handling, use and
disposal of hazardous and non-hazardous waste materials. These laws also create
a shared liability by responsible parties for the cost of cleaning up or
correcting releases to the environment of designated hazardous substances. We
therefore may have to remove or mitigate the environmental effects of the
disposal or release of these substances at CEMEX, Inc.'s various operating
facilities or elsewhere. We believe that our current procedures and practices
for handling and managing materials are generally consistent with the industry
standards and legal and regulatory requirements, and that we take appropriate
precautions to protect employees and others from harmful exposure to hazardous
materials.

                                       60


         Several of CEMEX, Inc.'s previously owned and currently owned
facilities have become the subject of various local, state or Federal
environmental proceedings and inquiries in the past. While some of these matters
have been settled, others are in their preliminary stages and may not be
resolved for years. The information developed to date on these matters is not
complete. CEMEX, Inc. does not believe it will be required to spend
significantly more on these matters than the amounts already recorded in our
consolidated financial statements included elsewhere in this annual report.
However, it is impossible for CEMEX, Inc. to determine the ultimate cost that it
might incur in connection with such environmental matters until all
environmental studies and investigations, remediation work, negotiations with
other parties that may be responsible, and litigation against other potential
sources of recovery have been completed. With respect to known environmental
contingencies, CEMEX, Inc. has recorded provisions for estimated probable
liabilities, and we do not believe that the ultimate resolution of such matters
will have a material adverse effect on our financial results.

         As of March 31, 2007, CEMEX, Inc. had accrued liabilities specifically
relating to environmental matters in the aggregate amount of approximately
U.S.$42.4 million. The environmental matters relate to (i) the disposal of
various materials, in accordance with past industry practice, which might be
categorized as hazardous substances or wastes, and (ii) the cleanup of sites
used or operated by CEMEX, Inc., including discontinued operations, regarding
the disposal of hazardous substances or wastes, either individually or jointly
with other parties. Most of the proceedings are in the preliminary stage, and a
final resolution might take several years. For purposes of recording the
provision, CEMEX, Inc. considers that it is probable that a liability has been
incurred and the amount of the liability is reasonably estimable, whether or not
claims have been asserted, and without giving effect to any possible future
recoveries. Based on information developed to date, CEMEX, Inc. does not believe
it will be required to spend significant sums on these matters, in excess of the
amounts previously recorded. The ultimate cost that might be incurred to resolve
these environmental issues cannot be assured until all environmental studies,
investigations, remediation work, and negotiations with or litigation against
potential sources of recovery have been completed.

         Rinker holds one and is the beneficiary of one other of 10 federal
quarrying permits granted for the Lake Belt area in South Florida. The permit
held by Rinker covers Rinker's SCL and FEC quarries. Rinker's Krome quarry is
operated under one of the other federal quarry permits. The FEC quarry is the
largest of Rinker Materials' quarries measured by volume of aggregates mined and
sold. Rinker's Miami cement mill is located at the SCL quarry and is supplied by
that quarry. A ruling was issued on March 22, 2006 by a judge of the U.S.
District Court for the Southern District of Florida in connection with
litigation brought by environmental groups concerning the manner in which the
permits were granted. Although not named as a defendant, Rinker has intervened
in the proceedings to protect its interests. The judge ruled that there were
deficiencies in the procedures and analysis undertaken by the relevant
governmental agencies in connection with the issuance of the permits. The judge
remanded the permits to the relevant governmental agencies for further review,
which review the governmental agencies have indicated in a March 2007 court
filing should take until December 2007 to conclude. The judge also conducted
further proceedings to determine the activities to be conducted during the
remand period and has yet to issue a ruling as a result of such proceedings.
Rinker expected quarrying operations to be unaffected pending the outcome of the
court proceedings. If the Lake Belt permits were ultimately set aside or
quarrying operations under them restricted, Rinker would need to source
aggregates, to the extent available, from other locations in Florida or import
aggregates. This would likely affect Rinker's profits. Any adverse impacts on
the Florida economy arising from the cessation or significant restriction of
quarrying operations in the Lake Belt could also have a material adverse effect
on Rinker.

Europe

         In 2003, the European Union adopted a directive implementing the Kyoto
Protocol on climate change and establishing a greenhouse gas emissions allowance
trading scheme within the European Union. The directive requires Member States
to impose binding caps on carbon dioxide emissions from installations involved
in energy activities, the production and processing of ferrous metals, the
mineral industry (including cement production) and the pulp, paper or board
production business. Under this scheme, companies with operations in these
sectors receive from the relevant Member States allowances that set limitations
on the levels of greenhouse gas emissions from their installations. These
allowances are tradable so as to enable companies that manage to reduce their
emissions to sell their excess allowances to companies that are not reaching
their emissions objectives. Companies can also use credits issued from the use
of the flexibility mechanisms under the Kyoto protocol to fulfill their European
obligations. These flexibility mechanisms provide that credits (equivalent to
allowances) can be obtained by

                                       61


companies for projects that reduce greenhouse gas emissions in emerging markets.
These projects are referred to as Clean Development Mechanism ("CDM") or joint
implementation projects depending on the countries where they take place.
Failure to meet the emissions caps is subject to heavy penalties.

         Companies can also use, up to a certain level, credits issued under the
flexible mechanisms of the Kyoto protocol to fulfill their European obligations.
Credits for Emission Reduction projects obtained under these mechanisms are
recognized, up to a certain level, under the European emission trading scheme as
allowances. To obtain these emission reduction credits, companies must comply
with very specific and restrictive requirements from the United Nations
Convention on Climate Change (UNFCC).

         As required by directive, each of the Member States established a
National Allocations Plan, or NAP, setting out the allowance allocations for
each industrial facility for the initial period of three years, from 2005 to
2007. Based on the NAPs established by the Member States of the European Union
for the 2005 to 2007 period and our actual production, on a consolidated basis
after trading allowances between our operations in countries with a deficit of
allowances and our operations in countries with an excess of allowances, we had
a surplus of allowances of approximately 731,000 tons of carbon dioxide in 2006.
Based on our consolidated production forecasts, we expect to have a surplus of
allowances of carbon dioxide for 2007 as well. For the next allocation period
comprising 2008 through 2012, however, we expect a reduction in the allowances
granted by the Member States, which may result in a consolidated deficit in our
carbon dioxide allowances during that period. We believe we may be able to
reduce the impact of any deficit by either reducing carbon dioxide emissions in
our facilities or by obtaining additional emission credits through the
implementation of CDM projects. If we are not successful in implementing
emission reductions in our facilities or obtaining credits from CDM projects, we
may have to purchase a significant amount of emission credits in the market, the
cost of which may have an impact on our operating results. As of December 31,
2006, the market value of carbon dioxide allowances for the current allocation
period was approximately (euro)6.45 per ton. However, the market for allowances
is highly volatile, as prices during the last twelve months have ranged between
(euro)32 and (euro)0.80 per ton. We are taking all the measures to minimize our
exposure to this market while assuring the supply of our products to our
clients.

         The U.K. government's NAP for phase two of the trading scheme (2008 to
2012) has been approved by the European Commission. Under this NAP, our cement
plant in Rugby has only been allocated 80% of the allowances it has under the
current NAP, representing a shortfall of 228,414 allowances per year, while
competitor plants have been awarded additional allowances compared to phase one
(2005 to 2007). The estimated cost of purchasing allowances to make up for this
shortfall is approximately (euro)4 million per year over the five-year period of
phase two, depending on the prevailing market price. A legal challenge to the
allocation has been dismissed at first instance by the U.K. domestic courts, but
an appeal has been lodged with the appellate court. In addition, we have lodged
an application to the European Court of First Instance, asking that it review
the European Commission's decision to approve the U.K.'s NAP for phase two. The
review is only with respect to the amount of allowances awarded to our cement
plant in Rugby. There is no indication on when the European Court of First
Instance will reach a decision. We believe that whilst a decision could be
reached as early as the end of 2007, it could be as late as 2009.

         German, Latvian, Polish and Spanish NAPs for phase two of the trading
scheme have been reviewed by the European Commission. However, final approvals
are conditioned on major changes. Until each country publishes its allocation
per site, it is premature for us to draw conclusions concerning our situation or
to fine-tune our strategy.

         On May 29, 2007, the Polish government filed an appeal before the Court
of First Instance in Luxemburg regarding the European Commission's rejection of
the initial version of the Polish NAP. At the same time, the Polish government
continued negotiations with the Commission regarding national limits on
allowances for the years 2008 to 2012. Seven major Polish cement producers,
representing 98% of Polish cement production (including CEMEX Polska), have also
filed seven separate appeals before the Court of First Instance regarding the
European Commission's rejection.

         In Great Britain, future expenditure on closed and current landfill
sites has been assessed and quantified over the period in which the sites are
considered to have the potential to cause environmental harm, generally
consistent with the regulator view of up to 60 years from the date of closure.
The assessed expenditure relates to the costs of monitoring the sites and the
installation, repair and renewal of environmental infrastructure. The costs have


                                       62


been quantified on a net present value basis in the amount of approximately
(pound)118 million, and an accounting provision for this sum has been made at
December 31, 2006.

ANTI-DUMPING

U.S. Anti-Dumping Rulings--Mexico

         Our exports of Mexican gray cement from Mexico to the United States
have been subject to an anti-dumping order that was imposed by the Commerce
Department on August 30, 1990. Pursuant to this order, firms that import gray
Portland cement from our Mexican operations in the United States must make cash
deposits with the U.S. Customs Service to guarantee the eventual payment of
anti-dumping duties. As a result, since that year and until April 3, 2006, we
have paid anti-dumping duties for cement and clinker exports to the United
States at rates that have fluctuated between 37.49% and 80.75% over the
transaction amount. Beginning in August 2003, we paid anti-dumping duties at a
fixed rate of approximately U.S.$52.41 per ton, which decreased to U.S.$32.85
per ton starting December 2004 and to U.S.$26.28 per ton in January 2006. Over
the past decade, we have used all available legal resources to petition the
Commerce Department to revoke the anti-dumping order, including the petitions
for "changed circumstances" reviews from the International Trade Commission, or
ITC, and the appeals to NAFTA described below. As described below, during the
first quarter of 2006, the U.S. and Mexican governments entered into an
agreement pursuant to which restrictions imposed by the United States on Mexican
cement imports will be eased during a three-year transition period and
completely eliminated following the transition period.

U.S./Mexico Anti-Dumping Settlement Agreement

         On January 19, 2006, officials from the Mexican and the United States
governments announced that they had reached an agreement in principle that will
bring to an end the long-standing dispute over anti-dumping duties on Mexican
cement exports to the United States. According to the agreement, restrictions
imposed by the United States will first be eased during a three-year transition
period and completely eliminated in early 2009 if Mexican cement producers abide
by its terms during the transition period, allowing cement from Mexico to enter
the U.S. without duties or other limits on volumes. In 2006, Mexican cement
imports into the U.S. were subject to volume limitations of three million tons
per year. During the second and third year of the transition period, this amount
may be increased in response to market conditions, subject to a maximum increase
per year of 4.5%. For the second year of the transition period, the amount was
increased by 2.7%. Quota allocations to companies that import Mexican cement
into the United States are made on a regional basis. The anti-dumping duty
during the three-year transition period was lowered to U.S.$3.00 per ton,
effective as of April 3, 2006, from the previous amount of U.S.$26.28 per ton.

         On March 6, 2006, the Office of the United States Trade Representative
and the Commerce Department entered into an agreement with the Mexican
Secretaria de Economia, providing for the settlement of all administrative
reviews and all litigation pending before NAFTA and World Trade Organization
panels challenging various anti-dumping determinations involving Mexican cement.
As part of the settlement, the Commerce Department agreed to compromise its
claims for duties with respect to imports of Mexican cement. The Commerce
Department and the Secretaria de Economia will monitor the regional export
limits through export and import licensing systems. The agreement provided that
upon the effective date of the agreement, on April 3, 2006, the Commerce
Department would order the U.S. Customs Service to liquidate all entries covered
by all the completed administrative reviews for the periods from August 1, 1995
through July 31, 2005, plus the unreviewed entries made between August 1, 2005
and April 2, 2006, and refund the cash deposits in excess of 10 cents per metric
ton. As a result of this agreement, refunds from the U.S. government associated
with the historic anti-dumping duties are shared among the various Mexican and
American cement industry participants. As of December 31, 2006, we had received
approximately U.S.$111 million in refunds under the agreement, and we received
and additional U.S.$0.2 million in March 2007. We do not expect to receive
further refunds.

         As of March 31, 2007, we had accrued liabilities, including accrued
interest, of approximately U.S.$3.0 million, the difference between the amount
of anti-dumping duties paid on imports and the latest findings by the Commerce
Department in its administrative reviews. As a result of the settlement between
the U.S. and Mexican governments described above, substantially all the
liabilities accrued for past anti-dumping duties have been eliminated.

                                       63


Anti-Dumping in Taiwan

         Five Taiwanese cement producers -- Asia Cement Corporation, Taiwan
Cement Corporation, Lucky Cement Corporation, Hsing Ta Cement Corporation and
China Rebar -- filed before the Tariff Commission under the Ministry of Finance
(MOF) of Taiwan an anti-dumping case involving imported gray Portland cement and
clinker from the Philippines and Korea.

         In July 2001, the MOF informed the petitioners and the respondent
producers in exporting countries that a formal investigation had been initiated.
Among the respondents in the petition were APO, Rizal and Solid, indirect
subsidiaries of us. In July 2002, the MOF notified the respondent producers that
a dumping duty would be imposed on Portland cement and clinker imports from the
Philippines and South Korea beginning on July 19, 2002. The duty rate imposed on
imports from APO, Rizal and Solid was fixed at 42%.

         In September 2002, APO, Rizal and Solid filed before the Taipei High
Administrative Court an appeal in opposition to the anti-dumping duty imposed by
the MOF. In August 2004, we received a copy of the decision of the Taipei
Administrative High Court, which was adverse to our appeal. The decision has
since become final. This anti-dumping duty is subject to review by the
government after five years following its imposition. If following that review
the government determines that the circumstances giving rise to the anti-dumping
order have changed and that the elimination of the duty would not harm the
domestic industry, the government may decide to revoke the anti-dumping duty.

TAX MATTERS

                  As of March 31, 2007, we and some of our subsidiaries in
Mexico have been notified by the Mexican tax authority (Secretaria de Hacienda y
Credito Publico) of several tax assessments related to different tax periods in
a total amount of approximately Ps4,000 million (U.S.$370 million). The tax
assessments are based primarily on: (i) disallowed restatement of tax loss
carryforwards in the same period in which they occurred, (ii) disallowed
determination of cumulative tax loss carryforwards, and (iii) investments made
in entities incorporated in foreign countries with preferential tax regimes
(currently known as Regimenes Fiscales Preferentes). We have filed an appeal for
each of these tax claims before the Mexican federal tax court, and the appeals
are pending resolution. If we do not elect to enter Mexico's tax amnesty program
or if we fail to obtain favorable rulings on appeal, these tax claims may have a
material impact on us.

         Pursuant to amendments to the Mexican income tax law (Ley del Impuesto
sobre la Renta), which became effective on January 1, 2005, Mexican companies
with direct or indirect investments in entities incorporated in foreign
countries whose income tax liability in those countries is less than 75% of the
income tax that would be payable in Mexico will be required to pay taxes in
Mexico on passive income such as dividends, royalties, interest, capital gains
and rental fees obtained by such foreign entities, provided that the income is
not derived from entrepreneurial activities in such countries (income derived
from entrepreneurial activities is not subject to tax under these amendments).
The tax payable by Mexican companies in respect of the 2005 tax year pursuant to
these amendments was due upon filing their annual tax returns in March 2006. We
believe these amendments are contrary to Mexican constitutional principles, and
on August 8, 2005, we filed a motion in the Mexican federal courts challenging
the constitutionality of the amendments. On December 23, 2005, we obtained a
favorable ruling from the Mexican federal court that the amendments were
unconstitutional; however, the Mexican tax authority has appealed this ruling,
and it is pending resolution. If the final ruling is not favorable to us, these
amendments may have a material impact on us.

         In addition, on March 20, 2006, we filed another motion in the Mexican
federal courts challenging the constitutionality of the amendments. On June 29,
2006, we obtained a favorable ruling from the Mexican federal court stating that
the amendments were unconstitutional. The Mexican tax authority has appealed the
ruling, which is pending resolution.

         Recently, the Mexican Congress approved several amendments to the
Mexican Asset Tax Law (Ley del Impuesto al Activo). As a result of such
amendments, starting on January 1, 2007, all Mexican corporations, including us,
are no longer allowed to deduct their liabilities from the calculation of the
asset tax. The Mexican tax


                                       64


authorities have stated that other aspects of such law will be clarified. To
date, these clarifications, which could impact our calculation of the asset tax,
have not been made.

         The asset tax is imposed at a rate of 1.25% on the value of most of the
assets of a Mexican corporation. The asset tax is "complementary" to the
corporate income tax (impuesto sobre la renta) and, therefore, is payable only
to the extent it exceeds payable income tax.

         We believe that the Asset Tax Law, as amended, is against the Mexican
constitution. We have challenged the Asset Tax Law through appropriate judicial
action (juicio de amparo). Notwithstanding our challenge, we will still be
required to pay asset tax as per the amended law, until the relevant judicial
procedure is finally resolved. We believe that the amendments to the Asset Tax
Law could increase the amount of asset tax that we would be required to pay in
Mexico during 2007 and subsequent fiscal years.

         On April 3, 2007, the Mexican tax authority issued a decree providing
for a tax amnesty program, which allows for the settlement of previously issued
tax assessments, and which we may apply to tax assessments of which we were
notified in May 2006. To qualify, we must elect application of the tax amnesty
program during 2007. As of the date of this annual report, we are evaluating the
effects that the amnesty program could have on us.

         As of March 31, 2007, the Philippine Bureau of Internal Revenue, or
BIR, assessed APO, Solid, IQAC, ALQC and CSPI, our operating subsidiaries in the
Philippines, for deficiencies in the amount of income tax paid in prior tax
years amounting to a total of approximately 1,994 million Philippine Pesos
(approximately U.S.$41.3 million as of March 31, 2007, based on an exchange rate
of Philippine Pesos 48.28 to U.S.$1.00, which was the Philippine Peso/Dollar
exchange rate on March 31, 2007 as published by the Bangko Sentral ng Pilipinas,
the central bank of the Republic of the Philippines). The tax assessments result
primarily from the disallowance of APO's income tax holiday related income from
1999 to 2001 (approximately Philippine Pesos 1,078 million or U.S.$22.3 million
as of March 31, 2007, based on an exchange rate of Philippine Pesos 48.28 to
U.S.$1.00). We have contested the BIR's assessment with the Court of Tax Appeal,
or CTA. The initial Division ruling of the CTA was unfavorable, but is subject
to further appeal with the CTA as a whole. The assessment is now currently on
appeal with the CTA en banc. The appeals proceeding for this assessment is
expected to reach the Supreme Court. In addition, Solid's 1998 and 2002 through
to 2005 tax years, and APO's 2001 through 2005 tax years, are under preliminary
review by the BIR for deficiency in the payment of taxes. As of the date of this
annual report, the finalization of these assessments was held in abeyance by the
BIR, as APO and Solid continue to present evidence to dispute its findings. We
believe that these assessments will not have a material adverse effect on us.

POLISH ANTITRUST INVESTIGATION

         During the period from May 31, 2006 to June 2, 2006, officers of the
Polish Competition and Consumer Protection Office, or the Protection Office,
assisted by police officers, conducted a search in the Warsaw office of CEMEX
Polska, one of our indirect subsidiaries in Poland, and in offices of other
cement producers in Poland. The search took place as a part of the exploratory
investigation that the head of the Polish Competition and Consumer Protection
Office started on April 26, 2006.

         On January 2, 2007, CEMEX Polska received a notification from the
Protection Office informing us about the formal initiation of an antitrust
proceeding against all cement producers in Poland, including CEMEX Polska and
another of our indirect subsidiaries in Poland. In the notification it was
assumed that there was an agreement between all cement producers in Poland
regarding prices and other sales conditions of cement, an agreed division of the
market with respect to the sale and production of cement, and the exchange of
confidential information, all of which limited competition in the Polish market
with respect to the production and sale of cement. On January 22, 2007, CEMEX
Polska filed its response to the notification, denying firmly that it has
committed the practices listed by the Protection Office in the notification. In
its response, CEMEX Polska also included various formal comments and objections
gathered during the proceeding, as well as facts supporting its position and
proving that its activities were in line with competition law.

         According to Polish competition law, the maximum fine could reach up to
10% of the total revenues of the company for the calendar year preceding the
imposition of the fine. Based on revenues for the year ended December 31, 2006
and exchange rates prevailing at that date, CEMEX Polska could face up to 78.9
million Polish

                                       65


Zloty (approximately U.S.$27.6 million) in fines. We believe, at this stage,
there are no justified factual grounds to expect fines to be imposed on CEMEX
Polska.

OTHER LEGAL PROCEEDINGS

         In May 1999, several companies filed a civil liability suit in the
civil court of the circuit of Ibague, Colombia, against two of our Colombian
subsidiaries, alleging that these subsidiaries were responsible for
deterioration of the rice production capacity of the land of the plaintiffs
caused by pollution from our cement plants located in Ibague, Colombia. On
January 13, 2004, CEMEX Colombia was notified of the judgment the court entered
against CEMEX Colombia, which awarded damages to the plaintiffs in the amount of
21,114 million Colombian Pesos (approximately U.S.$9.64 million as of March 31,
2007, based on an exchange rate of CoP2,190.30 to U.S.$1.00, which was the
Colombian Peso/Dollar exchange rate on March 31, 2007 as published by the Banco
de la Republica de Colombia, the central bank of Colombia). On January 15, 2004,
CEMEX Colombia appealed the judgment. The appeal was admitted and the case was
sent to the Tribunal Superior de Ibague, where CEMEX Colombia filed, on March
23, 2004, a statement of the arguments supporting its appeal. The case is
currently under review by the appellate court. We expect this proceeding to
continue for several years before final resolution.

         In March 2001, 42 transporters filed a civil liability suit in the
civil court of Ibague, Colombia, against three of our Colombian subsidiaries.
The plaintiffs contend that these subsidiaries are responsible for alleged
damages caused by the breach of raw material transportation contracts. The
plaintiffs asked for relief in the amount of CoP127,242 million (approximately
U.S.$58.09 million as of March 31, 2007). On February 23, 2006, CEMEX was
notified of the judgment of the court, dismissing the claims of the plaintiffs.
The case is currently under review by the appellate court.

         On August 5, 2005, a lawsuit was filed against a subsidiary of CEMEX
Colombia, claiming that it was liable along with the other members of the
Asociacion Colombiana de Productores de Concreto, or ASOCRETO, a union formed by
all the ready-mix concrete producers in Colombia, for the premature distress of
the roads built for the mass public transportation system of Bogota using
ready-mix concrete supplied by CEMEX Colombia and other ASOCRETO members. The
plaintiffs allege that the base material supplied for the road construction
failed to meet the quality standards offered by CEMEX Colombia and the other
ASOCRETO members and/or that they provided insufficient or inaccurate
information in connection with the product. The plaintiffs seek the repair of
the roads in a manner which guarantees their service during the 20-year period
for which they were originally designed, and estimate that the cost of such
repair will be approximately U.S.$45 million. The lawsuit was filed within the
context of a criminal investigation of two ASOCRETO officers and other
individuals, alleging that the ready-mix concrete producers were liable for
damages if the ASOCRETO officers were criminally responsible. The court
completed the evidentiary stage, and on August 17, 2006 dismissed the charges
against the members of ASOCRETO. The other defendants (one ex-director of the
Distrital Institute of Development, the legal representative of the constructor
and the legal representative of the auditor) were formally accused. The decision
was appealed, and on December 11, 2006, the decision was reversed and the two
ASOCRETO officers were formally accused as participants (determiners) in the
execution of a state contract without fulfilling all legal requirements thereof.
At this stage, we are not able to assess the likelihood of an adverse result or
the potential damages which could be borne by CEMEX Colombia.

         CEMEX and the Indonesian government have agreed to settle their
arbitration case before the ICSID. In this regard, CAH and the Indonesian
government filed on July 29, 2006 a joint letter to the ICSID, requesting the
issuance of an Award on Agreed Terms. On February 23, 2007, the Arbitral
Tribunal issued an award embodying the parties' settlement agreement.

         On August 5, 2005, Cartel Damages Claims, SA, or CDC, filed a lawsuit
in the District Court in Dusseldorf, Germany against CEMEX Deutschland AG and
other German cement companies. CDC is seeking (euro)102 million in respect of
damage claims by 28 entities relating to alleged price and quota fixing by
German cement companies between 1993 and 2002, which entities had assigned their
claims to CDC. CDC is a Belgian company established by two lawyers in the
aftermath of the German cement cartel investigation that took place from July
2002 to April 2003 by Germany's Federal Cartel Office with the express purpose
of purchasing potential damages claims from cement consumers and pursuing those
claims against the cartel participants. In January 2006, another entity

                                       66


assigned alleged claims to CDC, and the amount of damages being sought by CDC
increased to (euro)113.5 million plus interest. On February 21, 2007, the
District Court of Dusseldorf decided to allow this lawsuit to proceed without
going into the merits of this case by issuing an interlocutory judgment. All
defendants have appealed. As of March 31, 2007, we had accrued liabilities
regarding this matter for a total amount of approximately (euro)20 million.

         After an extended consultation period, in April 2006, the cities of
Kastela and Solin in Croatia published their respective Master (physical) Plans
defining the development zones within their respective municipalities, adversely
impacting the mining concession granted to Dalmacijacement, our subsidiary in
Croatia, by the Government of Croatia in September 2005. During the consultation
period, Dalmacijacement submitted comments and suggestions to the Master Plans,
but these were not taken into account or incorporated into the Master Plan by
Kastela and Solin. Most of these comments and suggestions were intended to
protect and preserve the rights of Dalmacijacement's mining concession
granted by the Government of Croatia in September 2005. Immediately after
publication of the Master Plans, Dalmacijacement filed a series of lawsuits and
legal actions before the local and federal courts to protect its acquired rights
under the mining concessions. The legal actions taken and filed by
Dalmacijacement were as follows: (i) on May 17, 2006, a constitutional appeal
before the constitutional court in Zagreb, seeking a declaration by the court
concerning Dalmacijacement's constitutional claim for decrease and obstruction
of rights earned by investment, and seeking prohibition of implementation of the
Master Plans; (ii) on May 17, 2006, a possessory action against the cities of
Kastela and Solin seeking the enactment of interim measures prohibiting
implementation of the Master Plans and including a request to implead the
Republic of Croatia into the proceeding on our side, and (iii) on May 17, 2006,
an administrative proceeding before the State Lawyer, seeking a declaration from
the Government of Croatia confirming that Dalmacijacement acquired rights under
the mining concessions. The municipal court in Solin issued a first instance
judgment dismissing our possessory action. We have filed an appeal against that
judgment. Currently it is difficult for Dalmacijacement to ascertain the
approximate economic impact of these measures by Kastela and Solin. These cases
are currently under review by the courts and applicable administrative entities
in Croatia, and it is expected that these proceedings will continue for several
years before resolution.

         In August 2006, our Panamanian subsidiary Cemento Bayano, S.A. filed an
opposition before the National Mineral Resources Directorate, in order to halt
or deny this directorate from granting permission to a third company to extract
minerals from a site close to our Bayano Plant.

         On December 8, 2006, the United States District Court, District of
Puerto Rico, issued a summons against Ready Mix Concrete, Inc. and Puerto Rican
Cement Company, Inc., in the amount of U.S.$21 million, after an employee of the
Puerto Rico Highway Authority was injured by a truck owned and operated by
CEMEX. On April 21, 2007, the First Instance Court for the Commonwealth of
Puerto Rico issued a summons against Hormigonera Mayaguezana Inc., seeking
damages in the amount of U.S.$39 million, after the death of two people in an
accident in which a Hormigonera Mayaguezana Inc. concrete mixer truck was
involved.

         On December 13, 2006, CEMEX Dominicana learned that the Dominican Port
Authority has called a meeting of its Executive Council to evaluate the
annulment of the authorization granted by contract to Orbis Chemical
Corporation, S.A. (a CEMEX subsidiary), to operate within the area of Puerto
Viejo, Azua, Dominican Republic. If the Council of the Dominican Port Authority
decides to seek annulment, Orbis will lose control of the port facilities. Since
there is no official decision on this matter, Orbis immediately notified the
Dominican Port Authority of its interest in retaining the contract, and argued
that any annulment should be sought through a decision pronounced by a tribunal
revoking the existing contract.

         In late December 2006, the Union of Employees in our Assiut plant in
Egypt filed a lawsuit against Assiut Cement Company, claiming 10% employees
profit sharing for the fiscal years 2004 and 2005 in the amount of approximately
U.S.$12 million. On April 30, 2007, the parties submitted their defenses and the
court postponed the case until a hearing scheduled for June 25, 2007, for the
court to render its decision.

         As of the date of this annual report, we are involved in various legal
proceedings involving product warranty claims, environmental claims,
indemnification claims relating to acquisitions and similar types of claims
brought against us that have arisen in the ordinary course of business. We
believe we have made adequate provisions to cover both current and contemplated
general and specific litigation risks, and we believe these matters will be
resolved without any significant effect on our operations, financial position or
results of operations.

                                       67


RECENT DEVELOPMENTS

Rinker acquisition

         On November 14, 2006, we launched our public offer to acquire all
outstanding shares of Rinker for U.S.$13.00 per share in cash. On April 9, 2007,
we increased our offer price to U.S.$15.85 per share in cash, which corresponds
to an enterprise value of Rinker of approximately U.S.$15.3 billion, which
includes approximately U.S.$1.1 billion of debt, Rinker's reported debt as of
March 31, 2007. On June 7, 2007, our offer to acquire Rinker became
unconditional. As a result, we obtained the right to vote approximately 50.3% of
Rinker's outstanding shares. Our offer was originally scheduled to conclude on
June 22, 2007, but has been extended until July 16, 2007. As of June 25, 2007,
we had been tendered a total of approximately 81% of Rinker's outstanding
shares.

         Some of the main reasons for our offer to acquire Rinker are:

         o    reinforcing our strategy of investing across the industry's value
              chain in cement, ready-mix concrete and aggregates;

         o    significantly strengthening our ability to serve customers in the
              United States with complementary products and locations, therefore
              meeting our long-standing investment criteria;

         o    obtaining a major presence in Australia;

         o    creating a significant opportunity to realize cost synergies by
              combining Rinker's operations with our own and applying best
              business practices to them; and

         o    reducing our cash flow volatility through increased exposure to
              the U.S. market and, consequently, lowering our cost of capital.

         On November 20, 2006, we received confirmation from the Competition and
Consumer Commission of the Commonwealth of Australia advising that it did not
propose to intervene pursuant to section 50 of the Australian Trade Practices
Act 1974 (Cth) in our acquisition of Rinker. On December 7, 2006, our
shareholders approved our offer to acquire Rinker. On March 8, 2007, the
Treasurer of the Commonwealth of Australia informed us that there were no
objections to the our offer to purchase Rinker in terms of the Australian
government's foreign investment policy. At the request of the Australian
Securities and Investment Commission, the Australian Takeovers Panel is
currently considering if we should be made to compensate Rinker shareholders who
sold their shares between April 10, 2007 and May 10, 2007, and who did not
receive Rinker's dividend.

         On April 4, 2007, the Antitrust Division announced its decision not to
oppose our offer to acquire Rinker under the United States Hart-Scott-Rodino
Antitrust Improvements Act of 1976, or the HSR Act. This decision was made
pursuant to a consent decree between us and the Antitrust Division, whereby we
agreed to the conditions set forth in the Final Judgment of the U.S. District
Court for the District of Columbia, dated April 4, 2007 (the "Final Judgment"),
and the Hold Separate Stipulation and Order, dated April 4, 2007 (the "Hold
Separate Order" and, together with the Final Judgment, the "DOJ Settlement").
The Hold Separate Order was amended, as of May 2, 2007, to add Rinker as a party
(the "Amended DOJ Settlement"). The Amended DOJ Settlement provides that we must
ensure that certain required divestitures are made by us or by Rinker on or
before October 17, 2007, unless the U.S. Department of Justice grants one or
more extensions which may not exceed a total of 60 calendar days, for the
purposes of remedying any loss of competition resulting from our acquisition. We
are required to divest or cause Rinker to divest, as the case may be, the
following assets, to purchasers approved by the Antitrust Division:

         o    21 ready-mix  concrete  plants in Florida  owned by Rinker in Fort
              Walton Beach/Panama City/Pensacola,  Orlando, Tampa/St. Petersburg
              and Fort Myers/Naples;

         o    Five ready-mix concrete plants in Florida owned by us in
              Jacksonville and Orlando;

         o    Three ready-mix concrete plants owned by Rinker in Tucson,
              Arizona;

                                       68


         o    Two ready-mix concrete plants owned by us in the Flagstaff and
              Tucson areas in Arizona;

         o    Six concrete block plants owned by Rinker in Florida in Tampa/St.
              Petersburg and Fort Myers/Naples;

         o    One aggregates plant owned by Rinker in Tucson, Arizona; and

         o    One aggregates plant owned by us in Tucson, Arizona;

         including all assets used in relation to these plants.

         If we do not divest these assets on or before October 17, 2007, the
U.S. District Court will be entitled to appoint a trustee to effect the
divestitures. In addition, the Hold Separate Order requires us to ensure that
prior to any divestiture, the Divestiture Assets remain independent,
economically viable and ongoing business concerns that are not influenced by our
acquisition of Rinker.

         For a description of the effects of our acquisition of Rinker on the
Ready Mix USA joint venture, see Item 4 -- "Information on the Company -- North
America -- Our U.S. Operations."

ITEM 4A -  UNRESOLVED STAFF COMMENTS
           -------------------------
s
         Not applicable.


                                       69


ITEM 5 -  OPERATING AND FINANCIAL REVIEW AND PROSPECTS
          --------------------------------------------

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

         This annual report contains forward-looking statements that reflect our
current expectations and projections about future events based on our knowledge
of present facts and circumstances and assumptions about future events. In this
annual report, the words "expects," "believes," "anticipates," "estimates,"
"intends," "plans," "probable" and variations of such words and similar
expressions are intended to identify forward-looking statements. Such statements
necessarily involve risks and uncertainties that could cause actual results to
differ materially from those anticipated. Some of the risks, uncertainties and
other important factors that could cause results to differ, or that otherwise
could impact us or our subsidiaries, include:

         o    the cyclical activity of the construction sector;

         o    competition;

         o    general political, economic and business conditions;

         o    weather and climatic conditions;

         o    the results of any proposed acquisitions and the impact of any
              related financing on our financial structure;

         o    national disasters and other unforeseen events; and

         o    the other risks and uncertainties described under Item 3 "-- Key
              Information -- Risk Factors" and elsewhere in this annual report.

         Readers are urged to read this entire annual report and carefully
consider the risks, uncertainties and other factors that affect our business.
The information contained in this annual report is subject to change without
notice, and we are not obligated to publicly update or revise forward-looking
statements. Readers should review future reports filed by us with the U.S.
Securities and Exchange Commission.

         This annual report also includes statistical data regarding the
production, distribution, marketing and sale of cement, ready-mix concrete,
clinker and aggregates. We generated some of these data internally, and some
were obtained from independent industry publications and reports that we believe
to be reliable sources. We have not independently verified these data nor sought
the consent of any organizations to refer to their reports in this annual
report.

OVERVIEW

         The following discussion should be read in conjunction with our
consolidated financial statements included elsewhere in this annual report.
These financial statements do not reflect the consolidation of Rinker following
the consummation of the acquisition, or asset sales subsequent to December 31,
2006. Our financial statements have been prepared in accordance with Mexican
FRS, which differ in significant respects from U.S. GAAP. See note 24 to our
consolidated financial statements, included elsewhere in this annual report, for
a description of the principal differences between Mexican FRS and U.S. GAAP as
they relate to us.

         Mexico experienced annual inflation rates of 5.4% in 2004, 3.0% in 2005
and 4.1% in 2006. Mexican FRS requires that our consolidated financial
statements recognize the effects of inflation. Consequently, financial data for
all periods in our consolidated financial statements and throughout this annual
report, except as otherwise noted, have been restated in constant Mexican Pesos
as of December 31, 2006. They have been restated using the CEMEX weighted
average inflation factors, as explained in note 3B to our consolidated financial
statements included elsewhere in this annual report.

                                       70


         The percentage changes in cement sales volumes described in this annual
report for our operations in a particular country or region include the number
of tons of cement and/or the number of cubic meters of ready-mix concrete sold
to our operations in other countries and regions. Likewise, unless otherwise
indicated, the net sales financial information presented in this annual report
for our operations in each country or region includes the Mexican Peso amount of
sales derived from sales of cement and ready-mix concrete to our operations in
other countries and regions, which have been eliminated in the preparation of
our consolidated financial statements included elsewhere in this annual report.

         The following table sets forth selected financial information as of and
for each of the three years ended December 31, 2004, 2005 and 2006 by principal
geographic segment expressed as an approximate percentage of our total
consolidated group. Through the RMC acquisition, we acquired new operations in
the United States, Spain, Africa and the Middle East and Asia, which had a
significant impact on our operations in those segments, and we acquired
operations in the United Kingdom and the Rest of Europe, in which segments we
did not have operations prior to the RMC acquisition. The financial information
as of and for the year ended December 31, 2005 in the table below includes the
consolidation of RMC's operations for the ten-month period ended December 31,
2005, and the financial information as of and for the year ended December 31,
2006 in the table below includes the consolidation of RMC's operations for the
entire year ended December 31, 2006. We operate in countries and regions with
economies in different stages of development and structural reform, with
different levels of fluctuation in exchange rates, inflation and interest rates.
These economic factors may affect our results of operations and financial
condition depending upon the depreciation or appreciation of the exchange rate
of each country and region in which we operate compared to the Mexican Peso and
the rate of inflation of each of these countries and regions. The variations in
(1) the exchange rates used in the translation of the local currency to Mexican
Pesos, and (2) the rates of inflation used for the restatement of our financial
information to constant Mexican Pesos, as of the latest balance sheet presented,
may affect the comparability of our results of operations and consolidated
financial position from period to period.




                                                                    %
                                                                 SOUTH
                                                                 AMERICA,    %
                                                                 CENTRAL   AFRICA
                                %               %         %      AMERICA   AND THE
                       %      UNITED    %     UNITED   REST OF   AND THE   MIDDLE    %      %               ELIMI-    CONSOLI-
                      MEXICO  STATES  SPAIN   KINGDOM   EUROPE  CARIBBEAN   EAST   ASIA   OTHERS  COMBINED  NATIONS    DATED
                                    (in millions of constant Mexican Pesos as of December 31, 2006, except percentages)
                                                                                   
Net Sales For the
Period Ended(1):

December 31, 2004       33%    22%     16%      N/A      N/A       14%       2%      2%     11%    103,552   (8,637)    94,915
December 31, 2005       19%    25%     9%       9%       16%        8%       4%      2%      8%    191,498  (14,113)   177,385
December 31, 2006       18%    21%     9%       10%      20%        8%       4%      2%      8%    215,891  (18,798)   197,093

Operating Income For
the Period Ended(2):

December 31, 2004       59%    14%     18%      N/A      N/A       20%       3%      1%    (15)%    21,567      --      21,567
December 31, 2005       41%    27%     14%      2%        7%        9%       4%      2%    (6)%     28,791      --      28,791
December 31, 2006       38%    29%     16%      1%        6%       12%       5%      2%    (9)%     31,814      --      31,814

Total Assets at(2):

December 31, 2004       26%    23%     17%      N/A      N/A       15%       3%      6%     10%    202,433      --     202,433
December 31, 2005       18%    23%     10%      9%       11%       10%       3%      6%     10%    309,866      --     309,866
December 31, 2006       18%    23%     10%      8%       13%       10%       3%      6%     9%     323,698      --     323,698

         (1) Percentages by reporting segment are determined before eliminations resulting from consolidation.
         (2) Percentages by reporting segment are determined after eliminations resulting from consolidation.



CRITICAL ACCOUNTING POLICIES

         We have identified below the accounting policies we have applied under
Mexican FRS that are critical to understanding our overall financial reporting.

                                       71


Income Taxes

         Our operations are subject to taxation in many different jurisdictions
throughout the world. Under Mexican FRS, we recognize deferred tax assets and
liabilities using a balance sheet methodology, which requires a determination of
the permanent and temporary differences between the financial statements
carrying amounts and the tax basis of assets and liabilities. Our worldwide tax
position is highly complex and subject to numerous laws that require
interpretation and application and that are not consistent among the countries
in which we operate. Significant judgment is required to appropriately assess
the amounts of tax assets and liabilities. We record tax assets when we believe
that the recoverability of the asset is determined to be more likely than not in
accordance with established accounting principles. If this determination cannot
be made, a valuation allowance is established to reduce the carrying value of
the asset.

         Our overall strategy is to structure our worldwide operations to
minimize or defer the payment of income taxes on a consolidated basis. Many of
the activities we undertake in pursuing this tax reduction strategy are highly
complex and involve interpretations of tax laws and regulations in multiple
jurisdictions and are subject to review by the relevant taxing authorities. It
is possible that the taxing authorities could challenge our application of these
regulations to our operations and transactions. The taxing authorities have in
the past challenged interpretations that we have made and have assessed
additional taxes. Although we have from time to time paid some of these
additional assessments, in general we believe that these assessments have not
been material and that we have been successful in sustaining our positions. No
assurance can be given, however, that we will continue to be as successful as we
have been in the past or that pending appeals of current tax assessments will be
judged in our favor.

Recognition of the effects of inflation

         Under Mexican FRS, the financial statements of each subsidiary are
restated to reflect the loss of purchasing power (inflation) of its functional
currency. The inflation effects arising from holding monetary assets and
liabilities are reflected in the income statements as monetary position result.
Inventories, fixed assets and deferred charges, with the exception of fixed
assets of foreign origin and the equity accounts, are restated to account for
inflation using the consumer price index applicable in each country. Fixed
assets of foreign origin are restated using the inflation index of the assets'
origin country and the variation in the foreign exchange rate between the
country of origin currency and the functional currency. The result is reflected
as an increase or decrease in the carrying value of each item, and is presented
in consolidated stockholders' equity in the line item "Effects from Holding
Non-Monetary Assets." Income statement accounts are also restated for inflation
into constant Mexican Pesos as of the reporting date.

         In the event of a sudden increase in the rate of inflation in Mexico,
the adjustment that the market makes in the exchange rate of the Mexican Peso
against other currencies resulting from such inflation is not immediate and may
take several months, if it occurs at all. In this situation, the value expressed
in the consolidated financial statements for fixed assets of foreign origin will
be understated in terms of Mexican inflation, given that the restatement factor
arising from the inflation of the assets' origin country and the variation in
the foreign exchange rate between the country of origin currency and the Mexican
Peso will not offset the Mexican inflation.

         A sudden increase in inflation could also occur in other countries in
which we operate.

Foreign currency translation

         As mentioned above, the financial statements of consolidated foreign
subsidiaries are restated for inflation in their functional currency based on
the subsidiary country's inflation rate. Subsequently, the restated financial
statements are translated into Mexican Pesos using the foreign exchange rate at
the end of the corresponding reporting period for balance sheet and income
statement accounts.

         In the event of an abrupt and deep depreciation of the Mexican Peso
against the Dollar, which would not be aligned with a corresponding inflation of
the same magnitude, the carrying amounts of the Mexican assets, when presented
in convenience translation into Dollars, will show a decrease in value, in terms
of Dollars, by the difference between the rate of depreciation against the
Dollar and the Mexican inflation rate.

                                       72


Derivative financial instruments

         As mentioned in note 3L to our consolidated financial statements
included elsewhere in this annual report, in compliance with the guidelines
established by our risk management committee, we use derivative financial
instruments such as interest rate and currency swaps, currency and stock forward
contracts, options and futures, in order to change the risk profile associated
with changes in interest rates and foreign exchange rates of debt agreements, as
a vehicle to reduce financing costs, as an alternative source of financing, and
as hedges of: (i) highly probable forecasted transactions, (ii) our net assets
in foreign subsidiaries and (iii) future exercises of options under our
executive stock option programs. These instruments have been negotiated with
institutions with significant financial capacity; therefore, we consider the
risk of non-compliance with the obligations agreed to by such counterparties to
be minimal.

         Derivative financial instruments are recognized as assets or
liabilities in the balance sheet at their estimated fair value and the changes
in such fair values are recognized in the income statement for the period in
which they occur, except for changes in the fair value of derivative instruments
that are designated and effective as hedges of the variability in the cash flows
associated with existing assets or liabilities and/or forecasted transactions.
Until December 31, 2004, no specific rules existed in Mexico for hedging
transactions. Beginning January 1, 2005, Bulletin C-10, "Derivative Financial
Instruments and Hedging Activities," establishes accounting standards for
hedging instruments. Some of our instruments have been designated as accounting
hedges of debt or equity instruments (see note 3L to our consolidated financial
statements included elsewhere in this annual report).

         Interest accruals generated by interest rate swaps and cross currency
swaps are recognized as financial expense, adjusting the effective interest rate
of the related debt. Interest accruals from other hedging derivative instruments
are recorded within the same item when the effects of the primary instrument
subject to the related hedging transactions are recognized. See notes 12C, D and
E to our consolidated financial statements included elsewhere in this annual
report.

         Pursuant to the accounting principles established by Mexican FRS, our
balance sheets and income statements are subject to volatility arising from
variations in interest rates, exchange rates, share prices and other conditions
established in our derivative instruments. The estimated fair value represents
the amount at which a financial asset could be bought or sold, or a financial
liability could be extinguished at the reporting date, between willing parties
in an arm's length transaction. Occasionally, there is a reference market that
provides the estimated fair value; in the absence of a market, such value is
determined by the net present value of projected cash flows or through
mathematical valuation models. The estimated fair values of derivative
instruments determined by us and used by us for recognition and disclosure
purposes in the financial statements and their notes, are supported by the
confirmations of these values received from the counterparties to these
financial instruments; nonetheless, significant judgment is required to account
appropriately for the effects of derivative financial instruments in the
financial statements.

         The estimated fair values of derivative financial instruments fluctuate
over time, and are based on estimated settlement costs or quoted market prices.
These values should be viewed in relation to the fair values of the underlying
instruments or transactions, and as part of our overall exposure to fluctuations
in foreign exchange rates, interest rates and prices of shares. The notional
amounts of derivative instruments do not necessarily represent amounts exchanged
by the parties and, therefore, are not a direct measure of our exposure through
our use of derivatives. The amounts exchanged are determined on the basis of the
notional amounts and other variables included in the derivative instruments.

Impairment of long-lived assets

         Our balance sheet reflects significant amounts of long-lived assets
(mainly fixed assets and goodwill) associated with our operations throughout the
world. Many of these amounts have resulted from past acquisitions, which have
required us to reflect these assets at their fair market values at the dates of
acquisition. According to their characteristics and the specific accounting
rules related to them, we assess the recoverability of our long-lived assets
periodically and at least once a year, as is the case for goodwill and other
intangible assets of indefinite life, or whenever events or circumstances arise
that we believe trigger a requirement to review such carrying values, as is the
case with property, machinery and equipment and intangible assets of definite
life.

                                       73


         Goodwill is evaluated for impairment by determining the value in use
(fair value) of the reporting units, which consists of the discounted amount of
estimated future cash flows to be generated by such reporting units to which
goodwill relates. A reporting unit refers to a group of one or more cash
generating units. Each reporting unit, for purposes of the impairment
evaluation, consists of all operations in each country. An impairment loss is
recognized if such discounted cash flows are lower than the net book value of
the reporting unit. In applying the value in use (fair value) method, we
determine the discounted amount of estimated future cash flows over a period of
5 years.

         For the years ended December 31, 2004, 2005 and 2006, the geographic
segments we reported in note 18 to our consolidated financial statements
included elsewhere in this annual report, each integrated by multiple cash
generating units, also represent our reporting units for purposes of testing
goodwill for impairment. Based on our analysis, we concluded that the operating
components that integrate the reported segment have similar economic
characteristics, by considering: a) the reported segments are the level used by
us to organize and evaluate our activities in the internal information system,
b) the homogenous nature of the items produced and traded in each operative
component, which are all used by the construction industry, c) the vertical
integration in the value chain of the products comprising each component, d) the
type of clients, which are substantially similar in all components, e) the
operative integration among operating components, evidenced by the adoption of
shared service centers, and f) the compensation system of any of our country
operations is based on the consolidated results of the geographic segment and
not on the particular results of the components.

         Impairment evaluations are significantly sensitive, among other
factors, to the estimation of future prices of our products, the development of
operating expenses, local and international economic trends in the construction
industry, as well as the long-term growth expectations in the different markets.
Likewise, the discount rates and the rates of growth in perpetuity used have an
effect on such impairment evaluations. We use specific discount rates for each
reporting unit, which consider the weighted average cost of capital of each
geographic segment. This determination requires substantial judgment and is
highly complex when considering the many countries in which we operate, each of
which has its own economic circumstances that have to be monitored.
Additionally, we monitor the lives assigned to these long-lived assets for
purposes of depreciation and amortization, when applicable. This determination
is subjective and is integral to the determination of whether an impairment has
occurred.

Valuation reserves on accounts receivable and inventories

         On a periodic basis, we analyze the recoverability of our accounts
receivable and our inventories (supplies, raw materials, work-in-process and
finished goods), in order to determine if due to credit risk or other factors in
the case of our receivables and due to weather or other conditions in the case
of our inventories, some receivables may not be recovered or certain materials
in our inventories may not be utilizable in the production process or for sale
purposes. If we determine such a situation exists, book values related to the
non-recoverable assets are adjusted and charged to the income statement through
an increase in the doubtful accounts reserve or the inventory obsolescence
reserve, as appropriate. These determinations require substantial management
judgment and are highly complex when considering the various countries in which
we have operations, each having its own economic circumstances that require
continuous monitoring, and our numerous plants, deposits, warehouses and
quarries. As a result, final losses from doubtful accounts or inventory
obsolescence could differ from our estimated reserves.

Asset retirement obligations

         We recognize unavoidable obligations, legal or constructive, to restore
operating sites upon retirement of tangible long-lived assets at the end of
their useful lives. These obligations represent the net present value of
estimated future cash flows to be incurred in the restoration process, and are
initially recognized against the related assets' book value. The additional
asset is depreciated during its remaining useful life. The increase of the
liability, by the passage of time, is charged to the income statement of the
period. Adjustments to the obligation for changes in the estimated cash flows or
the estimated disbursement period are made against fixed assets, and
depreciation is modified prospectively.

         Asset retirement obligations are related mainly to future costs of
demolition, cleaning and reforestation, so that at the end of their operation,
raw materials extraction sites, maritime terminals and other production sites
are left in acceptable condition. Significant judgment is required in assessing
the estimated cash outflows that will be

                                       74


disbursed upon retirement of the related assets. See notes 3M and 13 to our
consolidated financial statements included elsewhere in this annual report.

Transactions in our own stock

         From time to time we have entered into various transactions involving
our own stock. These transactions have been designed to achieve various
financial goals but were primarily executed to give us a means of satisfying
future transactions that may require us to deliver significant numbers of shares
of our own stock. These transactions are described in detail in the notes to our
consolidated financial statements included elsewhere in this annual report. We
have viewed these transactions as hedges against future exposure even though
they do not meet the definition of hedges under accounting principles. There is
significant judgment necessary to properly account for these transactions, as
the obligations underlying the related transactions are required to be reflected
at market value, with the changes in such value reflected in our income
statement. These transactions raise the possibility that we could be required to
reflect losses on the transactions in our own shares without having a converse
reflection of gains on the transactions under which we would deliver such shares
to others. See notes 3T and 17 to our consolidated financial statements included
elsewhere in this annual report.

RESULTS OF OPERATIONS

CONSOLIDATION OF OUR RESULTS OF OPERATIONS

         Our consolidated financial statements, included elsewhere in this
annual report, include those subsidiaries in which we hold a majority interest
or which we otherwise control. All significant intercompany balances and
transactions have been eliminated in consolidation.

         For the periods ended December 31, 2004, 2005, and 2006 our
consolidated results reflect the following transactions:

         o    On December 22, 2005, we terminated our 50/50 joint ventures with
              Lafarge Asland in Spain and Portugal, which we acquired in the RMC
              acquisition. Under the terms of the termination agreement, Lafarge
              Asland received a 100% interest in both joint ventures and we
              received (euro)50 million in cash, as well as 29 ready-mix
              concrete plants and five aggregates quarries in Spain. Our
              consolidated financial statements for the year ended December 31,
              2005 include our 50% interest in the results of operations
              relating to these joint venture assets through the proportionate
              consolidation method for the period from March 1, 2005 through
              December 22, 2005 only. Our consolidated financial statements for
              the year ended December 31, 2006 include the results of operations
              relating to the 29 ready-mix concrete plants and five aggregates
              quarries in Spain acquired in conjunction with the termination of
              our 50/50 joint ventures with Lafarge Asland.

         o    On August 29, 2005, we sold RMC's operations in the Tucson,
              Arizona area, consisting of several ready-mix concrete and related
              assets, to California Portland Cement Company for a purchase price
              of approximately U.S.$16 million. Our consolidated financial
              statements for the year ended December 31, 2005 include the
              results of operations relating to these assets for the period from
              March 1, 2005 through August 29, 2005 only.

         o    On July 1, 2005, we and Ready Mix USA established two
              jointly-owned limited liability companies, CEMEX Southeast, LLC, a
              cement company, and Ready Mix USA, LLC, a ready-mix concrete
              company, to serve the construction materials market in the
              southeast region of the United States. Under the terms of the
              limited liability company agreements and related asset
              contribution agreements, we contributed two cement plants
              (Demopolis, Alabama and Clinchfield, Georgia) and 11 cement
              terminals to CEMEX Southeast, LLC, representing approximately 98%
              of its contributed capital, while Ready Mix USA contributed cash
              to CEMEX Southeast, LLC representing approximately 2% of its
              contributed capital. In addition, we contributed our ready-mix
              concrete, aggregates and concrete block assets in the Florida
              panhandle and southern Georgia to Ready Mix USA, LLC, representing
              approximately 9% of its contributed capital, while Ready Mix USA
              contributed all its ready-mix


                                       75


              concrete and aggregate operations in Alabama, Georgia, the Florida
              panhandle and Tennessee, as well as its concrete block operations
              in Arkansas, Tennessee, Mississippi, Florida and Alabama to Ready
              Mix USA, LLC, representing approximately 91% of its contributed
              capital. We own a 50.01% interest, and Ready Mix USA owns a 49.99%
              interest, in the profits and losses and voting rights of CEMEX
              Southeast, LLC, while Ready Mix USA owns a 50.01% interest, and we
              own a 49.99% interest, in the profits and losses and voting rights
              of Ready Mix USA, LLC. In a separate transaction, on September 1,
              2005, we sold 27 ready-mix concrete plants and four concrete block
              facilities located in the Atlanta, Georgia metropolitan area to
              Ready Mix USA, LLC for approximately U.S.$125 million. As of
              December 31, 2005, we had control of, and consolidated, CEMEX
              Southeast, LLC, while our interest in Ready Mix USA, LLC was
              accounted for by the equity method since it was controlled by
              Ready Mix USA as of that date. The value of our assets relating to
              these companies was calculated based on the relative values of the
              assets contributed by us to each company. Our consolidated
              financial statements for the year ended December 31, 2005 include
              the results of operations relating to the assets we contributed to
              Ready Mix USA, LLC for the period from January 1, 2005 through
              July 1, 2005 only and the results of operations relating to the
              assets we sold to Ready Mix USA, LLC for the period from March 1,
              2005 through September 1, 2005 only, since we acquired those
              assets in the RMC acquisition.

         o    In July 2005, we acquired 15 ready-mix concrete plants through the
              purchase of Concretera Mayaguezana,  a ready-mix concrete producer
              located in Puerto Rico, for  approximately  Ps301 million (U.S.$28
              million). The resulting goodwill arising from this acquisition was
              approximately  Ps161 million (U.S.$15  million).  Our consolidated
              financial statements for the years ended December 31, 2005 include
              the  results of  operations  relating to the assets we acquired in
              Puerto Rico for the period from July 1, 2005 through  December 31,
              2005 only, and our consolidated  financial statements for the year
              ended December 31, 2006 include the results of the acquired Puerto
              Rican operations for the entire year ended December 31, 2006.

         o    On June 1, 2005, we sold a cement terminal adjacent to the Detroit
              river to the City of Detroit for a purchase price of approximately
              U.S.$24 million. Our consolidated financial statements for the
              year ended December 31, 2005 include the results of operations
              relating to this cement terminal for the five-month period ended
              May 31, 2005 only.

         o    On March 31, 2005, we sold our Charlevoix, Michigan and Dixon,
              Illinois cement plants and several distribution terminals located
              in the Great Lakes region to Votorantim Participacoes S.A., a
              cement company in Brazil, for an aggregate purchase price of
              approximately U.S.$389 million. The combined capacity of the two
              cement plants sold was approximately two million tons per year,
              and the operations of these plants represented approximately 9% of
              our U.S. operations' operating cash flow for the year ended
              December 31, 2004. Our consolidated financial statements for the
              year ended December 31, 2005 include the results of operations
              relating to these assets for the three-month period ended March
              31, 2005 only.

         o    On March 1, 2005, we completed our acquisition of RMC for a total
              purchase price of approximately U.S.$6.5 billion, which included
              approximately U.S.$2.2 billion of assumed debt. We accounted for
              the acquisition as a purchase under Mexican FRS, which means that
              our consolidated financial statements only include RMC from the
              date of the acquisition. Our consolidated financial statements for
              the years ended December 31, 2005 and December 31, 2006 include
              RMC's results of operations for the ten-month period ended
              December 31, 2005 and the year ended December 31, 2006,
              respectively. Our consolidated financial statements for the year
              ended December 31, 2004 do not include RMC's results of
              operations. As a result, the financial information for the years
              ended December 31, 2005 and December 31, 2006 are not comparable
              to the prior periods.

SELECTED CONSOLIDATED INCOME STATEMENT DATA

         The following table sets forth our selected consolidated income
statement data for each of the three years ended December 31, 2004, 2005, and
2006 expressed as a percentage of net sales.

                                       76




                                                                           YEAR ENDED DECEMBER 31,
                                                                   ---------------------------------------
                                                                     2004             2005         2006
                                                                   --------        ---------     ---------
                                                                                            
Net sales                                                            100.0           100.0           100
Cost of sales.............................................          (56.3)           (60.5)        (63.8)
     Gross profit.........................................           43.7             39.5          36.2
     Administrative, selling and distribution expenses              (21.0)           (23.3)        (20.1)
   Operating income.......................................           22.7             16.2          16.1
Comprehensive financing result:
   Financial expense......................................           (4.6)           (3.4)          (2.7)
   Financial income.......................................            0.3             0.3            0.3
   Foreign exchange result................................           (0.3)           (0.5)           0.1
   Results from valuation and liquidation of financial
      instruments ........................................            1.5             2.5           (0.1)
   Monetary position result...............................            4.7             2.8            2.2
   Net comprehensive financing result.....................            1.6             1.7           (0.2)
Other expenses, net.......................................           (5.9)           (2.1)          (0.2)
   Income before income tax, employees' statutory profit
     sharing and equity in income of affiliates...........           18.4             15.8          15.7
Income taxes, net.........................................           (2.3)           (2.2)          (2.6)
Employees' statutory profit sharing.......................           (0.4)             --            (0.1)
   Total income taxes and employees' statutory
      profit sharing .....................................           (2.7)           (2.2)          (2.7)
   Income before equity in income of affiliates...........           15.7             13.6          13.0
Equity in income of affiliates............................            0.6             0.6            0.7
Consolidated net income...................................           16.3             14.2          13.7
Minority interest net income..............................            0.3             0.4            0.7
Majority interest net income..............................           16.0             13.8          13.0


YEAR ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER 31, 2005

Overview

         Summarized in the table below are the percentage (%) increases (+) and
decreases (-) for the year ended December 31, 2006 compared to the year ended
December 31, 2005 in our sales volumes and average prices for each of our
geographic segments.



                                                                                                      AVERAGE DOMESTIC
                                                                                 EXPORT SALES         PRICES IN LOCAL
                                                        DOMESTIC SALES VOLUMES      VOLUMES              CURRENCY(1)
                                                        ----------------------   ------------     -----------------------
GEOGRAPHIC SEGMENT                                        CEMENT    READY-MIX      CEMENT             CEMENT   READY-MIX
-------------------------------------------------------------------------------------------------------------------------
NORTH AMERICA
-------------------------------------------------------------------------------------------------------------------------
                                                                                                 
Mexico(2)                                                  +8%        +21%          -10%               +1%        +1%
-------------------------------------------------------------------------------------------------------------------------
United States(3)                                           -1%        -15%          N/A                +14%       +16%
-------------------------------------------------------------------------------------------------------------------------
EUROPE
-------------------------------------------------------------------------------------------------------------------------
Spain(4)                                                   +10%        -7%          +25%               +8%        +5%
-------------------------------------------------------------------------------------------------------------------------
UK(5)                                                      +13%       +16%          N/A                +8%        +3%
-------------------------------------------------------------------------------------------------------------------------
Rest of Europe(6)                                          +17%       +16%          N/A                +12%       +4%
-------------------------------------------------------------------------------------------------------------------------
SOUTH/CENTRAL AMERICA AND THE CARIBBEAN(7)
-------------------------------------------------------------------------------------------------------------------------
Venezuela                                                  +30%       +22%          -47%               +1%        +10%
-------------------------------------------------------------------------------------------------------------------------
Colombia                                                   +8%         +3%          N/A                +34%       +15%
-------------------------------------------------------------------------------------------------------------------------
Rest of South/Central America and the Caribbean(8)         +13%       +25%          +32%               -2%        +4%
-------------------------------------------------------------------------------------------------------------------------
Africa and the Middle East(9)
-------------------------------------------------------------------------------------------------------------------------
Egypt                                                      +3%        +11%          -34%               +15%       +14%
-------------------------------------------------------------------------------------------------------------------------
Rest of Africa and the Middle East(10)                     N/A        +13%          N/A                N/A        +14%
-------------------------------------------------------------------------------------------------------------------------
ASIA(11)
-------------------------------------------------------------------------------------------------------------------------
Philippines                                                -2%         N/A          +51%               +14%       N/A
-------------------------------------------------------------------------------------------------------------------------
Rest of Asia(12)                                           +1%         +7%          N/A                +14%       +8%
-------------------------------------------------------------------------------------------------------------------------
N/A = Not Applicable



                                       77


(1)   Represents the average change in domestic cement and ready-mix concrete
      prices in local currency terms. For purposes of a geographic segment
      consisting of a region, the average prices in local currency terms for
      each individual country within the region are first translated into Dollar
      terms (except for the Rest of Europe region, which is translated first
      into Euros) at the exchange rates in effect as of the end of the reporting
      period. Variations for a region represent the weighted average change of
      prices in Dollar terms (except for the Rest of Europe region, which
      represent the weighted average change of prices in Euros) based on total
      sales volumes in the region.
(2)   In constant Mexican Pesos as of December 31, 2006.
(3)   Our cement and ready-mix concrete sales volumes and average prices in the
      United States for the years ended December 31, 2005 and December 31, 2006
      include the sales volumes and average prices of the cement and ready-mix
      concrete operations in the United States we acquired as a result of the
      RMC acquisition for the ten-month period ended December 31, 2005 and for
      the entire year ended December 31, 2006, respectively, except that the
      sales volumes and average prices relating to the assets we contributed on
      July 1, 2005, and the assets we sold on September 1, 2005, to Ready Mix
      USA, LLC, an entity in which Ready Mix USA owns a 50.01% interest and we
      own a 49.99% interest, are included only for the periods from March 1,
      2005 through July 1, 2005 and from March 1, 2005 through September 1,
      2005, respectively, and sales volumes and average prices related to RMC's
      operations in the Tucson, Arizona area, which were sold in August 2005,
      are included for the period from March 1, 2005 through August 29, 2005
      only, and the sales volumes and average prices related to Charlevoix and
      Dixon cement plants, which were sold in March 2005, are included for the
      period from January 1, 2005 through March 31, 2005 only.
(4)   Our ready-mix concrete sales volumes and average prices in Spain for the
      year ended December 31, 2005 include the sales volumes and average prices
      of the joint venture ready-mix concrete operations in Spain we acquired as
      a result of the RMC acquisition, which operations we divested on December
      22, 2005 in connection with the termination of the joint venture with
      Lafarge Asland through which such operations were conducted, for the
      period from March 1, 2005 through December 22, 2005. Our consolidated
      financial statements for the year ended December 31, 2006 include the
      results of operations relating to the 29 ready-mix concrete plants and
      five aggregates quarries in Spain acquired in conjunction with the
      termination of our 50/50 joint ventures with Lafarge Asland.
(5)   Our United Kingdom segment includes the operations in the United Kingdom
      we acquired as a result of the RMC acquisition for the ten-month period
      ended December 31, 2005 and for the entire year ended December 31, 2006.
(6)   Our Rest of Europe segment includes the operations in Germany, France,
      Republic of Ireland, Czech Republic, Austria, Poland, Croatia, Hungary and
      Latvia we acquired as a result of the RMC acquisition for the ten-month
      period ended December 31, 2005 and for the entire year ended December 31,
      2006, the operations in Denmark we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005 and for the
      period from January 1, 2006 to March 2, 2006, and the Italian operations
      we owned prior to the RMC acquisition.
(7)   Our South America, Central America and the Caribbean segment includes our
      operations in Venezuela, Colombia and the operations listed in note 8
      below; however, in above table, our operations in Venezuela and Colombia
      are presented separately from our other operations in the segment for
      purposes of comparison with our 2005 presentation of our operations in the
      region.
(8)   Our Rest of South/Central America and the Caribbean segment includes our
      operations in Costa Rica, Panama, the Dominican Republic, Nicaragua,
      Puerto Rico and our trading activities in the Caribbean, as well as the
      operations in Jamaica and Argentina we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005 and for the
      entire year ended December 31, 2006.
(9)   Our Africa and the Middle East segment includes our operations in Egypt
      and the operations listed in note 10 below; however, in the above table,
      our operations in Egypt are presented separately from our other operations
      in the segment for purposes of comparison with our 2005 presentation of
      our operations in the region.
(10)  Our Rest of Africa and the Middle East segment includes the operations in
      the United Arab Emirates and Israel we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005 and for the
      entire year ended December 31, 2006.
(11)  Our Asia segment includes our operations in the Philippines and the
      operations listed in note 12 below; however, for in the above table, our
      operations in the Philippines are presented separately from our other
      operations in the segment for purposes of comparison with our 2005
      presentation of our operations in the region.
(12)  Our Rest of Asia segment includes our operations in Thailand, Bangladesh
      and other assets in the Asian region, as well as the operations in
      Malaysia we acquired as a result of the RMC acquisition for the ten-month
      period ended December 31, 2005 and for the entire year ended December 31,
      2006.

         On a consolidated basis, our cement sales volumes increased
approximately 6%, from 80.6 million tons in 2005 to 85.7 million tons in 2006,
and our ready-mix concrete sales volumes increased approximately 6%, from 69.5
million cubic meters in 2005 to 73.6 million cubic meters in 2006. Our
consolidated net sales increased approximately 11% from Ps177,385 million in
2005 to Ps197,093 million in 2006, and our operating income increased
approximately 10% from Ps28,791 million in 2005 to Ps31,814 million in 2006 in
constant Peso terms.

         The following tables present selected condensed financial information
of net sales and operating income for each of our geographic segments for the
years ended December 31, 2005 and 2006. Variations in net sales determined on
the basis of constant Mexican Pesos include the appreciation or depreciation
which occurred during the period between the local currencies of the countries
in the regions vis-a-vis the Mexican Peso, as well as the effects of inflation
as applied to the Mexican Peso amounts using our weighted average inflation
factor; therefore, such variations differ substantially from those based solely
on the countries' local currencies:

                                       78




                                                                                       NET SALES
                                                         ---------------------------------------------------------------------
                                                                         APPROXIMATE                      FOR THE YEAR ENDED
                                                                          CURRENCY                            DECEMBER 31,
                                                         VARIATIONS     FLUCTUATIONS,                   ----------------------
                                                            IN             NET OF       VARIATIONS IN
                                                           LOCAL         INFLATION        CONSTANT
GEOGRAPHIC SEGMENT                                       CURRENCY(1)      EFFECTS       MEXICAN PESOS      2005        2006
------------------                                       -----------    -------------    -------------  ---------     --------
                                                                                                          (IN MILLIONS OF
                                                                                                          CONSTANT MEXICAN
                                                                                                             PESOS AS OF
                                                                                                          DECEMBER 31, 2006)
NORTH AMERICA                                                                                             --------------------
                                                                                                        
Mexico...........................................          +16.4%            -9.7%            +6.7%       36,775       39,256
United States(2).................................           +3.2%            -8.0%            -4.8%       47,359       45,096
EUROPE
Spain(3).........................................          +11.2%            +3.5%           +14.7%       17,550       20,131
United Kingdom(4)................................          +15.7%            +8.1%           +23.8%       17,769       21,993
Rest of Europe(5)................................          +21.9%            +8.5%           +30.4%       31,594       41,205
SOUTH/CENTRAL AMERICA AND THE CARIBBEAN
Venezuela........................................          +18.0%            +1.5%           +19.5%        4,795        5,732
Colombia.........................................          +41.2%            +7.7%           +33.5%        2,904        3,878
Rest of South / Central America and the Caribbean(6)       +16.3%           +10.0%            +6.3%        7,844        8,340
AFRICA AND THE MIDDLE EAST
Egypt............................................          +15.3%            -7.5%            +7.8%        3,059        3,298
Rest of Africa and the Middle East(7)............          +46.6%            -9.4%           +36.0%        3,250        4,420
ASIA
Philippines......................................           +7.1%            +1.6%            +8.7%        2,223        2,416
Rest of Asia(8)..................................          +14.3%           +26.3%           +40.6%        1,111        1,562

OTHERS(9)........................................          +30.4%            -8.8%           +21.6%       15,265       18,564
                                                                                              +12.7%      191,498      215,891
Eliminations from consolidation..................                                                         (14,113)     (18,798)
CONSOLIDATED NET SALES...........................                                             +11.1%      177,385      197,093




                                       79




                                                                                 OPERATING INCOME
                                                         ---------------------------------------------------------------------
                                                                         APPROXIMATE                      FOR THE YEAR ENDED
                                                                          CURRENCY                            DECEMBER 31,
                                                         VARIATIONS     FLUCTUATIONS,                   ----------------------
                                                            IN             NET OF       VARIATIONS IN
                                                           LOCAL         INFLATION        CONSTANT
GEOGRAPHIC SEGMENT                                       CURRENCY(1)      EFFECTS       MEXICAN PESOS      2005        2006
------------------                                       -----------    -------------    -------------  ---------     --------
                                                                                                          (IN MILLIONS OF
                                                                                                          CONSTANT MEXICAN
                                                                                                             PESOS AS OF
                                                                                                          DECEMBER 31, 2006)
NORTH AMERICA                                                                                             --------------------
                                                                                                        
Mexico...........................................           +13.5%           -9.4%           +4.1%         11,702      12,180
United States(2).................................           +24.0%           -4.6%          +19.4%          7,790       9,305
EUROPE
Spain(3).........................................           +17.8%           +7.0%          +24.8%          4,164       5,197
United Kingdom(4)................................          -112.0%          +35.0%          -77.0%            618         142
Rest of Europe(5)................................            +3.3%           +0.7%           +4.0%          1,969       2,047
SOUTH/CENTRAL AMERICA AND THE CARIBBEAN(6).......
Venezuela........................................             Flat           +6.3%           +6.3%          1,561       1,659
Colombia.........................................          +156.6%           +9.6%         +166.2%            394       1,049
Rest of South/Central America and the Caribbean(7)          +42.9%          +20.3%          +63.2%            747       1,219
AFRICA AND MIDDLE EAST(8)
Egypt............................................           +27.6%           -8.2%          +19.4%          1,139       1,360
Rest of Africa and the Middle East(9)............           +17.4%          -15.6%           +1.8%            109         111
ASIA(10)
Philippines......................................           +30.1%          +10.4%          +40.5%            476         669
Rest of Asia(11).................................          -181.3%          -18.7%         -200.0%           (19)        (57)

Others(12).......................................           -76.3%          +11.3%          -65.0%        (1,859)     (3,067)
CONSOLIDATED OPERATING INCOME....................                                           +10.5%         28,791      31,814



____________________________
N/A = Not Applicable
(1)   For purposes of a geographic segment consisting of a region, the net sales
      and operating income data in local currency terms for each individual
      country within the region are first translated into Dollar terms (except
      for the Rest of Europe region, which is translated first into Euros) at
      the exchange rates in effect as of the end of the reporting period.
      Variations for a region represent the weighted average change in Dollar
      terms (except for the Rest of Europe region, which represent the weighted
      average change in Euros) based on net sales and operating income for the
      region.
(2)   Our net sales and operating income in the United States for the years
      ended December 31, 2005 and December 31, 2006 include the results of the
      cement and ready-mix concrete operations in the United States we acquired
      as a result of the RMC acquisition for the ten-month period ended December
      31, 2005 and for the entire year ended December 31, 2006, respectively,
      except that the results of the assets we contributed on July 1, 2005, and
      the assets we sold on September 1, 2005, to Ready Mix USA, LLC, an entity
      in which Ready Mix USA owns a 50.01% interest and we own a 49.99%
      interest, are included only for the periods from March 1, 2005 through
      July 1, 2005 and from March 1, 2005 through September 1, 2005,
      respectively , and the net sales and operating income related to RMC's
      operations in the Tucson, Arizona area, which were sold in August 2005,
      are included in the results of operations relating to these assets for the
      period from March 1, 2005 through August 29, 2005 only, and the sales
      volumes and average prices related to Charlevoix and Dixon cement plants,
      which were sold in March 2005, are included for the period from January 1,
      2005 through March 31, 2005 only.
(3)   Our net sales and operating income in Spain for the year ended December
      31, 2005 include the proportionally consolidated results of the joint
      venture ready-mix concrete operations in Spain we acquired as a result of
      the RMC acquisition, which operations we divested on December 22, 2005 in
      connection with the termination of the joint venture with Lafarge Asland
      through which such operations were conducted, for the period from March 1,
      2005 through December 22, 2005. Our net sales and operating income in
      Spain for the year ended December 31, 2006 include the results of
      operations relating to the 29 ready-mix concrete plants and five
      aggregates quarries in Spain acquired in conjunction with the termination
      of our 50/50 joint ventures with Lafarge Asland.
(4)   Our United Kingdom segment includes the operations in the United Kingdom
      we acquired as a result of the RMC acquisition for the ten-month period
      ended December 31, 2005 and for the entire year ended December 31, 2006.
(5)   Our Rest of Europe segment includes the operations in Germany, France,
      Republic of Ireland, Czech Republic, Austria, Poland, Croatia, Hungary and
      Latvia we acquired as a result of the RMC acquisition for the ten-month
      period ended December 31, 2005 and for the entire year ended December 31,
      2006, the operations in Denmark we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005 and for the
      period from January 1, 2006 to March 2, 2006, and the Italian operations
      we owned prior to the RMC acquisition.
(6)   Our South America, Central America and the Caribbean segment includes our
      operations in Venezuela, Colombia and the operations listed in note 7
      below; however, in the above table, our operations in Venezuela and
      Colombia are presented separately from our other operations in the segment
      for purposes of comparison with our 2005 presentation of our operations in
      the region.

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(7)   Our Rest of South/Central America and the Caribbean segment includes our
      operations in Costa Rica, Panama, the Dominican Republic, Nicaragua,
      Puerto Rico and our trading activities in the Caribbean, as well as the
      operations in Jamaica and Argentina we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005 and for the
      entire year ended December 31, 2006.
(8)   Our Africa and the Middle East segment includes our operations in Egypt
      and the operations listed in note 9 below; however, in the above table,
      our operations in Egypt are presented separately from our other operations
      in the segment for purposes of comparison with our 2005 presentation of
      our operations in the region.
(9)   Our Rest of Africa and the Middle East segment includes the operations in
      the United Arab Emirates and Israel we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005 and for the
      entire year ended December 31, 2006.
(10)  Our Asia segment includes our operations in the Philippines and the
      operations listed in note 11 below; however, for in the above table, our
      operations in the Philippines are presented separately from our other
      operations in the segment for purposes of comparison with our 2005
      presentation of our operations in the region.
(11)  Our Rest of Asia segment includes our operations in Thailand, Bangladesh
      and other assets in the Asian region, as well as the operations in
      Malaysia we acquired as a result of the RMC acquisition for the ten-month
      period ended December 31, 2005 and for the entire year ended December 31,
      2006.
(12)  Our Others segment includes our worldwide trade maritime operations, our
      information solutions company and other minor subsidiaries.

     NET SALES

         Our consolidated net sales increased approximately 11% from Ps177,385
million in 2005 to Ps197,093 million in 2006 in constant Peso terms. The
increase in net sales was primarily attributable to the consolidation of RMC's
operations for the full year in 2006 as compared to only ten months in 2005, as
well as higher sales volumes and better pricing environments in most of our
markets, which were partially offset by our divestitures discussed above.
Approximately 55% of the net sales increase during 2006 compared to 2005
resulted from the consolidation of RMC's operations for an additional two months
in 2006 compared to 2005.

         Set forth below is a quantitative and qualitative analysis of the
effects of the various factors affecting our net sales on a geographic segment
basis.

         Mexico

         Our Mexican operations' domestic cement sales volumes increased
approximately 8% in 2006 compared to 2005, and ready-mix concrete sales volumes
increased approximately 21% during the same period. Our Mexican operations' net
sales represented approximately 18% of our total net sales in 2006, in constant
Peso terms, before eliminations resulting from consolidation. The main drivers
of the increase in the domestic sales volumes during the year were government
infrastructure spending, which was fueled in part by the oil revenue surplus,
and residential construction, which was supported by increased credit
availability from commercial banks and non-commercial sources such as Infonavit.
The self-construction sector showed moderate growth during the year. Our Mexican
operations' cement export volumes, which represented approximately 9% of our
Mexican cement sales volumes in 2006, decreased approximately 10% in 2006
compared to 2005, primarily as a result of decreased cement demand in Central
America. Of our Mexican operations' total cement export volumes during 2006, 89%
was shipped to the United States, 9% to Central America and the Caribbean and 2%
was shipped to South America. Our Mexican operations' average domestic sales
price of cement increased approximately 1% in constant Peso terms in 2006
compared to 2005 (increased approximately 4% in nominal Peso terms), and the
average sales price of ready-mix concrete increased approximately 1% in constant
Peso terms (increased approximately 5% in nominal Peso terms) over the same
period. For the year ended December 31, 2006, cement represented approximately
59%, ready-mix concrete approximately 25% and our other businesses approximately
16% of our Mexican operations' net sales before eliminations resulting from
consolidation.

         As a result of the increases in domestic cement and ready-mix concrete
sales volumes and average sales prices, partially offset by the decrease in the
cement export volumes, our Mexican net sales, in constant Peso terms, increased
approximately 7% (increased approximately 16% in nominal Peso terms) in 2006
compared to 2005.

         United States

         Our U.S. operations' domestic cement sales volumes, which include
cement purchased from our other operations, decreased approximately 1% in 2006
compared to 2005, and ready-mix concrete sales volumes decreased approximately
15% during the same period. The decreases in our U.S. operations' domestic
cement and


                                       81


ready-mix concrete sales volumes resulted primarily from the weaker residential
sector, resulting in weak demand during 2006 compared to the peak demand levels
of 2005, and reflected as well our divestiture of two cement plants and several
distribution terminals in the Great Lakes region and our other divestiture of a
cement terminal adjacent to the Detroit river to the City of Detroit, both in
2005, as well as our assets contributions for the establishment of two
jointly-owned limited liability companies in July 2005 and the sale of RMC's
Tucson, Arizona operations, in the same year, as described above. Our United
States operations' represented approximately 21% of our total net sales in 2006
in constant Peso terms, before eliminations resulting from consolidation. Our
U.S. operations average sales price of domestic cement increased approximately
14% in Dollar terms in 2006 compared to 2005, and the average sales price of
ready-mix concrete increased approximately 16% in Dollar terms over the same
period. The increases in average prices were primarily due to limited supply of
cement and ready-mix concrete. For the year ended December 31, 2006, cement
represented approximately 40%, ready-mix concrete approximately 37% and our
other businesses approximately 23% of our United States operations' net sales
before eliminations resulting from consolidation.

         As a result of the increases in the average sales prices of cement and
ready-mix concrete, net sales from our United States operations, in Dollar
terms, increased approximately 3% in 2006 compared to 2005. The increase in net
sales in the United States during 2006 compared to 2005 resulted from the
consolidation of RMC's operations for an additional two months in 2006 compared
to 2005, partially offset by the decreases in sales volumes described above.

         Spain

         Our Spanish operations' domestic cement sales volumes increased
approximately 10% in 2006 compared to 2005, while ready-mix concrete sales
volumes decreased approximately 7% during the same period. The increases in
domestic cement sales volumes resulted primarily from increases in the
residential and infrastructure sectors, as well as strong public spending in
anticipation of local elections in 2007. The decrease in ready-mix concrete
sales volumes reflected the termination of our 50/50 joint ventures with Lafarge
Asland, described above. Our Spanish operations' 2006 net sales represented
approximately 9% of our total net sales in constant Peso terms, before
eliminations resulting from consolidation. Our Spanish operations' cement export
volumes, which represented approximately 1% of our Spanish cement sales volumes
in 2006, increased approximately 25% in 2006 compared to 2005, primarily as a
result of increased cement demand in Africa. Of our Spanish operations' total
cement export volumes in 2006, 13% was shipped to Europe and the Middle East,
50% to Africa, and 37% to the United States. Our Spanish operations' average
domestic sales price of cement increased approximately 8% in Euro terms in 2006
compared to 2005, and the average price of ready-mix concrete increased
approximately 5% in Euro terms over the same period. The increases in average
prices were primarily due to increased demand for cement and ready-mix concrete.
For the year ended December 31, 2006, cement represented approximately 53%,
ready-mix concrete approximately 23% and our other businesses approximately 24%
of our Spanish operations' net sales before eliminations resulting from
consolidation.

         As a result of the increases in domestic cement sales volumes and the
increases in the average domestic sales prices of cement and ready-mix concrete,
our Spanish net sales, in Euro terms, increased approximately 11% in 2006
compared to 2005, despite the decline in ready-mix concrete sales volumes.

         United Kingdom

         Our United Kingdom operations consist of the United Kingdom operations
we acquired from RMC, which are consolidated in our results of operations for
ten months in 2005 and for the entire year in 2006. Domestic cement sales
volumes in our United Kingdom operations increased approximately 13% in 2006
compared to 2005, and ready-mix concrete sales volumes increased approximately
16% during the same period. The increase in net sales was primarily attributable
to the consolidation of RMC's operations for ten months in 2005 as compared to
the full year in 2006, partially offset by a slowdown in infrastructure demand
in the United Kingdom. Domestic cement demand during 2006 was primarily driven
by infrastructure projects relating to industrial, commercial and residential
construction. Our United Kingdom operations for the 2006 represented
approximately 10% of our total net sales in constant Peso terms, before
eliminations resulting from consolidation. Our United Kingdom operations'
average domestic sales price of cement increased approximately 8% in Pound terms
in 2006 compared to 2005, and the average price of ready-mix concrete increased
approximately 3% in Pound terms over the same period. For the


                                       82


year ended December 31, 2006, cement represented approximately 12%, ready-mix
concrete approximately 31% and our other businesses approximately 57% of our
United Kingdom operations' net sales before eliminations resulting from
consolidation.

         As a result of the increases in domestic cement sales volumes and
ready-mix concrete, net sales from our United Kingdom operations, in Pound
terms, increased approximately 16% in 2006 compared to 2005. The increase in net
sales in the United Kingdom during 2006 compared to 2005 resulted from the
consolidation of RMC's operations for an additional two months in 2006 compared
to 2005, partially offset by the slowdown in infrastructure construction
described above.

         Rest of Europe

         Our operations in our Rest of Europe segment in 2006 consisted of the
operations we acquired from RMC in Germany, France, Croatia, Poland, Latvia, the
Czech Republic, Ireland, Austria, Hungary, Portugal, Denmark, Finland, Norway
and Sweden, are consolidated in our results of operations for ten months in 2005
and for the entire year in 2006, and the Italian operations we owned prior to
the RMC acquisition. Our Rest of Europe operations' net sales for the year ended
December 31, 2006, represented approximately 20% of our total net sales in
constant Peso terms, before eliminations resulting from consolidation. Domestic
cement sales volumes in the Rest of Europe region increased approximately 17% in
2006 compared to 2005, while ready-mix concrete sales volumes increased
approximately 16% during the same period. The increase in volumes is primarily
attributable to the consolidation of RMC's operations for the full year during
2006 compared to only ten months in 2005.

         As a result of the increases in cement and ready-mix concrete sales
volumes, net sales in the Rest of Europe, in Euro terms, increased approximately
22% in 2006 compared to 2005. Approximately 56% of the increase in net sales in
the Rest of Europe during 2006 compared to 2005 resulted from the consolidation
of RMC's operations for an additional two months in 2006 compared to 2005. Our
Rest of Europe operations' average domestic sales price of cement increased
approximately 12% in Euro terms in 2006 compared to 2005, and the average price
of ready-mix concrete increased approximately 4% in Euro terms over the same
period. For the year ended December 31, 2006, cement represented approximately
20%, ready-mix concrete approximately 46% and our other businesses approximately
34% of our Rest of Europe operations' net sales before eliminations resulting
from consolidation. Set forth below is a discussion of sales volumes in Germany
and France, the most significant countries in our Rest of Europe segment, based
on net sales.

         In Germany, cement sales volumes in the operations we acquired from RMC
increased approximately 22% in 2006 compared to 2005, and ready-mix concrete
sales volumes in those operations increased approximately 28% during the same
period. These increases are primarily due to greater demand from the residential
sector, supported by the number of housing permits granted at the beginning of
2006, as well as the nonresidential sector, which grew more than GDP as a result
of an economic upswing and a favorable business climate. As a result of the
increases in cement and ready-mix concrete sales volumes, net sales in Germany,
in Euro terms, increased approximately 32% in 2006 compared to 2005.
Approximately 30% of the increase in net sales in Germany during 2006 compared
to 2005 resulted from the consolidation of RMC's operations for an additional
two months in 2006 compared to 2005, while the rest of the increase in net sales
in Germany was primarily due to the favorable economic environment.

         In France, ready-mix concrete sales volumes in the operations we
acquired from RMC increased approximately 20% in 2006 compared to 2005,
primarily as a result of increased demand from the residential sector, including
private and public housing, consumption during 2006, and the consolidation of
RMC's operations for the full year during 2006 compared to only ten months in
2005. As a result of the increase in ready-mix concrete sales volumes, net sales
in France, in Euro terms, increased approximately 26% in 2006 compared to 2005.
Approximately 68% of the increase in net sales in France during 2006 compared to
2005 resulted from the consolidation of RMC's operations for an additional two
months in 2006.

         For the reasons mentioned above, net sales before eliminations
resulting from consolidation in our Rest of Europe operations, in Euro terms,
increased approximately 22% in 2006 compared to 2005.

                                       83


         South America, Central America and the Caribbean

         Our operations in South America, Central America and the Caribbean in
2006 consisted of our operations in Venezuela, Colombia and the operations we
acquired from RMC in Argentina, which are consolidated in our results of
operations for ten months in 2005 and for the entire year in 2006, and our
Central American and the Caribbean operations, which include our operations in
Costa Rica, the Dominican Republic, Panama, Nicaragua, Puerto Rico (including
the 15 additional ready-mix concrete plants we acquired in Puerto Rico in July
2005 described above) and the operations we acquired from RMC in Jamaica, which
are consolidated in our results of operations for ten months in 2005 and for the
entire year in 2006, as well as several cement terminals and other assets in
other Caribbean countries and our trading operations in the Caribbean region.
Most of these trading operations consist of the resale in the Caribbean region
of cement produced by our operations in Venezuela and Mexico.

         Our South America, Central America and the Caribbean operations'
domestic cement sales volumes increased approximately 15% in 2006 compared to
2005, and ready-mix concrete sales volumes increased approximately 17% over the
same period. The increases in sales volumes are primarily attributable to the
increased sales volumes in our Venezuelan and Colombian operations described
below. Our South America, Central American and the Caribbean operations' average
domestic sales price of cement increased approximately 5% in Dollar terms in
2006 compared to 2005 due to better market conditions, while the average sales
price of ready-mix concrete increased approximately 10% in Dollar terms over the
same period. For the year ended December 31, 2006, our South America, Central
America and the Caribbean operations represented approximately 8% of our total
net sales in constant Peso terms, before eliminations resulting from
consolidation. As a result of the increases in domestic cement and ready-mix
concrete sales volumes and the average sales prices of domestic cement and
ready-mix concrete, net sales in our South America, Central America and the
Caribbean operations, in Dollar terms, increased approximately 21% in 2006
compared to 2005. For the year ended December 31, 2006, cement represented
approximately 67%, ready-mix concrete approximately 24% and our other businesses
approximately 9% of our South and Central America and the Caribbean operations'
net sales before eliminations resulting from consolidation. Set forth below is a
discussion of sales volumes in Venezuela and Colombia, the most significant
countries in our South America, Central American and the Caribbean segment,
based on net sales.

         Our Venezuelan operations' domestic cement sales volumes increased
approximately 30% in 2006 compared to 2005, and ready-mix concrete sales volumes
increased approximately 22% during the same period. The increases in volumes
resulted primarily from greater infrastructure spending, which continues to
benefit from increased oil revenues, and a strong residential sector, including
the formal and self-construction sectors. For the year ended December 31, 2006,
Venezuela represented approximately 3% of our total net sales in constant Peso
terms, before eliminations resulting from consolidation. Our Venezuelan
operations' cement export volumes, which represented approximately 26% of our
Venezuelan cement sales volumes in 2006, decreased approximately 47% in 2006
compared to 2005 primarily due to increases in domestic demand. Of our
Venezuelan operations' total cement export volumes during 2006, 40% was shipped
to North America and 60% to South America and the Caribbean. Our Venezuelan
operations' average domestic sales price of cement increased approximately 1% in
Bolivar terms in 2006 compared to 2005, and the average price of ready-mix
concrete increased approximately 10% in Bolivar terms over the same period. As a
result of the increases in domestic cement and ready-mix concrete sales volumes
and the increase in the average domestic cement sales price and ready-mix
concrete average price, despite the decrease in cement exports, net sales of our
Venezuelan operations, in Bolivar terms, increased approximately 18% in 2006
compared to 2005. For the year ended December 31, 2006, cement represented
approximately 70%, ready-mix concrete approximately 24% and our other businesses
approximately 6% of our Venezuelan operations' net sales before eliminations
resulting from consolidation.

         Our Colombian operations' cement volumes increased approximately 8% in
2006 compared to 2005, and ready-mix concrete sales volumes increased
approximately 3% during the same period. The increases in sales volumes resulted
primarily from the increases in the public infrastructure, residential and
industrial-and-commercial sectors, which have grown in anticipation of a
potential free-trade agreement with the United States. For the year ended
December 31, 2006, Colombia represented approximately 2% of our total net sales
in constant Peso terms, before eliminations resulting from consolidation. Our
Colombian operations' average domestic sales price of cement increased
approximately 34% in Colombian Peso terms in 2006 compared to 2005, and the
average price of ready-mix concrete increased approximately 15% in Colombian
Peso terms over the same period. As a result of the


                                       84


increase in the average domestic sales price of cement and ready-mix concrete
and the increase in domestic cement and ready-mix concrete sales volumes, net
sales of our Colombian operations, in Colombian Peso terms, increased
approximately 41% in 2006 compared to 2005. For the year ended December 31,
2006, cement represented approximately 54%, ready-mix concrete approximately 28%
and our other businesses approximately 18% of our Colombian operations' net
sales before eliminations resulting from consolidation.

         Our Rest of South and Central America and the Caribbean operations'
cement volumes increased approximately 13% in 2006 compared to 2005, and
ready-mix concrete sales volumes increased approximately 25% during the same
period. For the year ended December 31, 2006, the Rest of South and Central
America and the Caribbean represented approximately 3% of our total net sales in
constant Peso terms, before eliminations resulting from consolidation. Our Rest
of South and Central America and the Caribbean operations' average domestic
sales price of cement decreased approximately 2% in Dollar terms in 2006
compared to 2005, and the average sales price of ready-mix concrete increased
approximately 4% in Dollar terms over the same period. As a result of the
increase in the average ready-mix concrete and the increase in domestic cement
and ready-mix concrete sales volumes, net sales of our Rest of South and Central
America and the Caribbean operations, in Dollar terms, increased approximately
16% in 2006 compared to 2005. For the year ended December 31, 2006, cement
represented approximately 72%, ready-mix concrete approximately 23% and our
other businesses approximately 5%, of our Rest of South and Central America and
the Caribbean operations' net sales before eliminations resulting from
consolidation.

         For the reasons mentioned above, net sales before eliminations
resulting from consolidation in our South and Central America and Caribbean
operations, in Dollar terms, increased approximately 21% in 2006 compared to
2005.

         Africa and the Middle East

         Our operations in Africa and the Middle East consist of our operations
in Egypt and the operations we acquired from RMC in the United Arab Emirates
(UAE) and Israel, which are consolidated in our results of operations for ten
months in 2005 and for the entire year in 2006. Our Africa and the Middle East
operations' domestic cement sales volumes increased approximately 3% in 2006
compared to 2005, and ready-mix concrete sales volumes increased 13% during the
same period, primarily as a result of increased demand in Egypt and the UAE
described below. For the year ended December 31, 2006, Africa and the Middle
East represented approximately 4% of our total net sales in constant Peso terms,
before eliminations resulting from consolidation. Our Africa and the Middle East
operations' average domestic sales price of cement increased approximately 16%
in Dollar terms in 2006, and the average price of ready-mix concrete increased
approximately 14% in Dollar terms over the same period. For the year ended
December 31, 2006, cement represented approximately 25%, ready-mix concrete
approximately 32% and our other businesses approximately 43% of our African and
the Middle East operations' net sales before eliminations resulting from
consolidation.

         Our Egyptian operations' domestic cement sales volumes increased
approximately 3% in 2006 compared to 2005, and Egyptian ready-mix concrete sales
volumes increased approximately 11% during the same period. The increases in
volumes resulted primarily from the favorable economic environment in Egypt,
mainly in the self-construction sector, supported by high remittances from
overseas workers. For the year ended December 31, 2006, Egypt represented
approximately 2% of our total net sales in constant Peso terms, before
eliminations resulting from consolidation. The average domestic sales price of
cement increased approximately 15% in Egyptian pound terms in 2006 compared to
2005, and ready-mix concrete sales prices increased approximately 14% in
Egyptian pound terms. Cement export volumes, which represented approximately 10%
of our total Egyptian cement sales volumes in 2006, decreased approximately 34%
in 2006 compared to 2005 primarily due to increased domestic demand in Egypt.
All our Egyptian operations' total cement export volumes during 2006 were
shipped to Europe. As a result of the increases in domestic cement sales
volumes, net sales of our Egyptian operations, in Egyptian pound terms,
increased approximately 15% in 2006 compared to 2005. For the year ended
December 31, 2006, cement represented approximately 93%, ready-mix concrete
approximately 6% and our other businesses approximately 1% of our Egyptian
operations' net sales before eliminations resulting from consolidation.

         Our operations in Rest of Africa and the Middle East consist of the
ready-mix concrete operations we acquired from RMC in the UAE and Israel. Our
Rest of Africa and the Middle East operations' ready-mix concrete


                                       85


sales volumes increased approximately 13% in 2006 compared to 2005 primarily as
a result of the consolidation of RMC's UAE and Israeli operations for the full
year in 2006 compared to only ten months in 2005 (representing approximately 92%
of our ready-mix concrete sales volumes in the region), and the average
ready-mix concrete sales price increased approximately 14%, in Dollar terms, in
2006 compared to 2005. For the year ended December 31, 2006, the UAE and Israel
represented approximately 2% of our total net sales in constant Peso terms,
before eliminations resulting from consolidation. As a result of the
consolidation for the entire year in 2006 compared to only ten months in 2005 of
the UAE and Israeli operations, net sales of our Rest of Africa and the Middle
East operations, in Dollar terms, increased approximately 47% in 2006 compared
to 2005. Approximately 45% of the increase in net sales of Rest of Africa and
Middle East during 2006 compared to 2005 resulted from the consolidation of
RMC's operations for an additional two months in 2006 compared to 2005. The rest
of the increase in net sales, in Dollar terms, in our Rest of Africa and the
Middle East operations' was due to the increase in the average ready-mix
concrete sales price and ready-mix concrete sales volume. For the year ended
December 31, 2006, ready-mix concrete approximately 41% and our other businesses
approximately 59% of our UAE and Israel operations' net sales before
eliminations resulting from consolidation.

         As a result of the consolidation of RMC's UAE and Israeli operations
and the increases in domestic cement sales volumes and the average domestic
sales prices of cement in our Egyptian operations, net sales before eliminations
resulting from consolidation in our Africa and the Middle East operations, in
Dollar terms, increased approximately 32% in 2006 compared to 2005, despite the
decline in cement export volumes of our Egyptian operations.

         Asia

         Our operations in Asia consist of our operations in the Philippines,
Thailand, Bangladesh, Taiwan and the operations we acquired from RMC in
Malaysia, which are consolidated in our results of operations for ten months in
2005 and for the entire year in 2006. Our Asian operations' domestic cement
sales volumes decreased approximately 1% in 2006 compared to 2005 as a result of
a decrease in demand in the Philippines, while ready-mix concrete sales volumes
increased 7% during the same period. The main drivers of demand continue to be
the residential, commercial, and self-construction sectors. For the year ended
December 31, 2006, Asia represented approximately 2% of our total net sales in
constant Peso terms, before eliminations resulting from consolidation. The
average sales price of domestic cement in the region increased approximately 14%
in Dollar terms, and the ready-mix concrete average sales price in Dollar terms,
increased approximately 8% during 2006 compared to 2005. Our Asian operations'
cement export volumes, which represented approximately 33% of our Asian
operations' cement sales volumes in 2006, increased approximately 51% in 2006
compared to 2005 primarily due to increased cement demand in Southeast Asia. Of
our Asian operations' total cement export volumes during 2006, 73% was shipped
to Europe, 6% was shipped to Africa and 21% to the Southeast Asia region. For
the year ended December 31, 2006, cement represented approximately 76%,
ready-mix concrete approximately 16% and our other businesses approximately 8%
of our Asian operations' net sales before eliminations resulting from
consolidation.

         Our Philippines operations' cement volumes decreased approximately 2%
in 2006 compared to 2005. For the year ended December 31, 2006, the Philippines
represented approximately 1% of our total net sales in constant Peso terms,
before eliminations resulting from consolidation. Our Philippines operations'
average domestic sales price of cement increased approximately 14% in Philippine
Peso terms in 2006 compared to 2005. As a result of the increase in the average
domestic sales price of cement despite the decrease in domestic cement sales
volumes, net sales of our Philippines operations, in Philippine Peso terms,
increased approximately 7% in 2006 compared to 2005. For the year ended December
31, 2006, cement represented 100% of our Philippine operations' net sales before
eliminations resulting from consolidation.

         Our Rest of Asia operations' ready-mix concrete sales volumes, which
include our Malaysian operations acquired from RMC (representing nearly all of
our ready-mix concrete sales volumes in the Asia region), increased
approximately 7% in 2006 compared to 2005, in part due to the consolidation of
RMC's Malaysian operations for the full year in 2006 compared to only ten months
in 2005 and as a result of increased demand from the residential, commercial and
self-construction sectors. Approximately 13% of the increase in net sales in our
Rest of Asia operations during 2006 compared to 2005 resulted from the
consolidation of RMC's Malaysian operations for an additional two months in 2006
compared to 2005. The average sales price of ready-mix concrete increased
approximately 8%, in Dollar terms, during 2006. For the reasons mentioned above,
net sales of our Rest of Asia


                                       86


operations, in Dollar terms, increased approximately 14% in 2006 compared to
2005. For the year ended December 31, 2006, cement represented approximately
42%, ready-mix concrete approximately 40% and our other businesses approximately
18% of our Rest of Asia operations' net sales before eliminations resulting from
consolidation.

         Primarily as a result of the increases in domestic cement and ready-mix
concrete average sales prices, and the increase in the ready-mix concrete sales
volume, but also as a result of the consolidation of RMC's Malaysian ready-mix
concrete operations for two additional months in 2006, net sales of our Asia
operations, in Dollar terms, increased approximately 17% in 2006 compared to
2005, despite the decrease in domestic cement sales volumes.

         Others

         Our Others segment includes our worldwide cement, clinker and slag
trading operations, our information technology solutions company and other minor
subsidiaries. Net sales of our Others segment increased approximately 30% before
eliminations resulting from consolidation in 2006 compared to 2005 in Dollar
terms, primarily as a result of a 32% increase in our trading operations' net
sales in 2006 compared to 2005, reflecting an increase in our trading activity,
mainly due to an increase of demand for cement in the United States. For the
year ended December 31, 2006, our trading operations' net sales represented
approximately 65% of our Others segment's net sales.

     COST OF SALES

         Our cost of sales, including depreciation, increased approximately 17%
from Ps107,341 million in 2005 to Ps125,804 million in 2006 in constant Peso
terms, primarily due to the consolidation of RMC's operations for the full year
of 2006 and for only ten months during 2005. Approximately 45% of the increase
in our cost of sales during 2006 compared to 2005 resulted from the
consolidation of RMC's operations for an additional two months in 2006 compared
to 2005. As a percentage of net sales, cost of sales increased from 61% in 2005
to 64% in 2006, primarily as a result of a change in our product mix through the
RMC acquisition, as we had a higher percentage of sales of ready-mix concrete,
aggregates and other products having a higher cost of sales as compared to
cement.

     GROSS PROFIT

         For the reasons mentioned above, our gross profit increased
approximately 2% from Ps70,044 million in 2005 to Ps71,289 million in 2006 in
constant Peso terms. Our gross margin decreased from 40% in 2005 to 36% in 2006.
The increase in gross profit during 2006 compared to 2005 resulted from the
consolidation of RMC's operations for an additional two months in 2006 compared
to 2005, partially offset by the 17% increase in our cost of sales in 2006
compared to 2005.

     OPERATING EXPENSES

         Our operating expenses decreased approximately 4% from Ps41,253 million
in 2005 to Ps39,475 million in 2006 in constant Peso terms. As a percentage of
net sales, our operating expenses decreased from 23% in 2005 to 20% in 2006,
reflecting our continuing cost-reduction efforts, including reductions in
corporate overhead and travel expenses, which were partially offset by an
increase in transportation costs due to higher worldwide energy costs. The
effect of the consolidation of RMC's operations, for two additional months in
2006 compared to 2005, would have increased our operating expenses by
approximately 6%, but this effect was completely offset by realization of
synergies and our continuing cost-reduction efforts which resulted in the net
decrease of Ps1,778 million in operating expenses in 2006 compared to 2005.

     OPERATING INCOME

         For the reasons mentioned above, our operating income increased
approximately 10% from Ps28,791 million in 2005 to Ps31,814 million in 2006 in
constant Peso terms. The consolidation of the results of RMC operations for an
additional two months did not have a material impact on the increase in our
operating income in 2006 compared to 2005. Additionally, set forth below is a
quantitative and qualitative analysis of the effects of the various factors
affecting our operating income on a geographic segment basis.

                                       87


         Mexico

         Our Mexican operations' operating income increased approximately 4%
(increased approximately 14% in nominal Peso terms) from Ps11,702 million in
2005 to Ps12,180 million in 2006 in constant Peso terms. The increase in
operating income was primarily due to increases in the average prices of
domestic cement and ready-mix concrete and higher sales volumes. The average
sales price and sales volume increases were partially offset by increases in
production costs.

         United States

         Our U.S. operations' operating income increased approximately 19%
(increased approximately 24% in Dollar terms) from Ps7,790 million in 2005 to
Ps9,305 million in 2006 in constant Peso terms. The increase in operating income
resulted in part from the consolidation of RMC's U.S. operations for ten months
in 2005 compared to the full year in 2006. Approximately 30% of the increase in
our operating income in the U.S. during 2006 compared to 2005 resulted from the
consolidation of RMC operations for an additional two months in 2006 compared to
2005. The increase in the operating income due to the consolidation of RMC's for
an additional two months was partially offset by the decrease in domestic cement
and ready-mix concrete sales volumes.

         Spain

         Our Spanish operations' operating income increased approximately 25%
(increased approximately 18% in Euro terms) from Ps4,164 million in 2005 to
Ps5,197 million in 2006 in constant Peso terms. The increase in operating income
resulted primarily from increases in domestic cement and aggregates sales
volumes and increases in average sales prices for domestic cement and ready-mix
concrete. These increases were partially offset by a decline in ready-mix
concrete sales volumes and by the termination in December 2005 of our 50/50
joint ventures with Lafarge Asland, described above.

         United Kingdom

         Our United Kingdom operations consist of the United Kingdom operations
we acquired from RMC, which were consolidated in our results of operations for
ten months in 2005 and for the entire year in 2006. Our United Kingdom
operations' operating income decreased approximately 77% from Ps618 million in
2005 to Ps142 million in 2006 in constant Peso terms (decreased approximately
112% in Pound terms). The decrease in the operating income of our United Kingdom
operations during 2006 compared to 2005 primarily resulted from the
establishment of our European headquarters, which represented an increase in
operating expenses of approximately U.S.$55 million (approximately Ps594
million) in 2006.

         Rest of Europe

         Our Rest of Europe operations' operating income increased approximately
4% (increased approximately 3% in Euro terms) from Ps1,969 million in 2005 to
Ps2,047 million in 2006 in constant Peso terms. The increase in our Rest of
Europe operations' operating income resulted from higher sales volumes and
better pricing environments in most of our Rest of Europe markets during 2006.

         South America, Central America and the Caribbean

         Our South America, Central America and the Caribbean operations'
operating income increased approximately 45% (increased approximately 36% in
Dollar terms) from Ps2,702 million in 2005 to Ps3,927 million in 2006 in
constant Peso terms. The increase in operating income was primarily attributable
to the significant increase in domestic cement and ready-mix concrete sales
volumes in Venezuela and the substantial increases in Colombian average domestic
cement and ready-mix concrete sales prices and increased cement sales volumes
due to a reactivation of the construction sector in Colombia.

                                       88


         Africa and the Middle East

         Our Africa and the Middle East operations' operating income increased
approximately 18% (increased approximately 21% in Dollar terms) from Ps1,248
million in 2005 to Ps1,471 million in 2006 in constant Peso terms. The increase
in operating income resulted primarily from improvements in our Egyptian
operations. Operating income from our Egyptian operations increased
approximately 19% from Ps1,139 million in 2005 to Ps1,360 million in 2006 in
constant Peso terms, primarily as a result of increases in cement and ready-mix
concrete sales volumes and average domestic sales prices of cement and ready-mix
concrete, offset in part by decreases in export volumes and higher production
costs. The increase in operating income in 2006 in our Africa and the Middle
East operations also benefited from the consolidation of RMC's UAE and Israel
operations for the full year of 2006 compared to only ten months in 2005. Our
Rest of Africa and the Middle East operations increased operating income
approximately 2%, from Ps109 million in 2005 to Ps111 million in 2006 in
constant Peso terms. The increase in operating income in the Rest of Africa and
Middle East resulted from the consolidation of RMC's operations for an
additional two months in 2006 compared to 2005, partially offset by the decline
in export sales volumes.

         Asia

         Our Asian operations' operating income increased approximately 34%
(increased approximately 48% in Dollar terms) from Ps457 million in 2005 to
Ps612 million in 2006 in constant Peso terms. The increase in operating income
resulted primarily from increases in the average sales price of domestic cement
and ready-mix concrete in the region, as well as by the consolidation of
RMC's operations for the full year in the 2006 compared to only ten months
in 2005.

         Others

         Operating loss in our Others segment increased approximately 65%
(increased approximately 76% in Dollar terms) from a loss of Ps1,859 million in
2005 to a loss of Ps3,067 million in 2006 in constant Peso terms. The increase
in the operating loss can be primarily explained by the increase during 2006 in
the operating expenses of our trading operations, caused by the consolidation of
RMC's trading operations for ten months in 2005 compared to the full year in
2006.

     COMPREHENSIVE FINANCING RESULT

         Pursuant to Mexican FRS, the comprehensive financing result should
measure the real cost (gain) of an entity's financing, net of the foreign
currency fluctuations and the inflationary effects on monetary assets and
liabilities. In periods of high inflation or currency depreciation, significant
volatility may arise and is reflected under this caption. Comprehensive
financing income (expense) includes:

         o    financial or interest expense on borrowed funds;

         o    financial income on cash and temporary investments;

         o    appreciation or depreciation resulting from the valuation of
              financial instruments, including derivative instruments and
              marketable securities, as well as the realized gain or loss from
              the sale or liquidation of such instruments or securities;

         o    foreign exchange gains or losses associated with monetary assets
              and liabilities denominated in foreign currencies; and

         o    gains and losses resulting from having monetary liabilities or
              assets exposed to inflation (monetary position result).


                                       89


                                                       YEAR ENDED DECEMBER 31,
                                                     --------------------------
                                                         2005           2006
                                                     -----------    ------------
                                                             (in millions of
                                                             constant Pesos)
         Comprehensive financing result:
         Financial expense .........................   Ps (6,092)     (5,334)
         Financial income ..........................          455         494
         Results from valuation and
           liquidation of financial instruments ....        4,471       (148)
         Foreign exchange result....................        (912)         219
         Monetary position result...................        4,914       4,303
             Net comprehensive financing result.....     Ps 2,836       (466)


         Our net comprehensive financing result decreased substantially, from an
income of Ps2,836 million in 2005 to an expense of Ps466 million in 2006. The
components of the change are shown above. Our financial expense decreased
approximately 12%, from Ps6,092 million in 2005, to Ps5,334 million in 2006. The
decrease was primarily attributable to lower average levels of debt outstanding
during 2006 compared to 2005. Our results from valuation and liquidation of
financial instruments decreased significantly from a gain of Ps4,471 million in
2005 to a loss of Ps148 million in 2006, primarily attributable to significant
valuation changes in our derivative financial instruments portfolio during 2006
compared to 2005 (discussed below). Our net foreign exchange result improved
from a loss of Ps912 million in 2005 to a gain of Ps219 million in 2006, mainly
due to lower debt denominated in foreign currencies. Our monetary position
result (generated by the recognition of inflation effects over monetary assets
and liabilities) decreased approximately 13% from a gain of Ps4,914 million
during 2005 to a gain of Ps4,303 million during 2006, mainly as a result of the
decrease in the weighted average inflation index used in the monetary position
result, combined with the decrease in our monetary liabilities in 2006 compared
to 2005.

     DERIVATIVE FINANCIAL INSTRUMENTS

         For the years ended December 31, 2005 and 2006, our derivative
financial instruments that have a potential impact on our comprehensive
financing result consisted of equity forward contracts, foreign exchange
derivative instruments (excluding our foreign exchange forward contracts
designated as hedges of our net investment in foreign subsidiaries), interest
rate swaps, cross currency swaps and interest rate derivatives related to energy
projects.

         For the year ended December 31, 2005, we recognized a gain of Ps4,471
million in the item "Results from valuation and liquidation of financial
instruments," of which a net valuation gain of approximately Ps525 million was
attributable to changes in the fair value of our equity forward contracts that
hedge our stock option programs, net of the costs generated by such programs, a
valuation gain of approximately Ps3,086 million was attributable to changes in
the fair value of our foreign currency derivatives, a valuation gain of
approximately Ps36 million was attributable to changes in the fair value of our
marketable securities and a valuation gain of approximately Ps824 million was
attributable to changes in the fair value of our interest rate derivatives. The
estimated fair value gain of our foreign currency derivatives was primarily
attributable to changes in the estimated fair value of the contracts we entered
into in September 2004 that were designated as accounting hedges of the foreign
exchange risk associated with our commitment to purchase the remaining
outstanding shares of RMC following the necessary corporate and regulatory
approvals at a fixed price in Pounds (representing a gain of approximately
Ps1,538 million).

         For the year ended December 31, 2006, we recognized a loss of Ps148
million in the item "Results from valuation and liquidation of financial
instruments," of which a net valuation gain of approximately Ps17 million was
attributable to changes in the fair value of our equity forward contracts, a
valuation loss of approximately Ps202 million was attributable to changes in the
fair value of our foreign currency derivatives, a valuation loss of
approximately Ps60 million was attributable to changes in the fair value of our
interest rate derivatives and a valuation gain of approximately Ps97 million was
attributable to changes in the fair value of our other derivative financial
instruments, mainly marketable securities. The estimated fair value gain of our
equity forward contracts was attributable to the increase, during 2006, in the
market price of our listed securities (ADSs and CPOs) as compared to 2005. The
estimated fair value loss of our foreign currency derivatives is primarily
attributable to the

                                       90


devaluation of the Peso against the Dollar during 2006. The estimated fair value
loss of our interest rate derivatives is primarily attributable to an increase
in five-year interest rates.

     OTHER EXPENSES, NET

         Our other expenses, net decreased approximately 90% from Ps3,676
million in 2005 to Ps369 million in 2006 in constant Peso terms, primarily as a
result of the partial write-off of the anti-dumping duty provision following the
2006 agreement entered into between the Mexican and U.S. governments that
lowered the antidumping duties on Mexican cement imports into the United States
and the approximately Ps963 million (approximately U.S.$90 million) net gain on
the 2006 sale of Gresik's shares. See note 9A to our consolidated financial
statements.

     INCOME TAXES AND EMPLOYEES' STATUTORY PROFIT SHARING

         Our effective tax rate was 17.0% in 2006 compared to 13.9% in 2005. The
increase in the effective tax rate can be primarily explained as a result of
higher tax rates in the jurisdictions of operations we acquired from RMC and
higher taxable income in the United States and South American operations we
owned prior to the RMC acquisition. This resulted in a higher current tax,
increasing from Ps2,660 million (9.5%) in 2005 to Ps4,094 million (13.2%) in
2006. Our total tax expense, which primarily consists of income taxes and
business assets tax, plus deferred taxes, increased from Ps3,885 million in 2005
to Ps5,254 million in 2006. Our deferred taxes decreased slightly from Ps1,225
million (4.4%) in 2005 to Ps1,160 million (3.8%) in 2006. Our average statutory
income tax rate was 29% in 2006 and 30% in 2005.

         In connection with our employees' statutory profit sharing ("ESPS"),
changes in the deferred ESPS liability during 2005 and 2006, in addition to the
current ESPS effect, led to an income of Ps10 million during 2005 and an expense
of Ps166 million during 2006. The change in 2006 was mainly driven by higher
taxable income for profit sharing purposes in Mexico and Venezuela.

     MAJORITY INTEREST NET INCOME

         Majority interest net income represents the difference between our
consolidated net income and minority interest net income, which is the portion
of our consolidated net income attributable to those of our subsidiaries in
which non-affiliated third parties hold interests. Changes in minority interest
net income in any period reflect changes in the percentage of the stock of our
subsidiaries held by non-affiliated third parties as of the end of each month
during the relevant period and consolidated net income attributable to those
subsidiaries.

         For the reasons mentioned above, our consolidated net income (before
deducting the portion allocable to minority interest) for 2006 increased
approximately 7% from Ps25,088 million in 2005 to Ps26,873 million in 2006 in
constant Peso terms. The consolidation of RMC's operations for an additional two
months in 2006 compared to 2005 did not affect the increase in our consolidated
net income during 2006 compared to 2005. As a percentage of net sales,
consolidated net income remained flat at 14% in 2005 and 2006. The minority
interest net income increased 87%, from Ps638 million in 2005 to Ps1,191 million
in 2006, mainly as a result of a significant increase in the net income of the
consolidated entities in which others have a minority interest. Majority
interest net income increased by approximately 5% from Ps24,450 million in 2005
to Ps25,682 million in 2006 in constant Peso terms.

                                       91



     YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

         OVERVIEW

         Summarized in the table below are the percentage (%) increases (+) and
decreases (-) for the year ended December 31, 2005 compared to the year ended
December 31, 2004 in our sales volumes and average prices for each of our
geographic segments.




                                                                                EXPORT
                                                                                SALES       AVERAGE DOMESTIC PRICES
                                                      DOMESTIC SALES VOLUMES    VOLUMES      IN LOCAL CURRENCY(1)
                                                      ----------------------   --------     -----------------------
    GEOGRAPHIC SEGMENT                                 CEMENT    READY-MIX      CEMENT      CEMENT      READY-MIX
    ------------------                                -------    -----------   --------     ------      ---------
                                                                                              
NORTH AMERICA
Mexico                                                   +1%       +15%           +54%         -2%          -3%
United States(2)                                         +6%       +177%          N/A         +18%          +25%
EUROPE
Spain(3)                                                 +4%       +57%           -40%         +6%          +5%
UK(4)                                                    N/A        N/A           N/A          N/A          N/A
Rest of Europe(5)                                        N/A        N/A           N/A          N/A          N/A
SOUTH/CENTRAL AMERICA AND THE CARIBBEAN(6)
Venezuela                                               +38%       +27%           -21%         +9%          +23%
Colombia                                                +33%       +17%           N/A         -42%          -14%
Rest of South/Central America and the Caribbean(7)       +5%       +49%           +34%         -3%          +4%
AFRICA AND THE MIDDLE EAST(8)
Egypt                                                   +23%       +41%           -53%        +13%          +18%
Rest of Africa and the Middle East(9)                    N/A        N/A           N/A          N/A          N/A
ASIA(10)
Philippines                                              -1%        N/A          +116%        +13%          N/A
Rest of Asia(11)                                         +9%        N/A           N/A          -1%          N/A



N/A = Not Applicable
(1) Represents the average change in domestic cement and ready-mix prices in
    local currency terms. For purposes of a geographic segment consisting of a
    region, the average prices in local currency terms for each individual
    country within the region are first translated into Dollar terms at the
    exchange rates in effect as of the end of the reporting period. Variations
    for a region represent the weighted average change of prices in Dollar terms
    based on total sales volumes in the region.
(2) Our cement and ready-mix concrete sales volumes and average prices in the
    United States for the year ended December 31, 2005 include the sales volumes
    and average prices of the cement and ready-mix concrete operations in the
    United States we acquired as a result of the RMC acquisition for the
    ten-month period ended December 31, 2005, except that the sales volumes and
    average prices relating to the assets we contributed on July 1, 2005, and
    the assets we sold on September 1, 2005, to Ready Mix USA, LLC, an entity in
    which Ready Mix USA owns a 50.01% interest and we own a 49.99% interest, are
    included only for the periods from March 1, 2005 through July 1, 2005 and
    from March 1, 2005 through September 1, 2005, respectively.
(3) Our ready-mix concrete sales volumes and average prices in Spain for the
    year ended December 31, 2005 include the sales volumes and average prices of
    the joint venture ready-mix concrete operations in Spain we acquired as a
    result of the RMC acquisition, which operations we divested on December 22,
    2005 in connection with the termination of the joint venture with Lafarge
    Asland through which such operations were conducted, for the period from
    March 1, 2005 through December 22, 2005.
(4) Our United Kingdom segment includes the operations in the United Kingdom we
    acquired as a result of the RMC acquisition for the ten-month period ended
    December 31, 2005.
(5) Our Rest of Europe segment includes the operations in Germany, France,
    Republic of Ireland, Czech Republic, Austria, Poland, Croatia, Hungary,
    Latvia and Denmark we acquired as a result of the RMC acquisition for the
    ten-month period ended December 31, 2005.
(6) Our South America, Central America and the Caribbean segment includes our
    operations in Venezuela, Colombia and the operations listed in note 7 below;
    however, in above table, our operations in Venezuela and Colombia are
    presented separately from our other operations in the segment for purposes
    of comparison with our 2004 presentation of our operations in the region.
(7) Our Rest of South/Central America and the Caribbean segment includes our
    operations in Costa Rica, Panama, the Dominican Republic, Nicaragua, Puerto
    Rico and our trading activities in the Caribbean, as well as the operations
    in Jamaica and Argentina we acquired as a result of the RMC acquisition for
    the ten-month period ended December 31, 2005.
(8) Our Africa and the Middle East segment includes our operations in Egypt and
    the operations listed in note 9 below; however, in the above table, our
    operations in Egypt are presented separately from our other operations in
    the segment for purposes of comparison with our 2004 presentation of our
    operations in the region.
(9) Our Rest of Africa and the Middle East segment includes the operations in
    the United Arab Emirates and Israel we acquired as a result of the RMC
    acquisition for the ten-month period ended December 31, 2005.

                                       92


(10) Our Asia segment includes our operations in the Philippines and the
    operations listed in note 11 below; however, for in the above table, our
    operations in the Philippines are presented separately from our other
    operations in the segment for purposes of comparison with our 2004
    presentation of our operations in the region.
(11) Our Rest of Asia segment includes our operations in Thailand, Bangladesh
    and other assets in the Asian region, as well as the operations in Malaysia
    we acquired as a result of the RMC acquisition for the ten-month period
    ended December 31, 2005.

         On a consolidated basis, our cement sales volumes increased
approximately 23%, from 65.8 million tons in 2004 to 80.6 million tons in 2005,
and our ready-mix concrete sales volumes increased approximately 191%, from 23.9
million cubic meters in 2004 to 69.5 million cubic meters in 2005. Our net sales
increased approximately 87% from Ps94,915 million in 2004 to Ps177,385 million
in 2005, and our operating income increased approximately 33% from Ps21,567
million in 2004 to Ps28,791 million in 2005.

         Excluding the effect of the consolidation of RMC's operations, from
2004 to 2005, our consolidated cement sales volumes increased approximately 4%,
our consolidated ready-mix concrete sales volumes increased approximately 16%,
our consolidated net sales increased approximately 13%, and our consolidated
operating income increased approximately 14%.

         The following tables present selected condensed financial information
of net sales and operating income for each of our geographic segments for the
years ended December 31, 2004 and 2005. Variations in net sales determined on
the basis of constant Mexican Pesos include the appreciation or depreciation
which occurred during the period between the local currencies of the countries
in the regions vis-a-vis the Mexican Peso, as well as the effects of inflation
as applied to the Mexican Peso amounts using our weighted average inflation
factor; therefore, such variations differ substantially from those based solely
on the countries' local currencies:




                                                                            NET SALES
                                              ---------------------------------------------------------------------
                                                              APPROXIMATE                      FOR THE YEAR ENDED
                                                               CURRENCY                            DECEMBER 31,
                                              VARIATIONS     FLUCTUATIONS,                   ----------------------
                                                 IN             NET OF       VARIATIONS IN
                                                LOCAL         INFLATION        CONSTANT
GEOGRAPHIC SEGMENT                            CURRENCY(1)      EFFECTS       MEXICAN PESOS      2005        2006
----------------------------------------      -----------    -------------    -------------   ---------     --------
                                                                                                (IN MILLIONS OF
                                                                                                CONSTANT MEXICAN
                                                                                                   PESOS AS OF
                                                                                                DECEMBER 31, 2006)
NORTH AMERICA                                                                                  --------------------
                                                                                              
Mexico..................................         +0.7%            +7.4%         +8.1%          34,010        36,775
United States(2)........................        +105.4%           +0.5%        +105.9%         23,000        47,359
EUROPE
Spain(3)................................        +10.3%            -1.1%         +9.2%          16,070        17,550
United Kingdom(4).......................          N/A              N/A           N/A             N/A         17,769
Rest of Europe(5).......................          N/A              N/A           N/A             256         31,594
SOUTH/CENTRAL AMERICA AND THE CARIBBEAN
Venezuela...............................        +15.8%            +1.8%        +17.6%           4,080        4,795
Colombia................................        -16.7%           +18.4%         +1.7%           2,856        2,904
Rest of South / Central America
  and the Caribbean(6) .................        +11.7%           -13.9%         -2.2%           8,020        7,844
AFRICA AND MIDDLE EAST
Egypt...................................        +27.1%           +11.3%        +38.4%           2,211        3,059
Rest of Africa and the Middle East(7)...          N/A              N/A           N/A             N/A         3,250
ASIA
Philippines.............................        +18.3%            +7.8%        +26.1%           1,763        2,223
Rest of Asia(8).........................        +248.3%           -2.2%        +246.1%           321         1,111

Others(9)...............................        +40.0%            -0.8%        +39.2%          10,965        15,265
                                                                               +84.9%          103,552      191,498
Eliminations from consolidation.........                                                       (8,637)      (14,113)
CONSOLIDATED NET SALES..................                                       +86.9%          94,915       177,385





                                       93




                                                                       OPERATING INCOME
                                              ---------------------------------------------------------------------
                                                              APPROXIMATE                      FOR THE YEAR ENDED
                                                               CURRENCY                            DECEMBER 31,
                                              VARIATIONS     FLUCTUATIONS,                   ----------------------
                                                 IN             NET OF       VARIATIONS IN
                                                LOCAL         INFLATION        CONSTANT
GEOGRAPHIC SEGMENT                            CURRENCY(1)      EFFECTS       MEXICAN PESOS      2005          2006
----------------------------------------      -----------    -------------    -------------   ---------     --------
                                                                                                (IN MILLIONS OF
                                                                                                CONSTANT MEXICAN
                                                                                                   PESOS AS OF
                                                                                                DECEMBER 31, 2006)
NORTH AMERICA                                                                                  --------------------
                                                                                               
Mexico..................................          -14.6%          +6.3%          -8.3%          12,763        11,702
United States(2)........................          +156.7%         +0.7%         +157.4%          3,026         7,790
EUROPE
Spain(3)................................          +16.8%         -10.2%          +6.6%           3,905         4,164
United Kingdom(4).......................            N/A            N/A            N/A              N/A           618
Rest of Europe(5).......................            N/A            N/A            N/A              (45)        1,969
SOUTH/CENTRAL AMERICA AND THE CARIBBEAN(6)
Venezuela...............................          +20.7%          +1.8%         +22.5%           1,274         1,561
Colombia................................          -73.5%          +3.8%         -69.7%           1,302           394
Rest of South/Central America
   and the Caribbean(7) ................          -53.7%          -5.6%         -59.3%           1,837          747
AFRICA AND MIDDLE EAST(8)
Egypt...................................          +56.6%         +13.9%         +70.5%             668         1,139
Rest of Africa and the Middle East(9)...            N/A            N/A            N/A              N/A           109
ASIA(10)
Philippines.............................          +41.7%          +9.5%         +51.2%             315           476
Rest of Asia(11)........................          -146.6%         +0.3%         -146.3%             41           (19)

Others(12)..............................          +46.9%          +0.3%         +47.2%          (3,519)       (1,859)
CONSOLIDATED OPERATING INCOME...........                                        +33.5%          21,567        28,791



N/A = Not Applicable
(1)   For purposes of a geographic segment consisting of a region, the net sales
      and operating income data in local currency terms for each individual
      country within the region are first translated into Dollar terms at the
      exchange rates in effect as of the end of the reporting period. Variations
      for a region represent the weighted average change in Dollar terms based
      on net sales and operating income for the region.
(2)   Our net sales and operating income in the United States for the year ended
      December 31, 2005 include the results of the cement and ready-mix concrete
      operations in the United States we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005, except that
      the results of the assets we contributed on July 1, 2005, and the assets
      we sold on September 1, 2005, to Ready Mix USA, LLC, an entity in which
      Ready Mix USA owns a 50.01% interest and we own a 49.99% interest, are
      included only for the periods from March 1, 2005 through July 1, 2005 and
      from March 1, 2005 through September 1, 2005, respectively.
(3)   Our net sales and operating income in Spain for the year ended December
      31, 2005 include the proportionally consolidated results of the joint
      venture ready-mix concrete operations in Spain we acquired as a result of
      the RMC acquisition, which operations we divested on December 22, 2005 in
      connection with the termination of the joint venture with Lafarge Asland
      through which such operations were conducted, for the period from March 1,
      2005 through December 22, 2005.
(4)   Our United Kingdom segment includes the operations in the United Kingdom
      we acquired as a result of the RMC acquisition for the ten-month period
      ended December 31, 2005.
(5)   Our Rest of Europe segment includes the operations in Germany, France,
      Republic of Ireland, Czech Republic, Austria, Poland, Croatia, Hungary and
      Latvia we acquired as a result of the RMC acquisition for the ten-month
      period ended December 31, 2005, the operations in Denmark we acquired as a
      result of the RMC acquisition for the ten-month period ended December 31,
      2005 and for the period from January 1, 2006 to March 2, 2006, and the
      Italian operations we owned prior to the RMC acquisition..
(6)   Our South America, Central America and the Caribbean segment includes our
      operations in Venezuela, Colombia and the operations listed in note 7
      below; however, in the above table, our operations in Venezuela and
      Colombia are presented separately from our other operations in the segment
      for purposes of comparison with our 2004 presentation of our operations in
      the region.
(7)   Our Rest of South/Central America and the Caribbean segment includes our
      operations in Costa Rica, Panama, the Dominican Republic, Nicaragua,
      Puerto Rico and our trading activities in the Caribbean, as well as the
      operations in Jamaica and Argentina we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005.
(8)   Our Africa and the Middle East segment includes our operations in Egypt
      and the operations listed in note 9 below; however, in the above table,
      our operations in Egypt are presented separately from our other operations
      in the segment for purposes of comparison with our 2004 presentation of
      our operations in the region.
(9)   Our Rest of Africa and the Middle East segment includes the operations in
      the United Arab Emirates and Israel we acquired as a result of the RMC
      acquisition for the ten-month period ended December 31, 2005.
(10)  Our Asia segment includes our operations in the Philippines and the
      operations listed in note 11 below; however, for in the above table, our
      operations in the Philippines are presented separately from our other
      operations in the segment for purposes of comparison with our 2004
      presentation of our operations in the region.

                                       94


(11)  Our Rest of Asia segment includes our operations in Thailand, Bangladesh
      and other assets in the Asian region, as well as the operations in
      Malaysia we acquired as a result of the RMC acquisition for the ten-month
      period ended December 31, 2005.
(12)  Our Others segment includes our worldwide trade maritime operations, our
      information solutions company and other minor subsidiaries.

     NET SALES

         Our net sales increased approximately 87% from Ps94,915 million in 2004
to Ps177,385 million in 2005 in constant Peso terms. The increase in net sales
was primarily attributable to the consolidation of RMC's operations for ten
months in 2005 and higher sales volumes and prices in our operations in most of
our markets, which were partially offset by lower domestic cement prices in
South America, Central America and the Caribbean and by our divestiture in March
2005 of two cement plants and other assets in the United States, and our
contribution in July 2005 and sale in September 2005 of ready-mix concrete,
aggregates and concrete block assets in the United States to an entity in which
we own a 49.99% interest. Excluding the effect of the consolidation of RMC's
operations, our net sales increased approximately 6% during 2005 compared to
2004. Of our consolidated net sales in 2004 and 2005, approximately 71% and 70%,
respectively, were derived from sales of cement, approximately 24% and 26%,
respectively, from sales of ready-mix concrete and approximately 5% and 4%,
respectively, from sales of other construction materials, including aggregates,
and services.

         Through the RMC acquisition, we acquired additional operations in the
United States, Spain, Africa and the Middle East and Asia, which had a
significant impact on our operations in those segments, and we acquired
operations in the United Kingdom and the Rest of Europe, in which segments we
did not have operations prior to the RMC acquisition. The operating data set
forth below in the discussion of our United Kingdom, France and Germany
operations for 2004 and for January and February of 2005 represent operating
data for those operations prior to our acquisition of RMC.

         Set forth below is a quantitative and qualitative analysis of the
effects of the various factors affecting our net sales on a geographic segment
basis.

         Mexico

         Our Mexican operations' domestic cement sales volumes increased
approximately 1% in 2005 compared to 2004, and ready-mix concrete sales volumes
increased approximately 15% during the same period. The increases in sales
volumes were primarily due to increased government spending on infrastructure
projects and increased demand in the residential construction sector, which were
partially offset by a weak self-construction sector. Our Mexican operations'
cement export volumes, which represented approximately 10% of our Mexican cement
sales volumes in 2005, increased approximately 54% in 2005 compared to 2004,
primarily as a result of increased cement demand in the United States. Of our
Mexican operations' total cement export volumes during 2005, 73% was shipped to
the United States, 26% to Central America and the Caribbean and 1% to South
America. Our Mexican operations' average domestic sales price of cement
decreased approximately 2% in constant Peso terms in 2005 compared to 2004
(increased approximately 3% in nominal Peso terms). Our Mexican operations'
average sales price of ready-mix concrete decreased approximately 3% in constant
Peso terms (increased approximately 1% in nominal Peso terms) over the same
period. For the year ended December 31, 2005, sales of ready-mix concrete in
Mexico represented approximately 28% of our Mexican operations' net sales.

         As a result of the increases in domestic cement and ready-mix concrete
sales volumes and cement export volumes, net sales in Mexico, in constant Peso
terms, increased approximately 8% in 2005 compared to 2004, despite the
decreases in the average domestic sales prices of cement and ready-mix concrete.

         United States

         Our U.S. operations' cement sales volumes, which include cement
purchased from our other operations, increased approximately 6% in 2005 compared
to 2004, and ready-mix concrete sales volumes increased approximately 177%
during the same period. The increases in sales volumes resulted primarily from
the consolidation of RMC's U.S. operations for ten months in 2005 (representing
approximately 7% of our U.S. cement sales volumes and approximately 60% of our
U.S. ready-mix concrete sales volumes), as well as increased demand in the
public sector, particularly in streets and highway construction, increased
demand in the residential sector and


                                       95


the industrial-and-commercial sector, which were partially offset by our
divestiture in March 2005 of two cement plants and other assets in the Great
Lakes region, and our contributions in July 2005 and sale in September 2005 of
ready-mix concrete, aggregates and concrete block assets in the Florida
panhandle and southern Georgia to Ready Mix USA, LLC, an entity in which we own
a 49.99% interest. Our U.S. operations' average sales price of cement increased
approximately 18% in Dollar terms in 2005 compared to 2004, and the average
sales price of ready-mix concrete increased approximately 25% in Dollar terms
over the same period. The increases in average prices were primarily due to
continued strength in demand for, and limited supply of, cement and ready-mix
concrete. For the year ended December 31, 2005, sales of ready-mix concrete in
the United States represented approximately 46% of our U.S. operations' net
sales.

         As a result of the increases in cement and ready-mix concrete sales
volumes and the increases in the average sales prices of cement and ready-mix
concrete, net sales in the United States, in Dollar terms, increased
approximately 105% in 2005 compared to 2004.

         Spain

         Our Spanish operations' domestic cement sales volumes increased
approximately 4% in 2005 compared to 2004, and ready-mix concrete sales volumes
increased approximately 57% during the same period. The increases in sales
volumes resulted primarily from the proportional consolidation of RMC's Spanish
joint venture operations for nearly ten months in 2005 (representing
approximately 29% of our Spanish ready-mix concrete sales volumes), as well as
strong residential construction activity and increased spending in the
public-works sector, particularly on infrastructure projects. Our Spanish
operations' cement export volumes, which represented approximately 1% of our
Spanish cement sales volumes in 2005, decreased approximately 40% in 2005
compared to 2004 primarily due to increased domestic demand. Of our Spanish
operations' total cement export volumes in 2005, 19% was shipped to Europe and
the Middle East, 29% to Africa, and 52% to the United States. Our Spanish
operations' average domestic sales price of cement increased approximately 18%
in Euro terms in 2005 compared to 2004, and the average price of ready-mix
cement increased approximately 25% in Euro terms over the same period. The
increases in average prices were primarily due to increased demand for cement
and ready-mix concrete. For the year ended December 31, 2005, sales of ready-mix
concrete in Spain represented approximately 32% of our Spanish operations' net
sales.

         As a result of the increases in domestic cement and ready-mix concrete
sales volumes and the increases in the average domestic sales prices of cement
and ready-mix concrete, net sales in Spain, in Euro terms, increased
approximately 10% in 2005 compared to 2004, despite the decline in cement export
volumes.

         United Kingdom

         Our United Kingdom operations consist of the United Kingdom operations
we acquired from RMC, which are consolidated in our results of operations for
ten months in 2005. Cement sales volumes in these United Kingdom operations
decreased approximately 2% in 2005 compared to 2004, and ready-mix concrete
sales volumes decreased approximately 1% during the same period. The decreases
in sales volumes were primarily due to slower than expected growth in the U.K.
economy resulting in decreased construction activity in the repair, maintenance
and improvement sector and the public-works sector, which were partially offset
by moderate increases in demand in the residential sector and the industrial
sector. Our United Kingdom operations' net sales for the ten-month period ended
December 31, 2005 represented approximately 9% of our net sales in constant Peso
terms, before eliminations resulting from consolidation, for 2005.

         Rest of Europe

         Our operations in our Rest of Europe segment in 2005 consisted of the
operations we acquired from RMC in Germany, France, Croatia, Poland, Latvia, the
Czech Republic, Ireland, Austria, Hungary, Portugal, Denmark, Finland, Norway
and Sweden, which are consolidated in our results of operations for ten months
in 2005, and the Italian operations we owned prior to the RMC acquisition. Our
Rest of Europe operations' net sales for the ten-month period ended December 31,
2005 represented approximately 16% our net sales in constant Peso terms, before
eliminations resulting from consolidation, for 2005, and our Rest of Europe
operations' operating income for the ten-month period ended December 31, 2005
represented approximately 7% of our consolidated operating income, in


                                       96


constant Peso terms, for 2005. Set forth below is a discussion of sales volumes
in Germany and France, the most significant countries in our Rest of Europe
segment, based on net sales.

         In Germany, cement sales volumes in the operations we acquired from RMC
decreased approximately 8% in 2005 compared to 2004, and ready-mix concrete
sales volumes in those operations decreased approximately 12% during the same
period. These decreases are primarily due to a weak German economy, a high
unemployment rate, the slow growth of disposable income and political
uncertainty, resulting in decreased construction activity.

         In France, ready-mix concrete sales volumes in the operations we
acquired from RMC increased approximately 6% in 2005 compared to 2004, primarily
as a result of strong demand from the housing sector due to tax incentives to
promote housing construction and the launch of a new social housing program.

         South America, Central America and the Caribbean

         Our operations in South America, Central America and the Caribbean in
2005 consisted of our operations in Venezuela and Colombia, the operations we
acquired from RMC in Argentina, which are consolidated in our results of
operations for ten months in 2005, and our Central American and Caribbean
operations, which included our operations in Costa Rica, the Dominican Republic,
Panama, Nicaragua, Puerto Rico and the operations we acquired from RMC in
Jamaica, which are consolidated in our results of operations for ten months in
2005, as well as several cement terminals and other assets in other Caribbean
countries and our trading operations in the Caribbean region. Most of these
trading operations consist of the resale in the Caribbean region of cement
produced by our operations in Venezuela and Mexico.

         Our South America, Central America and the Caribbean operations'
domestic cement sales volumes increased 19% in 2005 compared to 2004, and
ready-mix concrete sales volumes increased 31% over the same period. The
increases in sales volumes are primarily attributable to the increased sales
volumes in our Venezuelan and Colombian operations described below, as well as
increased demand in the Dominican Republic due to new tourist development, new
infrastructure projects in Panama and the commencement of ready-mix operations
in Nicaragua and Costa Rica. Our South America, Central American and Caribbean
operations' average domestic sales price of cement decreased approximately 11%
in Dollar terms in 2005 compared to 2004 due to competitive pressures in the
Colombian market, while the average sales price of ready-mix concrete increased
approximately 4% in Dollar terms over the same period. For the year ended
December 31, 2005, sales of ready-mix concrete in South America, Central America
and the Caribbean represented approximately 27% of our South America, Central
America and the Caribbean operations' net sales. Set forth below is a discussion
of sales volumes in Venezuela and Colombia, the most significant countries in
our South America, Central American and Caribbean segment, based on net sales.

         Our Venezuelan operations' domestic cement sales volumes increased
approximately 38% in 2005 compared to 2004, and ready-mix concrete sales volumes
increased approximately 27% during the same period. The increases in volumes
resulted primarily from increased government spending in the public sector due
to higher oil revenues and increased demand in the self-construction sector. Our
Venezuelan operations' cement export volumes, which represented approximately
42% of our Venezuelan cement sales volumes in 2005, decreased approximately 21%
in 2005 compared to 2004 primarily due to increased domestic demand. Of our
Venezuelan operations' total cement export volumes during 2005, 76% was shipped
to North America and 24% to South America and the Caribbean.

         Our Colombian operations' cement volumes increased approximately 33% in
2005 compared to 2004, and ready-mix concrete sales volumes increased
approximately 17% during the same period. The increases in sales volumes
resulted primarily from increased demand in the self-construction sector due to
lower unemployment and higher wages and increased spending in the public works
sectors.

         As a result of the increases in domestic cement sales volumes,
ready-mix concrete sales volumes and the average sales prices of ready-mix
concrete, net sales in our South America, Central America and the Caribbean
operations, in constant Peso terms, increased approximately 4% in 2005 compared
to 2004, despite the decrease in the average domestic sales prices of cement in
Colombia and the decline in Venezuelan cement export volumes.

                                       97


         Africa and the Middle East

         Our operations in Africa and the Middle East consist of our operations
in Egypt and the operations we acquired from RMC in the United Arab Emirates
(UAE) and Israel, which are consolidated in our results of operations for ten
months in 2005.

         Our Africa and the Middle East operations' domestic cement sales
volumes increased approximately 23% in 2005 compared to 2004, primarily as a
result of increased demand in the housing sector and increased government
spending on infrastructure in Egypt due to higher oil revenues. Our Africa and
the Middle East operations' average domestic sales price of cement increased
approximately 13% in Egyptian pound terms and approximately 21% in Dollar terms
in 2005 compared to 2004, primarily due to better overall market conditions in
Egypt. Our Africa and the Middle East operations' cement export volumes, which
represented approximately 14% of our Africa and the Middle East operations'
cement sales volumes in 2005, decreased approximately 53% in 2005 compared to
2004 primarily due to increased domestic demand in Egypt. Of our Africa and the
Middle East operations' total cement export volumes during 2005, 95% was shipped
to Europe and 5% was shipped to Africa. Our Africa and the Middle East
operations' ready-mix concrete sales volumes increased significantly in 2005
compared to 2004 primarily as a result of the consolidation of RMC's UAE and
Israeli operations for ten months in 2005 (representing approximately 92% of our
ready-mix concrete sales volumes in the region). For the year ended December 31,
2005, sales of ready-mix concrete in Africa and the Middle East represented
approximately 51% of our Africa and the Middle East operations' net sales.

         As a result of the consolidation of RMC's UAE and Israeli operations
and the increases in domestic cement sales volumes and the average domestic
sales prices of cement in our Egyptian operations, net sales in our Africa and
the Middle East operations, in constant Peso terms, increased approximately 185%
in 2005 compared to 2004, despite the decline in cement export volumes.

         Asia

         Our operations in Asia consist of our operations in the Philippines,
Thailand, Bangladesh, Taiwan and the operations we acquired from RMC in
Malaysia, which are consolidated in our results of operations for ten months in
2005. Our Asian operations' domestic cement sales volumes increased
approximately 2% in 2005 compared to 2004, primarily due to strong cement demand
in the housing sector in Thailand and greater market coverage in Bangladesh,
which were partially offset by decreased demand in the Philippines as a result
of political uncertainty, while the average sales price of cement in the region
increased approximately 10%, in Dollar terms, during the same period. Our Asian
operations' cement export volumes, which represented approximately 18% of our
Asian operations' cement sales volumes in 2005, increased approximately 116% in
2005 compared to 2004 primarily due to expansion into other markets in the
Middle East and Southeast Asia. Of our Asian operations' total cement export
volumes during 2005, 58% was shipped to the Middle East and 42% to the Southeast
Asia region. Our Asian operations' ready-mix concrete sales volumes increased
significantly in 2005 compared to 2004, primarily due to the consolidation of
RMC's Malaysian operations for ten months in 2005 (representing nearly all of
our ready-mix concrete sales volumes in the region). For the year ended December
31, 2005, sales of ready-mix concrete in Asia represented approximately 15% of
our Asian operations' net sales.

         Primarily as a result of the increases in domestic cement sales
volumes, cement export volumes and the average sales price of cement, but also
as a result of the consolidation of RMC's Malaysian ready-mix concrete
operations, net sales in our Asian operations, in constant Peso terms, increased
approximately 89% in 2005 compared to 2004.

         Others

         Our Others segment includes our worldwide cement, clinker and slag
trading operations, our information solutions company and other minor
subsidiaries. Net sales in our Others segment increased approximately 39% in
2005 compared to 2004 in constant Peso terms, primarily as a result of a 74%
increase in our trading operations' net sales in 2005 compared to 2004 due to
increased trading activity resulting from the consolidation of RMC's trading
operations for ten months in 2005. For the year ended December 31, 2005, our
trading operations' net sales represented approximately 69% of our Others
segment's net sales.

                                       98


     COST OF SALES

         Our cost of sales, including depreciation, increased approximately 101%
from Ps53,417 million in 2004 to Ps107,341 million in 2005 in constant Peso
terms, primarily due to the consolidation of RMC's operations for ten months
during 2005. Excluding the effect of the consolidation of RMC's operations, our
cost of sales, including depreciation, increased approximately 7% during the
same period, primarily as a result of higher energy costs. As a percentage of
net sales, cost of sales increased from 56% in 2004 to 61% in 2005 (57%,
excluding the effect of the consolidation of RMC).

     GROSS PROFIT

         Our gross profit increased approximately 69% from Ps41,498 million in
2004 to Ps70,044 million in 2005 in constant Peso terms. Excluding the effect of
the consolidation of RMC's operations, our gross profit increased approximately
4% during the same period. Our gross margin decreased from 44% in 2004 to 40% in
2005, primarily due to higher energy costs and the consolidation of RMC's
operations for ten months during 2005, which resulted in a change in our product
mix as we had a higher percentage of sales of ready-mix concrete, aggregates and
other products having a higher cost of sales and a lower profit margin as
compared to cement. Excluding the effect of the consolidation of RMC's
operations, our gross margin decreased to 43% due to higher energy costs
partially offset by higher sales volumes and average sales prices in most of our
markets. The increase in our gross profit is primarily attributable to the 87%
increase in our net sales in 2005 compared to 2004 (6%, excluding the effect of
the consolidation of RMC), partially offset by the 101% increase in our cost of
sales in 2005 compared to 2004 (7%, excluding the effect of the consolidation of
RMC).

     OPERATING EXPENSES

         Our operating expenses increased approximately 107% from Ps19,931
million in 2004 to Ps41,253 million in 2005 in constant Peso terms, primarily
due to the consolidation of RMC's operations for ten months during 2005.
Excluding the effect of the consolidation of RMC's operations, our operating
expenses increased approximately 1% during the same period, primarily as a
result of increased transportation costs due to higher worldwide energy costs,
which were partially offset by our continuing cost-reduction efforts, including
reductions in corporate overhead and travel expenses. As a percentage of net
sales, our operating expenses increased from 21% in 2004 to 23% in 2005
(remained flat, excluding the effect of the consolidation of RMC).

     OPERATING INCOME

         For the reasons mentioned above, our operating income increased
approximately 34% from Ps21,567 million in 2004 to Ps28,791 million in 2005 in
constant Peso terms. Excluding the effect of the consolidation of RMC's
operations, our operating income increased approximately 6% as compared to 2004.
Additionally, set forth below is a quantitative and qualitative analysis of the
effects of the various factors affecting our operating income on a geographic
segment basis.

         Mexico

         Our Mexican operations' operating income decreased approximately 8%
from Ps12,763 million in 2004 to Ps11,702 million in 2005 in constant Peso
terms. The decrease in operating income was primarily due to decreases in the
average prices of domestic cement and ready-mix concrete and higher energy
costs. The price decreases and higher costs were partially offset by increases
in domestic cement and ready-mix concrete sales volumes and cement export
volumes.

         United States

         Our U.S. operations' operating income increased approximately 157% from
Ps3,026 million in 2004 to Ps7,790 million in 2005 in constant Peso terms. The
increase in operating income resulted primarily from the consolidation of RMC's
U.S. operations for ten months in 2005 (representing approximately 28% of our
U.S. operations' operating income) and increases in domestic cement and
ready-mix concrete sales volumes and average


                                       99


prices. These increases were partially offset by higher energy and material
costs, the divestiture of assets in March 2005 and the contribution in July 2005
and sale in September 2005 of assets to Ready Mix USA, LLC, as described above
under "Net Sales -- United States," and the depreciation of the Dollar against
the Peso.

         Spain

         Our Spanish operations' operating income increased approximately 7%
from Ps3,905 million in 2004 to Ps4,164 million in 2005 in constant Peso terms.
The increase in operating income resulted primarily from the proportional
consolidation of RMC's Spanish joint venture operations for nearly ten months in
2005 (representing approximately 4% of our Spanish operations' operating income)
and increases in domestic cement and ready-mix concrete sales volumes and
average prices. These increases were partially offset by a decline in cement
export volumes, higher energy costs and the depreciation of the Euro against the
Peso and the Dollar.

         United Kingdom

         Our United Kingdom operations consist of the United Kingdom operations
we acquired from RMC, which were consolidated in our results of operations for
ten months in 2005. Our United Kingdom operations' operating income for the
ten-month period ended December 31, 2005 represented approximately 2% of our
consolidated operating income, in constant Peso terms, for 2005.

         Rest of Europe

         Our operations in our Rest of Europe segment in 2005 consisted of our
Italian operations we owned prior to the RMC acquisition, and the operations we
acquired from RMC in Germany, France, Croatia, Poland, Latvia, the Czech
Republic, Ireland, Austria, Hungary, Portugal, Denmark, Finland, Norway and
Sweden, which are consolidated in our results of operations for ten months in
2005, and the Italian operations we owned prior to the RMC acquisition. Our Rest
of Europe operations' operating income for the ten-month period ended December
31, 2005 represented approximately 7% of our consolidated operating income, in
constant Peso terms, for 2005.

         South America, Central America and the Caribbean

         Our South America, Central America and the Caribbean operations'
operating income decreased approximately 39% from Ps4,413 million in 2004 to
Ps2,702 million in 2005 in constant Peso terms. The decrease in operating income
was primarily attributable to the decrease in the average domestic sales prices
of cement in Colombia, the decline in Venezuelan cement export volumes and
higher energy costs. The cement price and export volume decreases and higher
costs were partially offset by increases in domestic cement and ready-mix
concrete sales volumes and the average price of ready-mix concrete.

         Africa and the Middle East

         Our Africa and the Middle East operations' operating income increased
approximately 87% from Ps668 million in 2004 to Ps1,248 million in 2005 in
constant Peso terms. The increase in operating income resulted primarily from
the consolidation of RMC's UAE and Israeli operations for ten months in 2005
(representing approximately 9% of our operating income in the region) and
increases in cement sales volumes and the average domestic sales price of cement
in Egypt. These increases were partially offset by a decline in cement export
volumes and higher energy costs.

         Asia

         Our Asian operations' operating income increased approximately 45% from
Ps356 million in 2004 to Ps460 million in 2005 in constant Peso terms. The
increase in operating income resulted primarily from increases in cement export
volumes and the average domestic sales price of cement in the region. These
increases were partially offset by higher energy costs.

                                      100


         Others

         Operating income (loss) in our Others segment improved approximately
47% from a loss of Ps3,519 million in 2004 to a loss of Ps1,859 million in 2005
in constant Peso terms. The improvement in operating loss was primarily
attributable to a 37.6% increase in our trading operations' operating income in
2005 compared to 2004 due to increased trading activity resulting from the
consolidation of RMC's trading operations for ten months in 2005, and a 16.3%
improvement in our information solutions company's operating loss in 2005
compared to 2004.

     COMPREHENSIVE FINANCING RESULT

         Pursuant to Mexican FRS, the comprehensive financing result should
measure the real cost (gain) of an entity's financing, net of the foreign
currency fluctuations and the inflationary effects on monetary assets and
liabilities. In periods of high inflation or currency depreciation, significant
volatility may arise and is reflected under this caption. For presentation
purposes, comprehensive financing result includes: o financial or interest
expense on borrowed funds;

         o    financial income on cash and temporary investments;

         o    appreciation or depreciation resulting from the valuation of
              financial instruments, including derivative instruments and
              marketable securities, as well as the realized gain or loss from
              the sale or liquidation of such instruments or securities;

         o    foreign exchange gains or losses associated with monetary assets
              and liabilities denominated in foreign currencies; and

         o    gains and losses resulting from having monetary liabilities or
              assets exposed to inflation (monetary position result).




                                                                      YEAR ENDED DECEMBER 31,
                                                                      2004                2005
                                                                (in millions of constant Pesos as of
                                                                         December 31, 2006)
                                                                                  
             Comprehensive financing result:
             Financial expense ...............................    Ps (4,336)         Ps (6,092)
             Financial income ................................           273                455
             Results from valuation and liquidation
                  of financial instruments ...................         1,395              4,471
             Foreign exchange result .........................         (275)              (912)
             Monetary position result ........................         4,495              4,914
                                                                  ----------          ---------

             Net comprehensive financing result...............      Ps 1,552           Ps 2,836
                                                                  ==========          =========



         Our net comprehensive financing result increased approximately 82% f
Ps1,552 million in 2004 to Ps2,836 million in 2005 (Ps3,430 million, excluding
the effect of the consolidation of RMC). The components of the change are shown
above. Our financial expense was Ps6,092 million for 2005, an increase of
approximately 41% from Ps4,336 million in 2004. The increase was primarily
attributable to higher average levels of debt outstanding during 2005 compared
to 2004 as a result of borrowings related to the RMC acquisition. Our financial
income increased approximately 67% from Ps273 million in 2004 to Ps455 million
in 2005 as a result of increases in interest rates. Our results from valuation
and liquidation of financial instruments improved significantly from a gain of
Ps1,395 million in 2004 to a gain of Ps4,471 million in 2005, primarily
attributable to significant valuation improvements from our derivative financial
instruments portfolio (discussed below) during 2005. Our net foreign exchange
results declined from a loss of Ps275 million in 2004 to a loss of Ps912 million
in 2005, mainly due to the depreciation of the Euro against the Dollar. Our
monetary position result (generated by the recognition of inflation effects over
monetary assets and liabilities) increased from Ps4,495 million during 2004 to
Ps4,914 million during


                                      101


2005, as a result of an increase in the weighted average inflation index used in
the determination of the monetary position result in 2005 compared to 2004.

     DERIVATIVE FINANCIAL INSTRUMENTS

         For the years ended December 31, 2004 and 2005, our derivative
financial instruments that had a potential impact on our comprehensive financing
result consisted of equity forward contracts entered into to hedge our
obligations under our executive stock option programs, foreign exchange
derivative instruments (excluding our foreign exchange forward contracts
designated as hedges of our net investment in foreign subsidiaries), interest
rate swaps, cross currency swaps and interest rate derivatives related to energy
projects. We recognized a gain of Ps4,471 million in 2005 in the item "Results
from valuation and liquidation of financial instruments," of which a net
valuation gain of approximately Ps526 million was attributable to changes in the
fair value of our equity forward contracts that hedge our stock option programs,
net of the costs generated by such programs, a valuation gain of approximately
Ps3,086 million was attributable to changes in the fair value of our foreign
currency derivatives, a valuation gain of approximately Ps36 million was
attributable to changes in the fair value of our marketable securities and a
valuation gain of approximately Ps823 million was attributable to changes in the
fair value of our interest rate derivatives. The estimated fair value gain of
our equity forward contracts and the costs associated with the stock options
both were attributable to the increase, during 2005, in the market price of our
listed securities (ADSs and CPOs) as compared to 2004. The estimated fair value
gain of our foreign currency derivatives was primarily attributable to changes
in the estimated fair value of the contracts we entered into in September 2004
that were designated as accounting hedges of the foreign exchange risk
associated with our commitment to purchase the remaining outstanding shares of
RMC following the necessary corporate and regulatory approvals at a fixed price
in Pounds (representing a gain of approximately Ps1,537 million), and changes in
the estimated fair value of our cross currency swap contracts relating to our
debt portfolio (representing a gain of approximately Ps1,550 million). The
estimated fair value gain of our interest rate derivatives was primarily
attributable to an increase in five-year interest rates.

     OTHER EXPENSES, NET

         Our other expenses, net decreased approximately 35% from Ps5,635
million in 2004 to Ps3,676 million in 2005 in constant Peso terms, primarily as
a result of new accounting pronouncements under Mexican FRS, effective as of
January 1, 2005, pursuant to which the amortization of goodwill was eliminated,
although goodwill remains subject to periodic impairment evaluations, which was
partially offset by a one-time charge of Ps1,064 million related to the change
in pension fund plans from defined benefit to defined contribution. The decrease
was also due to the sale of our 11.9% interest in Cementos Bio Bio, S.A. in
April 2005, which resulted in a net profit of approximately U.S.$19.5 million
(Ps226 million), partially offset by the sale of our Charlevoix, Michigan and
Dixon, Illinois cement plants and several distribution terminals located in the
Great Lakes region in March 2005, which resulted in a net loss of approximately
U.S.$10.5 million (Ps122 million). Excluding the effect of the consolidation of
RMC's operations, our other expenses, net decreased approximately 50% during the
same period.

     INCOME TAXES AND EMPLOYEES' STATUTORY PROFIT SHARING

         Our effective tax rate was 13.9% in 2005 compared to 12.2% in 2004. Our
tax expense, which primarily consisted of income taxes, increased from Ps2,137
million in 2004 to Ps3,885 million in 2005. The increase was attributable to
higher taxable income in 2005 as compared to 2004. Our average statutory income
tax rate was approximately 30% in 2005 and approximately 33% in 2004.

         In connection with our ESPS, changes in the deferred ESPS liability
during 2004 and 2005, in addition to the current ESPS effect, led to an expense
of Ps346 million during 2004 and an income of Ps10 million during 2005. The
change in 2005 was mainly driven by lower taxable income for profit sharing
purposes in Mexico and Venezuela.

                                      102


     MAJORITY INTEREST NET INCOME

         Majority interest net income represents the difference between our
consolidated net income and minority interest net income, which is the portion
of our consolidated net income attributable to those of our subsidiaries in
which non-affiliated third parties hold interests. Changes in minority interest
net income in any period reflect changes in the percentage of the stock of our
subsidiaries held by non-affiliated third parties as of the end of each month
during the relevant period and consolidated net income attributable to those
subsidiaries.

         For the reasons described above, our consolidated net income (before
deducting the portion allocable to minority interest) for 2005 increased
approximately 62% from Ps15,468 million in 2004 to Ps25,088 million in 2005 in
constant Peso terms. Excluding the effect of the consolidation of RMC's
operations, our consolidated net income (before deducting the portion allocable
to minority interest) increased approximately 37% during the same period. The
percentage of our consolidated net income allocable to minority interests
increased from 1.6% in 2004 to 2.5% in 2005 (2.0%, excluding the effect of the
consolidation of RMC), as a result of our contributions in July 2005 and sale in
September 2005 of ready-mix concrete, aggregates and concrete block assets in
the Florida panhandle and southern Georgia to Ready Mix USA, LLC, an entity in
which we own a 49.99% interest. Majority interest net income increased by
approximately 61% from Ps15,224 million in 2004 to Ps24,450 million in 2005 in
constant Peso terms, mainly as a result of our increase in net sales, our
valuation gains on derivative financial instruments, and the decrease in other
expenses, net, partially offset by higher financial expenses and income taxes.
Excluding the effect of the consolidation of RMC's operations, our majority
interest net income increased by approximately 37% during the same period. As a
percentage of net sales, majority interest net income decreased from 16% in 2004
to 14% in 2005. Excluding the effect of the consolidation of RMC's operations,
as a percentage of net sales, majority interest net income increased from 16% in
2004 to 21% in 2005.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES

         We have satisfied our operating liquidity needs primarily through
operations of our subsidiaries and expect to continue to do so for both the
short-term and long-term. Although cash flow from our operations has
historically overall met our liquidity needs for operations, servicing debt and
funding capital expenditures and acquisitions, our subsidiaries are exposed to
risks from changes in foreign currency exchange rates, price and currency
controls, interest rates, inflation, governmental spending, social instability
and other political, economic or social developments in the countries in which
they operate, any one of which may materially reduce our net income and cash
from operations. Consequently, we also rely on cost-cutting and continual
operating improvements to optimize capacity utilization and maximize
profitability as well as to offset the risks associated with having worldwide
operations. Our consolidated net resources provided by operating activities were
Ps25.7 billion in 2004, Ps39.9 billion in 2005, and Ps44.1 billion in 2006. See
our Statement of Changes in the Financial Position included elsewhere in this
annual report.

OUR INDEBTEDNESS

         As of December 31, 2006, we had approximately U.S.$7.5 billion (Ps81.4
billion) of total debt, of which approximately 17% was short-term and 83% was
long-term. Approximately 5% of our long-term debt at December 31, 2006, or
U.S.$0.3 billion (Ps3.4 billion), is to be paid in 2007, unless extended. As of
December 31, 2006, before giving effect to our cross currency swap arrangements
discussed elsewhere in this annual report, 33% of our consolidated debt was
Dollar-denominated, 30% was Euro-denominated, 30% was Peso-denominated, 6% was
Yen-denominated, 1% was Pound-denominated, and immaterial amounts were
denominated in other currencies. The weighted average interest rates paid by us
in 2006 in our main currencies were 5.0% on our Dollar-denominated debt, 3.8% on
our Euro-denominated debt, 1.2% on our Yen-denominated debt and 5.0% on our
Pound-denominated debt. The foregoing debt information does not include the
perpetual instruments issued by C5 Capital (SPV) Limited and C10 Capital (SPV)
Limited in December 2006 described below.

         From time to time, as part of our financing activities, we and our
subsidiaries have entered into various financing agreements, including bank
loans, credit facilities, sale-leaseback transactions, forward contracts,


                                      103


forward lending facilities and equity swap transactions. Additionally, we and
our subsidiaries have issued notes, commercial paper, bonds, preferred equity
and putable capital securities.

         Most of our outstanding indebtedness has been incurred to finance our
acquisitions and to finance our capital investment programs. CEMEX Mexico, S.A.
de C.V. and Empresas Tolteca de Mexico, S.A. de C.V., two of our principal
Mexican subsidiaries, have provided guarantees of our indebtedness in the amount
of approximately U.S.$3,725 million (Ps40,230 million), as of December 31, 2006.
See Item 3 -- "Key Information -- Risk Factors -- Our ability to pay dividends
and repay debt depends on our subsidiaries' ability to transfer income and
dividends to us," and Item 3 -- "Key Information -- Risk Factors -- We have
incurred and will continue to incur debt, which could have an adverse effect on
the price of our CPOs and ADSs, result in us incurring increased interest costs
and limit our ability to distribute dividends, finance acquisitions and
expansions and maintain flexibility in managing our business activities," and
note 24(s) to our consolidated financial statements included elsewhere in this
annual report.

         Some of the debt instruments in respect of our and our subsidiaries'
indebtedness contain various covenants, which, among other things, require us
and them to maintain specific financial ratios, restrict asset sales and dictate
the use of proceeds from the sale of assets. These restrictions may adversely
affect our ability to finance our future operations or capital needs or to
engage in other business activities, such as acquisitions, which may be in our
interest. From time to time, we have sought and obtained waivers and amendments
to some of our and our subsidiaries' debt agreements, principally in connection
with acquisitions. In connection with our financing of the Rinker acquisition,
we and our subsidiaries have sought and obtained waivers and amendments to
several of our debt instruments relating to a number of financial ratios. Such
waivers are typically requested and granted for limited periods, after which
either a further waiver is requested or compliance makes a further waiver
unnecessary. In the case of the Rinker acquisition, we have obtained financial
ratio covenants waivers through December 31, 2007, and we expect to take such
actions as may be necessary to enable us to satisfy such financial covenants by
such date. Our failure to obtain any required waivers may result in the
acceleration of the affected indebtedness and could trigger our obligations to
make payments of principal, interest and other amounts under our other
indebtedness, which could have a material adverse effect on our financial
condition. We believe that we have good relations with our lenders and the
lenders to our subsidiaries, and nothing has come to our attention that would
lead us to believe that any future waivers, if required, would not be
forthcoming. However, we cannot assure you that future waivers would be
forthcoming, if requested. As of December 31, 2006, we were in compliance with
all the financial covenants in our own and our subsidiaries' debt instruments.

         Under Rule 5-04(c) of Regulation S-X under the Exchange Act, companies
with restricted net assets exceeding 25% of their consolidated net assets are
required to include Schedule 1 (parent company-only financial statements). Under
Rule 4-08(e)(3) of Regulation S-X, loan provisions prohibiting dividend
payments, loans or advances to the parent by a subsidiary, are considered
restrictions for purposes of computing restricted net assets.

         As of December 31, 2006, the financing agreements entered by us and our
subsidiaries do not include covenants or agreements that by their specific terms
restrict the transfer of funds from our subsidiaries to us in the form of
dividends, loans or advances. However, the financing agreements include some
restrictive covenants that would be considered transfer restrictions under Rule
4-08(e)(3) of Regulation S-X. These restrictive covenants are as follows:

         o    A restriction on asset dispositions that limits the use of
              proceeds of funds obtained from assets sales. The restriction
              requires us to reinvest such proceeds in cement-related assets or
              repay senior debt. As of December 31, 2006, we had senior debt in
              subsidiaries of approximately U.S.$4,394 million (equivalent to
              approximately 29% of our consolidated net assets); and

         o    A financial covenant limiting the amount of total debt maintained
              in New Sunward Holdings (a Dutch holding company subsidiary)
              relative to the stockholder's equity of CEMEX Espana (our
              operating company in Spain and the direct parent of New Sunward
              Holdings) to be not higher than 0.35 times. As of December 31,
              2006, New Sunward Holdings had outstanding debt of approximately
              (euro)1,546 million (U.S.$2,042 million).

                                      104



         In light of these restrictions, as of December 31, 2006, we had more
than 25% of our consolidated net assets subject to restrictions under Rule
4-08(e)(3) of Regulation S-X, and as a result we have included the required
Schedule 1 (parent company-only financial statements) elsewhere in this annual
report.

         As of December 31, 2006, after the completion of our acquisition of RMC
and the refinancing of the acquisition credit facilities, we had approximately
U.S.$7.5 billion of total outstanding debt, including debt assumed from RMC. Our
financing activities through December 31, 2005 are described in our previous
annual reports on Form 20-F. The following is a description of our financings in
2006.

         o    On November 30, 2000, RMC and several institutional purchasers
              entered in a Note Purchase Agreement in connection with a private
              placement by RMC. Pursuant to this agreement, RMC issued U.S.$120
              million aggregate principal amount of 8.40% Senior Notes due 2010,
              U.S.$90 million aggregate principal amount of 8.50% Senior Notes
              due 2012 and U.S.$45 million aggregate principal amount of 8.72%
              Senior Notes due 2020. On March 31, 2006, we issued a prepayment
              notice to the holders of the 8.40% Series A Senior Notes due 2010,
              8.50% Series B Senior Notes due 2012, and 8.72% Series C Senior
              Notes due 2020 issued by RMC on November 30, 2000 for a then
              aggregate principal amount of U.S.$255 million. At the same time,
              we issued a prepayment notice to the holders of other outstanding
              notes originally issued by RMC in private placements for an
              aggregate principal amount of U.S.$122 million. These prepayments,
              which amounted to a total of approximately U.S.$377 million, were
              made on May 5, 2006. With this transaction we completed the
              refinancing process of the debt incurred in connection with the
              RMC acquisition.

         o    On March 17, 2006, we issued two tranches in Mexico under our
              Medium-Term Promissory Notes Program (Certificados Bursatiles).
              The first tranche of notes was issued in a principal amount of
              Ps1,750 million with a maturity of five years at an interest rate
              equal to the 91- day Mexican treasury rate (CETES) plus 60 basis
              points. The second tranche of notes was issued in a principal
              amount of Ps750 million with a maturity of five years at a fixed
              interest rate of 8.7%. Both tranches were swapped to Dollars at
              floating rates of close to 6-month LIBOR.

         o    During the second quarter of 2006, under our Medium-Term
              Promissory Notes Program, we issued notes in a principal amount of
              Ps1.5 billion with a maturity of five years at an interest rate
              equal to the 91-day Mexican treasury rate (CETES) plus 53 basis
              points. We also issued various short-term notes under our
              Short-Term Promissory Notes Program (Certificados Bursatiles de
              Corto Plazo). We also entered into currency swaps to swap Peso
              obligations under the notes to Dollars at rates lower than LIBOR.

         o    During the third quarter of 2006, we issued additional notes under
              our Medium-Term Promissory Notes Program in a principal amount of
              Ps2.5 billion with a maturity of five years at an interest rate
              equal to the 91-day Mexican treasury rate (CETES) plus 46 basis
              points, which issuance was reopened with the same terms and
              conditions in October 2006 for an additional Ps.1.5 billion. We
              also issued various short-term notes under our Short-Term
              Promissory Notes Program, having an outstanding amount of Ps1.4
              billion at the end of the quarter. We also entered into currency
              swaps to swap Peso obligations under the notes to U.S. dollars at
              an average LIBO rate plus 7 basis points.

         o    During the fourth quarter of 2006, we issued additional notes
              under our Medium-Term Promissory Notes Program. On October 13,
              2006, we issued notes in a principal amount of Ps1.5 billion with
              a maturity of approximately five years at an interest rate equal
              to the 91-day Mexican treasury rate (CETES) plus 46 basis points,
              and on December 15, 2006, we issued notes in a principal amount of
              Ps2.95 billion with a maturity of approximately five years at an
              interest rate equal to the 91-day TIIE rate plus 9 basis points.
              Both series of notes issued were swapped to Dollars at a
              weighted-average rate of LIBOR plus 3 basis points.

         For a description of the perpetual debentures issued by C5 Capital
(SPV) Limited and C10 Capital (SPV) Limited, see "-- Our Minority Interest
Arrangements."

                                      105


         Funding for the Rinker acquisition is sourced from a combination of up
to U.S.$1,700 million in cash and cash equivalents, as well as drawdowns under
the following unsecured loan facilities, or the Loan Facilities:

         (a) a U.S.$6 billion acquisition facility, dated as of December 6,
2006, or the Acquisition Facility, arranged by CEMEX Espana, as borrower, with
Citigroup Global Markets Limited, The Royal Bank of Scotland plc and Banco
Bilbao Vizcaya Argentaria, S.A., as arrangers, comprising:

         (i)    a U.S.$3 billion 36-month term loan facility; and

         (ii)   a U.S.$3 billion 60-month term loan facility;

         for each facility, the interest rate is the aggregate of: (a) the
applicable LIBO rate, (b) a margin, calculated on the basis of net borrowings to
adjusted EBITDA, and (c) certain mandatory costs. The margin of the 364-day
facility is increased if this facility is extended. A U.S.$3 billion 364-day
revolving credit facility, with two term-out options of 180 days each, was
canceled on June 19, 2007, effective as of June 22, 2007;

         (b) a U.S.$1.2 billion committed acquisition facility, dated as of
October 24, 2006, or the Newly Committed Facility, arranged by CEMEX, S.A.B. de
C.V., as borrower, with BBVA Bancomer, S.A., which is currently available for
drawdowns and matures 12 months from the date of the initial drawing (unless
extended). The Newly Committed Facility comprises a bridge loan and a back stop
or stand-by loan and is guaranteed by CEMEX Mexico and Empresas Tolteca de
Mexico. The interest rates are as follows: (a) for Mexican peso loans, the
applicable domestic rate known as Tasa de Interes Interbancaria de Equilibrio
plus the applicable margin (which is based on the date of funding) and (b) for
Dollar loans, the applicable LIBO rate plus the applicable margin (which is
based on the date of funding);

         (c) an existing committed revolving credit facility, dated May 31,
2005, and amended on June 19, 2006, November 11, 2006 and May 9, 2007, or the
U.S.$1.2 billion Existing Committed Facility, arranged by CEMEX, S.A.B. de C.V.,
as borrower, with the lenders referred to in such facility including Barclays
Bank PLC and Citigroup Global Markets Inc. The interest rates under this
facility are as follows: (a) for LIBO rate loans, the applicable LIBO rate plus
any mandatory costs and (b) for EURIBO rate loans, the applicable EURIBO rate
plus any mandatory costs. All such interest rates are increased by the
applicable margin, which is calculated on the basis of CEMEX, S.A.B. de C.V.'s
net debt/EBITDA ratio. An aggregate amount of at least U.S.$1.2 billion is
available for drawdown as at the date of this annual report.

         (d) an existing committed revolving loan facility, dated September 24,
2004 (as amended and restated), or the CEMEX Espana Facility, arranged by CEMEX
Espana, as borrower, with the lenders referred to in such facility including
Banco Bilbao Vizcaya Argentaria S.A., Banco Santander Central Hispano, S.A.,
Calyon Corporate and Investment Bank and Citigroup Global Markets Limited. The
interest rates under this facility are as follows: (a) for LIBO rate loans, the
applicable LIBO rate plus any mandatory costs and (b) for EURIBO rate loans, the
applicable EURIBO rate plus any mandatory costs. All such interest rates are
increased by the applicable margin, which is calculated on the basis of CEMEX,
S.A.B. de C.V.'s net debt/EBITDA ratio. An aggregate amount of at least U.S.$2.1
billion is available for drawdown as at the date of this annual report.

         (e) an existing revolving credit facility arranged by CEMEX, S.A.B. de
C.V., as borrower, and guaranteed by CEMEX Mexico and Empresas Tolteca de
Mexico, originally dated as of June 23, 2004. This revolving credit facility was
amended and restated on June 6, 2005, the total facility was reduced to U.S.$700
million and extended for a new four-year period. On June 21, 2006, December 1,
2006 and May 9, 2007, the revolving credit facility was further amended. An
aggregate amount of U.S.$700 million is available for drawdown as at the date of
this annual report.

         (f) a new U.S.$1.5 billion committed facility, to be arranged by CEMEX
Espana, S.A., as borrower, with The Royal Bank of Scotland plc. as lender, which
is subject to the satisfaction of certain customary conditions. This committed
facility will be a 364-day term loan facility with an option for the borrower to
extend for 180 days.

                                      106


         Rinker's reported debt as of March 31, 2007, based on information
submitted by Rinker to the Australian Securities Exchange, was approximately
U.S.$1.1 billion. The following is a description of Rinker's material debt
instruments as of March 31, 2006:

         o    a U.S. commercial paper program, with Rinker Materials as
              borrower. The program has no maturity and allows for a maximum of
              U.S.$1 billion of notes to be issued and outstanding at any one
              time. The notes have maturities up to 365 days (366 days in a leap
              year) from the date of issuance;

         o    revolving cash advance credit facilities of U.S.$1,177.5 million;

         o    a private placement of U.S.$200 million in senior notes, in two
              series of U.S.$100 million each, maturing on August 8, 2010 and
              December 1, 2010; and

         o    U.S.$149.9 million in bonds, paying annual interest of 7.70% and
              due on July 21, 2025.

OUR EQUITY FORWARD ARRANGEMENTS

         As of December 31, 2004, we had forward contracts covering a total of
30,644,267 ADSs with different maturities until October 2006 and an aggregate
notional amount of U.S.$1,112 million. These forward contracts were entered into
to hedge the future exercise of the options granted under our executive stock
option programs. As of December 31, 2004, the estimated fair value of these
contracts was a gain of approximately U.S.$45 million (Ps524 million). In
October 2005, in connection with a non-dilutive equity offering of all the
shares underlying those forward contracts, we agreed with the forward banks to
settle those forward contracts for cash. This transaction did not increase the
number of shares outstanding. From the offering proceeds of approximately
U.S.$1.5 billion, after expenses, approximately U.S.$1.3 billion was used to
settle our obligations under those forward contracts.

         For the year ended December 31, 2005, considering the results of the
secondary offering, as well as those of the forward contracts initiated and
settled during the year to hedge the exercises of options under the stock option
programs, we recognized in the income statement a gain of approximately U.S.$422
million (Ps4,886 million), which offset the expenses generated by the stock
option programs. See note 12D to our consolidated financial statements included
elsewhere in this annual report.

         On December 20, 2006, we sold in the Mexican market 50 million CPOs
that we held in treasury for approximately Ps1,781 million to a financial
institution. On the same date, we negotiated a forward contract for the same
number of CPOs with maturity in December 2009. The notional amount of the
contract as of December 31, 2006 was approximately U.S.$171 million (Ps1,847
million). This equity forward contract provides for net cash settlement at its
maturity. See note 12D to our consolidated financial statements included
elsewhere in this annual report. As of March 31, 2007, we had settled in cash
approximately 37.7 million CPOs covered by this agreement.

OUR MINORITY INTEREST ARRANGEMENTS

         As of December 31, 2006, minority interest stockholders' equity
includes U.S.$1,250 million (Ps13,500 million) aggregate principal amount of the
perpetual debentures referred to below, which were issued by consolidated
entities. For accounting purposes, these debentures represent equity
instruments.

         On December 18, 2006, by means of two special purpose vehicles, or
SPVs, we issued perpetual debentures for an aggregate amount of U.S.$1,250
million (Ps13,500 million). These debentures have no fixed maturity date and do
not represent a contractual payment obligation for CEMEX. The first SPV, C5
Capital (SPV) Limited, issued debentures for a principal amount of U.S.$350
million bearing a fixed annual interest rate of 6.196% from their issuance date
to December 31, 2011, and thereafter an annual interest rate equal to the
3-month Dollar LIBO Rate plus 4.277%, reset quarterly, payable quarterly in
arrears beginning March 31, 2012. These debentures include an option that allows
C5 Capital (SPV) Limited to redeem the debentures at par (including all accrued
and unpaid interest) on and after December 31, 2011. The second SPV, C10 Capital
(SPV) Limited, issued debentures for a principal amount of U.S.$900 million
bearing an annual interest rate of 6.722% from their issuance date to


                                      107


December 31, 2016, and thereafter an annual interest rate equal to the 3-month
Dollar LIBO Rate plus 4.710%, reset quarterly, payable quarterly in arrears
beginning March 31, 2017. These debentures include an option that allows C10
Capital (SPV) Limited to redeem the debentures at par (including all accrued and
unpaid interest) on and after December 31, 2016. The interest rate on both
debentures may be increased upon the occurrence of certain change of control
events. Interest otherwise due on both debentures on any payment date may be
deferred indefinitely by the issuers. There is no limit on the amount of
interest that may be deferred, and no requirement that deferred interest be paid
at any time prior to the redemption or repayment of the debentures. Deferred
amounts will accumulate but will not bear interest. The weighted cost to CEMEX
in Dollars for these perpetual debentures for the first two years has been fixed
at 2.85% and 4.27% for year one and year two, respectively.

         The two SPVs, which were established solely for purposes of issuing the
perpetual debentures, are included in our consolidated financial statements.
Based on their characteristics, the debentures qualify for accounting purposes
as equity instruments and are classified within minority interest as they were
issued by consolidated entities. The treatment of the debentures as equity
instruments was made under applicable International Financing Reporting
Standards, or IFRS, which were applied to these transactions in compliance with
the supplementary application of IFRS in Mexico. Issuance costs for these
debentures of approximately U.S.$10 million (Ps108 million), as well as the
interest expense, which is recognized based on the principal amount, are
included within "Other capital reserves." Under U.S. GAAP, these perpetual
debentures are recognized as debt and interest payments are included as
financing expense in the income statement.

         As described below, there are derivative instruments associated with
the debentures issued by C5 Capital (SPV) Limited and C10 Capital (SPV) Limited,
through which we have changed the risk profile associated with interest rates
and foreign exchange rates in respect of these debentures.

         For a description of our recent minority interest arrangements, see "
-- Recent Developments" below.

OUR RECEIVABLES FINANCING ARRANGEMENTS

         We have established sales of trade accounts receivable programs with
financial institutions, referred to as securitization programs. These programs
were originally negotiated by our subsidiaries in Mexico during 2002, our
subsidiary in the United States during 2001, our subsidiary in Spain during 2000
and our subsidiary in France during 2006. Through the securitization programs,
our subsidiaries effectively surrender control, risks and the benefits
associated to the accounts receivable sold; therefore, the amount of receivables
sold is recorded as a sale of financial assets and the balances are removed from
the balance sheet at the moment of sale, except for the amounts that the
counterparties have not paid, which are reclassified to other accounts
receivable. See notes 5 and 6 to our consolidated financial statements included
elsewhere in this annual report. The balances of receivables sold pursuant to
these securitization programs as of December 31, 2004, 2005 and 2006 were
Ps7,437 million (U.S.$688 million), Ps7,996 million (U.S.$740 million), and
Ps11,738 million (U.S.$1,087 million), respectively. The accounts receivable
qualifying for sale do not include amounts over specified days past due or
concentrations over specified limits to any one customer, according to the terms
of the programs. Expenses incurred under these programs, originated by the
discount granted to the acquirers of the accounts receivable, are recognized in
the income statements and were approximately Ps132 million (U.S.$12 million) in
2004, Ps229 million (U.S.$21 million) in 2005 and Ps438 million (U.S.$41
million) in 2006. The proceeds obtained through these programs have been used
primarily to reduce net debt.

STOCK REPURCHASE PROGRAM

         Under Mexican law, our shareholders may authorize a stock repurchase
program at our annual shareholders' meeting. Unless otherwise instructed by our
shareholders, we are not required to purchase any minimum number of shares
pursuant to such program.

         In connection with our 2004 and 2005 annual shareholders' meetings held
on April 28, 2005, and April 27, 2006, respectively, our shareholders approved
stock repurchase programs in an amount of up to Ps6,000 million (nominal amount)
implemented between April 2005 and April 2007. No shares were purchased under
these programs.

                                      108


         In connection with our 2006 annual shareholders' meeting held on April
26, 2007, our shareholders approved a stock repurchase program in an amount of
up to Ps6,000 million (nominal amount) to be implemented between April 2007 and
April 2008.

RECENT DEVELOPMENTS

         On February 2, 2007, we issued notes under our Medium-Term Promissory
Notes Program in a principal amount of Ps3 billion (approximately U.S.$272
million) with a maturity of approximately five years at an interest rate equal
to the 28-day TIIE plus 10 basis points (equivalent to LIBOR plus 9 basis
points).

         On February 12, 2007, by means of an SPV named C8 Capital (SPV)
Limited, we issued a third tranche of perpetual debentures for a principal
amount of U.S.$750 million, which do not have a fixed maturity date and do not
represent a contractual payment obligation for CEMEX. These debentures bear a
fixed annual interest rate of 6.640% from their issuance date to December 31,
2014, and thereafter an annual interest rate equal to the 3-month Dollar LIBO
Rate plus 4.400%, reset quarterly, payable quarterly in arrears beginning March
31, 2015. These debentures include an option that allows the issuer to redeem
the debentures at par (including all accrued and unpaid interest) on and after
December 31, 2014. The interest rate on the debentures may be increased upon the
occurrence of certain change of control events. Interest otherwise due on the
debentures on any payment date may be deferred indefinitely by the issuer. There
is no limit on the amount of interest that may be deferred, and no requirement
that deferred interest be paid at any time prior to the redemption or repayment
of the debentures. Deferred amounts will accumulate but will not bear interest.
The weighted cost to CEMEX in Dollars for these perpetual debentures for the
first two years has been fixed at 2.53% and 4.06% for year one and year two,
respectively.

         On May 9, 2007, by means of an SPV named C10-EUR Capital (SPV) Limited,
we issued a fourth tranche of perpetual debentures for a principal amount of
(euro)730 (approximately U.S.$946), which do not have a fixed maturity date and
do not represent a contractual payment obligation for CEMEX. These debentures
bear a fixed annual interest rate of 6.277% from their issuance date to June 30,
2017, and thereafter an annual interest rate equal to the 3-month Euribo Rate
plus 4.790%, reset quarterly, payable quarterly in arrears beginning September
30, 2017. These debentures include an option that allows the issuer to redeem
the debentures at par (including all accrued and unpaid interest) on and after
June 30, 2017. The interest rate on the debentures may be increased upon the
occurrence of certain change of control events. Interest otherwise due on the
debentures on any payment date may be deferred indefinitely by the issuer. There
is no limit on the amount of interest that may be deferred, and no requirement
that deferred interest be paid at any time prior to the redemption or repayment
of the debentures. Deferred amounts will accumulate but will not bear interest.
The weighted cost to CEMEX in Dollars for these perpetual debentures for the
first year has been fixed at 2.925%.

         C8 Capital (SPV) Limited and C10-EUR Capital (SPV) Limited were
established solely for purposes of issuing the perpetual debentures described
above, and are included in our consolidated financial statements. Under Mexican
FRS, these perpetual debentures qualify as equity instruments and are classified
within minority interest as they were issued by consolidated entities. Interest
due on the debentures is recognized within "Other capital reserves". Under U.S.
GAAP, these perpetual debentures are recognized as debt and interest payments
are included as financing expense in the income statement.

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

         Our research and development, or R&D, efforts help us in achieving our
goal of increasing market share in the markets in which we operate. The
department of the Vice President of Technology is responsible for developing new
products for our cement and ready-mix concrete businesses that respond to our
clients' needs. The department of the Vice President of Energy has the
responsibility for developing new processes, equipment and methods to optimize
operational efficiencies and reduce our costs. For example, we have developed
processes and products that allow us to reduce heat consumption in our kilns,
which in turn reduces energy costs. Other products have also been developed to
provide our customers a better and broader offering of products in a sustainable
manner. We believe this has helped us to keep or increase our market share in
many of the markets in which we operate.

         We have ten laboratories dedicated to our R&D efforts. Nine of these
laboratories are strategically located in close proximity to our plants to
assist our operating subsidiaries with troubleshooting, optimization techniques

                                      109


and quality assurance methods. One of our laboratories is located in
Switzerland, where we are continually improving and consolidating our research
and development efforts in the areas of cement, concrete, aggregates,
admixtures, mortar and asphalt technology, as well as in information technology
and energy management. We have several patent registrations and pending
applications in many of the countries in which we operate. These patent
registrations and applications relate primarily to different materials used in
the construction industry and the production processes related to them, as well
as processes to improve our use of alternative fuels and raw materials.

         Our Information Technology divisions have developed information
management systems and software relating to cement and ready-mix concrete
operational practices, automation and maintenance. These systems have helped us
to better serve our clients with respect to purchasing, delivery and payment.

         R&D activities comprise part of the daily routine of the departments
and divisions mentioned above; therefore, the costs associated with such
activities are expensed as incurred. However, the costs incurred in the
development of software for internal use are capitalized and amortized in
operating results over the estimated useful life of the software, which is
approximately four years.

         In 2004, 2005 and 2006, the combined total expense of the departments
of the Vice President of Energy and the Vice President of Technology, which
includes R&D activities, amounted to approximately U.S.$34 million, U.S.$38
million and U.S.$43 million, respectively. In addition, in 2004, 2005 and 2006,
we capitalized approximately U.S.$10 million, U.S.$18 million and U.S.$203
million, respectively, related to internal use software development. The
increase in 2006 was attributable to our decision to initiate the replacement of
the technological platform in which we execute the most important processes of
our business model. The replacement of systems under this project started in the
subsidiaries located in the United Kingdom, Germany and France, obtained through
the acquisition of RMC in 2005. The items capitalized refer to direct costs
incurred in the development phase of the software and relate mainly to
professional fees, direct labor and related travel expenses. In 2007 and 2008 we
plan to continue the development of the new technological platform in the rest
of our subsidiaries. See note 11 to our consolidated financial statements
included elsewhere in this annual report.

         As of March 31, 2006, Rinker did not report any material R&D costs.

TREND INFORMATION

         The following discussion contains forward-looking statements that
reflect our current expectations and projections about future events based on
our knowledge of present facts and circumstances and assumptions about future
events. In this annual report, the words "expects," "believes," "anticipates,"
"estimates," "intends," "plans," "probable" and variations of such words and
similar expressions are intended to identify forward-looking statements. Such
statements necessarily involve risks and uncertainties that could cause actual
results to differ materially from those anticipated. The information set forth
below is subject to change without notice, and we are not obligated to publicly
update or revise forward-looking statements.

Overview

         During 2006, we posted our strongest financial results ever. This
achievement comes primarily from the consolidation of RMC's operations and the
related synergies, as well as from higher domestic sales volumes and favorable
supply-demand dynamics in most of the markets in which we operate. For 2007, we
expect to further improve our financial results through higher domestic sales
volumes and positive supply-demand dynamics in most of our markets.

         In addition, we accomplished the full integration of RMC's operations.
We estimate that we realized approximately U.S.$240 million of additional cost
savings through synergies during 2006, not including cost-saving synergies from
initiatives implemented near the end of the year, which we expect will allow us
to realize an additional U.S.$60 million in savings by the end of 2007, leading
to approximately U.S.$360 million of total savings through synergies by December
31, 2007. Our target return-on-capital ratio of 10% or more for the RMC
acquisition and this total amount of savings is being reached one year earlier
than originally expected.

                                      110


Outlook for Our Major Markets

         The following is a discussion of our outlook for our four major
markets, the United States, Mexico, Spain and the United Kingdom, which together
generated approximately 58% of our net sales in 2006.

         United States

         In the United States, we experienced a decline in sales volume for all
our products during 2006. This decline is explained by the downturn in the
residential sector, which accelerated throughout the year and resulted in very
weak demand in the fourth quarter of 2006 compared to the peak demand levels of
the prior year. For 2007, we expect the infrastructure, industrial and
commercial sectors to continue to be the main drivers of demand for our
industry, and continue to partially compensate for weakness in the residential
sector.

         Non-residential construction spending, which grew by 10% in 2006, is
expected to grow an additional 4% to 5% during 2007. The U.S.$287 billion,
six-year surface-transportation program known as SAFETEA-LU, together with the
improving economic environment and fiscal condition of the states, are the
forces behind this continued strength.

         The industrial and commercial sectors are also expected to continue
their growth trend due to a continued economic expansion.

         In the residential sector, construction spending was down 1% during
2006. For 2007, there is continued uncertainty about the depth and duration of
the ongoing correction. As such, our guidance is particularly sensitive to
changes in the outlook for construction spending. We expect cement sales volumes
in the residential sector to decline by about 15% to 16% during 2007 depending
on builders' aggressiveness in selling excess inventories and other factors that
drive new home sales, such as affordability, job creation, and demographic
trends.

         Overall, we see our cement sales volumes in the United States declining
by about 1% to 2% for 2007. We expect our ready-mix concrete sales volumes to
decline by about 4% because of our higher exposure to the residential market.

         As a result of our acquisition of Rinker, the size of our U.S.
operations has recently increased significantly.

         Mexico

         In Mexico, we expect GDP growth of about 3.2%, driven in part by
increased government spending as a result of improved government finances due to
overall increased economic activity. For 2007, foreign direct investment and
remittances from workers abroad should remain at about the same levels as 2006.

         We see two main factors driving cement sales volumes during 2007. The
first is government spending on streets and highways, public buildings, and
other infrastructure projects. Total federal spending on public works is
expected to reach U.S.$5 billion during 2007. Expenditure in this sector is
supported by strong government finances and continued fiscal discipline. The
private sector is also expected to increase its contribution to the financing of
public infrastructure projects.

         The second factor is growth in the home-building sector due to an
accelerated increase in mortgages, which are expected to grow by 80,000, or an
increase of 11%. Of these 80,000 mortgages, 62,000 are expected to come from
public institutions such as Infonavit, representing a growth of 10%. Mortgages
sponsored by commercial banks and SOFOLES are expected to increase by 18,000, or
an increase of 15%. While this last number may seem small relative to the total
amount of expected mortgages, please consider that commercial banks and SOFOLES
together fund more than 40% of the total value of all mortgages in Mexico. In
addition, the houses constructed as a result of these mortgages are larger on
average and require more cement than Infonavit-sponsored units.

                                      111


         We expect sales volumes in the self-construction sector to increase. We
believe this sector is growing below the overall economic growth rate because
the higher availability of mortgage financing has enabled the residential
construction sector to satisfy some of the housing demand.

         Overall, we expect that cement consumption from government and other
ready-mix concrete-intensive projects will likely bring an increase in our
ready-mix concrete sales volumes of approximately 16% for 2007. We are
optimistic about the trend in cement demand in Mexico, and we expect cement
sales volumes to rise more than 4% in 2007.

         Spain

         In Spain, performance for the year 2006 exceeded our initial
expectations. All segments of demand remained strong throughout the year, driven
by a robust construction sector. For 2007, we expect that GDP growth will be
more moderate at about 1%.

         In 2006, the residential sector in Spain experienced its strongest year
ever, with the number of housing starts in excess of 850,000. Housing starts
reached very high levels during the summer in anticipation of the changes in the
residential building code that took effect in October. Accordingly, we expect
housing starts to be more moderate in 2007 and to cause a deceleration in this
sector, especially in the second half of the year.

         Performance of the public-works sector is expected to be positive in
2007. Most of the growth in this sector in 2006 came from local municipalities
in anticipation of the local elections held in May 2007. This year, new projects
currently being initiated under the government's new infrastructure plan will
more than compensate for the expected decline in activity by local
municipalities. The infrastructure plan is expected to run through 2020 and has
an estimated total budget of U.S.$300 billion.

         The industrial and commercial sectors should grow at a moderate rate
during 2007. Overall, we estimate cement sales volumes in Spain to grow about 3%
during 2007.

         United Kingdom

         In the United Kingdom, cement sales volumes declined 4% during 2006.
During the year we increased the sale of slag cement to our ready-mix concrete
operations. Sales volumes of cementitious materials, including cement and slag
cement, rose by 1% during 2006. Ready-mix concrete sales volumes decreased by 1%
and aggregates sales volumes increased by 3% during 2006.

         During 2006, cement demand was driven mainly by a good performance of
the industrial, commercial, and public-housing sectors. These sectors, together
with improved performance of the infrastructure sector, will drive cement
consumption during 2007, while the private new housing sector and the
repair-maintenance-and-improvement sector will remain subdued during the year.

         For 2007, we expect cement sales volumes in the United Kingdom to
increase around 7%.

SUMMARY OF MATERIAL CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

         As of December 31, 2006, our subsidiaries had future commitments for
the purchase of raw materials for an approximate amount of U.S.$225 million.

         In March 1998, we entered into a 20-year contract with PEMEX providing
that PEMEX's refinery in Cadereyta would supply us with 0.9 million tons of
petcoke per year, commencing in 2003. In July 1999, we entered into a second
20-year contract with PEMEX providing that PEMEX's refinery in Madero would
supply us with 0.85 million tons of petcoke per year, commencing in 2002. We
expect the PEMEX petcoke contracts to reduce the volatility of our fuel costs
and provide us with a consistent source of petcoke throughout their 20-year
terms.

                                      112


         In 1999, we reached an agreement with ABB Alstom Power and Sithe
Energies, Inc. (currently Excelon Generation Company LLC) requiring Alstom and
Sithe to finance, build and operate "Termoelectrica del Golfo," a 230 megawatt
energy plant in Tamuin, San Luis Potosi, Mexico and to supply electricity to us
for a period of 20 years. Pursuant to the agreement, we are obligated to
purchase the full electric capacity generated by the power plant during the
20-year period. We are also obligated to supply Alstom and Sithe with 1.2
million tons of petcoke per year for the 20-year period for the consumption of
this power plant and another power plant built and operated by Alstom and Sithe
for Penoles, a Mexican mining company. We expect to meet our petcoke delivery
requirements through several petcoke supply agreements, including our petcoke
supply contract with PEMEX. Pursuant to the agreement, we may be obligated to
purchase the Termoelectrica del Golfo plant upon the occurrence of specified
material defaults or events, such as failure to pay when due, bankruptcy or
insolvency, and revocation of permits necessary to operate the facility, and
upon termination of the 20-year period, we will have the right to purchase the
assets of the power plant. We expect this arrangement to reduce the volatility
of our energy costs and to provide approximately 80% of CEMEX Mexico's
electricity needs. The power plant commenced commercial operations on May 1,
2004. In February 2007, ABB Alstom Power and Excelon Generation Company LLC sold
their participations in the project to a subsidiary of The AES Corporation. As
of December 31, 2006, after 32 months of operations, the power plant has
supplied electricity to 10 of our cement plants in Mexico covering approximately
77% of their needs for electricity and has represented a decrease of
approximately 34% in the cost of electricity at these plants.

         For purposes of presenting the approximate cash flows that will be
required to meet our other material contractual obligations, the following table
presents a summary of those obligations, as of December 31, 2006:




                                                                           PAYMENTS DUE BY PERIOD
                                                         --------------------------------------------------------
                                                                       (in millions of U.S. Dollars)

                                                                        LESS                               MORE
                                                                       THAN 1                              THAN 5
              CONTRACTUAL OBLIGATIONS                       TOTAL       YEAR     1-3 YEARS    3-5 YEARS    YEARS
              -----------------------                       -----       ----     ---------    ---------    -----
                                                                                              
Long-term bank loans and notes payable.................    6,537         296      2,913        2,385         943
Capital lease obligations..............................       68          20         28           17           3
    Total debt(1)......................................    6,605         316      2,941        2,402         946
Operating leases(2)....................................      653         166        241          135         111
Interest payments on our indebtedness(3)...............    1,418         411        603          304         100
Estimated cash flows under interest
  rate derivatives(4) .................................      311          93        127           83           8
Planned funding of pension plans and
  other post-retirement benefits(5) ...................    1,773         157        321          353         942
                                                          ------       -----      -----        -----       -----
Total..................................................   10,760       1,143      4,233        3,277       2,107


(1) Total long-term debt including current maturities is presented in note 12 to
    our consolidated financial statements included elsewhere in this annual
    report. In addition, as of December 31, 2006, we had lines of credit
    totaling approximately U.S.$6.7 billion, of which the available portion
    amounted to approximately U.S.$2.4 billion. The scheduling of debt payments
    does not consider the effect of any refinancing that may occur on our debt
    during the following years. However, we have been successful in the past in
    replacing our long-term obligations with others of similar nature, and we
    intend to do so in the future. Total long-term debt does not include the
    perpetual debentures for an aggregate amount of U.S.$1,250 (Ps13,500),
    issued by C5 Capital (SPV) Limited and C10 Capital (SPV) Limited on December
    18, 2006, as they do not represent contractual payment obligations for
    CEMEX.
(2) Operating leases have not been calculated on the basis of net present value;
    instead they are presented in the basis of nominal future cash flows. See
    note 21B to our consolidated financial statements included elsewhere in this
    annual report.
(3) In the determination of our future estimated interest payments on our
    floating rate denominated debt, we used the interest rates in effect as of
    December 31, 2006.
(4) Our estimated cash flows under interest rate derivatives, which include the
    interest rate cash flows under our interest rate swaps and our cross
    currency swap contracts, represent the net amount between the rate we pay
    and the rate we receive under such contracts. In the determination of our
    future estimated cash flows, we used the interest rates applicable under
    such contracts as of December 31, 2006.
(5) Amounts relating to our planned funding to pensions and other postretirement
    benefits presented in the table above represent our estimated annual
    payments under these benefits for the next 10 years, determined in local
    currency and translated into Dollars at the exchange rates as of December
    31, 2006, and includes our estimate of the number of new retirees during
    such future years. See note 14 to our consolidated financial statements
    included elsewhere in this annual report.

OFF-BALANCE SHEET ARRANGEMENTS

         We do not have any off-balance sheet arrangements that are reasonably
likely to have a material effect on our financial condition, operating results,
liquidity or capital resources.

                                      113


QUALITATIVE AND QUANTITATIVE MARKET DISCLOSURE

OUR DERIVATIVE FINANCIAL INSTRUMENTS

         In compliance with the procedures and controls established by our risk
management committee, we have entered into various derivative financial
instrument transactions in order to manage our exposure to market risks
resulting from changes in interest rates, foreign exchange rates and the price
of our common stock. We actively evaluate the creditworthiness of the financial
institutions and corporations that are counterparties to our derivative
financial instruments, and we believe that they have the financial capacity to
meet their obligations in relation to these instruments.

         The fair value of derivative financial instruments is based on
estimated settlement costs or quoted market prices and supported by
confirmations of these values received from the counterparties to these
financial instruments. The notional amounts of derivative financial instrument
agreements are used to measure interest to be paid or received and do not
represent the amount of exposure to credit loss.




                                                                  (U.S.$ MILLIONS)
                                                   ----------------------------------------------
                                                    AT DECEMBER 31, 2005     AT DECEMBER 31, 2006
                                                   ----------------------   ---------------------
                                                                ESTIMATED
                                                    NOTIONAL      FAIR       NOTIONAL   ESTIMATED
          DERIVATIVE INSTRUMENTS                     AMOUNT       VALUE       AMOUNT    FAIR VALUE     MATURITY DATE
----------------------------------------------     ---------    ---------   ---------   ----------     ---------------
                                                                                                     
Equity forward contracts......................           --         --          171          --                Dec '09
Foreign exchange forward contracts............        3,200        173        5,908         127      Jan '07 - Jan '10
Derivatives related to
  perpetual equity instruments ...............           --         --        1,250          46      Dec '11 - Dec '16
Interest rate swaps...........................        2,725         52        3,184          39      Jul '08 - Aug '10
Cross currency swaps..........................        2,290        212        2,144         154      Jan '07 - Mar '12
Derivatives related to energy.................          159        (4)          159         (4)      Dec '07 - May '17



Our Equity Derivative Forward Contracts

         On December 20, 2006, we sold 50 million CPOs which had previously been
held by a subsidiary of ours for approximately Ps1,781 million. On that date, we
also entered into a forward purchase agreement with a financial institution
which relates to the same number of CPOs and matures on December 20, 2009. At
maturity, settlement of the agreement will be made in cash. As of March 31,
2007, we had settled in cash approximately 37.7 million CPOs covered by this
agreement.

Our Foreign Exchange Forward Contracts

         A portion of our foreign exchange forward contracts held as of December
31, 2005 and 2006, with notional amounts of U.S.$3,137 million and U.S.$5,034
million, respectively, are accounted for at their estimated market value as
hedge instruments for our net investments in foreign subsidiaries. Gains or
losses on these forward contracts are recognized as an adjustment to
stockholders' equity within the related foreign currency translation adjustment.

         As of December 31, 2004, we held structured foreign exchange forward
contracts, collars and digital options for a notional amount of U.S.$3,453
million in connection with our commitment to purchase RMC. The derivatives were
entered into to hedge the variability in cash flows associated with exchange
fluctuations between the Dollar, the currency in which we obtained the funds to
purchase, and Pounds, the currency in which our firm commitment was denominated.
These contracts were designated as accounting hedges of the foreign exchange
risk associated with the firm commitment agreed to on November 17, 2004, the
date on which RMC's shareholders committed to sell their shares at a fixed
price. Changes in the estimated fair value of these contracts from the
designation date, which represented a gain of approximately U.S.$132 million
(Ps1,537 million), was recognized in stockholders' equity in 2004, and was
reclassified to earnings in March 2005, the month in which the final purchase
occurred. The change in the estimated fair value of these contracts from their
origination until their designation as


                                      114


hedges in 2004 was a gain of approximately U.S.$102 million (Ps1,188 million)
and was recognized in earnings in 2004. See note 12C to our consolidated
financial statements included elsewhere in this annual report.

Our Interest Rate Swaps

         As of December 31, 2005 and 2006, we held interest rate swaps for
notional amounts of approximately U.S.$2,725 million and U.S.$3,184 million,
respectively, entered into in order to hedge contractual cash flows (interest
payments) of underlying debt negotiated at floating rates. Although these
interest rate swap contracts, are part of, and complement, our financial
strategy, they generally do not meet the accounting hedge criteria.
Consequently, changes in the estimated fair value of these instruments were
recognized in earnings. However, as of December 31, 2005 and 2006, several of
our interest rate swap contracts, with an aggregate notional amount of
approximately U.S.$1.5 billion and U.S.$1.4 billion, respectively, met the
accounting hedge criteria and were designated as accounting hedges of
contractual cash flows (interest payments) of a portion of our floating rate
debt. Accordingly, changes in the estimated fair value of these instruments that
meet the accounting hedge criteria are recognized as stockholders' equity, and
will be reclassified to earnings as the financial expense of the related debt is
accrued. In addition, periodic payments under these instruments that meet the
accounting hedge criteria are recognized in earnings as an adjustment of the
effective interest rate of the related debt. See note 12A to our consolidated
financial statements included elsewhere in this annual report.

Our Cross Currency Swaps

         As of December 31, 2005 and 2006, we held cross currency swap contracts
related to our short-term and long-term financial debt portfolio. Through these
contracts, we carried out the exchange of the originally contracted currencies
and interest rates, over a determined amount of underlying debt. During the life
of these contracts, the cash flows originated by the exchange of interest rates
under the cross currency swap contracts match the interest payment dates and
conditions of the underlying debt. Likewise, at maturity of the contracts and
the underlying debt, we will exchange with the counterparty notional amounts
provided by the contracts so that we will receive an amount of cash flow equal
to cover our primary obligation under the underlying debt. In exchange, we will
pay the notional amount in the exchanged currency. As a result, we have
effectively exchanged the risks related to interest rates and foreign exchange
variations of the underlying debt to the rates and currencies negotiated in the
cross currency swap contracts. See note 12C to our consolidated financial
statements included elsewhere in this annual report.

         The periodic cash flows on the cross currency swap instruments arising
from the exchange of interest rates are recorded in the comprehensive financing
result as part of the effective interest rate of the related debt. We recognize
the estimated fair value of the cross currency swap contracts as assets or
liabilities in the balance sheet, with changes in the estimated fair value being
recognized through the income statement. All financial assets and liabilities
with the same maturity, for which our intention is to simultaneously realize or
settle, have been offset for presentation purposes, in order to reflect the cash
flows that we expect to receive or pay upon settlement of the financial
instruments.

         In respect of the estimated fair value recognition of the cross
currency swap contracts, as of December 31, 2005 and 2006, we recognized net
assets of U.S.$212 million (Ps2,453 million) and U.S.$154 million (Ps1,663
million), respectively, related to the estimated fair value of the short-term
and long-term cross currency swap contracts, of which,

         o    A gain of approximately U.S.$212 million (Ps2,453 million) and
              U.S.$154 million (Ps1,663 million) as of December 31, 2005 and
              2006, respectively, represented the contracts' estimated fair
              value, before prepayment effects, and includes:

         o    Gains of approximately U.S.$135 million (Ps1,563 million) and
              U.S.$60 million (Ps648 million) as of December 31, 2005 and 2006,
              respectively, which are directly related to variations in exchange
              rates between the inception of the contracts and the balance sheet
              date,

                                      115


         o    Gains of approximately U.S.$15 million (Ps173 million) and U.S.$16
              million (Ps173 million) as of December 31, 2005 and 2006,
              respectively, identified with the periodic cash flows for the
              interest rate swaps, and which were recognized as an adjustment of
              the related financing interest payable, and

         o    Remaining net assets of approximately U.S.$69 million (Ps799
              million) and approximately U.S.$78 million (Ps842 million) as of
              December 31, 2005, and 2006, which were recognized within other
              short-term and long-term assets and liabilities, as applicable.
              See note 12C to our consolidated financial statements included
              elsewhere in this annual report.

         As of December 31, 2006, as a result of new accounting pronouncements
under Mexican FRS, which became effective as of January 1, 2005, the book value
of the financial liabilities directly related to the cross currency swap
contracts are presented in the originally contracted currency. For the years
ended December 31, 2004, 2005 and 2006, changes in the estimated fair value of
the cross-currency swaps, before prepayments, resulted in gains of U.S.$10
million (Ps116 million), U.S.$3 million (Ps35 million) and a loss of U.S.$58
million (Ps626 million), respectively. The periodic interest rate cash flows
under the cross-currency swaps were recognized within financial expense as part
of the effective interest rate of the related debt. See note 12C to our
consolidated financial statements included elsewhere in this annual report.

Our Derivatives Related to Energy Projects

         As of December 31, 2005 and 2006, we had an interest rate swap maturing
in May 2017, for notional amounts of U.S.$150 million and U.S.$141 million,
respectively, negotiated to exchange floating for fixed interest rates, in
connection with agreements we entered into for the acquisition of electric
energy for a 20-year period commencing in 2003. During the life of the
derivative contract and over its notional amount, we will pay LIBO rates and
receive a 7.53% fixed rate until maturity in May 2017. In addition, during 2001
we sold a floor option for a notional amount of U.S.$159 million and U.S.$149
million as of December 31, 2005 and 2006, respectively, related to the interest
rate swap contract, pursuant to which, commencing in 2003 and until 2017, we pay
the difference between the 7.53% fixed rate and LIBO rates. Through the sale of
this option, we received a premium of approximately U.S.$22 million (Ps276
million) in 2001. As of December 31, 2005 and 2006, the combined estimated fair
value of the swap and floor contracts, amounting to approximate losses of U.S.$4
million (Ps46 million) and U.S.$3 million (Ps32 million), respectively, were
recorded in the comprehensive financing result for each period. As of December
31, 2005 and 2006, the notional amount of both contracts is not aggregated,
considering that there is only one notional amount with exposure to changes in
interest rates and the effects of one instrument are proportionally inverse to
the changes in the other one. See note 12D to our consolidated financial
statements included elsewhere in this annual report.

         In addition, in December 2006, CEMEX negotiated a derivative instrument
based on gas prices for a notional amount of U.S.$9 million (Ps97 million). The
instrument matures in December 2007.

Our Derivative Instruments Related to Perpetual Equity Instruments

         In connection with the issuance of the debentures by C5 Capital (SPV)
Limited and C10 Capital (SPV) Limited described above, pursuant to which we pay
a fixed Dollar rate of 6.196% on a notional amount of U.S.$350 million and a
fixed Dollar rate of 6.722% on a notional amount of U.S.$900 million, we decided
to change the foreign exchange exposure on the coupon payments from Dollars to
Yen. In order to do so, we contemporaneously entered into two cross-currency
swaps: a U.S.$350 million notional amount cross-currency swap, pursuant to
which, for a five-year period, we receive a fixed rate in Dollars of 6.196% of
the notional amount and pay six-month Yen LIBOR multiplied by a factor of
4.3531, and a U.S.$900 million notional amount cross-currency swap, pursuant to
which, for a ten-year period, we receive a fixed rate in Dollars of 6.722% of
the notional amount and pay six-month Yen LIBOR multiplied by a factor of
3.3878. Each cross-currency swap includes an extinguishable swap, which provides
that if the relevant debentures are extinguished for certain stated conditions
but before the maturity of the cross-currency swap, such cross-currency swap
would be automatically extinguished, with no amounts payable by the swap
counterparties. In addition, in order to eliminate variability during the first
two years in the Yen-denominated payments due under the cross-currency swaps, we
entered into foreign exchange forwards for a notional amount of U.S.$89 million,
under which we pay Dollars and receive payments in Yen. Changes in fair


                                      116


value of all the derivative instruments associated with the perpetual debentures
are recognized in the income statement as part of the comprehensive financing
result. We have entered into similar hedging instruments in connection with the
issuance of the perpetual debentures debentures by C8 Capital (SPV) Limited and
C10-EUR Capital (SPV) Limited in February and May 2007, respectively.

INTEREST RATE RISK, FOREIGN CURRENCY RISK AND EQUITY RISK

Interest Rate Risk

         The table below presents tabular information of our fixed and floating
rate long-term foreign currency-denominated debt as of December 31, 2006. It
includes the effects generated by the interest rate swaps and the cross currency
swap contracts that we have entered into, covering a portion of our financial
debt originally negotiated in Pesos and Dollars. See note 12C to our
consolidated financial statements included elsewhere in this annual report.
Average floating interest rates are calculated based on forward rates in the
yield curve as of December 31, 2006. Future cash flows represent contractual
principal payments. The fair value of our floating rate long-term debt is
determined by discounting future cash flows using borrowing rates available to
us as of December 31, 2006 and is summarized as follows:




                                              EXPECTED MATURITY DATES AS OF DECEMBER 31, 2006
                                   --------------------------------------------------------------------
                                                                                      AFTER                 FAIR
              DEBT                  2007     2008     2009       2010       2011       2012       TOTAL     VALUE
-------------------------------     ----     ----     ----       ----       ----       ----       -----     -----
                                     (Millions of Dollars equivalents of debt denominated in foreign currencies)
                                   ------------------------------------------------------------------------------

                                                                                    
Variable rate..................      123      563      290        768      1,262        317       3,323     3,278
Average interest rate..........    5.49%    5.28%    5.20%      5.24%      5.26%      5.30%
Fixed rate.....................      192      795    1,293        313         60        628       3,282     3,228
Average interest rate..........    4.31%    4.44%    4.36%      4.62%      4.52%      4.86%


         As of December 31, 2006, we were subject to the volatility of the
floating interest rates, which, if such rates were to increase, may adversely
affect our financing cost and our net income. As of December 31, 2006, 47% of
our foreign currency-denominated long-term debt bears floating rates at a
weighted average interest rate of LIBOR minus 91 basis points, after giving
effect to our interest rate swaps and cross currency swaps. As of December 31,
2006, we also held interest rate swaps for a notional amount of U.S.$3,184
million and with a fair value gain of approximately U.S.$39 million during 2006.
Pursuant to these interest rate swaps, we receive variable rates and deliver
fixed rates over the notional amount. These derivatives, even when they do not
meet the criteria to be considered hedging items for accounting purposes,
complement our financial strategy and mitigate our overall exposure to floating
rates. See "-- Our Derivative Financial Instruments -- Our Interest Rate Swaps."

         The potential change in the fair value as of December 31, 2006 of these
contracts that would result from a hypothetical, instantaneous decrease of 50
basis points in the interest rates would be a loss of approximately U.S.$21
million (Ps226 million).

Foreign Currency Risk

         Due to our geographic diversification, our revenues are generated in
various countries and settled in different currencies. However, some of our
production costs, including fuel and energy, and some of our cement prices, are
periodically adjusted to take into account fluctuations in the Dollar/Peso
exchange rate. For the year ended December 31, 2006, approximately 18% of our
net sales, before eliminations resulting from consolidation, were generated in
Mexico, 21% in the United States, 9% in Spain, 10% in the United Kingdom, 20% in
our Rest of Europe segment, 8% in South America, Central America and the
Caribbean, 4% in Africa and the Middle East, 2% in Asia and 8% from other
regions and our cement and clinker trading activities. As of December 31, 2006,
our debt amounted to Ps81.4 billion, of which approximately 33% was
Dollar-denominated, 30% was Euro-denominated, 30% was Peso-denominated, 6% was
Yen-denominated and 1% was Pound-denominated; therefore, we had a foreign
currency exposure arising from the Dollar-denominated debt, the Euro-denominated
debt, the Yen-denominated debt and the Pound-denominated debt, versus the
currencies in which our revenues are settled in most countries in which we
operate. See "-- Liquidity and Capital Resources -- Our Indebtedness," Item 10--


                                      117


"Additional Information -- Material Contracts" and "Risk Factors -- We have
to service our Dollar-denominated debt with revenues generated in Pesos or other
currencies, as we do not generate sufficient revenue in Dollars from our
operations to service all our Dollar-denominated debt. This could adversely
affect our ability to service our debt in the event of a devaluation or
depreciation in the value of the Peso, or any of the other currencies of the
countries in which we operate, compared to the Dollar." Although we also have a
small portion of our debt in other currencies, we have generated enough cash
flow in those currencies to service that debt. Therefore, we believe there is no
material foreign currency risk exposure with respect to that debt. As previously
mentioned, we have entered into cross currency swap contracts, designed to
change the original profile of interest rates and currencies over a portion of
our financial debt. See "-- Our Derivative Financial Instruments." As of
December 31, 2006, the estimated fair value of these instruments was a gain of
approximately U.S.$154 million (Ps1,663 million). The potential change in the
fair value of these contracts as of December 31, 2006 that would result from a
hypothetical, instantaneous depreciation of 10% in the exchange rate of the Peso
against the Dollar, would be a loss of approximately U.S.$193 million (Ps2,089
million).

         Additionally, as previously mentioned, we have entered into foreign
exchange forward contracts designed to hedge our net investment in foreign
subsidiaries, our firm commitments, as well as other currency derivative
instruments. See "-- Our Derivative Financial Instruments." The combined
estimated fair value of our foreign exchange forwards that hedge our net
investment in foreign subsidiaries and our other currency derivatives as of
December 31, 2006 was a gain of approximately U.S.$127 million (Ps1,372
million). The potential change in the fair value of these derivatives as of
December 31, 2006 that would result from a hypothetical, instantaneous
depreciation of 10% in the exchange rate of the Peso combined with a
appreciation of 10% of the Euro against the Dollar would be a loss of
approximately U.S.$730 million (Ps7,884 million), which would be partially
offset by a corresponding foreign translation gain as a result of our net
investment in foreign subsidiaries.

Equity Risk

         As described above, we have entered into equity forward contracts on
our own stock. Upon liquidation and at our option, the equity forward contracts
provide for physical settlement or net cash settlement of the estimated fair
value and the effects are recognized in the income statement. At maturity, if
these forward contracts are not settled or replaced, or if we default on these
agreements, our counterparties may sell the shares underlying the contracts.
Such sales may have an adverse effect on our stock market price.

INVESTMENTS, ACQUISITIONS AND DIVESTITURES

         The transactions described below represent our principal investments,
acquisitions and divestitures completed during 2004, 2005 and 2006. For a
description of our acquisition of Rinker, see Item 4 -- "Information on the
Company -- Recent Developments -- Rinker Acquisition."

Investments and Acquisitions

         On September 27, 2004, in connection with a public offer to purchase
RMC's outstanding shares, CEMEX UK Limited, our indirect wholly-owned
subsidiary, acquired 50 million shares of RMC for approximately (pound)432
million (U.S.$786 million, based on a Pound/Dollar exchange rate of
(pound)0.5496 to U.S.$1.00 on September 27, 2004), which represented
approximately 18.8% of RMC's outstanding shares. On March 1, 2005, following
board and shareholder approval and clearance from applicable regulators, CEMEX
UK Limited purchased the remaining 81.2% of RMC's outstanding shares and
completed the acquisition of RMC. The total purchase price for RMC was
approximately U.S.$6.5 billion, which included approximately U.S.$2.2 billion of
assumed debt. We accounted for the acquisition as a purchase under Mexican FRS,
which means that our consolidated financial statements only include RMC from
March 1, 2005.

         In July 2005, we acquired 15 ready-mix concrete plants through the
purchase of Concretera Mayaguezana, a ready-mix concrete producer located in
Puerto Rico, for approximately Ps301 million (U.S.$28 million). The resulting
goodwill arising from this acquisition was approximately Ps161 million.

                                      118


         In January 2006, we acquired a grinding mill with a grinding capacity
of 500,000 tons per year in Guatemala for approximately U.S.$17.4 million. We
entered into an agreement to purchase these operations in September 2005 and
completed the acquisition on January 1, 2006.

         On March 2, 2006, we acquired two companies engaged in the ready-mix
concrete and aggregates business in Poland from Unicon A/S, a subsidiary of
Cementir Group, an Italian cement producer, for approximately (euro)12 million.

         On March 20, 2006, we agreed to terminate our lease on the Balcones
cement plant located in New Braunfels, Texas prior to expiration, and purchased
the Balcones cement plant for approximately U.S.$61 million.

         In addition to the above-mentioned acquisitions, our net investment in
property, machinery and equipment, as reflected in our consolidated statements
of changes in financial position included elsewhere in this annual report,
excluding acquisitions of equity interests in subsidiaries and associates, was
approximately Ps5,055 million (U.S.$468 million) in 2004, Ps9,093 million
(U.S.$842 million) in 2005, and Ps14,814 million (U.S.$1,372 million) in 2006.
This net investment in property, machinery and equipment has been applied to the
construction and upgrade of plants and equipment, to the maintenance of plants
and equipment, including environmental controls and technology updates.

         In 2006 we invested U.S.$731 million in expansion capital expenditures
in different projects around the world to increase our production capacity. In
2007, we have allocated over U.S.$1 billion to continue with this effort. We
expect these expansion projects to provide, on average, returns well in excess
of our stated criteria for acquisitions, which include a minimum return on
capital employed of at least ten percent.

Divestitures

         On March 31, 2005, we sold our Charlevoix, Michigan and Dixon, Illinois
cement plants and several distribution terminals located in the Great Lakes
region to Votorantim Participacoes S.A., a cement company in Brazil, for an
aggregate purchase price of approximately U.S.$389 million. The combined
capacity of the two cement plants sold was approximately two million tons per
year, and the operations of these plants represented approximately 9% of our
U.S. operations' operating cash flow for the year ended December 31, 2004.

         On April 26, 2005, we divested our 11.9% interest in Cementos Bio Bio,
S.A., a cement company in Chile, for approximately U.S.$65 million.

         On June 1, 2005, we sold a cement terminal adjacent to the Detroit
river to the City of Detroit for a purchase price of approximately U.S.$24
million.

         As a condition to closing the RMC acquisition, we agreed with the U.S.
Federal Trade Commission, or FTC, to divest several ready-mix and related assets
in the Tucson, Arizona area. Following FTC approval, we sold RMC's operations in
the Tucson area to California Portland Cement Company for a purchase price of
approximately U.S.$16 million on August 29, 2005.

         On July 1, 2005, we and Ready Mix USA, Inc. established two
jointly-owned limited liability companies, CEMEX Southeast, LLC, a cement
company, and Ready Mix USA, LLC, a ready-mix concrete company, to serve the
construction materials market in the southeast region of the United States.
Under the terms of the limited liability company agreements and related asset
contribution agreements, we contributed two cement plants (Demopolis, Alabama
and Clinchfield, Georgia) and eleven cement terminals to CEMEX Southeast, LLC,
representing approximately 98% of its contributed capital, while Ready Mix USA
contributed cash to CEMEX Southeast, LLC representing approximately 2% of its
contributed capital. In addition, we contributed our ready-mix concrete,
aggregates and concrete block assets in the Florida panhandle and southern
Georgia to Ready Mix USA, LLC, representing approximately 9% of its contributed
capital, while Ready Mix USA contributed all its ready-mix concrete and
aggregate operations in Alabama, Georgia, the Florida panhandle and Tennessee,
as well as its concrete block operations in Arkansas, Tennessee, Mississippi,
Florida and Alabama to Ready Mix USA, LLC, representing approximately 91% of its
contributed capital. We own a 50.01% interest, and Ready Mix USA owns a 49.99%
interest, in the profits and losses and voting rights of CEMEX Southeast, LLC,
while Ready Mix USA owns a 50.01% interest, and we own a 49.99%


                                      119


interest, in the profits and losses and voting rights of Ready Mix USA, LLC. In
a separate transaction, on September 1, 2005, we sold 27 ready-mix concrete
plants and four concrete block facilities located in the Atlanta, Georgia
metropolitan area to Ready Mix USA, LLC for approximately U.S.$125 million.

         On December 22, 2005, we terminated our 50/50 joint ventures with
Lafarge Asland in Spain and Portugal which we acquired in the RMC acquisition.
The Spanish joint venture operated 122 ready-mix concrete plants and 12
aggregates, and the Portuguese joint venture operated 31 ready-mix concrete
plants and five aggregates quarries. Under the terms of the termination
agreement, Lafarge Asland received a 100% interest in both joint ventures and we
received (euro)50 million in cash, as well as 29 ready-mix concrete plants and
five aggregates quarries in Spain.

         As a condition to closing the RMC acquisition, we agreed with the U.S.
Federal Trade Commission, or FTC, to divest several ready-mix concrete and
related assets in the Tucson, Arizona area. Following FTC approval, on August
29, 2005, we sold RMC's operations in the Tucson, Arizona area, consisting of
several ready-mix concrete and related assets, to California Portland Cement
Company for a purchase price of approximately U.S.$16 million.

         On March 2, 2006, we sold 4K Beton A/S, our Danish subsidiary, which
operated 18 ready-mix concrete plants in Denmark, to Unicon A/S, a subsidiary of
Cementir Group, an Italian cement producer, for approximately (euro)22 million.
As part of the transaction, we purchased from Unicon A/S two companies engaged
in the ready-mix concrete and aggregates business in Poland for approximately
(euro)12 million. We received net cash proceeds of approximately (euro)6
million, after cash and debt adjustments, from this transaction.

         On July 27, 2006, we divested a 24.9% interest in Gresik for
approximately U.S.$337 million, and we have subsequently divested our remaining
interest in Gresik.

         See note 11A to our consolidated financial statements included
elsewhere in this annual report.

U.S. GAAP RECONCILIATION

         Our consolidated financial statements included elsewhere in this annual
report have been prepared in accordance with Mexican FRS, which differ in some
significant respects from U.S. GAAP. The Mexican FRS consolidated financial
statements include the effects of inflation as provided for under Bulletin B-10
and Bulletin B-15 and are presented in constant Pesos representing the same
purchasing power for each period presented, whereas financial statements
prepared under U.S. GAAP are presented on a historical cost basis. The
reconciliation to U.S. GAAP included as note 24 to our consolidated financial
statements presented elsewhere in this annual report includes (i) a reconciling
item for the reversal of the effect of applying the CEMEX weighted average
inflation factor instead of the Mexican inflation-only factor for the
restatement to constant pesos for the year ended December 31, 2003, and (ii) a
reconciling item to reflect the difference in the carrying value of machinery
and equipment of foreign origin and related depreciation, between (a) the
methodology set forth by Mexican FRS in which fixed assets are restated using
the inflation index of the assets' origin country and the variation in the
foreign exchange rate between the country of origin currency and the functional
currency, and (b) the amounts that would be determined by using the historical
cost/constant currency method in which fixed assets are restated using the
inflation index of the country that holds the asset. As described below, these
provisions of inflation accounting under Mexican FRS do not meet the
requirements of Rule 3-20 of Regulation S-X of the Securities and Exchange
Commission. Our reconciliation does not include the reversal of other Mexican
FRS inflation accounting adjustments as these adjustments represent a
comprehensive measure of the effects of price level changes in the inflationary
Mexican economy and, as such, is considered a more meaningful presentation than
historical cost-based financial reporting for both Mexican and U.S. accounting
purposes.

         Majority net income under U.S. GAAP for the years ended December 31,
2004, 2005, and 2006 amounted to Ps19,260 million, Ps23,017 million and Ps25,374
million, respectively, compared to majority net income under Mexican FRS for the
years ended December 31, 2004, 2005, and 2006 of approximately Ps15,224 million,
Ps24,450 million and Ps25,682 million, respectively. See note 24 to our
consolidated financial statements included elsewhere


                                      120


in this annual report for a description of the principal differences between
Mexican FRS and U.S. GAAP as they relate to us and the effects that newly issued
accounting pronouncements have had in our financial position.

NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS UNDER U.S. GAAP

         In March 2006, the FASB issued SFAS 156, Accounting for Servicing of
Financial Assets an amendment of FASB Statement No.140 ("SFAS 156"). This
Statement requires that all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable. SFAS 156
permits, but does not require, the subsequent measurement of servicing assets
and servicing liabilities at fair value. CEMEX is required to adopt SFAS 156
beginning on January 1, 2007. An entity should apply the requirements for
recognition and initial measurement of servicing assets and servicing
liabilities prospectively to all transactions after the effective date of SFAS
156. CEMEX is currently evaluating the impact of adopting SFAS 156 on its
results of operations and financial position under U.S. GAAP.

         In September 2006, the FASB issued SFAS 157, Fair Value Measurement
("SFAS 157"). SFAS 157 defines fair value, establishes a framework for the
measurement of fair value, and enhances disclosures about fair value
measurements. SFAS 157 does not require any new fair value measures. SFAS 157 is
effective for fair value measures already required or permitted by other
standards for fiscal years beginning after November 15, 2007. CEMEX is required
to adopt SFAS 157 beginning on January 1, 2008. SFAS 157 is required to be
applied prospectively, except for certain financial instruments. Any transition
adjustment will be recognized as an adjustment to opening retained earnings in
the year of adoption. CEMEX is currently evaluating the impact of adopting SFAS
157 on its results of operations and financial position under U.S. GAAP.

         In September 2006, the FASB issued FASB Staff Position No. AUG AIR-1,
Accounting for Planned Major Maintenance Activities. This guidance prohibits the
use of the accrue-in-advance method of accounting for planned major activities
because an obligation has not occurred and therefore a liability should not be
recognized. The provisions of this guidance will be effective for reporting
periods beginning after December 15, 2006. The provisions of the Staff Position
are consistent with CEMEX's current policies and CEMEX does not anticipate that
the adoption of the provisions of this guidance will have a material impact on
its results of operations and financial position under U.S. GAAP.

         In July 2006, the FASB issued FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes, an interpretation of FASB Statement 109 ("FIN
48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements and prescribes a threshold of
more-likely-than-not for recognition of tax benefits of uncertain tax positions
taken or expected to be taken in a tax return. FIN 48 also provides related
guidance on measurement, derecognition, classification, interest and penalties,
and disclosure. The provisions of FIN 48 will be effective for CEMEX on January
1, 2007, with any cumulative effect of the change in accounting principle
recorded as an adjustment to opening retained earnings. CEMEX is in the process
of assessing the impact of adopting FIN 48 on its results of operations and
financial position under U.S. GAAP.

                                      121



ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
         ------------------------------------------

SENIOR MANAGEMENT AND DIRECTORS

Senior Management

         Set forth below is the name and position of each of our executive
officers as of December 31, 2006. The terms of office of the executive officers
are indefinite.



                                        
 Lorenzo H. Zambrano,                      Joined CEMEX in 1968. During his career with CEMEX, Mr.
   Chief Executive Officer                 Zambrano has been involved in all operational aspects of our
                                           business.  He held several positions in CEMEX prior to his
                                           appointment as director of operations in 1981.  In 1985, Mr.
                                           Zambrano was appointed chief executive officer, and in 1995 he
                                           was elected chairman of the board of directors.  Mr. Zambrano
                                           is a graduate of Instituto Tecnologico y de Estudios Superiores
                                           de Monterrey, A.C., or ITESM, with a degree in mechanical
                                           engineering and administration and holds an M.B.A. from
                                           Stanford University.

                                           Mr. Zambrano has been a member of our board of directors since
                                           1979 and chairman of our board of directors since 1995.  He is
                                           a member of the board of directors of IBM and the International
                                           Advisory Board of Citigroup.  He is also a member of the board
                                           of directors of Fomento Economico Mexicano, S.A.B. de C.V.,
                                           Alfa, S.A.B. de C.V., Grupo Financiero Banamex,  S.A. de C.V.,
                                           Vitro, S.A.B. and Grupo Televisa, S.A.B.  Mr. Zambrano is
                                           chairman of the board of directors of Consejo de Ensenanza e
                                           Investigacion Superior, A.C., which manages ITESM, and a member
                                           of the board of directors of Museo de Arte Contemporaneo de
                                           Monterrey A.C. (MARCO).  Until July 2005, Mr. Zambrano
                                           participated in the Chairman's Council of Daimler Chrysler AG
                                           and until January 2006, Mr. Zambrano was a member of the
                                           Stanford University's Graduate School of Business Advisory
                                           Council.

                                           In recognition of his business and philantrophic record, Mr.
                                           Zambrano has received several awards and recognitions,
                                           including the Woodrow Wilson Center's Woodrow Wilson Award for
                                           Corporate Citizenship, the America's Society Gold Medal
                                           Distinguished Service Award, and Stanford University's Graduate
                                           School of Business Alumni Association's Ernest C. Arbuckle
                                           Award.

                                           Lorenzo H. Zambrano is a first cousin of Lorenzo Milmo Zambrano
                                           and Rogelio Zambrano Lozano, both members of our board of
                                           directors, as well as of Rodrigo Trevino, our chief financial
                                           officer.  He is also a second cousin of Roberto Zambrano
                                           Villarreal and Mauricio Zambrano Villarreal, both members of
                                           our board of directors.

Hector Medina,                             Joined CEMEX in 1988.  He has held several positions in CEMEX,
  Executive Vice President of Planning     including director of strategic planning from 1991 to 1994,
   and Finance                             president of CEMEX Mexico from 1994 to 1996, and has served as
                                           executive vice president of planning and finance since 1996.
                                           He is a graduate of ITESM with a degree in chemical engineering
                                           and administration.  He also received a Masters of Science
                                           degree in management studies from the management Center of the
                                           University of Bradford in



                                      122



                                        

                                           England and a Masters of Science diploma in Operations Research
                                           from the Escuela de Organizacion Industrial in Spain in 1975.
                                           Among the positions he previously held are those of Project
                                           Director at Grupo Protexa, S.A. de C.V., Administrative Director
                                           at Grupo Xesa, S.A. de C.V., Commercial Director at Direcplan,
                                           S.A. and Industrial Relations Sub-Director at Hylsa, S.A. de C.V.
                                           In March 2006, Mr. Medina was appointed chairman of the board of
                                           Universidad Regimontana, a private university located in
                                           Monterrey, Mexico. Mr. Medina is a member of the board of
                                           directors of Cementos Chihuahua, Compania Minera Autlan,
                                           Mexifrutas, S.A. de C.V. and Chocota Productos del Mar, S.A. de
                                           C.V. and member of the "consejo de vigilancia" of Ensenanza e
                                           Investigacion Superior A.C. and ITESM. Mr. Medina is also a
                                           member of the Advisory Board of Nacional Monte de Piedad.

Armando J. Garcia Segovia,                 Initially joined CEMEX in 1975 and rejoined CEMEX in 1985.  He
  Executive Vice President of              has served as director of operational and strategic planning
    Development                            from 1985 to 1988, director of operations from 1988 to 1991,
                                           director of corporate services and affiliate companies from
                                           1991 to 1994, director of development from 1994 to 1996,
                                           general director of development from 1996 to 2000, and
                                           executive vice president of development since 2000.  He is a
                                           graduate of ITESM with a degree in mechanical engineering and
                                           administration and holds an M.B.A. from the University of
                                           Texas.  He was employed at Cydsa, S.A. from 1979 to 1981 and at
                                           Conek, S.A. de C.V. from 1981 to 1985.

                                           Mr. Garcia has been a member of our board of directors since
                                           1983.  He also serves as a member of the board of directors of
                                           Grupo Cementos de Chihuahua, S.A.B. de C.V., GCC Cemento, S.A.
                                           de C.V., and Confederacion Patronal de la Republica Mexicana.
                                           He is a member of the board and former chairman of Centro de
                                           Estudios del Sector Privado para el Desarrollo Sostenible, and
                                           member of the board of the World Environmental Center.  He is
                                           also founder and chairman of the board of Comenzar de Nuevo,
                                           A.C.

                                           He is a brother of Jorge Garcia Segovia, an alternate member of
                                           our board of directors, and a first cousin of Rodolfo Garcia
                                           Muriel, a member of our board of directors.

Victor Romo,                               Joined CEMEX in 1985 and has served as director of
  Executive Vice President of              administration of CEMEX Espana from 1992 to 1994, general
   Administration                          director of administration and finance of CEMEX Espana from
                                           1994 to 1996, president of CEMEX Venezuela from 1996 to 1998,
                                           president of the South American and Caribbean region from 1998
                                           to May 2003, and executive vice president of administration
                                           since May 2003.  He is a graduate in public accounting and
                                           holds a master's degree in administration and finance from
                                           ITESM.  Previously, he worked for Grupo Industrial Alfa, S.A.
                                           de C.V. from 1979 to 1985.

Francisco Garza,                           Joined CEMEX in 1988 and has served as director of trading from
  President of CEMEX                       1988 to 1992, president of CEMEX USA from 1992 to 1994,
  North America Region and Trading         president of CEMEX Venezuela and Cemento Bayano from 1994 to
                                           1996, and president of CEMEX Mexico and CEMEX USA from 1996 to
                                           1998.  In 1998, he was appointed president of the North
                                           American region and trading.  He is a graduate in business
                                           administration from ITESM and holds an M.B.A. from the Johnson
                                           School of Management at Cornell University.


                                                    123



                                        

Fernando Gonzalez,                         Joined CEMEX in 1989, and has served as vice-president-human
  President of the Europe, Middle East,    resources from 1992 to 1994, vice-president-strategic planning
   Africa and Asia Region                  from 1994 to 1998, president of CEMEX Venezuela from 1998 to
                                           2000, president of CEMEX Asia from 2000 to May 2003, and
                                           president of the South American and Caribbean region from May
                                           2003 to February 2005.  In March 2005, he was appointed
                                           president of the expanded European Region, and in February 2007
                                           was appointed president of the Europe, Middle East, Africa and
                                           Asia Region.  Mr. Gonzalez is a graduate in business
                                           administration and holds a master's degree in administration
                                           from ITESM.

Juan Romero,                               Joined CEMEX in 1989 and has occupied several senior management
  President of CEMEX South America and     positions, including commercial director for CEMEX Espana,
   the Caribbean                           president of CEMEX, Colombia, commercial director for CEMEX
                                           Mexico, and president of CEMEX Mexico.  In March 2005, Mr.
                                           Romero became president of the South America and Caribbean
                                           Regions.  Mr. Romero graduated from Universidad de Comillas in
                                           Spain, where he studied Law and Economics and Enterprise
                                           Sciences.

Rodrigo Trevino,                           Joined CEMEX in 1997 and has served as chief financial officer
  Chief Financial Officer                  since then. He holds both bachelor and master of science
                                           degrees in industrial engineering from Stanford University.
                                           Prior to joining CEMEX, he served as the country corporate
                                           officer for Citicorp/Citibank Chile from 1995 to 1996, and
                                           prior to that, he worked at Citibank, N.A. from 1979 to 1994.
                                           Rodrigo Trevino is a first cousin of Lorenzo H. Zambrano, our
                                           chief executive officer and chairman of our board of directors.

Ramiro G. Villarreal,                      Joined CEMEX in 1987 and has served as general counsel since
  General Counsel                          then, and also has served as secretary of our board of
                                           directors since 1995.  He is a graduate of the Universidad
                                           Autonoma de Nuevo Leon with a degree in law.  He also received
                                           a masters of science degree in finance from the University of
                                           Wisconsin.  Prior to joining CEMEX, he served as assistant
                                           general director of Grupo Financiero Banpais from 1985 to 1987.



Board of Directors

         Set forth below are the names of the members of our board of directors.
The members of our board of directors serve for one-year terms. At our 2006
annual shareholders' meeting held on April 26, 2007, our shareholders re-elected
all the members of our board of directors to serve until the next annual
shareholders' meeting.

Lorenzo H. Zambrano,                       See "- Senior Management."
  Chairman

Lorenzo Milmo Zambrano                     Has been a member of our board of directors since 1977.  He is
                                           also chief executive officer of Inmobiliaria Ermiza, S.A. de
                                           C.V. He is a first cousin of Lorenzo H. Zambrano, chairman of
                                           our board of directors and our chief executive officer, a first
                                           cousin of Rogelio Zambrano Lozano, a member of our board of
                                           directors, and an uncle of Tomas Milmo Santos, an alternate
                                           member of our board of directors.


                                      124




                                        

Armando J. Garcia Segovia                  See "- Senior Management."

Rodolfo Garcia Muriel                      Has been a member of our board of directors since 1985.  He is
                                           the chief executive officer of Compania Industrial de Parras,
                                           S.A. de C.V. and Parras Cone de Mexico, S.A. de C.V.  He is
                                           member of the board of directors of Parras Williamson, S.A. de
                                           C.V., Telas de Parras, S.A. de C.V.,  Synkro, S.A. de C.V.,
                                           IUSA-GE, S. de R.L., Industrias Unidas, S.A., Apolo Operadora
                                           de Sociedades de Inversion, S.A. de C.V., and Cambridge Lee
                                           Industries, Inc.  Mr. Garcia Muriel is also vice president of
                                           Camara Nacional de la Industria Textil. He is a first cousin of
                                           Armando J. Garcia Segovia, executive vice president of
                                           development of CEMEX and a member of our board of directors,
                                           and Jorge Garcia Segovia, an alternate member of our board of
                                           directors.

Rogelio Zambrano Lozano                    Has been a member of our board of directors since 1987.  He is
                                           also a member of the advisory board of Grupo Financiero Banamex
                                           Accival, S.A. de C.V. Zona Norte, and member of the boards of
                                           directors of Carza, S.A. de C.V., Plaza Sesamo, S.A. de C.V.,
                                           Hospital San Jose, and ITESM. He is a first cousin of Lorenzo
                                           H. Zambrano, chairman of our board of directors and our chief
                                           executive officer, a first cousin of Lorenzo Milmo Zambrano, a
                                           member of our board of directors, and an uncle of Tomas Milmo
                                           Santos, an alternate member of our board of directors.

Roberto Zambrano Villarreal                Has been a member of our board of directors since 1987.  He was
                                           president of our audit committee from 2002 to 2006, and has
                                           been president of our Corporate Practices and Audit Committee
                                           since 2006. He is also a member of the board of directors of
                                           CEMEX Mexico, S.A. de C.V.  He is chairman of the board of
                                           directors of Desarrollo Integrado, S.A. de C.V., Administracion
                                           Ficap, S.A. de C.V., Aero Zano, S.A. de C.V., Ciudad
                                           Villamonte, S.A. de C.V., Focos, S.A. de C.V., C & I Capital,
                                           S.A. de C.V., Industrias Diza, S.A. de C.V., Inmobiliaria
                                           Sanni, S.A. de C.V., Inmuebles Trevisa, S.A. de C.V., Servicios
                                           Tecnicos Hidraulicos, S.A. de C.V., Mantenimiento Integrado,
                                           S.A. de C.V., , Pilatus PC-12 Center de Mexico, S.A. de C.V.,
                                           and Pronatura, A.C.  He is a member of the board of directors
                                           of S.L.I. de Mexico, S.A. de C.V., and Compania de Vidrio
                                           Industrial, S.A. de C.V.  He is a brother of Mauricio Zambrano
                                           Villarreal, a member of our board of directors.

Bernardo Quintana Isaac                    Has been a member of our board of directors since 1990.  He is
                                           chairman of the board of directors of Empresas ICA, S.A.B de
                                           C.V., where he was also chief executive officer until December,
                                           2006.  Mr. Quintana Isaac is a member of the board of directors
                                           of Telefonos de Mexico, S.A. de C.V., Grupo Financiero Banamex,
                                           S.A. de C.V., Banco Nacional de Mexico, S.A., Grupo
                                           Aeroportuario del Centro Norte, S.A. de C.V., and Grupo Maseca,
                                           S.A. de C.V.  He is also a member of Consejo Mexicano de
                                           Hombres de Negocios, Fundacion UNAM, Fundacion ICA, and
                                           Patronato UNAM, and founding associate of Fundacion para las
                                           Letras Mexicanas.

Dionisio Garza Medina                      Has been a member of our board of directors since 1995.  He is
                                           also chairman of the board and chief executive officer of Alfa,
                                           S.A.B. de C.V.  He is a member of the board of directors of
                                           Vitro, S.A., Cydsa, S.A., and ING Mexico.  He is also chairman
                                           of the executive board of the Universidad de Monterrey and a
                                           member of Consejo Mexicano de



                                      125



                                        
                                           Hombres de Negocios, the advisory committee of the
                                           David Rockefeller Center for Latin American Studies of
                                           Harvard University, the board of Harvard Business School,
                                           and the advisory committee of the New York Stock Exchange.

Alfonso Romo Garza                         Has been a member of our board of directors since 1995, member
                                           of our Audit Committee from 2002 to 2006, and member of our
                                           Corporate Practices and Audit Committee since 2006.  He is
                                           chairman of the board and chief executive officer of Savia,
                                           S.A. de C.V. and member of the boards of Grupo Maseca, S.A. de
                                           C.V., The Donald Danforth Plant Science Center, and Synthetic
                                           Genomics, among others.

Mauricio Zambrano Villarreal               Has been a member of our board of directors since 2001.  Mr.
                                           Zambrano Villarreal served as an alternate member of our board
                                           of directors from 1995 to 2001.  He is also general
                                           vice-president of Desarrollo Integrado, S.A. de C.V., chairman
                                           of the board of directors of Empresas Falcon, S.A. de C.V. and
                                           Trek Associates, Inc., secretary of the board of directors of
                                           Administracion Ficap, S.A. de C.V., Aero Zano, S.A. de C.V.,
                                           Ciudad Villamonte, S.A. de C.V., Focos, S.A. de C.V., Compania
                                           de Vidrio Industrial, S.A. de C.V., C & I Capital, S.A. de
                                           C.V., Industrias Diza, S.A. de C.V., Inmuebles Trevisa, S.A. de
                                           C.V., and Servicios Tecnicos Hidraulicos, S.A. de C.V., and a
                                           member of the board of directors of Invercap Holdings, S.A. de
                                           C.V.  He is a brother of Roberto Zambrano Villarreal, a member
                                           of our board of directors.

Tomas Brittingham Longoria                 Has been a member of our board of directors since 2002.
                                           Previously served as an alternate member of our board of
                                           directors from 1987 until 2002.  He was a member of our Audit
                                           Committee from 2002 to 2006, and has been a member of our
                                           Corporate Practices and Audit Committee since 2006.  He is
                                           chief executive officer of Laredo Autos, S.A. de C.V.  He is a
                                           son of Eduardo Brittingham Sumner, an alternate member of our
                                           board of directors.

Jose Manuel Rincon Gallardo                Has been a member of our board of directors since 2003.  He is
                                           also the board's "financial expert" and a member of our
                                           Corporate Practices and Audit Committee.  He is president of
                                           the board of directors of Sonoco de Mexico, S.A. de C.V.,
                                           member of the board of directors and audit committee of Grupo
                                           Financiero Banamex, S.A. de C.V., Grupo Herdez, S.A. de C.V.,
                                           General de Seguros, S.A.B., Kansas City Southern, and Grupo
                                           Aeroportuario del Pacifico, and member of the board of
                                           directors of Laboratorio Sanfer-Hormona, and Lockton de
                                           Mexico.  Mr. Rincon Gallardo is a member of Instituto Mexicano
                                           de Contadores Publicos, A.C., and Instituto Mexicano de
                                           Ejecutivos de Finanzas, A.C.  Mr. Rincon Gallardo was managing
                                           partner of KPMG Mexico, and was a member of the board of
                                           directors of KPMG United States and KPMG International.

Tomas Milmo Santos                         Has been a member of our board of directors since 2006.  Mr.
                                           Milmo Santos served as an alternate member of our board of
                                           directors from 2001 to 2006.  He is chief executive officer and
                                           president of the board of directors of Axtel, S.A. de C.V., a
                                           telecommunications company that operates in the local, long
                                           distance and data transfer market.  He is also a member of the
                                           board of directors of Cemex Mexico, HSBC Mexico, and ITESM.
                                           Mr. Milmo Santos holds a degree in economics


                                                    126



                                        

                                           from Stanford University. Mr. Milmo Santos is a nephew of Lorenzo
                                           H. Zambrano, our chief executive officer and chairman of our
                                           board of directors, and a nephew of Lorenzo Milmo Zambrano and
                                           Rogelio Zambrano Lozano, both members of our board of directors.


Alternate Directors

         Set forth below are the names of the alternate members of our board of
directors. The alternate members of our board serve for one-year terms.



                                        
Eduardo Brittingham Sumner                 Has been an alternate member of our board of directors since
                                           2002. Previously served as a regular member of our board of
                                           directors from 1967 until 2002. He is also general director of
                                           Laredo Autos, S.A. de C.V., Auto Express Rapido Nuevo Laredo,
                                           S.A. de C.V., Consorcio Industrial de Exportacion, S.A. de C.V.,
                                           and an alternate member of the board of directors of Vitro,
                                           S.A.B. He is the father of Tomas Brittingham Longoria, a member
                                           of our board of directors.

Jorge Garcia Segovia                       Has been an alternate member of our board of directors since
                                           1985. He is also a member of the board of directors of Compania
                                           Industrial de Parras, S.A.B. de C.V., Compania Minera Autlan,
                                           S.A.B. de C.V., and Hoteles City Express, S.A. de C.V. He is a
                                           brother of Armando J. Garcia Segovia, our executive vice
                                           president of development and a member of our board of directors,
                                           and first cousin of Rodolfo Garcia Muriel, a member of our board
                                           of directors.

Luis Santos de la Garza                    Has been an alternate member of our board of directors since
                                           2006. Previously, he served as statutory examiner (comisario)
                                           from 1989 to 2006. Mr. Santos de la Garza was federal senator for
                                           the State of Nuevo Leon, from 1997 to 2000, and was an advisor to
                                           the Legal Counsel of the Mexican President from 2001 to 2002. He
                                           is a founding partner of the law firm
                                           Santos-Elizondo-Cantu-Rivera-Gonzalez-De la Garza-Mendoza, S.C.

Fernando Ruiz Arredondo                    Has been an alternate member of our board of directors since
                                           2006. Previously, he served as alternate statutory examiner
                                           (comisario suplente) from 1981 to 2006. Mr. Ruiz Arredondo is
                                           also a member of the board of directors of Value Grupo
                                           Financiero, S.A. de C.V.


BOARD PRACTICES

         In compliance with the new Mexican securities markets law (Ley del
Mercado de Valores), which was enacted on December 28, 2005 and became effective
on June 28, 2006, our shareholders approved, at a general extraordinary meeting
of shareholders held on April 27, 2006, a proposal to amend various articles of
our by-laws, or estatutos sociales, in order to improve our standards of
corporate governance and transparency, among other matters. The amendments
include outlining the fiduciary duties of the members of our board of directors,
who are now required:

         o    to perform their duties in a value-creating manner for the benefit
              of CEMEX without favoring a specific shareholder or group of
              shareholders;

         o    to act diligently and in good faith by adopting informed
              decisions; and

         o    to comply with their duty of care and loyalty, abstaining from
              engaging in illicit acts or activities.

                                      127


         The new law also eliminated the position of statutory examiner, whose
duties of surveillance are now the responsibility of the board of directors,
fulfilled through the new corporate practices and audit committee, as well as
through the external auditor who audits the entity's financial statements, each
within its professional role. With its new surveillance duties, our board of
directors is no longer in charge of managing CEMEX; instead, this is the
responsibility of our chief executive officer.

         Pursuant to the new law and our by-laws, at least 25% of our directors
must qualify as independent directors.

         We have not entered into any service contracts with our directors that
provide for benefits upon termination of employment.

         The Corporate Practices and Audit Committee

         The new Mexican securities market law required us to create, in
addition to our then existing audit committee, a corporate practices committee
comprised entirely of independent directors. In compliance with this new
requirement, we increased the responsibilities of our audit committee and
changed its name to "corporate practices and audit committee." Effective as of
July 3, 2006, our corporate practices and audit committee is responsible for:

         o    evaluating our internal controls and procedures, and identifying
              material deficiencies;

         o    following up with corrective and preventive measures in response
              to any non-compliance with our operation and accounting guidelines
              and policies;

         o    evaluating the performance of our external auditors;

         o    describing and valuing non-audit services performed by our
              external auditor;

         o    reviewing our financial statements;

         o    assessing the effects of any modifications to the accounting
              policies approved during any fiscal year;

         o    overseeing measures adopted as a result of any observations made
              by our shareholders, directors, executive officers, employees or
              any third parties with respect to accounting, internal controls
              and internal and external audit, as well as any complaints
              regarding management irregularities, including anonymous and
              confidential methods for addressing concerns raised by employees;

         o    ensuring that resolutions adopted at our shareholders' or board of
              directors' meetings are executed;

         o    evaluating the performance of our executive officers;

         o    reviewing related party transactions;

         o    reviewing the compensation paid to our executive officers; and

         o    evaluating waivers granted to our directors or executive officers
              regarding seizure of corporate opportunities.

         Under our bylaws and Mexican securities laws, all members of the
corporate practices and audit committee, including its president, are required
to be independent directors.

         Set forth below are the names of the members of our current corporate
practices and audit committee. The terms of the members of our corporate
practices and audit committee are indefinite, and members may only be


                                      128


removed by a resolution of the board of directors. Jose Manuel Rincon Gallardo
qualifies as an "audit committee financial expert." See "Item 16A--Audit
Committee Financial Expert."

    Roberto Zambrano Villarreal                     See "--Board of Directors."
    President
    Jose Manuel Rincon Gallardo                     See "--Board of Directors."
    Tomas Brittingham Longoria                      See "--Board of Directors."
    Alfonso Romo Garza                              See "--Board of Directors."
    Mauricio Zambrano Villarreal                    See "--Board of Directors."

COMPENSATION OF OUR DIRECTORS AND MEMBERS OF OUR SENIOR MANAGEMENT

         For the year ended December 31, 2006, the aggregate amount of
compensation we paid, or our subsidiaries paid, to all members of our board of
directors, alternate members of our board of directors and senior managers, as a
group, was approximately U.S.$41.4 million. Approximately U.S.$11.4 million of
this amount was paid as base compensation, U.S.$27.2 million was paid to
purchase 7,560,034 CPOs pursuant to the Restricted Stock Incentive Plan, or
RSIP, described below under "-- Restricted Stock Incentive Plan (RSIP)," and
approximately U.S.$2.9 million as executive performance bonuses. In 2006, as a
result of our strategy to reduce the volatility of our RSIP, the nominal
compensation received by eligible employees, including our directors and senior
managers, increased in proportion to the additional number of CPOs required to
be purchased. For more information about our revised RSIP strategy, see "--
Restricted Stock Incentive Plan (RSIP)."

         Several key executives also participate in a bonus plan that
distributes a bonus pool based on our operating performance. This bonus is
calculated and paid annually, a portion in cash and another portion in
restricted CPOs under a RSIP, according to responsibility level.

Employee Stock Option Plan (ESOP)

         In 1995, we adopted an employee stock option plan, or ESOP, under which
we were authorized to grant members of our board of directors, members of our
senior management and other eligible employees options to acquire our CPOs. Our
obligations under the plan are covered by shares held in a trust created for
such purpose (initially 216,300,000 shares). As of December 31, 2006, after
giving effect to the exchange programs of November 2001 and February 2004
described below, and the exercise of options that has occurred through that
date, options to acquire 5,075,073 CPOs remained outstanding, with a weighted
average exercise price of approximately Ps7.12 per CPO, and a weighted average
remaining tenure of approximately 2.1 years.

         In November 2001, starting with the 2001 voluntary exchange program
described below, we incorporated new features to our ESOP, including an
escalating strike price in dollars, increasing at an annual rate of 7%, adjusted
downward by dividends paid. Options under this amended ESOP were hedged by
non-dilutive equity forward contracts.

         In February and December 2004, in the context of the voluntary exchange
program and the voluntary early exercise program described below, we further
amended our ESOP. The amendments provided, among other things, that the options
would be automatically exercised at predetermined prices per CPO; if, at any
time during the life of the options, the CPO closing market price reached or
exceeded those predetermined prices. As of December 31, 2006, all predetermined
prices had been reached and, therefore, all options under the amended ESOP with
predetermined exercise prices had been automatically exercised. Under the terms
of the amended ESOP, all gains realized through exercise of the options were
invested in restricted CPOs. The restricted CPOs received upon exercise of the
options are held in a trust on behalf of each employee. The restrictions
gradually lapse, at which time the CPOs become freely transferable and the
employee may withdraw them from the trust.

                                      129


CEMEX, Inc. ESOP

         As a result of the acquisition of CEMEX, Inc. (formerly Southdown,
Inc.) in November 2000, we established a stock option program for CEMEX, Inc.'s
executives for the purchase of our ADSs. The options granted under the program
have a fixed exercise price in Dollars equivalent to the average market price of
one ADS during a six month period before the grant date and have a 10-year term.
Twenty-five percent of the options vested annually during the first four years
after their grant date. The options are covered using shares currently owned by
our subsidiaries, thus potentially increasing stockholders' equity and the
number of shares outstanding. As of December 31, 2006, considering the options
granted since 2001, and the exercise of options that has occurred through that
date, options to acquire 2,459,906 ADSs remained outstanding under this program.
These options have a weighted average exercise price of approximately U.S.$1.33
per CPO, or U.S.$13.30 per ADS as each ADS currently represents 10 CPOs.

         Stock options activity during 2005 and 2006, the balance of options
outstanding as of December 31, 2005 and 2006 and other general information
regarding our stock option programs, is presented in note 17 to our consolidated
financial statements included elsewhere in this annual report.

         As of December 31, 2006, the following ESOP options to purchase our
securities were outstanding:



                                  Number of CPOs or CPO                        Range of exercise
          Title of security      equivalents underlying                        prices per CPO or
          underlying options             options           Expiration Date       CPO equivalent
          ------------------     ----------------------    ---------------     -----------------
                                                                          
             CPOs (Pesos)               5,075,073            2007 - 2011         Ps5.2 - Ps8.9

        CPOs (Dollars) (may be                                                    U.S.$1.10 -
       instantly cash-settled)          7,387,468            2011 - 2013           U.S.$1.60

       CPOs (Dollars) (receive
           restricted CPOs)            66,410,081                2012              U.S.$1.90

                                                                                  U.S.$1.00 -
           CEMEX, Inc. ESOP            24,599,060            2011 - 2015           U.S.$1.90


         As of December 31, 2006, our senior management and directors held the
following ESOP options to acquire our securities:

                                  Number of CPOs or CPO                        Range of exercise
          Title of security      equivalents underlying                        prices per CPO or
          underlying options             options           Expiration Date       CPO equivalent
          ------------------     ----------------------    ---------------     -----------------
       CPOs (Dollars) (receive
           restricted CPOs)            26,318,362                2012              U.S.$1.90


         As of December 31, 2006, our employees and former employees, other than
senior management and directors, held the following ESOP options to acquire our
securities:

                                  Number of CPOs or CPO                        Range of exercise
          Title of security      equivalents underlying                        prices per CPO or
          underlying options             options           Expiration Date       CPO equivalent
             CPOs (Pesos)               5,075,073            2007 - 2011         Ps5.2 - Ps8.9
          ------------------     ----------------------    ---------------     -----------------
        CPOs (Dollars) (may be                                                    U.S.$1.10 -
       instantly cash-settled)          7,387,468            2011 - 2013           U.S.$1.60

       CPOs (Dollars) (receive
           restricted CPOs)            40,091,719                2012              U.S.$1.90

                                                                                  U.S.$1.00 -
           CEMEX, Inc. ESOP            24,599,060            2011 - 2015           U.S.$1.90




                                      130


The November 2001 Voluntary Exchange Program

         In November 2001, we implemented a voluntary exchange program to offer
participants in our ESOP new options in exchange for their existing options. The
new options had an escalating strike price in Dollars and were hedged by our
equity forward contracts, while the old options had a fixed strike price in
Pesos. The executives who participated in this program exchanged their options
to purchase CPOs at a weighted average strike price of Ps34.11 per CPO, for cash
equivalent to the intrinsic value on the exchange date and new options to
purchase CPOs with an escalating dollar strike price set at U.S.$4.93 per CPO as
of December 31, 2001, growing by 7% per annum less dividends paid on the CPOs.
Of the old options, 57,448,219 (approximately 90.1%) were exchanged for new
options in the voluntary exchange program and 8,695,396 were not exchanged. In
the context of the program, 81,630,766 new options were issued, in addition to
7,307,039 of the new options that were purchased by participants under a
voluntary purchase option that was also part of the exchange. As of December 31,
2006, considering the options granted under the program, the exercise of options
through that date, the result of the February 2004 exchange program described
below and the 2004 voluntary early exercise program, 1,555,114 options to
acquire 7,387,468 CPOs remained outstanding under this program, with a weighted
average exercise price of approximately U.S.$1.36 per CPO. As of December 31,
2006, the outstanding options under this program had a remaining tenure of
approximately 5.3 years.

The February 2004 Voluntary Exchange Program

         In February 2004, we implemented a voluntary exchange program to offer
ESOP participants, as well as holders of options granted under our existing
voluntary employee stock option plan, or VESOP, new options in exchange for
their existing options. Under the terms of the exchange offer, participating
employees surrendered their options in exchange for new options with an initial
strike price of U.S.$5.05 per CPO and a life of 8.4 years, representing
respectively the weighted average strike price and maturity of existing options.
The strike price of the new options increased annually at a 7% rate, less
dividends paid on the CPOs. Holders of these options were entitled to receive an
annual payment of U.S.$0.10 net of taxes per option outstanding as of the
payment date until exercise or maturity of the options, which was scheduled to
grow annually at a 10% rate.

         The new options were exercisable at any time at the discretion of their
holders, and would be automatically exercised if, at any time during the life of
the options, the closing CPO market price reached U.S.$7.50. Any gain realized
through the exercise of these options was required to be invested in restricted
CPOs at a 20% discount to market. The restrictions would be removed gradually
within a period of between two and four years, depending on the exercise date.

         As a result of the voluntary exchange offer, 122,708,146 new options
were issued in exchange for 114,121,358 existing options, which were
subsequently cancelled. All options not exchanged in the offer maintained their
existing terms and conditions.

         On January 17, 2005, the closing CPO market price reached U.S.$7.50
and, as a result, all existing options under this program were automatically
exercised. Holders of these options received the corresponding gain in
restricted CPOs, as described above.

The 2004 Voluntary Early Exercise Program

         In December 2004, we offered ESOP and VESOP participants new options,
conditioned on the participants exercising and receiving the intrinsic value of
their existing options. As a result of this program, 120,827,370 options from
the February 2004 voluntary exchange program, 16,580,004 options from other
ESOPs, and 399,848 options from VESOP programs were exercised, and we granted a
total of 139,151,236 new options. The new options had an initial strike price of
US$7.4661 per CPO, which was US$0.50 above the closing CPO market price on the
date on which the old options were exercised, and which increased at a rate of
5.5% per annum. All gains from the exercise of these new options would be paid
in restricted CPOs. The restrictions would be removed gradually within a period
of between two and four years, depending on the exercise date.

                                       131


         The new options could be exercised at any time at the discretion of
their holders. Of the 139,151,236 new options, 120,827,370 would be
automatically exercised if the closing CPO market price reached U.S.$8.50, while
the remaining 18,323,866 options did not have an automatic exercise threshold.
Holders of these options were entitled to receive an annual payment of US$0.10
net of taxes per option outstanding as of the payment date until exercise or
maturity of the options or until the closing CPO market price reached U.S.$8.50,
which payment was scheduled to grow annually at a 10% rate.

         On June 17, 2005, the closing CPO market price reached U.S.$8.50, and,
as a result, all outstanding options subject to automatic exercise were
automatically exercised and the annual payment to which holders of the remaining
options were entitled was terminated.

         For accounting purposes under Mexican FRS and U.S. GAAP, as of December
31, 2006, we accounted for the options granted under the February 2004 voluntary
exchange program by means of the fair value method through earnings. See notes
3T and 17 to our consolidated financial statements included elsewhere in this
annual report.

Voluntary Employee Stock Option Plan (VESOP)

         During 1998, 1999, 2002 and 2003, we established voluntary employee
stock option plans, or VESOPs, pursuant to which managers and senior executives
elected to purchase options to CPOs. As of December 31, 2006, there were 5,000
options to acquire 24,431 CPOs, with an exercise price of U.S.$1.5860 per CPO
and a remaining life of approximately five years, outstanding from options sold
to executives under a VESOP in April 2002.

         As of December 31, 2006, no member of our senior management or board of
directors held any VESOP options to acquire our securities.

Restricted Stock Incentive Plan (RSIP)

         Since January 2005, we have been changing our long-term variable
compensation programs from stock option grants to restricted stock awards under
a Restricted Stock Incentive Plan, or RSIP. Under the terms of the RSIP,
eligible employees are allocated a specific number of restricted CPOs as
variable compensation to be vested over a four-year period. Before 2006, we
distributed annually to a trust an amount in cash sufficient to purchase in the
market, on behalf of each eligible employee, 25% of such employee's allocated
number of CPOs. During 2006, in order to reduce the volatility of our RSIP, we
began to distribute annually an amount in cash sufficient to purchase 100% of
the allocated CPOs for each eligible employee. Although the vesting period of
the restricted CPOs and other features of the RSIP did not change as a result of
this new policy, the nominal amount of annual compensation received by eligible
employees increased in proportion to the additional number of CPOs received as a
result of the new policy. The CPOs purchased by the trust will be held in a
restricted account by the trust on behalf of each employee for one year. At the
end of the one-year period the restrictions will lapse, at which time the CPOs
will become freely transferable and the employee may withdraw them from the
trust.

         During 2006, approximately 29.9 million CPOs were purchased by the
trust on behalf of eligible employees pursuant to the Restricted Stock Incentive
Plan, of which approximately 7.56 million were purchased for members of our
senior management and board of directors.

EMPLOYEES

         The information set forth in this section does not take into account
the Rinker acquisition, which occurred after December 31, 2006.

         As of December 31, 2006, we had approximately 54,635 employees
worldwide, which represented an increase of 3.7% from year-end 2005. This
increase was mainly attributable to additional hiring in Mexico during 2006.

         The following table sets forth the number of our full-time employees
and a breakdown of their geographic location at the end of each of the last
three fiscal years:

                                      132


                                                        2004      2005      2006
                                                        ----      ----      ----

North America.......................................
    Mexico..........................................   11,689    13,044   15,130
    United States...................................    5,010     9,657    9,109
Europe..............................................
    Spain...........................................    2,851     2,838    3,102
    United Kingdom..................................       --     6,237    6,020
    Rest of Europe..................................      135    10,714   11,034
South America, Central America and the Caribbean....    5,108     6,309    6,376
Africa and the Middle East..........................      929     2,364    2,416
Asia................................................      957     1,511    1,448

         Employees in Mexico have collective bargaining agreements on a
plant-by-plant basis, which are renewable on an annual basis with respect to
salaries and on a biannual basis with respect to benefits. During 2006, more
than 300 contracts with different labor unions were renewed.

         Approximately one-fifth of our employees in the United States are
represented by unions, with the largest number being members of the
International Brotherhood of Boilermakers and the International Brotherhood of
Teamsters. Collective bargaining agreements are in effect at all our U.S. plants
and have various expiration dates from 2007 through 2013. As of March 31, 2006,
Rinker Materials had approximately 46 different collective bargaining agreements
with a number of unions, covering approximately 4,400 of its employees.

         Our Spanish union employees have contracts that are renewable every two
to three years on a company-by-company basis. Employees in the ready-mix
concrete, mortar, aggregates and transport sectors have collective bargaining
agreements by sector. Executive compensation in Spain is subject to our
institutional policies and influenced by the local labor market.

         In the United Kingdom, our cement and logistics operations have
collective bargaining agreements with the Transport & General Workers Union
(TGWU) and Amicus. The rest of our operations in the United Kingdom are not part
of a collective bargaining agreement; however, there are local recognition
agreements for consultation and employee representation with the TGWU and the
GMB union, Britain's general labor union.

         In Germany, most of our operations have collective bargaining
agreements with the Industriegewerkschaft - BAUEN AGRAR UMWELT - IG B.A.U.
union. In addition to the collective bargaining agreements, there are internal
company agreements, negotiated between the workers council and the company
itself.

         In France, less than 20% of our employees are members of one of the
five main unions. Each union is represented in the company mainly in Paris and
in Southern France. All agreements are negotiated with unions and non-union
representatives elected in the local workers council (Comite d'Entreprise).

         In Venezuela, each of our subsidiary companies operating our cement
plants has its own union, and each company has separately negotiated three-year
labor contracts with the union employees of the relevant plants.

         In Colombia, a single union represents the union employees of the
Bucaramanga and Cucuta cement plants. There are also collective agreements with
non-union workers at the Caracolito/Ibague cement plant, Santa Rosa cement plant
and all ready-mix concrete plants in Colombia.

         As of March 31, 2006, Rinker had approximately 61 enterprise bargaining
agreements and certified agreements in Australia, covering approximately 2,300
of its employees.

         Overall, we consider our relationships with labor unions representing
our employees to be satisfactory.

                                      133


SHARE OWNERSHIP

         As of March 31, 2007, our senior management and directors and their
immediate families owned, collectively, approximately 4.74% of our outstanding
shares, including shares underlying stock options and restricted CPOs under our
ESOPs. This percentage does not include shares held by the extended families of
members of our senior management and directors, since to the best of our
knowledge, no voting arrangements or other agreements exist with respect to
those shares. No individual director or member of our senior management
beneficially owned one percent or more of any class of our outstanding capital
stock.

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
         -------------------------------------------------

MAJOR SHAREHOLDERS

         Based upon information contained in a statement on Schedule 13G filed
with the Securities and Exchange Commission on February 12, 2007, as of December
31, 2006, Southeastern Asset Management, Inc., an investment adviser registered
under the U.S. Investment Advisers Act of 1940, as amended, beneficially owned
53,455,500 ADSs and 15,276,032 CPOs, representing a total 549,831,032 CPOs or
approximately 7% of our outstanding capital stock. Southeastern Asset
Management, Inc. does not have voting rights different from our other
non-Mexican holders of CPOs.

         Other than Southeastern Asset Management, Inc., the CPO trust and the
shares and CPOs owned by our subsidiaries, we are not aware of any person that
is the beneficial owner of five percent or more of any class of our voting
securities.

         As of March 31, 2007, our outstanding capital stock consisted of
15,778,133,836 Series A shares and 7,889,066,918 Series B shares, in each case
including shares held by our subsidiaries.

         As of March 31, 2007, a total of 15,295,243,004 Series A shares and
7,647,621,502 Series B shares were held by the CPO trust. Each CPO represents
two Series A shares and one Series B share. A portion of the CPOs is represented
by ADSs. Under the terms of the CPO trust agreement, non-Mexican holders of CPOs
and ADSs have no voting rights with respect to the A shares underlying those
CPOs and ADSs. All ADSs are deemed to be held by non-Mexican nationals. At every
shareholders' meeting, the A shares held in the CPO trust are voted in
accordance with the vote cast by holders of the majority of A shares held by
Mexican nationals and B shares voted at that meeting of shareholders.

         As of March 31, 2007, through our subsidiaries, we owned approximately
558.2 million CPOs, representing approximately 7.3% of our outstanding CPOs and
7.1% of our outstanding voting stock. These CPOs are voted at the direction of
our management. From time to time, our subsidiaries are active participants in
the trading market for our capital stock; as a result, the levels of our CPO and
share ownership by those subsidiaries are likely to fluctuate. Our voting rights
over those CPOs are the same as those of any other CPO holder. As of the same
date, an additional 58.7 million CPOs, representing approximately 0.8% of our
outstanding CPOs and 0.7% of our outstanding voting stock, were held in a
derivative instrument hedging expected cash flows of stock options exercises in
the short and medium term.

         Our by-laws, or estatutos sociales, provide that our board of directors
must authorize in advance any transfer of voting shares of our capital stock
that would result in any person, or group acting in concert, becoming a holder
of 2% or more of our voting shares.

         Mexican securities regulations provide that our majority-owned
subsidiaries may neither directly or indirectly invest in our CPOs nor other
securities representing our capital stock. The Mexican securities authority
could require any disposition of the CPOs or of other securities representing
our capital stock so owned and/or impose fines on us if it were to determine
that the ownership of our CPOs or of other securities representing our capital
stock by our subsidiaries, in most cases, negatively affects the interests of
our shareholders. Notwithstanding the foregoing, the exercise of all rights
pertaining to our CPOs or to other securities representing our capital stock in
accordance with the instructions of our subsidiaries does not violate any
provisions of our bylaws or the bylaws of


                                      134


our subsidiaries. The holders of these CPOs or of other securities representing
our capital stock are entitled to exercise the same rights relating to their
CPOs or their other securities representing our capital stock, including all
voting rights, as any other holder of the same series.

         As of March 26, 2007, we had 147,713 ADS holders of record in the
United States, holding approximately 62% of our outstanding CPOs.

         On April 27, 2006, our shareholders approved a stock split, which
occurred on July 17, 2006. In connection with the stock split, each of our
existing series A shares was surrendered in exchange for two new series A
shares, and each of our existing series B shares was surrendered in exchange for
two new series B shares. Concurrent with this stock split, we authorized the
amendment of the CPO trust agreement pursuant to which our CPOs are issued to
provide for the substitution of two new CPOs for each of our existing CPOs, with
each new CPO representing two new series A shares and one new series B share. In
connection with the stock split and at our request, Citibank, N.A., as
depositary for the ADSs, distributed one additional ADS for each ADS outstanding
as of the record date for the stock split. The ratio of CPOs to ADSs did not
change as a result of the stock split; each ADS represents ten new CPOs
following the stock split and the CPO trust amendment. The proportional equity
interest participation of existing shareholders did not change as a result of
the stock split. The financial data set forth in this annual report have been
adjusted to give effect to the stock split.

RELATED PARTY TRANSACTIONS

         Mr. Bernardo Quintana Isaac, a member of our board of directors, is
chief executive officer and chairman of the board of directors of Grupo ICA,
S.A. de C.V., or Grupo ICA, a large Mexican construction company. In the
ordinary course of business, we extend financing to Grupo ICA for varying
amounts at market rates, as we do for our other customers.

         In the past, we have extended loans of varying amounts and interest
rates to our directors and executives. During 2006 and as of March 31, 2007, we
did not have any outstanding loans to any of our directors or members of senior
management.

ITEM 8 - FINANCIAL INFORMATION
         ---------------------

CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

         See Item 18 -- "Financial Statements" and "Index to Consolidated
Financial Statements."

LEGAL PROCEEDINGS

         See Item 4 -- "Information on the Company -- Regulatory Matters and
Legal Proceedings."

DIVIDENDS

         A declaration of any dividend by us is made by our shareholders at a
general ordinary meeting. Any dividend declaration is usually based upon the
recommendation of our board of directors. However, the shareholders are not
obligated to approve the board's recommendation. We may only pay dividends from
retained earnings included in financial statements that have been approved by
our shareholders and after all losses have been paid for, a legal reserve equal
to 5% of our paid-in capital has been created and our shareholders have approved
the relevant dividend payment. According to 1999 Mexican tax reforms, all
shareholders, excluding Mexican corporations, that receive a dividend in cash or
in any other form are subject to a withholding tax. See Item 10 -- "Additional
Information -- Taxation -- Mexican Tax Considerations." Since we conduct our
operations through our subsidiaries, we have no significant assets of our own
except for our investments in those subsidiaries. Consequently, our ability to
pay dividends to our shareholders is dependent upon our ability to receive funds
from our subsidiaries in the form of dividends, management fees, or otherwise.
Some of our credit agreements and debt instruments and some of those of our
subsidiaries contain provisions restricting our ability, and that of our
subsidiaries, as the case may be, to pay dividends if financial covenants are
not maintained. As of December 31,


                                      135


2006, we and our subsidiaries were in compliance with, or had obtained waivers
in connection with, those covenants. See Item 3 -- "Key Information -- Risk
Factors -- We have incurred and will continue to incur debt, which could have an
adverse effect on the price of our CPOs and ADSs, result in us incurring
increased interest costs and limit our ability to distribute dividends, finance
acquisitions and expansions and maintain flexibility in managing our business
activities."

         Although our board of directors currently intends to continue to
recommend an annual dividend on the common stock, the recommendation whether to
pay and the amount of those dividends will continue to be based upon, among
other things, earnings, cash flow, capital requirements and our financial
condition and other relevant factors.

         Owners of ADSs on the applicable record date will be entitled to
receive any dividends payable in respect of the A shares and the B shares
underlying the CPOs represented by those ADSs; however, as permitted by the
deposit agreement pursuant to which our ADSs are issued, we may instruct the ADS
depositary not to extend the option to elect to receive cash in lieu of the
stock dividend to the holders of ADSs, as we did in connection with the dividend
for the 2005 and 2006 fiscal years, as described below. The ADS depositary will
fix a record date for the holders of ADSs in respect of each dividend
distribution. Unless otherwise stated, the ADS depositary has agreed to convert
cash dividends received by it in respect of the A shares and the B shares
underlying the CPOs represented by ADSs from Pesos into Dollars and, after
deduction or after payment of expenses of the ADS depositary, to pay those
dividends to holders of ADSs in Dollars. We cannot assure holders of our ADSs
that the ADS depositary will be able to convert dividends received in Pesos into
Dollars.

         The following table sets forth the amounts of annual cash dividends
paid in Pesos, on a per share basis, and a convenience translation of those
amounts into Dollars based on the CEMEX accounting rate as of December 31, 2006:

                                                   DIVIDENDS PER SHARE
                                           --------------------------------
                                           CONSTANT PESOS           DOLLARS
                                           --------------           -------
     2002.......................                0.21                 0.02
     2003.......................                0.22                 0.02
     2004.......................                0.21                 0.02
     2005.......................                0.45                 0.04
     2006.......................                0.25                 0.02


         Dividends declared at each year's annual shareholders' meeting are in
respect of dividends for the preceding year. In recent years, our board of
directors has proposed, and our shareholders have approved, dividend proposals,
whereby our shareholders have had a choice between stock dividends or cash
dividends declared in respect of the prior year's results, with the stock
issuable to shareholders who elect the stock dividend over the cash dividend
being issued at a 20% discount from then current market prices. The dividends
declared per share or per CPO in recent years, expressed in constant Pesos as of
December 31, 2006, were as follows: 2002, Ps0.64 per CPO (or Ps0.21 per share);
2003, Ps0.67 per CPO (or Ps0.22 per share); 2004, Ps0.64 per CPO (or Ps0.21 per
share); 2005, Ps1.36 per CPO (or Ps0.45 per share); and 2006, Ps0.75 per CPO (or
Ps0.25 per share). As a result of dividend elections made by shareholders, in
2002, Ps286 million in cash was paid and approximately 256 million additional
CPOs were issued in respect of dividends declared for the 2001 fiscal year; in
2003, Ps74 million in cash was paid and approximately 396 million additional
CPOs were issued in respect of dividends declared for the 2002 fiscal year; in
2004, Ps176 million in cash was paid and approximately 300 million additional
CPOs were issued in respect of dividends declared for the 2003 fiscal year; in
2005, Ps414 million in cash was paid and approximately 266 million additional
CPOs were issued in respect of dividends declared for the 2004 fiscal year; and
in 2006, Ps148 million in cash was paid and approximately 212 million additional
CPOs were issued in respect of dividends declared for the 2005 fiscal year.

         At our 2006 annual shareholders' meeting, which was held on April 26,
2007, our shareholders approved a dividend for the 2006 fiscal year of the Peso
equivalent of U.S.$0.0745 per CPO (U.S.$0.02483 per share) or Ps0.80 (Ps0.27 per
share), based on the Peso/Dollar exchange rate in effect for May 31, 2007 of
Ps10.7873 to U.S.$1.00, as published by the Mexican Central Bank. Holders of our
series A shares, series B shares and CPOs are entitled to


                                      136


receive the dividend in either stock or cash consistent with our past practices;
however, as we did in respect of the dividend for the 2006 fiscal year, under
the terms of the deposit agreement pursuant to which our ADSs are issued, we
instructed the depositary for the ADSs not to extend the option to elect to
receive cash in lieu of the stock dividend to the holders of ADSs. As a result
of dividend elections made by shareholders, in June 2007, approximately Ps140
million in cash was paid and approximately 189 million additional CPOs were
issued in respect of dividends declared for the 2006 fiscal year. The final
amount of the increase in the variable part of our capital stock, based on the
number of stock dividend election decisions, was approximately Ps6,199 million.

SIGNIFICANT CHANGES

         Except as described herein, no significant change has occurred since
the date of our consolidated financial statements included in this annual
report.

ITEM 9 - OFFER AND LISTING
         -----------------

MARKET PRICE INFORMATION

         Our CPOs are listed on the Mexican Stock Exchange and trade under the
symbol "CEMEX.CPO." Our ADSs, each of which currently represents ten CPOs, are
listed on the New York Stock Exchange and trade under the symbol "CX." The
following table sets forth, for the periods indicated, the reported highest and
lowest market quotations in nominal Pesos for CPOs on the Mexican Stock Exchange
and the high and low sales prices in Dollars for ADSs on the NYSE. The
information below gives effect to the two-for-one stock split in our CPOs and
ADSs approved by our shareholders on April 27, 2006, which occurred on July 17,
2006, and prior stock splits.




                    CALENDAR PERIOD                            CPOS(1)                           ADSS
                    ---------------                 ----------------------           -------------------------
        Yearly                                        HIGH            LOW                 HIGH            LOW
        ------                                      ---------       -------          -----------     ---------
                                                                                          
        2002....................................     Ps15.46        Ps9.77           U.S.$16.50      U.S.$9.63
        2003....................................       14.88          8.91                13.32           8.16
        2004....................................       20.50         14.57                18.28          12.99
        2005....................................       33.25         18.88                30.99          17.06
        2006....................................       39.35         27.25                36.04          23.78
        Quarterly
        2005
           First quarter........................       23.38         19.50                21.26          17.27
           Second quarter.......................       23.51         18.88                21.86          17.06
           Third quarter........................       28.65         22.45                26.90          20.93
           Fourth quarter.......................       33.25         25.60                30.99          23.39
        2006
           First quarter .......................       36.02         29.65                33.55          28.00
           Second quarter.......................       39.35         27.25                36.04          23.78
           Third quarter........................       34.75         29.50                30.80          26.75
           Fourth quarter.......................       36.85         32.30                33.99          29.57
        2007
           First quarter .......................       41.60         35.01                38.01          31.20
        Monthly
        2006-2007
           November.............................       36.00         32.50                32.81          30.07
           December.............................       36.85         34.68                33.99          32.00
           January..............................       39.70         35.10                36.37          31.71
           February.............................       41.60         37.00                38.01          32.71
           March................................       38.95         35.01                35.42          31.20
           April................................       39.41         35.10                35.94          32.16
           May..................................       42.69         35.33                39.80          31.97


________________________
Source: Based on data of the Mexican Stock Exchange and the NYSE.

(1) As of December 31, 2006, approximately 96.9% of our outstanding share
capital was represented by CPOs.

         On June 19, 2007, the last reported closing price for CPOs on the
Mexican Stock Exchange was Ps41.85 per CPO, and the last reported closing price
for ADSs on the NYSE was U.S.$38.88 per ADS.

                                      137


ITEM 10 - ADDITIONAL INFORMATION
          ----------------------

ARTICLES OF ASSOCIATION AND BY-LAWS

General

         Pursuant to the requirements of Mexican corporation law, our articles
of association and by-laws, or estatutos sociales, have been registered with the
Mercantile Section of the Public Register of Property and Commerce in Monterrey,
Mexico, under entry number 21, since June 11, 1920.

         We are a holding company engaged, through our operating subsidiaries,
primarily in the production, distribution, marketing and sale of cement,
ready-mix concrete and clinker. Our objectives and purposes can be found in
article 2 of our by-laws. We are a global cement manufacturer, with operations
in North, Central and South America, Europe, the Caribbean, Asia, Oceania and
Africa. We plan to continue focusing on the production and sale of cement and
ready-mix concrete, as we believe that this strategic focus has enabled us to
grow our existing businesses and to expand our operations internationally.

         We have two series of common stock, the series A common stock, with no
par value, or A shares, which can only be owned by Mexican nationals, and the
series B common stock, with no par value, or B shares, which can be owned by
both Mexican and non-Mexican nationals. Our by-laws state that the A shares may
not be held by non-Mexican persons, groups, units or associations that are
foreign or have participation by foreign governments or their agencies. Our
by-laws also state that the A shares shall at all times account for a minimum of
64% of our total outstanding voting stock. Other than as described herein,
holders of the A shares and the B shares have the same rights and obligations.

         In 1994, we changed from a fixed capital corporation to a variable
capital corporation in accordance with Mexican corporation law and effected a
three-for-one split of all our outstanding capital stock. As a result, we
changed our corporate name from CEMEX, S.A. to CEMEX, S.A. de C.V., established
a fixed capital account and a variable capital account and issued one share of
variable capital stock of the same series for each eight shares of fixed capital
stock held by any shareholder, after giving effect to the stock split. At our
2005 annual shareholders' meeting held on April 27, 2006, pursuant to
requirements of the new Mexican securities markets law, our shareholders
authorized the change of CEMEX's legal and commercial name to CEMEX, Sociedad
Anonima Bursatil de Capital Variable, or CEMEX, S.A.B. de C.V., effective as of
July 3, 2006, indicating that we are a publicly traded stock corporation.

         Each of our fixed and variable capital accounts is comprised of A
shares and B shares. Under the new Mexican securities law and our by-laws,
holders of shares representing variable capital are not entitled to have those
shares redeemed.

         Shareholder authorization is required to increase or decrease either
the fixed capital account or the variable capital account. Shareholder
authorization to increase or decrease the fixed capital account must be obtained
at an extraordinary meeting of shareholders. Shareholder authorization to
increase or decrease the variable capital account must be obtained at an
ordinary general meeting of shareholders.

         On September 15, 1999, our shareholders approved a stock split, and for
every one of our shares of any series we issued two series A shares and one
series B share. Concurrently with this stock split, we also consummated an
exchange offer to exchange new CPOs and new ADSs representing the new CPOs for
our then existing A shares, B shares and ADSs, and converted our then existing
CPOs into the new CPOs. As of December 31, 2006, approximately 96.9% of our
outstanding share capital was represented by CPOs, a portion of which is
represented by ADSs.

         At a general extraordinary meeting of shareholders held on April 28,
2005, our shareholders approved a two-for-one stock split, which became
effective on July 1, 2005. In connection with this stock split, each of our
existing series A shares was surrendered in exchange for two new series A
shares, and each of our existing series B shares was surrendered in exchange for
two new series B shares. Concurrent with this stock split, we authorized the

                                      138


amendment of the CPO trust agreement pursuant to which our CPOs are issued to
provide for the substitution of two new CPOs for each of our existing CPOs, with
each new CPO representing two new series A shares and one new series B share.
The number of our existing ADSs did not change as a result of the stock split.
Instead, the ratio of CPOs to ADSs was modified so that each existing ADS
represented ten new CPOs following the stock split and the CPO trust amendment.

         At the 2005 annual shareholders' meeting held on April 27, 2006, our
shareholders approved a new stock split, which became effective on July 17,
2006. In connection with this new two-for-one stock split, each of our existing
series A shares was surrendered in exchange for two new series A shares, and
each of our existing series B shares was surrendered in exchange for two new
series B shares. Concurrent with this stock split, we authorized the amendment
of the CPO trust agreement pursuant to which our CPOs are issued to provide for
the substitution of two new CPOs for each of our existing CPOs, with each new
CPO representing two new series A shares and one new series B share. In
connection with the stock split and at our request, Citibank, N.A., as
depositary for the ADSs, distributed one additional ADS for each ADS outstanding
as of the record date for the stock split. The ratio of CPOs to ADSs did not
change as a result of the stock split; each ADS continued to represent ten CPOs
following the stock split and the CPO trust amendment. The proportional equity
interest participation of existing shareholders did not change as a result of
this stock split.

         As of December 31, 2006, our capital stock consisted of 25,110,308,208
issued shares. As of December 31, 2006, series A shares represented 66.67% of
our capital stock, or 16,740,205,472 shares, of which 15,778,133,836 shares were
subscribed and paid, 536,248,572 shares were treasury shares and 425,823,064
shares were issued pursuant to our employee stock option plans and subscribed to
by Banamex as trustee thereunder, but had not yet been paid. These shares have
been and will continue to be gradually paid upon exercise of the corresponding
stock options. As of December 31, 2006, series B shares represented 33.33% of
our capital stock, or 8,370,102,736 shares, of which 7,889,066,918 shares were
subscribed and paid, 268,124,286 shares were treasury shares and 212,911,532
shares were issued pursuant to our employee stock option plans and subscribed to
by Banamex as trustee thereunder, but had not yet been paid. These shares have
been and will continue to be gradually paid upon exercise of the corresponding
stock options. Of the total of our A shares and B shares outstanding as of
December 31, 2006, 13,068,000,000 shares corresponded to the fixed portion of
our capital stock and 10,599,200,754 shares corresponded to the variable portion
of our capital stock.

         At the 2006 annual shareholders' meeting held on April 26, 2007, in
connection with their approval of a dividend for the 2006 fiscal year, our
shareholders approved an increase in the variable part of our capital stock
through the capitalization of retained earnings in an amount up to Ps7,889
million, through the issuance of up to 960 million series A shares and 480
million series B shares, to be represented by new CPOs. The final amount of the
increase in the variable part of our capital stock, based on the number of stock
dividend election decisions, was approximately Ps6,199 million. See Item 8 --
"Financial Information -- Dividends" above. In addition, at the 2006 annual
shareholders' meeting, our shareholders approved the cancellation of 536,248,572
series A treasury shares and 268,124,286 series B treasury shares.

         On June 1, 2001, the Mexican securities law (Ley de Mercado de Valores)
was amended to increase the protection granted to minority shareholders of
Mexican listed companies and to commence bringing corporate governance
procedures of Mexican listed companies in line with international standards.

         On February 6, 2002, the Mexican securities authority (Comision
Nacional Bancaria y de Valores) issued an official communication authorizing the
amendment of our by-laws to incorporate additional provisions to comply with the
new provisions of the Mexican securities law. Following approval from our
shareholders at our 2002 annual shareholders' meeting, we amended and restated
our by-laws to incorporate these additional provisions, which consist of, among
other things, protective measures to prevent share acquisitions, hostile
takeovers, and direct or indirect changes of control. As a result of the
amendment and restatement of our by-laws, the expiration of our corporate term
of existence was extended from 2019 to 2100.

         On March 19, 2003, the Mexican securities authority issued new
regulations designed to (i) further implement minority rights granted to
shareholders by the Mexican securities law and (ii) simplify and comprise in a
single document provisions relating to securities offerings and periodic reports
by Mexican listed companies.

                                      139


         On April 24, 2003, our shareholders approved changes to our by-laws,
incorporating additional provisions and removing some restrictions. The changes
that are still in force are as follows:

         o    The limitation on our variable capital was removed. Formerly, our
              variable capital was limited to ten times our minimum fixed
              capital.

         o    Increases and decreases in our variable capital now require the
              notarization of the minutes of the ordinary general shareholders'
              meeting that authorize such increase or decrease, as well as the
              filing of these minutes with the Mexican National Securities
              Registry (Registro Nacional de Valores), except when such increase
              or decrease results from (i) shareholders exercising their
              redemption rights or (ii) stock repurchases.

         o    The cancellation of registration of our shares in the Securities
              Section of the Mexican National Securities Registry now involves
              an amended procedure, which is described below under "Repurchase
              Obligation." In addition, any amendments to the article containing
              these provisions no longer require the consent of the Mexican
              securities authority and 95% approval by shareholders entitled to
              vote.

         On December 30, 2005, a new Mexican securities law was published in an
attempt to continue bringing corporate governance procedures of Mexican listed
companies in line with international standards. This new law includes provisions
increasing disclosure information requirements, improving minority shareholder
rights, and strengthening corporate governance standards.

         Under the new Mexican securities law, we were required to adopt
specific amendments to our by-laws within 180 days of the effective date of the
new law. Following approval from our shareholders at our 2005 annual
shareholders' meeting held on April 27, 2006, we amended and restated our
by-laws to incorporate these amendments. The amendments to our by-laws became
effective on July 3, 2006. The most significant of these amendments were as
follows:

         o    The change of our corporate name from CEMEX, S.A. de C.V. to
              CEMEX, S.A.B. de C.V., which means that we are now called a
              Publicly Held Company (Sociedad Anonima Bursatil or S.A.B.).

         o    The creation of a corporate practices committee, which is a new
              committee of our board of directors and which is comprised
              exclusively of independent directors.

         o    The elimination of the position of statutory examiner (Comisario)
              and the assumption of its responsibilities by the board of
              directors through the audit committee and the new corporate
              practices committee, as well as through the external auditor who
              audits our financial statements, each within its professional
              role.

         o    The express attribution of certain duties (such as the duty of
              loyalty and the duty of care) and liabilities on the members of
              the board of directors as well as on the relevant officers.

         o    The implementation of a mechanism for claims of a breach of a
              director's or officer's duties, to be brought by us or by holders
              of 5% or more of our shares.

         o    An increase in the responsibilities of the audit committee.

         o    The chief executive officer is now the person in charge of
              managing the company; previously, this was the duty of the board
              of directors. The board of directors now supervises the chief
              executive officer.

         o    Shareholders are given the right to enter into certain agreements
              with other shareholders.

                                      140



Changes in Capital Stock and Preemptive Rights

         Our by-laws allow for a decrease or increase in our capital stock if it
is approved by our shareholders at a shareholders' meeting. Additional shares of
our capital stock, having no voting rights or limited voting rights, are
authorized by our by-laws and may be issued upon the approval of our
shareholders at a shareholders' meeting, with the prior approval of the Mexican
securities authority.

         Our by-laws provide that shareholders have preemptive rights with
respect to the class and in proportion to the number of shares of our capital
stock they hold, before any increase in the number of outstanding A shares, B
shares, or any other existing series of shares, as the case may be. This
preemptive right to subscribe is not applicable to increases of our capital
through public offers or through the issuance of our own shares previously
acquired by us. Preemptive rights give shareholders the right, upon any issuance
of shares by us, to purchase a sufficient number of shares to maintain their
existing ownership percentages. Preemptive rights must be exercised within the
period and under the conditions established for that purpose by the
shareholders, and our by-laws and applicable law provide that this period must
be 15 days following the publication of the notice of the capital increase in
the Periodico Oficial del Estado de Nuevo Leon.

         Pursuant to our by-laws, significant acquisitions of shares of our
capital stock and changes of control of CEMEX require prior approval from our
board of directors. Our board of directors must authorize in advance any
transfer of voting shares of our capital stock that would result in any person
or group becoming a holder of 2% of more of our shares. Our board of directors
shall consider the following when determining whether to authorize such transfer
of voting shares: a) the type of investors involved; b) whether the acquisition
would result in the potential acquirer exercising a significant influence or
being able to obtain control; c) whether all applicable rules and our by-laws
have been observed by the potential acquirer; d) whether the potential acquirers
are our competitors and there is a risk of affecting market competition, or the
potential acquirers could have access to confidential and privileged
information; e) the moral and economic solvency of the potential acquirers; f)
the protection of minority rights and the rights of our employees; and g)
whether an adequate base of investors would be maintained. If our board of
directors denies the authorization, or the requirements established in our
by-laws are not complied with, the persons involved in the transfer shall not be
entitled to exercise the voting rights corresponding to the transferred shares,
and such shares shall not be taken into account for the determination of the
quorums of attendance and voting at shareholders' meetings, nor shall the the
transfers be recorded in the shareholder ledger and the registry done by
Indeval, the Mexican securities depositary, shall not have any effect.

         Any acquisition of shares of our capital stock representing 30% or more
of our capital stock by a person or group of persons requires prior approval
from our board of directors and, in the event approval is granted, the acquiror
has an obligation to make a public offer to purchase all of the outstanding
shares of our capital stock. In the event the requirements for significant
acquisitions of shares of our capital stock are not met, the persons acquiring
such shares will not be entitled to any corporate rights with respect to such
shares, such shares will not be taken into account for purposes of determining a
quorum for shareholders' meetings, we will not record such persons as holders of
such shares in our shareholder ledger, and the registry done by the Indeval
shall not have any effect.

         Our by-laws require the stock certificates representing shares of our
capital stock to make reference to the provisions in our by-laws relating to the
prior approval of the board of directors for significant share transfers and the
requirements for recording share transfers in our shareholder ledger. In
addition, shareholders are responsible for informing us within five business
days whenever their shareholdings exceed 5%, 10%, 15%, 20%, 25% and 30% of the
outstanding shares of a particular class of our capital stock. We are required
to maintain a shareholder ledger that records the names, nationalities and
domiciles of all significant shareholders, and any shareholder that meets or
exceeds these thresholds must be recorded in this ledger if such shareholder is
to be recognized or represented at any shareholders' meeting. If a shareholder
fails to inform us of its shareholdings reaching a threshold as described above,
we will not record the transactions that cause such threshold to be met or
exceeded in our shareholder ledger, and such transaction will have no legal
effect and will not be binding on us.

         Our by-laws also require that our shareholders comply with legal
provisions regarding acquisitions of securities and certain shareholders'
agreements that require disclosure to the public.

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Repurchase Obligation

         In accordance with Mexican securities regulations, our majority
shareholders are obligated to make a public offer for the purchase of stock to
the minority shareholders if the listing of our stock with the Mexican Stock
Exchange is canceled, either by resolution of our shareholders or by an order of
the Mexican securities authority. The price at which the stock must be purchased
by the majority shareholders is the higher of:

         o    the weighted average price per share based on the weighted average
              trading price of our CPOs on the Mexican Stock Exchange during the
              latest period of 30 trading days preceding the date of the offer,
              for a period not to exceed six months; or

         o    the book value per share, as reflected in the last quarterly
              report filed with the Mexican securities authority and the Mexican
              Stock Exchange.

         Our board of directors shall prepare and disclose to the public through
the Mexican Stock Exchange, within ten business days after the day the public
offer begins, and after consulting the corporate practices and audit committee,
its opinion regarding the price of the offer and any conflicts of interests that
each of its members may have regarding such offer. This opinion may be
accompanied by an additional opinion issued by an independent expert that we may
hire.

         Following the expiration of this offer, if the majority shareholders do
not acquire 100% of the paid-in capital, such shareholders must place in a trust
set up for that purpose for a six-month period an amount equal to that required
to repurchase the remaining shares held by investors who did not participate in
the offer. The majority shareholders are not obligated to make the offer to
purchase if shareholders representing 95% of our share capital waive that right,
and the amount offered for the shares is less than 300,000 UDIs (Unidades de
Inversion), which are Mexican Peso-denominated investment units that reflect
inflation variations. For purposes of these provisions, majority shareholders
are shareholders who own a majority of our shares and have sufficient voting
power to control decisions at general shareholders' meetings, or who may elect a
majority of our board of directors.

Shareholders' Meetings and Voting Rights

         Shareholders' meetings may be called by:

         o    our board of directors or the corporate practices and audit
              committee;

         o    shareholders representing at least 10% of the then outstanding
              shares of our capital stock, by requesting the chairman of our
              board of directors or our corporate practices and audit committee;

         o    any shareholder (i) if no meeting has been held for two
              consecutive years or when the matters referred to in Article 181
              of the General Law of Commercial Companies (Ley General de
              Sociedades Mercantiles) have not been dealt with, or (ii) when,
              for any reason, the required quorum for valid sessions of the
              corporate practices and audit committee was not reached and the
              board of directors failed to make the appropriate provisional
              appointments; or

         o    a Mexican court, in the event our board of directors or the
              corporate practices and audit committee do not comply with the
              valid shareholders' request indicated above.

         Notice of shareholders' meetings must be published in the official
gazette for the State of Nuevo Leon, Mexico or any major newspaper published and
distributed in the City of Monterrey, Nuevo Leon, Mexico. The notice must be
published at least 15 days prior to the date of any shareholders' meeting.
Consistent with Mexican law, our by-laws further require that all information
and documents relating to the shareholders' meeting be available to shareholders
from the date the notice of the meeting is published.

         General shareholders' meetings can be ordinary or extraordinary. At
every general shareholders' meeting, each holder of A shares and B shares is
entitled to one vote per share. Shareholders may vote by proxy duly


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appointed in writing. Under the CPO trust agreement, holders of CPOs who are not
Mexican nationals cannot exercise voting rights corresponding to the A shares
represented by their CPOs.

         An annual general ordinary shareholders' meeting must be held during
the first four months after the end of each of our fiscal years to consider the
approval of a report of our board of directors regarding our performance and our
financial statements for the preceding fiscal year and to determine the
allocation of profits from the preceding year. In addition, our annual general
ordinary shareholders' meeting must:

         o    review the annual reports of our corporate practices and audit
              committee, our chief executive officer, and
              our board of directors;

         o    elect, remove, or substitute the members of our board of
              directors;

         o    determine the level of independence of the members of our board of
              directors; and

         o    approve any transaction that represents 20% or more of the net
              worth of CEMEX.

         A general extraordinary shareholders' meeting may be called at any time
to deal with any of the matters specified by Article 182 of the General Law of
Commercial Companies, which include, among other things:

         o    extending our corporate existence;

         o    our early dissolution;

         o    increasing or reducing our fixed capital stock;

         o    changing our corporate purpose;

         o    changing our country of incorporation;

         o    changing our form of organization;

         o    a proposed merger;

         o    issuing preferred shares;

         o    redeeming our own shares;

         o    any amendment to our by-laws; and

         o    any other matter for which a special quorum is required by law or
              by our by-laws.

         In order to vote at a meeting of shareholders, shareholders must (i)
appear on the list that Indeval and the Indeval participants holding shares on
behalf of the shareholders prepare prior to the meeting or must deposit prior to
that meeting, or (ii) prior to the meeting, deposit the certificates
representing their shares at our offices or in a Mexican credit institution or
brokerage house, or foreign bank approved by our board of directors to serve
this function. The certificate of deposit with respect to the share certificates
must be presented to our company secretary at least 48 hours before a meeting of
shareholders. Our company secretary verifies that the person in whose favor any
certificate of deposit was issued is named in our share registry and issues an
admission pass authorizing that person's attendance at the meeting of
shareholders.

         Our by-laws provide that a shareholder may only be represented by proxy
in a shareholders' meeting with a duly completed form provided by us authorizing
the proxy's presence. In addition, our by-laws require that the secretary acting
at the shareholders' meeting publicly affirm the compliance by all proxies with
this requirement.

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         A shareholders' resolution is required to take action on any matter
presented at a shareholders' meeting. At an ordinary meeting of shareholders,
the affirmative vote of the holders of a majority of the shares present at the
meeting is required to adopt a shareholders' resolution. At an extraordinary
meeting of shareholders, the affirmative vote of at least 50% of the capital
stock is required to adopt a shareholders' resolution, except that when amending
Article 7 (with respect to measures limiting shareholding ownership), Article 10
(relating to the register of shares and significant participations) or Article
22 (specifying the impediments to being appointed a member of our board of
directors) of our by-laws, the affirmative vote of at least 75% of the voting
stock is needed. The quorum for a first ordinary meeting of shareholders is 50%
of our outstanding and fully paid shares, and for the second ordinary meeting is
any number of our outstanding and fully paid shares. The quorum for the first
extraordinary shareholders' meeting is 75% of our outstanding and fully paid
shares, and for the second extraordinary meeting is 50% of our outstanding and
fully paid shares.

Rights of Minority Shareholders

         At our general annual shareholders' meeting, any shareholder or group
of shareholders representing 10% or more of our voting stock has the right to
appoint or remove one member of our board of directors, in addition to the
directors appointed by the majority. Such appointment may only be revoked by
other shareholders when the appointment of all other directors is also revoked.

         Our by-laws provide that holders of at least 10% of our capital stock
are entitled to demand the postponement of the voting on any resolution of which
they deem they have not been sufficiently informed.

         Under Mexican law, holders of at least 20% of our outstanding capital
stock entitled to vote on a particular matter may seek to have any shareholder
action with respect to that matter set aside, by filing a complaint with a court
of law within 15 days after the close of the meeting at which that action was
taken and showing that the challenged action violates Mexican law or our
by-laws. Relief under these provisions is only available to holders who were
entitled to vote on, or whose rights as shareholders were adversely affected by,
the challenged shareholder action and whose shares were not represented when the
action was taken or, if represented, voted against it.

         Under Mexican law, an action for civil liabilities against directors
may be initiated by a shareholders' resolution. In the event shareholders decide
to bring an action of this type, the persons against whom that action is brought
will immediately cease to be directors. Additionally, shareholders representing
not less than 33% of the outstanding shares may directly exercise that action
against the directors; provided that:

         o    those shareholders shall not have voted against exercising such
              action at the relevant shareholders' meeting; and

         o    the claim covers all of the damage alleged to have been caused to
              us and not merely the damage suffered by the plaintiffs.

         Under our by-laws, shareholders representing 5% or more of our
outstanding capital stock may initiate actions exclusively on behalf of CEMEX
against members of our board of directors, our corporate practices and audit
committee, our chief executive officer, or any relevant executives, for breach
of their fiduciary duties or for committing illicit acts or activities. The only
requirement is that the claim covers all of the damage alleged to have been
caused to us and not merely the damage suffered by the plaintiffs.

         Any recovery of damage with respect to these actions will be for our
benefit and not that of the shareholders bringing the action.

Registration and Transfer

         Our common stock is evidenced by share certificates in registered form
with registered dividend coupons attached. Our shareholders may hold their
shares in the form of physical certificates or through institutions that have
accounts with Indeval. Accounts may be maintained at Indeval by brokers, banks
and other entities approved by the Mexican securities authority. We maintain a
stock registry, and, in accordance with Mexican law, only those


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holders listed in the stock registry and those holding certificates issued by
Indeval and by Indeval participants indicating ownership are recognized as our
shareholders.

Redemption

         Our capital stock is subject to redemption upon approval of our
shareholders at an extraordinary shareholders' meeting.

Share Repurchases

         If approved by our shareholders at a general shareholders' meeting, we
may purchase our outstanding shares for cancellation. We may also repurchase our
equity securities on the Mexican Stock Exchange at the then prevailing market
prices in accordance with the Mexican securities law. If we intend to repurchase
shares representing more than 1% of our outstanding shares at a single trading
session, we must inform the public of such intention at least ten minutes before
submitting our bid. If we intend to repurchase shares representing 3% or more of
our outstanding shares during a period of twenty trading days, we are required
to conduct a public tender offer for such shares. We must conduct share
repurchases through the person or persons approved by our board of directors,
through a single broker dealer during the relevant trading session, and without
submitting bids during the first and the last 30 minutes of each trading
session. We must inform the Mexican Stock Exchange of the results of any share
repurchase no later than the business day following any such share repurchase.

Directors' and Shareholders' Conflict of Interest

         Under Mexican law, any shareholder who has a conflict of interest with
us with respect to any transaction is obligated to disclose such conflict and is
prohibited from voting on that transaction. A shareholder who violates this
prohibition may be liable for damages if the relevant transaction would not have
been approved without that shareholder's vote.

         Under Mexican law, any director who has a conflict of interest with us
in any transaction must disclose that fact to the other directors and is
prohibited from participating and being present during the deliberations and
voting on that transaction. A director who violates this prohibition will be
liable for damages. Additionally, our directors may not represent shareholders
in our shareholders' meetings.

Withdrawal Rights

         Whenever our shareholders approve a change of corporate purpose, change
of nationality or transformation from one form of corporate organization to
another, Mexican law provides that any shareholder entitled to vote on that
change who has voted against it may withdraw from CEMEX and receive an amount
calculated as specified by Mexican law attributable to such shareholder's
shares, provided that such shareholder exercises that right within 15 days
following the meeting at which the change was approved.

Dividends

         At the annual ordinary general shareholders' meeting, our board of
directors submits, for approval by our shareholders, our financial statements
together with a report on them prepared by our board of directors and the
statutory auditors. Our shareholders, once they have approved the financial
statements, determine the allocation of our net income, after provision for
income taxes, legal reserve and statutory employee profit sharing payments, for
the preceding year. All shares of our capital stock outstanding at the time a
dividend or other distribution is declared are entitled to share equally in that
dividend or other distribution.

Liquidation Rights

         In the event we are liquidated, the surplus assets remaining after
payment of all our creditors will be divided among our shareholders in
proportion to the respective shares held by them. The liquidator may, with the
approval of our shareholders, distribute the surplus assets in kind among our
shareholders, sell the surplus assets and

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divide the proceeds among our shareholders or put the surplus assets to any
other uses agreed to by a majority of our shareholders voting at an
extraordinary shareholders' meeting.

Differences Between Our Corporate Governance Practices and NYSE Standards
for Domestic Companies

         For a description of significant ways in which our corporate governance
practices differ from those required of domestic companies under NYSE standards,
please visit our website at www.cemex.com (under the heading "Investor
Center/Corporate Governance").

MATERIAL CONTRACTS

         On June 23, 2003, CEMEX Espana Finance LLC, as issuer, CEMEX Espana,
Sandworth Plaza Holding B.V., Cemex Caracas Investments B.V., Cemex Caracas II
Investments B.V., Cemex Manila Investments B.V. and Cemex Egyptian Investments
B.V., as guarantors, and several institutional purchasers, entered into a Note
Purchase Agreement in connection with a private placement by CEMEX Espana
Finance, LLC. CEMEX Espana Finance, LLC issued to the institutional purchasers
U.S.$103 million aggregate principal amount of 4.77% Senior Notes due 2010,
U.S.$96 million aggregate principal amount of 5.36% Senior Notes due 2013 and
U.S.$201 million aggregate principal amount of 5.51% Senior Notes due 2015. On
October 30, 2006, all guarantors (other than CEMEX Espana) were removed as
guarantors under this agreement.

         On March 30, 2004, CEMEX Espana, with Sandworth Plaza Holding B.V.,
Cemex Caracas Investments B.V., Cemex Caracas II Investments B.V., Cemex Manila
Investments B.V. and Cemex Egyptian Investments, B.V., as guarantors, entered
into a Term and Revolving Facilities Agreement with Banco Bilbao Vizcaya
Argentaria, S.A. and Societe Generale, as mandated lead arrangers, relating to
three credit facilities with an aggregate amount of (euro)250 million and
(Y)19,308,000,000. The first facility was a five-year multi-currency term loan
facility with a variable interest rate; the second facility was a 364-day
multi-currency revolving credit facility; and the third facility was a five-year
Yen-denominated term loan facility with a fixed interest rate. The proceeds of
these facilities were used to prepay part of CEMEX Espana's outstanding debt as
of that date and for general corporate purposes. On March 18, 2005, the term of
the 364-day multi-currency revolving credit facility (up to an aggregate amount
of (euro)100 million) was extended for an additional year and on March 31, 2006,
all outstanding amounts under this multi-currency revolving credit facility were
paid and the multi-currency revolving credit facility expired. On August 5,
2006, (euro)150,000,000 of the multi-currency loan facility was prepaid. On
October 30, 2006, all guarantors (other than CEMEX Espana) were removed as
guarantors under this agreement. As of December 31, 2006, the (Y)19,308,000,000
credit facility remains outstanding.

         On April 15, 2004, CEMEX Espana Finance LLC, as issuer, CEMEX Espana,
Sandworth Plaza Holding B.V., Cemex Caracas Investments B.V., Cemex Caracas II
Investments B.V., Cemex Manila Investments B.V. and Cemex Egyptian Investments
B.V., as guarantors, and several institutional purchasers, entered into a Note
Purchase Agreement in connection with a private placement by CEMEX Espana
Finance, LLC. CEMEX Espana Finance, LLC issued to the institutional purchasers
(Y)4,980,600,000 aggregate principal amount of 1.79% Senior Notes due 2010 and
(Y)6,087,400,000 aggregate principal amount of 1.99% Senior Notes due 2011. The
proceeds of the private placement were used to repay existing facilities and for
general corporate purposes. On October 30, 2006, all guarantors (other than
CEMEX Espana) were removed as guarantors under this agreement.

         On June 23, 2004, we entered into a three-year U.S.$800 million
revolving credit facility guaranteed by CEMEX Mexico and Empresas Tolteca de
Mexico. The facility consists of credit lines with two different sublimits. The
facility provides for swing line loan availability of U.S.$100 million and has a
sublimit for standby letters of credit of U.S.$200 million. The proceeds were
applied to refinance outstanding debt. On June 6, 2005, this revolving credit
facility was amended and restated; the total facility was reduced to U.S.$700
million and extended to a new four-year period. The sublimits of the swing line
and standby letters of credit were left unchanged. On May 9, 2007, the revolving
credit facility was extended from a four-year to a five-year period.

         On September 24, 2004, CEMEX Espana (as borrower and guarantor) and
Cemex American Holdings, B.V., Cemex Caracas Investments B.V., Cemex Caracas II
Investments B.V., Cemex Manila Investments B.V. and Cemex Egyptian Investments
B.V. (as guarantors) entered into a U.S.$3.8 billion multi-currency term loan
that consisted of three tranches. All proceeds were used in connection with the
RMC acquisition. The facilities

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agreement has been amended and restated on several occasions. As of March 31,
2007, the amended facility is made up of a U.S.$525 million term loan maturing
in September 2007, a U.S.$1.05 billion amortizing loan maturing in September
2009 and a U.S.$525 million term loan maturing in July 2011, with a one year
extension option. All borrowings under the amended and restated facilities
agreement can be denominated in Dollars, Euros, or Pounds, or a combination
thereof. On October 30, 2006, all guarantors (other than CEMEX Espana) were
removed as guarantors under this agreement. As of the date of this annual
report, the maturity of U.S.$512.5 million under the term loan maturing in 2011
has been extended to July 2012.

         On May 31, 2005, we entered into a multi-credit five-year U.S.$1.2
billion revolving credit agreement guaranteed by CEMEX Mexico and Empresas
Tolteca de Mexico. The multi-currency credit facility was entered into to fund
the repayment of amounts outstanding under the credit agreement of CEMEX, S.A.B.
de C.V. dated April 5, 2005. On June 19, 2006, the agreement was amended to,
among other things, create an option for us to request a one-year credit
extension. On May 9, 2007, the revolving credit facility was extended from a
five-year to a six-year period.

         On June 27, 2005, New Sunward Holding B.V. entered into a U.S.$700
million Term and Revolving Facilities Agreement with several lenders, Banco
Bilbao Vizcaya Argentaria, S.A., BNP Paribas and Citigroup Global Markets as
mandated lead arrangers and Citibank, N.A., as agent. This agreement is
guaranteed by CEMEX, CEMEX Mexico and Empresas Tolteca de Mexico. The facility
consists of two separate U.S.$350 million facilities. The proceeds from this
Term and Revolving Facilities Agreement was used to repay all amounts due and
payable under the U.S.$1.15 billion term loan agreement dated October 15, 2003
and to pay other debt of New Sunward Holding B.V. The first facility matures in
June 2008, and the second facility matures in June 2010.

         On June 13, 2005, CEMEX Espana Finance LLC, as issuer, CEMEX Espana,
Cemex Caracas Investments B.V., Cemex Caracas II Investments B.V., Cemex Manila
Investments B.V. (subsequently merged with and into Cemex Asia B.V.), Cemex
Egyptian Investments B.V., Cemex American Holdings B.V. and Cemex Shipping B.V.,
as guarantors, and several institutional purchasers, entered into a Note
Purchase Agreement in connection with a private placement and issuance by CEMEX
Espana Finance, LLC of U.S.$133 million aggregate principal amount of 5.18%
Senior Notes due 2010, and U.S.$192 million aggregate principal amount of 5.62%
Senior Notes due 2015. The proceeds of the private placement were used to repay
existing facilities and for general corporate purposes. On October 30, 2006, all
guarantors (other than CEMEX Espana) were removed as guarantors under this
agreement.

         On July 1, 2005, we and Ready Mix USA entered into limited liability
company agreements and asset contribution agreements in connection with our
establishment of two jointly-owned limited liability companies, CEMEX Southeast,
LLC, a cement company, and Ready Mix USA, LLC, a ready-mix concrete company, to
serve the construction materials market in the southeast region of the United
States. Under the terms of the limited liability company agreements and related
asset contribution agreements, we contributed two cement plants (Demopolis,
Alabama and Clinchfield, Georgia) and eleven cement terminals to CEMEX
Southeast, LLC, representing approximately 98% of its contributed capital, while
Ready Mix USA contributed cash to CEMEX Southeast, LLC representing
approximately 2% of its contributed capital. In addition, we contributed our
ready-mix concrete, aggregates and concrete block assets in the Florida
panhandle and southern Georgia to Ready Mix USA, LLC, representing approximately
9% of its contributed capital, while Ready Mix USA contributed all its ready-mix
concrete and aggregate operations in Alabama, Georgia, the Florida panhandle and
Tennessee, as well as its concrete block operations in Arkansas, Tennessee,
Mississippi, Florida and Alabama to Ready Mix USA, LLC, representing
approximately 91% of its contributed capital. We own a 50.01% interest, and
Ready Mix USA owns a 49.99% interest, in the profits and losses and voting
rights of CEMEX Southeast, LLC, while Ready Mix USA owns a 50.01% interest, and
we own a 49.99% interest, in the profits and losses and voting rights of Ready
Mix USA, LLC. CEMEX Southeast, LLC is managed by us, and Ready Mix USA, LLC is
managed by Ready Mix USA. Under the terms of the limited liability company
agreements, after the third anniversary of the formation of these companies,
Ready Mix USA will have the option, but not the obligation, to require us to
purchase Ready Mix USA's interest in the two companies at a purchase price equal
to the greater of the book value of the companies' assets or a formula based on
the companies' earnings. This option will expire on the twenty fifth anniversary
of the formation of these companies.

         On September 1, 2005, RMC Mid-Atlantic, LLC, our indirect wholly-owned
U.S. subsidiary, and Ready Mix USA entered into an asset purchase agreement
pursuant to which we sold 27 ready-mix concrete plants and four

                                      147


concrete block facilities located in the Atlanta, Georgia metropolitan area to
Ready Mix USA, LLC for approximately U.S.$125 million.

         On October 24, 2006, we entered into a U.S.$1.2 billion committed
acquisition facility, guaranteed by CEMEX Mexico and Empresas Tolteca de Mexico.
The interest rates are as follows: (a) for Mexican Peso loans, the applicable
TIIE plus the applicable margin (which ranges from 0.175% to 0.40% based on the
date of funding) and (b) for Dollar loans, the applicable LIBO rate plus the
applicable margin (which ranges from 0.20% to 0.35% based on the date of
funding). This facility will mature 12 months from the date of the initial
drawing, unless extended.

         On December 6, 2006, CEMEX Espana entered into a U.S.$9 billion
committed acquisition facilities agreement. The first facility was a U.S.$3
billion 364-day multicurrency revolving loan denominated in Dollars or Euros
with two optional 6-month extensions. The second facility is a multicurrency
three-year U.S.$3 billion term loan denominated in Dollars or Euros. The third
facility is a multicurrency five-year U.S.$3 billion term loan denominated in
Dollars or Euros. On December 21, 2006, the facilities agreement was amended to
include new lenders. The first facility was canceled on June 19, 2007, effective
as of June 22, 2007.

         On December 18, 2006, CEMEX, by means of two special purpose vehicles,
issued two tranches of fixed-to-floating rate callable perpetual debentures.
U.S.$350 million was issued by C5 Capital (SPV) Limited under the first tranche,
and the issuer has the option to redeem the debentures on December 31, 2011 and
on each interest payment date thereafter. U.S.$900 million was issued by C10
Capital (SPV) Limited under the second tranche, and the issuer has the option to
redeem the debentures on December 31, 2016 and on each interest payment date
thereafter. Both tranches will pay coupons denominated in Dollars at a fixed
rate until the call date and at a floating rate thereafter. Due to its perpetual
nature and optional deferral of coupons, this transaction, in accordance with
Mexican FRS, qualifies as equity.

         On February 12, 2007, CEMEX, by means of a special purpose vehicle,
issued a third tranche of fixed-to-floating rate callable perpetual debentures.
U.S.$750 million was issued by C8 Capital (SPV) Limited under this third tranche
with a first optional call date on December 31, 2014 and on each interest
payment date thereafter. This third issuance will also pay coupons denominated
in Dollars at a fixed rate until the call date and at a floating rate
thereafter. Due to its perpetual nature and optional deferral of coupons, this
transaction, in accordance with Mexican FRS, qualifies as equity.

         On March 5, 2007, CEMEX Finance Europe B.V., issued (euro)900 million
in notes paying a fixed coupon of 4.75% and maturing in 2014. The notes have
been listed for trading on the London Stock Exchange's Professional Securities
Market. The notes are guaranteed by CEMEX Espana.

         On May 9, 2007 CEMEX, by means of a special purpose vehicle, issued a
fourth tranche of fixed-to-floating rate callable perpetual debentures.
(euro)730 million was issued by C10-EUR Capital (SPV) Limited under this fourth
tranche with a first optional call date on June 30, 2017 and on each interest
payment date thereafter. This fourth issuance will pay coupons denominated in
Euros at a fixed rate until the call date and at a floating rate thereafter. Due
to its perpetual nature and optional deferral of coupons, this transaction, in
accordance with Mexican FRS, qualifies as equity.

EXCHANGE CONTROLS

         See Item 3-- "Key Information -- Mexican Peso Exchange Rates."

TAXATION

MEXICAN TAX CONSIDERATIONS

General

         The following is a summary of certain Mexican federal income tax
considerations relating to the ownership and disposition of our CPOs or ADSs.

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         This summary is based on Mexican income tax law that is in effect on
the date of this annual report, which is subject to change. This summary is
limited to non-residents of Mexico, as defined below, who own our CPOs or ADSs.
This summary does not address all aspects of Mexican income tax law. Holders are
urged to consult their tax counsel as to the tax consequences that the purchase,
ownership and disposition of our CPOs or ADSs, may have.

         For purposes of Mexican taxation, an individual is a resident of Mexico
if he or she has established his or her home in Mexico. If the individual also
has a home in another country, he or she will be considered a resident of Mexico
if his or her center of vital interests is in Mexico. Under Mexican law, an
individual's center of vital interests is in Mexico if, among other things:

         o    more than the 50% of the individual's total income in the relevant
              year comes from Mexican sources; or

         o    the individual's main center of professional activities is in
              Mexico.

         A legal entity is a resident of Mexico if it is organized under the
laws of Mexico or if it maintains the principal administration of its business
or the effective location of its management in Mexico.

         A Mexican citizen is presumed to be a resident of Mexico for tax
purposes unless such person or entity can demonstrate otherwise. If a legal
entity or an individual is deemed to have a permanent establishment in Mexico
for tax purposes, all income attributable to such permanent establishment will
be subject to Mexican taxes, in accordance with relevant tax provisions.

         Individuals or legal entities that cease to be residents of Mexico must
notify the tax authorities within 15 business days before their change of
residency.

         A non-resident of Mexico is a legal entity or individual that does not
satisfy the requirements to be considered a resident of Mexico for Mexican
federal income tax purposes.

Taxation of Dividends

         Dividends, either in cash or in any other form, paid to non-residents
of Mexico with respect to A shares or B shares represented by the CPOs (or in
the case of holders who hold CPOs represented by ADSs), will not be subject to
withholding tax in Mexico.

Disposition of CPOs or ADSs

         Gains on the sale or disposition of ADSs by a holder who is a
non-resident of Mexico will not be subject to Mexican tax.

         Gains on the sale or disposition of CPOs by a holder who is a
non-resident of Mexico will not be subject to any Mexican tax if the sale is
carried out through the Mexican Stock Exchange or other recognized securities
market, as determined by Mexican tax authorities. Gains realized on sales or
other dispositions of CPOs by non-residents of Mexico made in other
circumstances would be subject to Mexican income tax.

         Under the terms of the Convention Between the United States and Mexico
for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect
to Income Taxes, and a Protocol thereto, the Tax Treaty, gains obtained by a
U.S. Shareholder eligible for benefits under the Tax Treaty on the disposition
of CPOs will not generally be subject to Mexican tax, provided that such gains
are not attributable to a permanent establishment of such U.S. Shareholder in
Mexico and that the eligible U.S. Shareholder did not own, directly or
indirectly, 25% or more of our outstanding stock during the 12-month period
preceding the disposition. In the case of non-residents of Mexico eligible for
the benefits of a tax treaty, gains derived from the disposition of ADSs or CPOs
may also be exempt, in whole or in part, from Mexican taxation under a treaty to
which Mexico is a party.

         Deposits and withdrawals of ADSs will not give rise to any Mexican tax
or transfer duties.

                                      149


         The term U.S. Shareholder shall have the same meaning ascribed below
under the section "-- U.S. Federal Income Tax Considerations."

Estate and Gift Taxes

         There are no Mexican inheritance or succession taxes applicable to the
ownership, transfer or disposition of ADSs or CPOs by holders that are
non-residents of Mexico, although gratuitous transfers of CPOs may, in some
circumstances, cause a Mexican federal tax to be imposed upon a recipient. There
are no Mexican stamp, issue, registration or similar taxes or duties payable by
holders of ADSs or CPOs.

U.S. FEDERAL INCOME TAX CONSIDERATIONS

General

         The following is a summary of the material U.S. federal income tax
consequences relating to the ownership and disposition of our CPOs and ADSs.

         This summary is based on provisions of the U.S. Internal Revenue Code,
or the Code, of 1986, as amended, U.S. Treasury regulations promulgated under
the Code, and administrative rulings, and judicial interpretations of the Code,
all as in effect on the date of this annual report and all of which are subject
to change, possibly retroactively. This summary is limited to U.S. Shareholders
(as defined below) who hold our ADSs or CPOs, as the case may be, as capital
assets. This summary does not discuss all aspects of U.S. federal income
taxation which may be important to an investor in light of its individual
circumstances, for example, an investor subject to special tax rules (e.g.,
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, expatriates,
tax-exempt investors, persons who own 10% or more of our voting stock, or
holders whose functional currency is not the Dollar or U.S. Shareholders who
hold a CPO or an ADS as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset). In addition, this summary does
not address any aspect of state, local or foreign taxation.

         For purposes of this summary, a "U.S. Shareholder" means a beneficial
owner of CPOs or ADSs, who is for U.S. federal income tax purposes: o an
individual who is a citizen or resident of the United States for U.S. federal
income tax purposes;

         o    a corporation or other entity taxable as a corporation that is
              created or organized in the United States or under the laws of the
              United States or any state thereof (including the District of
              Columbia);

         o    an estate the income of which is includible in gross income for
              U.S. federal income tax purposes regardless of its source; or

         o    a trust if a court within the United States is able to exercise
              primary supervision over the administration of such trust and one
              or more United States persons have the authority to control all
              substantial decisions of such trust.

         If a partnership (including any entity treated as a partnership for
U.S. federal income tax purposes) is the beneficial owner of CPOs or ADSs, the
U.S. federal income tax treatment of a partner in such partnership will
generally depend upon the status of the partner and the activities of the
partnership. A partner in a partnership that is the beneficial owner of CPOs or
ADSs is urged to consult its own tax advisor regarding the associated tax
consequences.

         U.S. Shareholders should consult their own tax advisors as to the
particular tax consequences to them under United States federal, state and
local, and foreign laws relating to the ownership and disposition of our CPOs
and ADSs.

                                      150


Ownership of CPOs or ADSs in general

         In general, for U.S. Federal income tax purposes, U.S. Shareholders who
own ADSs will be treated as the beneficial owners of the CPOs represented by
those ADSs, and each CPO will represent a beneficial interest in two A shares
and one B share.

Taxation of dividends with respect to CPOs and ADSs

         Distributions of cash or property with respect to the A shares or B
shares represented by CPOs, including CPOs represented by ADSs, generally will
be includible in the gross income of a U.S. Shareholder as foreign source
"passive" or "financial services" income on the date the distributions are
received by the CPO trustee or successor thereof, to the extent paid out of our
current or accumulated earnings and profits, as determined under U.S. federal
income tax principles. Pursuant to changes in U.S. tax law applicable to tax
years beginning after December 31, 2006, payments that would have been treated
as "financial services" income for these purposes will be treated as "general
category" income. These dividends will not be eligible for the
dividends-received deduction allowed to corporate U.S. Shareholders. To the
extent, if any, that the amount of any distribution by us exceeds our current
and accumulated earnings and profits as determined under U.S. federal income tax
principles, it will be treated first as a tax-free return of the U.S.
Shareholder's adjusted tax basis in the CPOs or ADSs and thereafter as capital
gain.

         The gross amount of any dividends paid in Pesos will be includible in
the income of a U.S. Shareholder in a Dollar amount calculated by reference to
the exchange rate in effect the day the Pesos are received by the CPO trustee or
successor thereof whether or not they are converted into Dollars on that day.
Generally, any gain or loss resulting from currency exchange fluctuations during
the period from the date the dividend payment is includible in income to the
date such payment is converted into Dollars will be treated as ordinary income
or loss. Such gain or loss will generally be income from sources within the
United States for foreign tax credit limitation purposes.

         Dividend income is generally taxed as ordinary income. However, a
maximum United States federal income tax rate of 15 percent will apply to
"qualified dividend income" received by U.S. Shareholders that are individuals
(as well as certain trusts and estates) in taxable years beginning before
January 1, 2011, provided that certain holding period requirements are met.
"Qualified dividend income" includes dividends paid on shares of "qualified
foreign corporations" if, among other things: (i) the shares of the foreign
corporation are readily tradable on an established securities market in the
United States; or (ii) the foreign corporation is eligible with respect to
substantially all of its income for the benefits of a comprehensive income tax
treaty with the United States which contains an exchange of information program.

         We believe that we are a "qualified foreign corporation" because (i)
the ADSs trade on the New York Stock Exchange and (ii) we are eligible for the
benefits of the comprehensive income tax treaty between Mexico and the United
States which includes an exchange of information program. Accordingly, we
believe that any dividends we pay should constitute "qualified dividend income"
for United States federal income tax purposes. There can be no assurance,
however, that we will continue to be considered a "qualified foreign
corporation" and that our dividends will continue to be "qualified dividend
income."

Taxation of capital gains on disposition of CPOs or ADSs

         The sale or exchange of CPOs or ADSs will result in the recognition of
gain or loss by a U.S. Shareholder for U.S. federal income tax purposes in an
amount equal to the difference between the amount realized and the U.S.
Shareholder's tax basis therein. That gain or loss recognized by a U.S.
Shareholder will be long-term capital gain or loss if the U.S. Shareholder's
holding period for the CPOs or ADSs exceeds one year at the time of disposition.
Long-term capital gain realized by a U.S. Shareholder that is an individual (as
well as certain trusts and estates) upon the sale or exchange of CPOs or ADSs
before the end of a taxable year which begins before January 1, 2011, generally
will be subject to a maximum United States federal income tax rate of 15
percent. The deduction of capital losses is subject to limitations. Gain from
the sale or exchange of the CPOs or ADSs usually will be treated as U.S. source
for foreign tax credit purposes; losses will generally be allocated against U.S.
source income. Deposits and withdrawals of CPOs by U.S. Shareholders in exchange
for ADSs will not result in the realization of gain or loss for U.S. federal
income tax purposes.

                                      151


United States Backup Withholding and Information Reporting

         A U.S. Shareholder may, under certain circumstances, be subject to
information reporting with respect to some payments to that U.S. Shareholder
such as dividends or the proceeds of a sale or other disposition of the CPOs or
ADSs. Backup withholding at a 28 percent rate also may apply to amounts paid to
such holder unless such holder (i) is a corporation or comes within certain
exempt categories, and demonstrates this fact when so required, or (ii) provides
a correct taxpayer identification number and otherwise complies with applicable
requirements of the backup withholding rules. Backup withholding is not an
additional tax. Amounts withheld as backup withholding may be creditable against
the U.S. Shareholder's federal income tax liability, and the U.S. Shareholder
may obtain a refund of any excess amounts withheld under the backup withholding
rules by filing the appropriate claim for refund with the Internal Revenue
Service and furnishing any required information.

DOCUMENTS ON DISPLAY

         We are subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance with these requirements, file reports
and information statements and other information with the Securities and
Exchange Commission. These reports and information statements and other
information filed by us with the Securities and Exchange Commission can be
inspected and copied at the public reference room of the Securities and Exchange
Commission at 100 F Street, N.E., Washington, D.C. 20549.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          ----------------------------------------------------------

         See Item 5 -- "Operating and Financial Review and Prospects --
Derivatives and Other Hedging Instruments."

ITEM 12 - DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
          ------------------------------------------------------

         Not applicable.


                                      152



                                     PART II


ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
          -----------------------------------------------

         None.

ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
          USE OF PROCEEDS
          ------------------------------------------------------------

         None.

ITEM 15 - CONTROLS AND PROCEDURES
          -----------------------

DISCLOSURE CONTROLS AND PROCEDURES

         We maintain a system of disclosure controls and procedures designed to
provide reasonable assurance that information required to be disclosed in the
reports that we file under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Executive Vice President of Planning
and Finance, to allow timely decisions regarding required disclosure.

         Our Chief Executive Officer and Executive Vice President of Planning
and Finance have evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act). Based on such evaluation, such officers have concluded that our
disclosure controls and procedures are effective as of December 31, 2006.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

         Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in the rules
promulgated under the Exchange Act. Internal control over financial reporting is
a process designed to provide reasonable assurance regarding the reliability of
our financial reporting and the preparation of financial statements for external
reporting purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting
is not intended to provide absolute assurance that a misstatement of our
financial statements would be prevented or detected.

         Under the supervision and with the participation of our management,
including our Chief Executive Officer and principal financial and accounting
officers, we conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in "Internal
Control--Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). The evaluation included a
review of the documentation of controls, evaluation of the design effectiveness
of controls, and testing of the operating effectiveness of controls.

         Based on this evaluation, our management has concluded that internal
control over financial reporting was effective as of December 31, 2006.
Management's assessment of the effectiveness of our internal control over
financial reporting as December 31, 2006 has been audited by KPMG, an
independent registered public accounting firm, as stated in their report, which
can be found on page F-3 below.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.

         In 2006, we begun the implementation of an IT platform supporting our
business model, that includes an Enterprise Resource Planning ("ERP") system, in
some of our operations acquired in Europe in 2005. We plan to continue the
implementation of this platform over the course of the next few years, where we
consider appropriate. This business model is intended to improve the efficiency
of our operations and financial information process. There were no other changes
in our internal control over financial reporting during 2006 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

                                      153


ITEM 16A - AUDIT COMMITTEE FINANCIAL EXPERT
           --------------------------------

         Our board of directors has determined that it has an "audit committee
financial expert" (as defined in Item 16A of Form 20-F) serving on its audit
committee. Mr. Jose Manuel Rincon Gallardo meets the requisite qualifications.

ITEM 16B - CODE OF ETHICS
           --------------

         We have adopted a written code of ethics that applies to all our senior
executives, including our principal executive officer, principal financial
officer and principal accounting officer.

         You may view our code of ethics in the corporate governance section of
our website (www.cemex.com), or you may request a copy of our code of ethics, at
no cost, by writing to or telephoning us as follows:

                  CEMEX, S.A.B. de C.V.
                  Av. Ricardo Margain Zozaya #325
                  Colonia Valle del Campestre
                  Garza Garcia, Nuevo Leon, Mexico 66265.
                  Attn:  Luis Hernandez or Javier Amaya
                  Telephone:  (011-5281) 8888-8888

ITEM 16C - PRINCIPAL ACCOUNTANT FEES AND SERVICES
           --------------------------------------

         Audit Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide charged us approximately Ps179 million in fiscal year 2006 in
connection with the professional services rendered for the audit of our annual
financial statements and services normally provided by them relating to
statutory and regulatory filings or engagements. In fiscal year 2005, KPMG
Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide billed us approximately
Ps138 million for these services.

         Audit-Related Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide billed us approximately Ps3 million in fiscal year 2006 for assurance
and related services reasonably related to the performance of our audit. In
fiscal year 2005, KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide
charged us approximately Ps6 million for audit-related services.

         Tax Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide
charged us approximately Ps25 million in fiscal year 2006 for tax compliance,
tax advice and tax planning. KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide billed us approximately Ps32 million for tax-related services in
fiscal year 2005.

         All Other Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide billed us Ps4 million in fiscal year 2006 for products and services
other than those comprising audit fees, audit-related fees and tax fees. In
fiscal year 2005, KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide
charged us approximately Ps1 million for products and services in this category.
These fees relate mainly to services provided by KPMG to us with respect to our
due diligence activities around the world.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

         Our audit committee is responsible, among other things, for the
appointment, compensation and oversight of our external auditors. To assure the
independence of our independent auditors, our audit committee pre-approves
annually a catalog of specific audit and non-audit services in the categories
Audit Services, Audit-Related Services, Tax-Related Services, and Other Services
that may be performed by our auditors, as well as the budgeted fee levels for
each of these categories. All other permitted services must receive a specific
approval from our audit committee. Our external auditor periodically provides a
report to our audit committee in order for our audit committee to review the
services that our external auditor is providing, as well as the status and cost
of those services.

                                      154


         During 2006, none of the services provided to us by our external
auditors were approved by our audit committee pursuant to the de minimis
exception to the pre-approval requirement provided by paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.

ITEM 16D - EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
           ----------------------------------------------------------

         Not applicable.

ITEM 16E - PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
           AFFILIATED PURCHASERS
           ----------------------------------------------------------

         In connection with our 2004 and 2005 annual shareholders' meetings held
on April 28, 2005, and April 27, 2006, respectively, our shareholders approved
stock repurchase programs in an amount of up to Ps6,000 million (nominal amount)
implemented between April 2005 and April 2007. No shares were purchased under
this program.

         In connection with our 2006 annual shareholders' meeting held on April
26, 2007, our shareholders approved a stock repurchase program in an amount of
up to Ps6,000 million (nominal amount) to be implemented between April 2007 and
April 2008. As of the date of this annual report, no shares had been repurchased
under this program.

                                      155



                                    PART III


ITEM 17 - FINANCIAL STATEMENTS
          --------------------

         Not applicable.

ITEM 18 - FINANCIAL STATEMENTS
          --------------------

         See pages F-1 through F-81, incorporated herein by reference.

ITEM 19 - EXHIBITS



        
1.1        Amended and Restated By-laws of CEMEX, S.A.B. de C.V. (a)
2.1        Form of Trust Agreement between CEMEX, S.A.B. de C.V., as founder of the trust, and Banco
           Nacional de Mexico, S.A. regarding the CPOs. (b)
2.2        Amendment Agreement, dated as of November 21, 2002, amending the Trust Agreement between CEMEX,
           S.A.B. de C.V., as founder of the trust, and Banco Nacional de Mexico, S.A. regarding the CPOs.
           (c)
2.3        Form of CPO Certificate. (b)
2.4        Form of Second Amended and Restated Deposit Agreement (A and B share CPOs), dated as of August
           10, 1999, among CEMEX, S.A.B. de C.V., Citibank, N.A. and holders and beneficial owners of
           American Depositary Shares. (b)
2.5        Form of American Depositary Receipt (included in Exhibit 2.3) evidencing American Depositary
           Shares. (b)
2.6        Form of Certificate for shares of Series A Common Stock of CEMEX, S.A.B. de C.V. (b)
2.7        Form of Certificate for shares of Series B Common Stock of CEMEX, S.A.B. de C.V. (b)
4.1        Note Purchase Agreement, dated June 23, 2003, by and among CEMEX Espana Finance, LLC, as
           issuer, and several institutional purchasers named therein, in connection with the issuance by
           CEMEX Espana Finance, LLC of U.S.$103 million aggregate principal amount of Senior Notes due
           2010, U.S.$96 million aggregate principal amount of Senior Notes due 2013, U.S.$201 million
           aggregate principal amount of Senior Notes due 2015. (d)
4.1.1      Amendment No. 1 to Note Purchase Agreement, dated September 1, 2006. (g)
4.2        Euro250,000,000 and Yen19,308,000,000 Term and Revolving Facilities Agreement, dated as of March 30,
           2004, by and among CEMEX Espana, as borrower, Banco Bilbao Vizcaya Argentaria, S.A. and Societe
           Generale, as mandated lead arrangers, and the several banks and other financial institutions
           named therein, as lenders. (d)
4.3        CEMEX Espana Finance LLC Note Purchase Agreement, dated as of April 15, 2004 for Yen4,980,600,000
           1.79% Senior Notes, Series 2004, Tranche 1, due 2010 and Yen6,087,400,000 1.99% Senior Notes,
           Series 2004, Tranche 2, due 2011. (e)
4.3.1      Amendment No. 1 to CEMEX Espana Finance LLC Note Purchase Agreement, dated September 1, 2006.
           (g)
4.4        U.S.$700,000,000 Amended and Restated Credit Agreement, dated as of June 6, 2005, among CEMEX,
           S.A.B. de C.V., as Borrower and CEMEX Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A.
           de C.V., as Guarantors, and Barclays Bank PLC as Issuing Bank and Documentation Agent and ING
           Bank N.V. as Issuing Bank and Barclays Capital, the Investment Banking division of Barclays
           Bank Plc as Joint Bookrunner and ING Capital LLC as Joint Bookrunner and Administrative Agent.
           (g)
4.4.1      Amendment No. 1 to U.S.$700,000,000 Amended and Restated Credit Agreement, dated June 21, 2006.
           (g)
4.4.2      Amendment and Waiver Agreement to U.S.$700,000,000 Amended and Restated Credit Agreement, dated
           dated December 1, 2006. (g)
4.4.3      Amendment No. 3 to U.S.$700,000,000 Amended and Restated Credit Agreement, dated May 9, 2007.
           (g)
4.5        U.S.$3,800,000,000 Term and Revolving Facilities Agreement, dated September 24, 2004 for CEMEX
           Espana, S.A., as Borrower, arranged by Citigroup Global Markets Limited and Goldman Sachs
           International with Citibank International PLC acting as Agent. (e)
4.6        Implementation Agreement, dated September 27, 2004, by and between CEMEX UK Limited and RMC
           Group p.l.c. (e)
4.7        Scheme of Arrangement, dated October 25, 2004, pursuant to which CEMEX UK Limited acquired the
           outstanding shares of RMC Group p.l.c. (e)
4.8        Asset Purchase Agreement by and between CEMEX, Inc. and Votorantim Participacoes S.A., dated as
           of February 4, 2005. (e)
4.8.1      Amendment No. 1 to Asset Purchase Agreement, dated as of March 31, 2005, by and between CEMEX,
           Inc. and Votorantim Participacocoes S.A. (e)
4.9        U.S.$1,200,000,000 Term Credit Agreement, dated as of May 31, 2005, among CEMEX, S.A.B. de
           C.V., as Borrower, CEMEX Mexico, S.A. de C.V., as Guarantor, Empresas Tolteca de Mexico, S.A.
           de C.V., as Guarantor, Barclays Bank PLC, as Administrative Agent, Barclays Capital, the
           Investment Banking Division of Barclays Bank PLC, as Joint Lead Arranger and Joint Bookrunner,
           and Citigroup Global Markets Inc., as Documentation Agent, Joint Lead Arranger and Joint
           Bookrunner. (f)


                                      156




        
4.9.1      Amendment No. 1 to U.S.$1,200,000,000 Term Credit Agreement, dated as of June 19, 2006. (g)
4.9.2      Amendment and Waiver Agreement to U.S.$1,200,000,000 Term Credit Agreement, dated as of
           November 30, 2006. (g)
4.9.3      Amendment No. 3 to U.S.$1,200,000,000 Term Credit Agreement, dated as of May 9, 2007. (g)
4.10       U.S.$700,000,000 Term and Revolving Facilities Agreement, dated June 27, 2005, for New Sunward
           Holding B.V., as Borrower, CEMEX, S.A.B. de C.V., CEMEX Mexico, S.A. de C.V. and Empresas
           Tolteca De Mexico, S.A. de C.V., as Guarantors, arranged by Banco Bilbao Vizcaya Argentaria,
           S.A., BNP Paribas and Citigroup Global Markets Limited, as Mandated Lead Arrangers and Joint
           Bookrunners, the several financial institutions named therein, as Lenders, and Citibank, N.A.,
           as Agent. (f)
4.10.1     Amendment Agreement to U.S.$700,000,000 Term and Revolving Facilities Agreement, dated June 22,
           2006. (g)
4.10.2     Deed of Waiver and Second Amendment to U.S.$700,000,000 Term and Revolving Facilities
           Agreement, dated November 30, 2006. (g)
4.11       Note Purchase Agreement, dated as of June 13, 2005, among CEMEX Espana Finance LLC, as issuer,
           and several institutional purchasers, relating to the private placement by CEMEX Espana
           Finance, LLC of U.S.$133,000,000 aggregate principal amount of 5.18% Senior Notes due 2010, and
           U.S.$192,000,000 aggregate principal amount of 5.62% Senior Notes due 2015. (f)
4.11.1     Amendment No. 1 to Note Purchase Agreement, dated September 1, 2006. (g)
4.12       Amended and Restated Limited Liability Company Agreement of CEMEX Southeast LLC, dated as of
           July 1, 2005, among CEMEX Southeast LLC, CEMEX Southeast Holdings, LLC, Ready Mix USA, Inc. and
           CEMEX, Inc. (f)
4.12.1     Amendment No. 1 to Amended and Restated Limited Liability Company Agreement of CEMEX Southeast
           LLC, dated as of September 1, 2005, among CEMEX Southeast LLC, CEMEX Southeast Holdings, LLC,
           Ready Mix USA, Inc. and CEMEX, Inc. (f)
4.13       Limited Liability Company Agreement of Ready Mix USA, LLC, dated as of July 1, 2005, among
           Ready Mix USA, LLC, CEMEX Southeast Holdings, LLC, Ready Mix USA, Inc. and CEMEX, Inc. (f)
4.13.1     Amendment No. 1 to Limited Liability Company Agreement of Ready Mix USA, LLC, dated as of
           September 1, 2005, among Ready Mix USA, LLC, CEMEX Southeast Holdings, LLC, Ready Mix USA, Inc.
           and CEMEX, Inc. (f)
4.14       Asset and Capital Contribution Agreement, dated as of July 1, 2005, among Ready Mix USA, Inc.,
           CEMEX Southeast Holdings, LLC, and CEMEX Southeast LLC. (f)
4.15       Asset and Capital Contribution Agreement, dated as of July 1, 2005, among Ready Mix USA, Inc.,
           CEMEX Southeast Holdings, LLC, and Ready Mix USA, LLC. (f)
4.16       Asset Purchase Agreement, dated as of September 1, 2005, between Ready Mix USA, LLC and RMC
           Mid-Atlantic, LLC. (f)
4.17       U.S.$1,200,000,000 Acquisition Facility Agreement, dated as of October 24, 2006, between CEMEX
           S.A.B. de C.V., as Borrower, CEMEX Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de
           C.V., as Guarantors, and BBVA Bancomer, S.A. Institucion de Banca Multiple, Grupo Financiero
           BBVA Bancomer, acting as Agent. (g)
4.18       U.S.$9,000,000,000 Acquisition Facilities Agreement, dated as of December 6, 2006, between
           CEMEX Espana, S.A., as Borrower, Citigroup Global Markets Limited, The Royal Bank of Scotland
           PLC, and Banco Bilbao Vizcaya Argentaria, S.A. as Mandated Lead Arrangers and Joint
           Bookrunners, as amended on December 21, 2006. (g)
4.19       Debenture Purchase Agreement, dated as of December 11, 2006, among C5 Capital (SPV) Limited, as
           issuer, CEMEX S.A.B. de C.V., CEMEX Mexico, S.A. de C.V., New Sunward Holding B.V., New Sunward
           Holding Financial Ventures B.V., and J.P. Morgan Securities Inc, as representative of the
           several initial institutional purchasers named therein, in connection with the issuance by C5
           Capital (SPV) Limited (CEMEX, S.A.B. de C.V.) of U.S.$350,000,000 aggregate principal amount of
           6.196% Fixed-to-Floating Rate Callable Perpetual Debentures. (g)
4.20       Debenture Purchase Agreement, dated as of December 11, 2006, among C10 Capital (SPV) Limited,
           as issuer, CEMEX S.A.B. de C.V., CEMEX Mexico, S.A. de C.V., New Sunward Holding B.V., New
           Sunward Holding Financial Ventures B.V., and J.P. Morgan Securities Inc, as representative of
           the several initial institutional purchasers named therein, in connection with the issuance by
           C10 Capital (SPV) Limited (CEMEX, S.A.B. de C.V.) of U.S.$900,000,000 aggregate principal
           amount of 6.722% Fixed-to-Floating Rate Callable Perpetual Debentures. (g)
4.21       Debenture Purchase Agreement, dated as of February 6, 2007, among C8 Capital (SPV) Limited, as
           issuer, CEMEX S.A.B. de C.V., CEMEX Mexico, S.A. de C.V., New Sunward Holding B.V., New Sunward
           Holding Financial Ventures B.V., and J.P. Morgan Securities Inc, as representative of the
           several initial institutional purchasers named therein, in connection with the issuance by C8
           Capital (SPV) Limited (CEMEX, S.A.B. de C.V.) of U.S.$750,000,000 aggregate principal amount of
           6.640% Fixed-to-Floating Rate Callable Perpetual Debentures. (g)
4.22       Subscription Agreement, dated as of February 28, 2007, among CEMEX Finance Europe B.V., as
           issuer, and several institutional purchasers, relating to the issuance by CEMEX Finance Europe
           B.V. of Euro900,000,000 aggregate principal amount of 4.75% Notes due 2014. (g)
4.23       Bid Agreement, dated as of April 9, 2007, among CEMEX, S.A.B. de C.V., CEMEX Australia Pty Ltd
           and Rinker Group Limited. (g)


                                      157



        

4.24       Debenture Purchase Agreement, dated as of May 3, 2007, among C10-EUR Capital (SPV) Limited, as
           issuer, CEMEX S.A.B. de C.V., CEMEX Mexico, S.A. de C.V., New Sunward Holding B.V., New Sunward
           Holding Financial Ventures B.V., and the institutional purchasers named therein, in connection
           with the issuance by C10-EUR Capital (SPV) Limited (CEMEX, S.A.B. de C.V.) of Euro730,000,000
           aggregate principal amount of 6.277% Fixed-to-Floating Rate Callable Perpetual Debentures. (g)
8.1        List of subsidiaries of CEMEX, S.A.B. de C.V. (g)
12.1       Certification of the Principal Executive Officer of CEMEX, S.A.B. de C.V. pursuant to Section
           302 of the Sarbanes-Oxley Act of 2002. (g)
12.2       Certification of the Principal Financial Officer of CEMEX, S.A.B. de C.V. pursuant to Section
           302 of the Sarbanes-Oxley Act of 2002. (g)
13.1       Certification of the Principal Executive and Financial Officers of CEMEX, S.A.B. de C.V.
           pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
           Act of 2002. (g)
14.1       Consent of KPMG Cardenas Dosal, S.C. to the incorporation by reference into the effective
           registration statements of CEMEX, S.A.B. de C.V. under the Securities Act of 1933 of their
           report with respect to the consolidated financial statements of CEMEX, S.A.B. de C.V., which
           appears in this Annual Report on Form 20-F. (g)



_____________________

(a)   Incorporated by reference to Post-Effective Amendment No. 4 to the
      Registration Statement on Form F-3 of CEMEX, S.A.B. de C.V. (Registration
      No. 333-11382), filed with the Securities and Exchange Commission on
      August 27, 2003.
(b)   Incorporated by reference to the Registration Statement on Form F-4 of
      CEMEX, S.A.B. de C.V. (Registration No. 333-10682), filed with the
      Securities and Exchange Commission on August 10, 1999.
(c)   Incorporated by reference to the 2002 annual report on Form 20-F of CEMEX,
      S.A.B. de C.V. filed with the Securities and Exchange Commission on April
      8, 2003.
(d)   Incorporated by reference to the 2003 annual report on Form 20-F of CEMEX,
      S.A.B. de C.V. filed with the Securities and Exchange Commission on May
      11, 2004.
(e)   Incorporated by reference to the 2004 annual report on Form 20-F of CEMEX,
      S.A.B. de C.V. filed with the Securities and Exchange Commission on May
      27, 2005.
(f)   Incorporated by reference to the 2005 annual report on Form 20-F of CEMEX,
      S.A.B. de C.V. filed with the Securities and Exchange Commission on June
      8, 2006.
(g)   Filed herewith.



                                      158



                                   SIGNATURES


         CEMEX, S.A.B. de C.V. hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.


                                           CEMEX, S.A.B. de C.V.


                                           By:  /s/ Lorenzo H. Zambrano
                                                -----------------------
                                                Name:   Lorenzo H. Zambrano
                                                Title:  Chief Executive Officer

Date:  June 29, 2007





        INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
        ----------------------------------------------------------------

                                                                            Page
                                                                          ------
CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES:

Independent Auditors' Report--KPMG Cardenas Dosal, S.C...................... F-2

Internal control over financial reporting--KPMG Cardenas Dosal, S.C......... F-3

Audited consolidated balance sheets as of December 31, 2005 and 2006........ F-4

Audited consolidated statements of income for the years ended
December 31, 2004, 2005 and 2006............................................ F-5

Audited statements of changes in stockholders' equity for the years
ended December 31, 2004, 2005 and 2006 ..................................... F-6

Audited consolidated statements of changes in financial position
for the years ended December 31, 2004, 2005 and 2006 ....................... F-7

Notes to the audited consolidated financial statements...................... F-8

SCHEDULES

Independent Auditors' Report on Schedules - KPMG Cardenas Dosal, S.C........ S-1

Schedule I - Parent company financials only................................. S-2

Schedule II - Valuation and qualifying accounts.............................S-12


                                      F-1



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders
CEMEX, S.A.B. de C. V.:

We have audited the accompanying consolidated balance sheets of CEMEX, S.A.B. de
C.V. and subsidiaries as of December 31, 2005 and 2006, and the related
consolidated statements of income, changes in stockholders' equity and changes
in financial position for each of the years ended December 31, 2004, 2005 and
2006. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and with auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and are prepared in accordance with Mexican Financial
Reporting Standards. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CEMEX, S.A.B. de
C.V. and subsidiaries as of December 31, 2005 and 2006, and the results of their
operations, the changes in their stockholders' equity and the changes in their
financial position for each of the years ended December 31, 2004, 2005 and 2006,
in conformity with Mexican Financial Reporting Standards.

The accompanying consolidated financial statements as of and for the year ended
December 31, 2006 have been translated into United States dollars solely for the
convenience of the reader. We have audited the translation and, in our opinion,
the consolidated financial statements expressed in Mexican pesos have been
translated into dollars on the basis set forth in note 3A) of the notes to the
consolidated financial statements.

Mexican Financial Reporting Standards vary in certain significant respects from
accounting principles generally accepted in the United States of America.
Application of accounting principles generally accepted in the United States of
America would have affected results of operations for each of the years ended
December 31, 2004, 2005, and 2006, and stockholders' equity as of December 31,
2005 and 2006, to the extent summarized in note 24 to the consolidated financial
statements.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of CEMEX, S.A.B.
de C.V. and subsidiaries internal control over financial reporting as of
December 31, 2006, based on criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated June 26, 2007 expressed an unqualified
opinion on management's assessment of, and the effective operation of, internal
control over financial reporting.

KPMG Cardenas Dosal, S.C.




/s/ Leandro Castillo Parada

Monterrey, N.L., Mexico
June 26, 2007

                                      F-2



    INTERNAL CONTROL REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
CEMEX, S.A.B. de C. V.:

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting, that CEMEX,
S.A.B. de C.V. ( the Company) maintained effective internal control over
financial reporting as of December 31, 2006, based on criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that CEMEX, S.A.B. de C.V. maintained
effective internal control over financial reporting as of December 31, 2006, is
fairly stated, in all material respects, based on criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Also, in our opinion, CEMEX,
S.A.B. de C.V. maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2006, based on criteria established
in Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
CEMEX S.A.B. de C.V., and subsidiaries as of December 31, 2006 and 2005, and the
related consolidated statements of income, changes in stockholders' equity and
changes in financial position for each of the years ended December 31, 2004,
2005 and 2006, and our report dated June 26, 2007 expressed an unqualified
opinion on those consolidated financial statements.

KPMG Cardenas Dosal, S.C.




/s/ Leandro Castillo Parada

Monterrey, N.L., Mexico
June 26, 2007

                                      F-3




                           CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
                                 CONSOLIDATED BALANCE SHEETS
                (MILLIONS OF CONSTANT MEXICAN PESOS AS OF DECEMBER 31, 2006)

                                                                                                  DECEMBER 31,
                                                                               ------------------------------------------------
                                                                                                                    2006
                                                                                                                 CONVENIENCE
                                                                                                                 TRANSLATION
                                                                  NOTES                 2005          2006        (note 3A)
------------------------------------------------------------------------------------------------------------ ------------------
                                 ASSETS                                                                     |
                                                                                                       
CURRENT ASSETS                                                                                              |
Cash and investments.............................................   4        Ps         6,963       17,051  |  U.S.$   1,579
Trade receivables less allowance for doubtful accounts...........   5                  18,440       15,236  |          1,411
Other accounts receivable........................................   6                   8,979        8,488  |            786
Inventories......................................................   7                  12,009       12,884  |          1,193
Other current assets.............................................   8                   1,850        2,079  |            192
                                                                               -------------- ------------  |    --------------
     Total current assets........................................                      48,241       55,738  |          5,161
                                                                               -------------- ------------  |    --------------
NON-CURRENT ASSETS                                                                                          |
Investments in associates........................................   9A                  9,728        7,654  |            709
Other investments and non-current accounts receivable...........    9B                  8,324        9,567  |            886
Properties, machinery and equipment, net........................    10                179,942      185,714  |         17,196
Goodwill, intangible assets and deferred charges................    11                 63,631       65,025  |          6,020
                                                                               -------------- ------------  |    --------------
     Total non-current assets....................................                     261,625      267,960  |         24,811
                                                                               -------------- ------------  |    --------------
     TOTAL ASSETS................................................            Ps       309,866      323,698  |  U.S.$  29,972
                                                                               -------------- ------------  |    --------------
                  LIABILITIES AND STOCKHOLDERS' EQUITY                                                      |
CURRENT LIABILITIES                                                                                         |
Short-term debt including current                                                                           |
  maturities of long-term debt...................................   12       Ps        13,788       13,514  |  U.S.$   1,252
Trade payables...................................................                      15,771       18,541  |          1,717
Other accounts payable and accrued expenses......................   13                 18,070       15,861  |          1,468
                                                                               -------------- ------------  |    --------------
     Total current liabilities...................................                      47,629       47,916  |          4,437
                                                                               -------------- ------------  |
NON-CURRENT LIABILITIES                                                                                     |
Long-term debt...................................................   12                 95,944       67,927  |          6,290
Pension and other postretirement benefits........................   14                  6,966        6,900  |            639
Deferred income taxes............................................  15B                 28,224       27,770  |          2,571
Other non-current liabilities....................................   13                 11,227       13,576  |          1,256
                                                                               -------------- ------------  |    --------------
     Total non-current liabilities...............................                     142,361      116,173  |         10,756
                                                                               -------------- ------------  |    --------------
     TOTAL LIABILITIES...........................................                     189,990      164,089  |         15,193
                                                                               -------------- ------------  |
STOCKHOLDERS' EQUITY                                                                                        |
Majority interest:                                                                                          |
   Common stock..................................................  16A                  3,954        3,956  |            366
   Additional paid-in capital....................................  16A                 49,056       54,801  |          5,074
   Other equity reserves.........................................  16B               (85,986)     (86,554)  |         (8,014)
   Retained earnings.............................................  16C                122,283      140,993  |         13,055
   Net income....................................................                      24,450       25,682  |          2,378
                                                                                -------------- ------------ |     --------------
     Total majority interest.....................................                     113,757      138,878  |         12,859
   Minority interest.............................................  16F                  6,119       20,731  |          1,920
                                                                               -------------- ------------  |    --------------
     TOTAL STOCKHOLDERS' EQUITY..................................                     119,876      159,609  |         14,779
                                                                               -------------- ------------  |    --------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................            Ps       309,866      323,698  |  U.S.$  29,972
===============================================================================================================================


   The accompanying notes are part of these consolidated financial statements.

                                      F-4




                                       CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
                                         Consolidated Statements of Income
           (Millions of constant Mexican pesos as of December 31, 2006, except for earnings per share)

                                                                                      YEARS ENDED DECEMBER 31,
                                                                   ------------------------------------------------------------
                                                                                                                       2006
                                                                                                                   CONVENIENCE
                                                                                                                   TRANSLATION
                                                         NOTES          2004           2005          2006          (note 3A)
-------------------------------------------------------------------------------------------------------------------------------

                                                                                                    
Net sales..............................................   3Q    Ps     94,915       177,385       197,093      U.S.$    18,249
Cost of sales..........................................   3G          (53,417)     (107,341)     (125,804)             (11,649)
                                                                  ------------ ------------- -------------     ----------------
   GROSS PROFIT........................................                41,498        70,044        71,289                6,600

 Administrative, selling and distribution expenses.....               (19,931)      (41,253)      (39,475)              (3,655)
                                                                  ------------ ------------- -------------     ----------------

   OPERATING INCOME....................................                21,567         28,791       31,814                2,945
                                                                  ------------ ------------- -------------     ----------------

Comprehensive financing result:
   Financial expense...................................                (4,336)       (6,092)       (5,334)                (494)
   Financial income....................................                   273           455           494                   46
   Results from valuation and liquidation
     of financial instruments .........................                 1,395         4,471          (148)                 (14)
   Foreign exchange result.............................                  (275)         (912)          219                   20
   Monetary position result............................                 4,495         4,914         4,303                  398
                                                                  ------------ ------------- -------------     ----------------
     Net comprehensive financing result................                 1,552         2,836          (466)                 (44)

Other expenses, net....................................  3S            (5,635)       (3,676)         (369)                 (34)
                                                                  ------------ ------------- -------------     ----------------

   INCOME BEFORE INCOME TAXES, EMPLOYEES' STATUTORY
     PROFIT SHARING AND EQUITY IN INCOME OF ASSOCIATES.                17,484        27,951        30,979                2,867
                                                                  ------------ ------------- -------------     ----------------

Income taxes, net......................................  15            (2,137)       (3,885)       (5,254)                (486)
Employees' statutory profit sharing....................  15              (346)           10          (166)                 (15)
                                                                  ------------ ------------- -------------     ----------------
   Total income taxes and employees' statutory
      profit sharing...................................                (2,483)       (3,875)       (5,420)                (501)
                                                                  ------------ ------------- -------------     ----------------

   INCOME BEFORE EQUITY IN INCOME OF ASSOCIATES........                15,001        24,076        25,559                2,366

Equity in income of associates.........................                   467         1,012         1,314                  122
                                                                   ------------ ------------- -------------     ----------------

   Consolidated net income.............................                15,468        25,088        26,873                2,488
   Minority interest net income........................                   244           638         1,191                  110
                                                                   ------------ ------------- -------------     ----------------
   MAJORITY INTEREST NET INCOME........................          Ps    15,224        24,450        25,682      U.S.$     2,378
==========================================================================================================     =================



BASIC EARNINGS PER SHARE ............................    20      Ps      0.77          1.18          1.19      U.S.$      0.11
DILUTED EARNINGS PER SHARE...........................    20      Ps      0.76          1.17          1.19      U.S.$      0.11
==========================================================================================================     =================


   The accompanying notes are part of these consolidated financial statements.


                                      F-5




                                            CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
                                        Statement of Changes in Stockholder's Equity
                                ((Millions of constant Mexican pesos as of December 31, 2006

                                                        ADDITIONAL      OTHER                   TOTAL                  TOTAL
                                                COMMON    PAID-IN      EQUITY    RETAINED     MAJORITY   MINORITY   STOCKHOLDERS'
                                      NOTES      STOCK    CAPITAL     RESERVES   EARNINGS     INTEREST   INTEREST     EQUITY
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
BALANCES AT DECEMBER 31, 2003                 Ps  3,949     40,921     (83,915)     116,877      77,832     6,642      84,474
  Results for holding
    non-monetary assets                16B            -          -      (3,005)           -      (3,005)        -      (3,005)
  Currency translation of
    foreign subsidiaries               16B            -          -       3,568            -       3,568         -      3,568
  Hedge derivative
    financial instruments              12             -          -       2,507            -       2,507         -      2,507
  Deferred income taxes in equity      15             -          -         747            -         747         -        747
  Goodwill for acquisition of
    minority interest                  9A             -          -      (1,044)           -      (1,044)        -     (1,044)
  Net income                                          -          -           -       15,224      15,224       244     15,468
                                                ---------------------------------------------------------------------------------
Comprehensive income for the period                   -          -       2,773       15,224      17,997       244     18,241
Dividends (Ps0.21 pesos per share)     16A            -          -           -       (4,516)     (4,516)        -     (4,516)
Issuance of common stock               16A            3      4,525           -            -       4,528         -      4,528
Liquidation of optional instruments    16E            -     (1,129)          -            -      (1,129)        -     (1,129)
Treasury shares owned by subsidiaries  16B            -          -      (3,510)           -      (3,510)        -     (3,510)
Changes and transactions relating
  to minority interest................ 16F            -          -           -            -           -    (2,356)    (2,356)
                                                 --------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 2004                     3,952     44,317     (84,652)     127,585      91,202     4,530     95,732
  Results for holding
    non-monetary assets                16B            -          -      10,532            -      10,532         -     10,532
  Currency translation of
     foreign subsidiaries              16B            -          -      (4,099)           -      (4,099)        -     (4,099)
  Hedge derivative
    financial instruments              12             -          -      (1,482)           -      (1,482)        -     (1,482)
  Deferred income taxes in equity      15             -          -       1,902            -       1,902         -      1,902
  Net income                                          -          -           -       24,450      24,450       638     25,088
                                                ---------------------------------------------------------------------------------
Comprehensive income for the period                   -          -       6,853       24,450      31,303       638     31,941
Dividends (Ps0.45 pesos per share)     16A            -          -           -       (5,302)     (5,302)        -     (5,302)
Issuance of common stock               16A            2      4,739           -            -       4,741         -      4,741
Treasury shares owned by subsidiaries  16B            -          -      (8,187)           -      (8,187)        -     (8,187)
Changes and transactions relating
  to minority interest................ 16F            -          -           -            -           -       951        951
                                                ---------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 2005                     3,954     49,056     (85,986)     146,733     113,757     6,119    119,876
  Results for holding
    non-monetary assets                16B            -          -      (4,338)           -      (4,338)        -     (4,338)
  Currency translation of
    foreign subsidiaries               16B            -          -       3,071            -       3,071         -      3,071
  Hedge derivative
    financial instruments              12             -          -         136            -         136         -        136
  Deferred income taxes in equity      15             -          -        (591)           -        (591)        -        (591)
  Net income                                          -          -           -       25,682       25,682    1,191      26,873
                                                ---------------------------------------------------------------------------------
Comprehensive income for the period                   -          -      (1,722)      25,682      23,960     1,191      25,151
Dividends (Ps0.25 pesos per share)     16A            -          -           -       (5,740)     (5,740)        -      (5,740)
Issuance of common stock               16A            2      5,745           -                    5,747         -       5,747
Treasury shares owned by subsidiaries  16B            -          -       1,154            -       1,154         -       1,154
Changes and transactions
  relating to minority interest....... 16F            -          -           -            -           -    13,421      13,421
                                                ---------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 2006                 Ps  3,956     54,801     (86,554)     166,675     138,878    20,731     159,609
=================================================================================================================================

s
The accompanying notes are part of these consolidated financial statements.

                                      F-6




                                            CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                                 (Millions of constant Mexican pesos as of December 31, 2006)


                                                                                           YEARS ENDED DECEMBER 31,
                                                                      ----------------------------------------------------------
                                                                                                                     2006
                                                                                                                 CONVENIENCE
                                                                                                                 TRANSLATION
                                                               NOTES        2004           2005         2006      (note 3A)
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
OPERATING ACTIVITIES                                                                                          |
MAJORITY INTEREST NET INCOME.................................          Ps    15,224       24,450      25,682  |  U.S.$  2,378
Adjustments to reconcile majority interest                                                                    |
  net income to resources provided                                                                            |
  by operating activities:                                                                                    |
  Depreciation of properties, machinery and equipment........    10           6,985       10,887      11,393  |        1,055
  Amortization of intangible assets and deferred charges.....    11           3,000        1,750       1,479  |          137
  Impairment of assets.......................................  10,11          1,641          181         649  |           60
  Pensions and other postretirement benefits.................    14             492        2,181         844  |           78
  Deferred income taxes charged to results...................    15           1,097        1,225       1,160  |          107
  Equity in income of associates.............................    9B           (467)      (1,012)     (1,314)  |          (122)
  Minority interest..........................................                   244          638       1,191  |          110
                                                                      --------------------------------------  |       --------
  RESOURCES PROVIDED BY OPERATING ACTIVITIES.................                28,216       40,300      41,084  |        3,803
                                                                                                              |
Changes in working capital, excluding acquisition effects:                                                    |
  Trade receivables, net.....................................                   770        (504)       3,222  |          298
  Other accounts receivable and other assets.................                 (348)      (1,496)         266  |           25
  Inventories................................................                 (158)        1,718       (962)  |           (89)
  Trade payables.............................................                   164        1,990       2,761  |          256
  Other accounts payable and accrued expenses................               (2,906)      (2,094)     (2,260)  |          (209)
                                                                      --------------------------------------  |       --------
     Net change in working capital...........................               (2,478)        (386)       3,027  |          281
                                                                      --------------------------------------  |       --------
  NET RESOURCES PROVIDED BY OPERATING ACTIVITIES.............                25,738       39,914      44,111  |        4,084
                                                                      --------------------------------------  |       --------
FINANCING ACTIVITIES                                                                                          |
Proceeds from debt (repayments), net,                                                                         |
  excluding the effect of business                                                                            |
  acquisitions...............................................               (4,254)       14,618    (28,799)  |        (2,667)
Decrease of treasury shares owned by subsidiaries............                 -            -           1,781  |          165
Liquidation of optional instruments..........................               (1,129)        -       -          |
Dividends paid...............................................               (4,516)      (5,302)     (5,740)  |          (531)
Issuance of common stock from stock dividend elections.......                 4,456        4,722       5,742  |          532
Issuance of common stock under stock option programs.........                    72           19           5  |
Issuance (repurchase) of equity instruments by subsidiaries..   16F           (827)        -          13,500  |        1,250
Other financing activities, net..............................               (1,686)      (6,413)       1,594  |          148
                                                                      --------------------------------------  |       --------
  RESOURCES (USED IN) PROVIDED BY FINANCING ACTIVITIES.......               (7,884)        7,644    (11,917)  |        (1,103)
                                                                      --------------------------------------  |       --------
INVESTING ACTIVITIES                                                                                          |
Properties, machinery and equipment, net.....................    10         (5,055)      (9,093)    (14,814)  |        (1,372)
Disposal (acquisition) of subsidiaries and associates........  9A,11        (8,608)     (44,928)       2,727  |          253
Minority interest............................................               (1,528)        (169)        (79)  |            (7)
Goodwill, intangible assets and other deferred charges.......    11           1,622       11,205     (2,424)  |          (224)
Other investments and monetary foreign currency effect.......               (3,936)      (1,597)     (7,516)  |          (697)
                                                                      --------------------------------------  |       --------
  RESOURCES USED IN INVESTING ACTIVITIES.....................              (17,505)     (44,582)    (22,106)  |        (2,047)
                                                                      --------------------------------------  |       --------
  Increase in cash and investments...........................                   349        2,976      10,088  |          934
  Cash and investments at beginning of year..................                 3,638        3,987       6,963  |          645
                                                                      --------------------------------------  |       --------
  CASH AND INVESTMENTS AT END OF YEAR........................    4     Ps     3,987        6,963      17,051  |  U.S.$ 1,579
==============================================================================================================================


   The accompanying notes are part of these consolidated financial statements.

                                      F-7


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

1.   DESCRIPTION OF BUSINESS

CEMEX, S.A.B. de C.V. is a Mexican corporation, a holding company (parent) of
entities whose main activities are oriented to the construction industry,
through the production, marketing, distribution and sale of cement, ready-mix
concrete, aggregates and other construction materials. CEMEX is a public stock
corporation with variable capital (S.A.B. de C.V.) organized under the laws of
the United Mexican States, or Mexico.

At the annual stockholders' meeting held on April 27, 2006, the entity's legal
name was changed from CEMEX, Sociedad Anonima de Capital Variable, or S.A. de
C.V., to CEMEX, Sociedad Anonima Bursatil de Capital Variable or S.A.B. de C.V.,
effective from July 3, 2006. The inclusion of the word "Bursatil" to the
entity's legal name indicates that the shares of CEMEX, S.A.B. de C.V. are
listed on the Mexican Stock Exchange; therefore, the entity is a publicly held
company. The change in the legal name was made to comply with requirements of
the new Mexican Securities Law, enacted on December 28, 2005.

CEMEX, S.A.B. de C.V. was founded in 1906 and was registered with the Mercantile
Section of the Public Register of Property and Commerce in Monterrey, N.L.,
Mexico, on June 11, 1920 for a period of 99 years. In 2002 this period was
extended to the year 2100. On April 27, 2006, the stockholders of CEMEX, S.A.B.
de C.V. approved a new two-for-one stock split, which became effective on July
17, 2006. In connection with this stock split, each of our existing series "A"
shares was surrendered in exchange for two new series "A" shares, and each of
our existing series "B" shares was surrendered in exchange for two new series
"B" shares. The proportional equity interest participation of existing
stockholders did not change as a result of the stock split (note 16).

Concurrent with the stock split mentioned above, two new CPOs were issued in
exchange for each of the existing CPOs, with each new CPO representing two new
series "A" shares and one new series "B" share. In addition, CEMEX, S.A.B. de
C.V. shares are listed on the New York Stock Exchange ("NYSE") as American
Depositary Shares or "ADSs" under the symbol "CX". As a result of the stock
split, one additional ADS was issued in exchange for each existing ADS, each ADS
representing ten (10) CPOs. Unless otherwise indicated, all amounts in CPOs,
shares and prices per share for 2004 and 2005 included in these notes to the
financial statements have been adjusted to give retroactive effect to the new
stock split.

The terms "CEMEX, S.A.B. de C.V." or "the Parent Company" used in these
accompanying notes to the financial statements refer to CEMEX, S.A.B. de C.V.
without its consolidated subsidiaries. The terms "the Company" or "CEMEX" refer
to CEMEX, S.A.B. de C.V. together with its consolidated subsidiaries.

The consolidated financial statements under Mexican Financial Reporting
Standards were authorized for their issuance by the Company's management on
January 25, 2007 and approved by the stockholders at the annual ordinary
stockholders' meeting held on April 26, 2007.

2.   OUTSTANDING EVENT IN 2006

On October 27, 2006, CEMEX announced a cash offer to acquire all of the
outstanding shares of the Australian building material company, Rinker Group
Limited ("Rinker"), for 13 U.S. dollars per share, equivalent to 17 Australian
dollars per share as of the offer date. The offer represents a 27% premium over
the closing price of the share as of the announcement day. The total amount of
the transaction, including the outstanding debt of Rinker, is approximately 12.8
billion U.S. dollars, equivalent to approximately 16.8 billion Australian
dollars. The purchase offer expired originally on December 27, 2006, but was
initially extended by CEMEX to January 31, 2007 and subsequently extended until
March 31, 2007. The combination of CEMEX and Rinker, if consummated, would
create one of world's largest building materials companies. As of the date of
these financial statements, CEMEX cannot anticipate the decision of Rinker's
stockholders in response to the purchase offer.

3.   SIGNIFICANT ACCOUNTING POLICIES

A)   BASIS OF PRESENTATION AND DISCLOSURE

Beginning in 2006, the financial statements are prepared in accordance with
Mexican Financial Reporting Standards ("MFRS") issued by the Mexican Board for
Research and Development of Financial Reporting Standards ("Consejo Mexicano
para la Investigacion y Desarrollo de Normas de Informacion Financiera, A.C.",
or CINIF). The MFRS, which replaced the Generally Accepted Accounting Principles
in Mexico ("Mexican GAAP") issued by the Mexican Institute of Public Accountants
("IMCP"), recognize the effects of inflation on the financial information. The
regulatory framework of the MFRS applicable beginning in 2006 initially adopted
in their entirety the former Mexican GAAP effective in 2004 and 2005; therefore,
there were no effects in CEMEX's financial statements resulting from the
adoption of the MFRS.

                                      F-8


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


When reference is made to "pesos" or "Ps", it means Mexican pesos. Except when
specific references are made to "earnings per share" and "prices per share", the
amounts in these notes are stated in millions of constant Mexican pesos as of
the latest balance sheet date. When reference is made to "U.S.$" or "dollars",
it means dollars of the United States of America ("United States or U.S.A.").
When reference is made to "(pound)" or "pounds", it means British Pounds
Sterling. When reference is made to "(euro)" or euros, it means the currency in
circulation in a significant number of the European Union countries. Except for
per share data and as otherwise noted, all amounts in such currencies are stated
in millions.

The consolidated balance sheet as of December 31, 2006, as well as the statement
of income and the statement of changes in financial position for the year ended
December 31, 2006, include the presentation, caption by caption, of amounts
denominated in dollars under the column "Convenience translation". These amounts
in dollars have been presented solely for the convenience of the reader at the
rate of Ps10.80 pesos per dollar, the CEMEX accounting exchange rate as of
December 31, 2006. These translations are informative data and should not be
constructed as representations that the amounts in pesos actually represent
those dollar amounts or could be converted into dollars at the rate indicated.

Likewise, in the accompanying notes to the financial statements, when it deemed
relevant and only for the convenience of the reader, next to an amount in pesos
or dollars, CEMEX includes between parentheses the corresponding translation
into dollars or pesos, as applicable. When the amount between parentheses is in
dollars, it means that: a) the amount in pesos disclosed in the notes also
appears on the face of financial statements; or b) the amount was originally
generated in pesos or in a currency other than the dollar. When the amount
between parentheses is in pesos, it means that the amount in dollars was
originated from a transaction denominated in dollars. These convenience
translations were calculated dividing the peso amounts by the closing accounting
exchange rate of the respective year and restated into constant pesos as of
December 31, 2006.

B)   RESTATEMENT OF COMPARATIVE FINANCIAL STATEMENTS

The restatement factors applied to the consolidated financial statements of
prior periods were calculated using the weighted average inflation and the
fluctuation in the exchange rate of each country in which the Company operates
relative to the Mexican peso.

                                   WEIGHTED AVERAGE        MEXICAN INFLATION
                                  RESTATEMENT FACTOR      RESTATEMENT FACTOR
                                  ------------------     --------------------
2003 to 2004...................         1.0624                  1.0539
2004 to 2005...................         0.9590                  1.0300
2005 to 2006...................         1.0902                  1.0408
                                  ------------------     --------------------

Common stock and additional paid-in capital are restated by Mexican inflation.
The weighted average inflation factor is used for all other restatement
adjustments to stockholders' equity.

C)   PRINCIPLES OF CONSOLIDATION AND MAIN SUBSIDIARIES

The consolidated financial statements include those of CEMEX, S.A.B. de C.V. and
the entities in which the Parent Company holds, directly or through
subsidiaries, more than 50% of their common stock and/or has control. Control
exists when CEMEX has the power, directly or indirectly, to govern the
administrative, financial and operating policies of an entity in order to obtain
benefits from its activities.

The financial statements of joint ventures, which are those entities in which
CEMEX and third-party investors have agreed to exercise joint control, are
consolidated through the proportional integration method considering CEMEX's
interest in the results of operations, assets and liabilities of such entities,
based on International Accounting Standard 31, "Interests in Joint Ventures".
CEMEX applies the full consolidation or the equity method, as applicable, for
those joint ventures in which one of the venture partners controls the entity's
administrative, financial and operating policies.

Investments in associates (note 9A) are accounted for by the equity method, when
the Company holds between 10% and 50% of the issuer's capital stock and does not
have effective control. Under the equity method, after acquisition, the
investment's original cost is adjusted for the proportional interest of the
holding company in the affiliate's equity and earnings, considering the effects
of inflation.

All significant balances and transactions between related parties have been
eliminated in consolidation.


                                      F-9


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


The main operating subsidiaries as of December 31, 2005 and 2006, ordered by
holding company, are as follows:



                                                                                                  % INTEREST
                                                                                        ---------------------------
                   SUBSIDIARY                                       COUNTRY                   2005           2006
-------------------------------------------------------------------------------------   ------------  -------------
                                                                                                
CEMEX Mexico, S. A. de C.V.(1).............................    Mexico                        100.0          100.0
CEMEX Espana, S.A. 2.......................................    Spain                          99.7           99.7
  CEMEX Venezuela, S.A.C.A.................................    Venezuela                      75.7           75.7
  CEMEX, Inc...............................................    United States                 100.0          100.0
  CEMEX (Costa Rica), S.A. ................................    Costa Rica                     99.1           99.1
  Assiut Cement Company ...................................    Egypt                          95.8           95.8
  CEMEX Colombia, S.A. ....................................    Colombia                       99.7           99.7
  Cemento Bayano, S.A. ....................................    Panama                         99.3           99.3
  CEMEX Dominicana, S.A....................................    Dominican Republic             99.9           99.9
  CEMEX de Puerto Rico, Inc................................    Puerto Rico                   100.0          100.0
  RMC France, S.A.S........................................    France                        100.0          100.0
  CEMEX Asia Holdings Ltd.(3)..............................    Singapore                     100.0          100.0
    Solid Cement Corporation(3)............................    Philippines                   100.0          100.0
    APO Cement Corporation(3)..............................    Philippines                   100.0          100.0
    CEMEX (Thailand) Co. Ltd.(3)...........................    Thailand                      100.0          100.0
  CEMEX U.K. Ltd...........................................    United Kingdom                100.0          100.0
    CEMEX Investments Limited..............................    United Kingdom                100.0          100.0
    CEMEX Deutschland, AG. ................................    Germany                       100.0          100.0
    CEMEX Austria p.l.c. ..................................    Austria                       100.0          100.0
    Dalmacijacement d.d. ..................................    Croatia                        99.2           99.2
    CEMEX Czech Republic, s.r.o. ..........................    Czech Republic                100.0          100.0
    CEMEX Polska sp. z.o.o. ...............................    Poland                        100.0          100.0
    Danubiusbeton Betonkeszito Kft.........................    Hungary                       100.0          100.0
    Readymix Plc.(4).......................................    Ireland                        61.7           61.7
    CEMEX Holdings (Israel) Ltd. ..........................    Israel                        100.0          100.0
    SIA CEMEX .............................................    Latvia                        100.0          100.0
    CEMEX Topmix LLC, Gulf Quarries Company LLC,
       CEMEX Supermix LLC and Falcon Cement LLC(5).........    United Arab Emirates          100.0          100.0
====================================================================================================================


1. CEMEX Mexico, S.A. de C.V., the entity that indirectly holds CEMEX Espana,
   S.A. and subsidiaries, also holds 100% of the shares of Empresas Tolteca de
   Mexico, S.A. de C.V. and Centro Distribuidor de Cemento, S.A. de C.V.

2. CEMEX Espana, S.A. is the indirect holding company of all CEMEX's
   international operations.

3. Represents CEMEX's indirect interest in the economic benefits of these
   entities.

4. The Irish subsidiary is a public company, whose main minority shareholder is
   the Bank of Ireland Nominees Ltd., which owns approximately 14.2% of the
   subsidiary's common stock.

5. CEMEX owns 49% of the common stock and obtains 100% of the economic benefits
   of the operating subsidiaries in that country, through an agreement with
   other stockholders.

D) USE OF ESTIMATES

The preparation of financial statements in accordance with MFRS requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, as well as the reported amounts of
revenues and expenses during the period. These assumptions are reviewed on an
ongoing basis using available information. Actual results could differ from
these estimates.

The main captions subject to estimates and assumptions include, among others,
the book value of fixed assets, allowances for doubtful accounts, inventories
and assets for deferred income taxes, the fair market values of financial
instruments and the assets and liabilities related to labor obligations.

                                      F-10


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006



E) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FOREIGN CURRENCY FINANCIAL
STATEMENTS

Transactions denominated in foreign currencies are recorded at the exchange
rates prevailing on the dates of their execution. Monetary assets and
liabilities denominated in foreign currencies are adjusted into pesos at the
exchange rates prevailing at the balance sheet date, and the resulting foreign
exchange fluctuations are recognized in earnings, except for the exchange
fluctuations arising from foreign currency indebtedness directly related to the
acquisition of foreign entities and the fluctuations associated with related
parties balances denominated in foreign currency that are of a long-term
investment nature, considering that CEMEX does not anticipate their liquidation
in the foreseeable future, which are recorded against stockholders' equity, as
part of the foreign currency translation adjustment of foreign subsidiaries.

The financial statements of foreign subsidiaries, which are determined using the
functional currency applicable in each country, are restated in their functional
currency based on the subsidiary country's inflation rate and subsequently
translated by using the foreign exchange rate at the end of the reporting period
for balance sheet and income statement accounts.

The closing exchange rates used to translate the financial statements of the
Company's main foreign subsidiaries as of December 31, 2004, 2005 and 2006, are
as follows:

                                         PESOS PER 1 UNIT OF FOREIGN CURRENCY
                                     ------------------------------------------
                 Currency                 2004            2005           2006
                                     --------------  -------------- -----------
United States Dollar.................    11.1400        10.6200        10.8000
Euro.................................    15.0887        12.5829        14.2612
British Pound Sterling...............    21.3492        18.2725        21.1557
Colombian Peso.......................     0.0047         0.0046         0.0048
Venezuelan Bolivar...................     0.0058         0.0049         0.0050
Egyptian Pound.......................     1.8258         1.8452         1.8888
Philippine Peso......................     0.1979         0.2000         0.2203
                                     --------------- -------------- -----------

The financial statements of foreign subsidiaries are initially translated from
their functional currencies into dollars and subsequently into pesos. Therefore,
the foreign exchange rates presented in the table above between the functional
currency and the peso represent the accounting exchange rates resulting from
this methodology. Likewise, the peso to U.S. dollar exchange rate used by CEMEX
is an average of free market rates available to settle its foreign currency
transactions. The Mexican central bank ("Banco de Mexico" or "Banxico")
publishes exchange rates of the U.S. dollar, the pound sterling and the euro,
among others, vis-a-vis the peso. No significant differences exist, in any case,
between the foreign exchange rates used by CEMEX and those exchange rates
published by Banxico in the most relevant foreign currencies for CEMEX.

F)   CASH AND INVESTMENTS (NOTE 4)

The balance in this caption is comprised of available amounts of cash and cash
equivalents, represented by investments held for trading purposes, which are
easily convertible into cash and have maturities of less than three months from
the investment date. Those investments in fixed-income securities are recorded
at cost plus accrued interest. Investments in marketable securities, such as
shares of public companies, are recorded at market value. Gains or losses
resulting from changes in market values, accrued interest and the effects of
inflation arising from these investments are included in the income statements
as part of the Comprehensive Financing Result.

G)   INVENTORIES AND COST OF SALES (NOTE 7)

Inventories are recognized at the lower of replacement cost or market value.
Replacement cost is based upon the latest purchase price, the average price of
the last purchases or the last production cost. Cost of sales reflects
replacement cost of inventories at the time of sale, expressed in constant pesos
as of the balance sheet date.

The Company analyzes its inventory balances to determine if, as a result of
internal events, such as physical damage, or external events, such as
technological changes or market conditions, certain portions of such balances
have become obsolete or impaired. When an impairment situation arises, the
inventory balance is adjusted to its net realizable value, whereas, if an
obsolescence situation occurs, the inventory obsolescence reserve is increased.
In both cases, these adjustments are recognized against the results of the
period.

H) OTHER INVESTMENTS AND NON-CURRENT RECEIVABLES (NOTE 9B)

Other investments and non-current accounts receivable include the Company's
collection rights with maturities of more than twelve months as of the reporting
date. Non-current assets resulting from the valuation of derivative financial
instruments, as well as investments in private funds and other investments that
are recognized at their estimated fair value as of the balance sheet date, and
their changes in valuation are included in the income statement as part of the
Comprehensive Financing Result.

                                      F-11


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


I)   PROPERTIES, MACHINERY AND EQUIPMENT (NOTE 10)

Properties, machinery and equipment ("fixed assets") are presented at their
restated value, using the inflation index of each country, except for those
foreign assets which are restated using the inflation index of the fixed assets'
origin country and the variation in the foreign exchange rate between the
country of origin currency and the functional currency of the country holding
the asset.

Depreciation of fixed assets is recognized within "Cost of sales" and
"Administrative, selling and distibution expenses", depending on the utilization
of the respective assets, and is calculated using the straight-line method over
the estimated useful lives of the assets, except for mineral reserves, which are
depleted using the units-of-production method. The maximum useful lives by
category of assets are as follows:

                                                                       YEARS
                                                                 ---------------
Administrative buildings.............................                   50
Industrial buildings.................................                   35
Machinery and equipment in plant.....................                   20
Ready-mix trucks and motor vehicles..................                    8
Office equipment and other assets....................                   10
                                                                 ---------------

The Comprehensive Financing Result arising from indebtedness incurred during the
construction or installation period of significant fixed assets is capitalized
as part of the historical cost of such assets.

Costs incurred on operating fixed assets that result in future economic
benefits, such as an extension in their useful lives, an increase in their
production capacity or in safety, as well as those costs incurred to mitigate or
prevent environmental damage, are capitalized as part of the carrying amount of
the related assets. These capitalized costs are depreciated over the remaining
useful lives of the related fixed assets. Other costs, including periodic
maintenance on fixed assets, are expensed as incurred.

J) BUSINESS COMBINATIONS, GOODWILL, OTHER INTANGIBLE ASSETS AND DEFERRED CHARGES
(NOTE 11)

In accordance with MFRS B-7, "Business Acquisitions", effective from January 1,
2005, CEMEX applies the following accounting principles to business
combinations: a) adoption of the purchase method as the sole recognition
alternative; b) allocation of the purchase price to all assets acquired and
liabilities assumed based on their estimated fair values as of the acquisition
date; c) goodwill is not amortized and is subject to periodic impairment
evaluations; d) intangible assets acquired are identified, valued and
recognized; and e) any unallocated portion of the purchase price is recognized
as goodwill.

CEMEX capitalizes intangible assets acquired, as well as costs incurred in the
development of intangible assets, when future economic benefits associated are
identified and control over such benefits is evidentiated. Other costs not
meeting these requirements are expensed as incurred. Intangible assets are
presented at their restated value and are classified as having a definite or
indefinite life; the latter are not amortized since the period cannot be
accurately established in which the benefits associated with such intangibles
will terminate. Amortization of intangible assets of definite life is calculated
under the straight-line method.

Intangible assets acquired in a business combination are accounted for at fair
value at the acquisition date. Begining January 1, 2005, goodwill is not
amortized. In 2004, goodwill was amortized under the present worth or sinking
fund method, which was intended to provide a better matching of goodwill
amortization with the revenues generated from the acquired companies. Goodwill
generated from 1992 to 2004 was amortized over a maximum period of 20 years,
while goodwill generated before 1992 was amortized over a maximum period of 40
years.

Direct costs incurred in debt issuances or borrowings are capitalized and
amortized as part of the effective interest rate of each transaction over its
maturity. These costs include discounts, commissions and professional fees.
Direct costs incurred in the development stage of computer software for internal
use are capitalized and amortized through the operating results over the useful
life of the software, which is approximately 4 years.

Preoperational expenses are recognized in the income statement as they are
incurred. Those preoperational expenses which had been deferred through December
31, 2003, in compliance with regulations effective as of that date, continue to
be amortized over their original periods. Costs associated to research and
development activities ("R&D"), performed by CEMEX to create new products and
services, as well as to develop processes, equipments and methods to optimize
operational efficiency and reduce costs, are recognized in the operating results
as incurred. The Technology and Energy departments in CEMEX undertake all
significant R&D activities as part of their daily routines. In 2004, 2005 and
2006, total combined expenses of these departments were approximately Ps396
(U.S.$34), Ps440 (U.S.$38) and Ps464 (U.S.$43), respectively.


                                      F-12


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006



K)   IMPAIRMENT OF LONG LIVED ASSETS (NOTES 10 AND 11)

PROPERTY, MACHINERY AND EQUIPMENT, INTANGIBLE ASSETS OF DEFINITE LIFE
AND OTHER INVESTMENTS

The Company evaluates its fixed assets, intangible assets of definite life and
other investments to establish if factors such as the occurrence of a
significant adverse event, changes in the operating environment in which the
Company operates, changes in projected use or in technology, as well as
expectations of operating results for each cash generating unit, provide
elements indicating that the book value may not be recovered, in which case an
impairment loss is recorded in the income statement, within other expenses, net,
for the period when such determination is made, resulting from the excess of the
carrying amount over the net present value of estimated cash flows related to
such assets.

GOODWILL AND INTANGIBLE ASSETS OF INDEFINITE LIFE

Goodwill and other intangible assets of indefinite life are evaluated for
impairment at least once a year, during the second half of the period, by
determining the value in use (fair value) of the reporting units, which consists
in the discounted amount of estimated future cash flows to be generated by such
reporting units to which those assets relate. A reporting unit refers to a group
of one or more cash generating units, which, for purposes of the impairment
evaluation, each reporting unit is considered to comprise the entire operations
in each country. An impairment loss is recognized if such discounted cash flows
are lower than the net book value of the reporting unit. In applying the value
in use (fair value) method, CEMEX determines the discounted amount of estimated
future cash flows over a period of 5 years.

At December 31, 2004, 2005 and 2006, the geographic segments reported by CEMEX
(note 18), each integrated by multiple cash generating units, also represent
CEMEX's reporting units for purposes of testing goodwill for impairment. Based
on the Company's management analysis, it was concluded that the operating
components that integrate the reported segment have similar economic
characteristics, by considering: a) the reported segments are the level used by
CEMEX to organize and evaluate its activities in the internal information
system; b) the homogeneous nature of the items produced and traded in each
operative component, which are all used by the construction industry; c) the
vertical integration in the value chain of the products comprising each
component; d) the type of clients, which are substantially similar in all
components; e) the operative integration among operating components, evidenced
by the adoption of shared service centers; and f) the compensation system of a
specific country is based on the consolidated results of the geographic segment
and not in the particular results of the components.

Impairment evaluations are significantly sensitive, among other factors, to the
estimation of future prices of CEMEX's products, the development of operating
expenses, local and international economic trends in the construction industry,
as well as the long-term growth expectations in the different markets. Likewise,
the discount rates and the rates of growth in perpetuity used have an effect on
such impairment evaluations. CEMEX uses specific discount rates for each
reporting unit, which considers the weighted average cost of capital of each
geographic segment.

L) DERIVATIVE FINANCIAL INSTRUMENTS (NOTES 12C, D AND E)

In compliance with the guidelines established by its Risk Management Committee,
CEMEX uses derivative financial instruments ("derivative instruments"), in order
to change the risk profile associated with changes in interest rates and
exchange rates of foreign currency denominated debt agreements, as a vehicle to
reduce financing costs, as an alternative source of financing, and as hedges of:
(i) highly probable forecasted transactions, (ii) the Company's net assets in
foreign subsidiaries, and (iii) executive stock option programs.

In accordance with MFRS C-10, "Derivative Financial Instruments and Hedging
Activities" ("MFRS C-10"), CEMEX recognizes derivative financial instruments as
assets or liabilities in the balance sheet at their estimated fair value, and
the changes in such fair values are recognized in the income statement for the
period in which they occur, except for changes in fair value of derivative
instruments designated and that are effective as hedges of the variability in
the cash flows associated to existing assets or liabilities and/or forecasted
transactions. These effects are initially recognized in stockholders' equity and
subsequently reclassified to earnings as the effects of the underlying hedged
instruments or transactions impact the income statement. Some of our instruments
have been designated as hedges of debt or equity instruments.

Until December 31, 2004, no specific rules existed in Mexico for hedging
transactions; therefore, CEMEX applied international accounting rules, which in
most cases complied with the rules set forth in MFRS C-10. During 2004, 2005 and
2006, the accounting rules applied to specific derivative instruments were as
follows:

a) Changes in the estimated fair value of interest rate swaps to exchange
   floating rates for fixed rates, designated as hedges of the variability in
   the cash flows associated with the interest expense of a portion of the
   outstanding debt, as well as those instruments negotiated to hedge the
   interest rates at which certain forecasted debt is expected to be contracted
   or existing debt is expected to be renegotiated, are recognized temporarily
   in stockholders' equity. These effects are reclassified to earnings as the
   interest expense of the related debt is accrued, in the case of the
   forecasted transactions, once the related debt has been negotiated and
   recognized in the balance sheet.

b) Changes in the estimated fair value of foreign currency forwards, designated
   as hedges of a portion of the Company's net investments in foreign
   subsidiaries, are recognized in stockholders' equity, offsetting the foreign
   currency translation result (notes 3E and 16B). The accumulated effect in
   stockholders' equity is reversed through the income statement when the
   foreign investment is disposed of.

c) Beginning on January 1, 2005, changes in the estimated fair value of forward
   contracts in the Company's own shares are recognized in the income statement.
   In 2004, only the effects of those contracts designated as hedges for
   executive stock option programs were recognized in earnings as part of the
   costs related to such programs. The results derived from equity forward
   contracts not designated as hedges of the stock option programs were
   recognized in stockholders' equity upon settlement (note 12D).

                                      F-13


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


d) Changes in the estimated fair value of foreign currency forward contracts or
   options, negotiated to hedge an underlying firm commitment, are recognized
   through stockholders' equity, following the cash flow hedging model, and are
   reclassified to the income statement once the firm commitment takes place, as
   the effects from the hedged item are recognized in the income statement. With
   respect to hedges of the foreign exchange risk associated with a firm
   commitment for the acquisition of a net investment in a foreign country (note
   12D), the accumulated effect in stockholders' equity is reclassified to the
   income statement when the purchase occurs.

e) Changes in fair value generated by derivative instruments not designated as
   cash flow hedges are recognized in the income statement as they occur within
   "Results from valuation and liquidation of financial instruments".

Interests accruals generated by interest rate swaps and cross currency swaps
("CCS") are recognized as financial expense, adjusting the effective interest
rate of the related debt. Interest accruals from other hedging derivative
instruments are recorded within the same caption where the effects of the
primary instrument subject to the hedging relation are recognized.

For presentation purposes of short-term and long-term debt in the balance
sheets, the valuation effects of related CCS are recognized and presented
separately from the primary financial instruments; consequently, debt associated
to the CCS is presented in the currencies originally negotiated.

Derivative instruments are negotiated with institutions with significant
financial capacity; therefore, the Company considers the risk of non-performance
of the obligations agreed to by such counterparties to be minimal. The estimated
fair value represents the amount at which a financial asset could be bought or
sold, or a financial liability could be extinguished, between willing parties in
arm's length transaction. Occasionally, there is a reference market that
provides the estimated fair value; in the absence of such market, such value is
determined by the net present value of projected cash flows or through
mathematical valuation models. The estimated fair values of derivative
instruments determined by CEMEX and used for recognition and disclosure purposes
in the financial statements and their notes, are supported by the confirmations
of these values received from the financial counterparties.

M)   PROVISIONS

CEMEX recognizes a provision when it has a legal or constructive obligation
resulting from past events, which resolution would imply cash outflows or the
delivery of other resources owned by the Company.

RESTRUCTURING (NOTE 13)

CEMEX recognizes a provision for restructuring costs, only when the
restructuring plans have been properly finalized and authorized by management,
and have been communicated to third parties involved and/or affected prior to
the balance sheet date. These provisions may include costs not associated with
CEMEX's ongoing activities.

ASSET RETIREMENT OBLIGATIONS (NOTE 13)

CEMEX recognizes a liability for unavoidable obligations, legal or constructive,
to restore operating sites upon retirement of tangible long-lived assets at the
end of their useful lives. These liabilities represent the net present value of
estimated future cash flows to be incurred in the restoration process, and are
initially recognized against the related assets' book value. The additional
asset is depreciated during its remaining useful life. The increase in the
liability, by the passage of time, is charged to the income statement.
Adjustments to the liability for changes in the estimated cash flows or the
estimated disbursement period are made against fixed assets, and depreciation is
modified prospectively.

Asset retirement obligations are related mainly to future costs of demolition,
cleaning and reforestation, so that at the end of their operation, the sites for
the extraction of raw materials, the maritime terminals and other production
sites are left in acceptable condition.

COSTS RELATED TO REMEDIATION OF THE ENVIRONMENT (NOTES 13 AND 22)

Likewise, CEMEX recognizes a provision when it is probable that an environmental
remediation liability exists and that it will represent an outflow of resources.
The provision represents the estimated future cost of remediation.
Reimbursements from insurance companies are recognized as assets only when their
recovery is practically certain. In that case, such insurance reimbursement
assets are not offset against the provision for remediation costs. Provisions
for environmental remediation costs are recognized at their nominal value when
the time schedule for the disbursement is not clear, or when the economic effect
for the passage of time is not significant. Otherwise, such provisions are
recognized at their discounted value.

                                      F-14



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


CONTINGENCIES AND COMMITMENTS (NOTES 21 AND 22)

Obligations or losses, related to contingencies, are recognized as liabilities
in the balance sheet when present obligations exist resulting from past events,
are expected to result in an outflow of resources and the amount can be measured
reliably. Otherwise, a qualitative disclosure is included in the notes to the
financial statements. The effects of long-term commitments established with
third parties, such as supply contracts with suppliers or customers, are
recognized in the financial statements on the incurred or accrued basis, taking
into consideration the substance of the agreements. Relevant commitments are
disclosed in the notes to the financial statements. The Company does not
recognize contingent revenues, income or assets.

N) PENSIONS, OTHER POSTRETIREMENT BENEFITS AND TERMINATION BENEFITS (NOTE 14)

DEFINED CONTRIBUTION PLANS

Costs of defined contribution pension plans are recognized in the operating
results as they are incurred.

DEFINED BENEFIT PLANS, OTHER POSTRETIREMENT BENEFITS AND TERMINATION BENEFITS

In accordance with MFRS D-3, "Labor Obligations", amended beginning January 1,
2005 to incorporate the requirement to accrue those costs associated to
termination benefits not associated to a restructuring event, the costs
associated with employees' benefits for: a) defined benefit pension plans; b)
other postretirement benefits, basically comprised of health care benefits, life
insurance and seniority premiums, granted pursuant to applicable law or by
Company grant; and c) termination benefits, which mainly represent ordinary
severance payments, are recognized in the operating results, as services are
rendered, based on actuarial estimations of the benefits' present value.

The actuarial assumptions upon which the Company's employee benefit liabilities
are determined consider the use of real rates (nominal rates discounted by
inflation). Actuarial gains and losses, outside a 10% corridor of the greater of
plan assets and plan obligations, as well as the prior service cost and the
transition liability, are amortized to the operating results over the employees'
estimated active service life.

For certain pension plans, irrevocable trust funds have been created to cover
future benefit payments. These assets are valued at their estimated fair value
at the balance sheet date.

The net period cost recognized in the operating results includes: a) the
increase in the obligation resulting from additional benefits earned by
employees during the period; b) interest cost, which results from the increase
in the liability by the passage of time; c) the amortization of the actuarial
gains and losses, prior service cost and transition liability; and d) the
expected return on plan assets for the period.

In 2004, termination benefits, consisting basically of ordinary severance
payments, were recognized in the income statement as they were incurred. The
liability associated with the initial accrual resulting from the accounting
change was measured as of January 1, 2005 and recognized as part of the net
transition liability.

O) INCOME TAX, BUSINESS ASSETS TAX, EMPLOYEES' STATUTORY PROFIT SHARING AND
DEFERRED INCOME TAXES (NOTE 15)

The Income Tax ("IT"), Business Assets Tax ("BAT") and Employees' Statutory
Profit Sharing ("ESPS"), reflected in the income statements, include amounts
incurred during the period and the amounts of deferred IT and ESPS. Consolidated
deferred IT represents the summary of the amounts determined in each subsidiary
under the assets and liabilities method, by applying the enacted statutory
income tax rate to the total temporary differences resulting from comparing the
book and taxable values of assets and liabilities, considering when the amounts
became available and subject to a recoverability analysis, tax loss
carryforwards as well as other recoverable taxes and tax credits. The effect of
a change in enacted statutory tax rates is recognized in the income statement
for the period in which the change occurs and is officially declared.

Management analyzes projections of future taxable income in each consolidated
entity, to sustain the tax benefits associated with the deferred income tax
assets and tax loss carryforwards, prior to their expiration. When it is
determined that future operations would not generate enough taxable income, or
that tax strategies are no longer viable, the valuation allowance on such assets
would be increased against the income statement.

The effect of deferred ESPS is recognized for those temporary differences, which
are of a non-recurring nature, arising from the reconciliation of the net income
for the period and the taxable income for the period for ESPS.

P)   STOCKHOLDERS' EQUITY

COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL (NOTE 16A)

Balances of common stock and additional paid-in capital represent the value of
stockholders' contributions, restated to constant pesos as of the most recent
reporting period presented, using Mexican inflation.

OTHER EQUITY RESERVES (NOTE 16B)

The caption of "Other equity reserves" groups the accrued balances of items and
transactions that are, temporarily or permanently, recognized directly to
stockholders' equity. This caption includes, except for net income for the
period, the elements of "Comprehensive income", which are presented in the
statement of changes in stockholders' equity. Comprehensive income includes all
changes in stockholders' equity during a period, not resulting from investments
by owners and distributions to owners.

                                      F-15


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006



The most important items within "Other equity reserves" are as follows:

   ITEMS OF COMPREHENSIVE INCOME WITHIN "OTHER EQUITY RESERVES":

   o   Results from holding non-monetary assets, which represent the effect
       arising from the revaluation of non-monetary assets (inventories, fixed
       assets, intangible assets) in each country, using specific restatement
       factors that differ from the weighted average consolidated inflation;

   o   Currency translation effects from the translation of foreign
       subsidiaries' financial statements, net of the foreign exchange
       fluctuations arising from foreign currency indebtedness directly related
       to the acquisition of foreign subsidiaries and foreign currency related
       parties balances that are of a long-term investment nature (note 3E);

   o   The effective portion of the valuation and liquidation effects from
       derivative instruments under cash flow hedging relationships, which are
       recorded temporarily in stockholders' equity (note 3L); and

   o   The deferred income tax for the period arising from items which effects
       are directly recognized in stockholders' equity.

   ITEMS FROM "OTHER EQUITY RESERVES" NOT INCLUDED IN COMPREHENSIVE INCOME:

   o   Effects related to majority stockholders' equity for changes or
       transactions affecting minority interest stockholders' in CEMEX's
       consolidated subsidiaries;

   o   Effects attributable to majority stockholders' equity for financial
       instruments issued by consolidated subsidiaries that qualify for
       accounting purposes as equity instruments;

   o   This caption includes the adjustment related to the cancellation of own
       shares held in the Parent Company's treasury, as well as those held by
       consolidated subsidiaries; and

   o   Likewise, "Other equity reserves" include the cumulative initial effect
       of deferred income taxes arising from the adoption of the assets and
       liabilities method on January 1, 2000. Note 16B presents the consolidated
       cumulative initial effect of deferred income taxes.

RETAINED EARNINGS (NOTE 16C)

Represents the cumulative net results of prior accounting periods, net of
dividends declared to stockholders, restated to constant pesos as of the most
recent balance sheet date.

MINORITY INTEREST (NOTE 16F)

Represents the share of minority stockholders in the results and equity of
consolidated subsidiaries. Likewise, this caption includes the notional amount
of financial instruments issued by consolidated entities that qualify as equity
instruments for accounting purposes. An equity instrument, which may take the
form of a perpetual debenture or preferred stock, is an instrument in which the
issuer does not have a contractual obligation to deliver cash or other financial
asset, does not have a predefined maturity date, meaning that it is issued to
perpetuity, and in which CEMEX has the unilateral option to defer interest
payments or preferred dividends for indeterminate periods.

Q)   REVENUE RECOGNITION

CEMEX's consolidated net sales represent the value, before tax on sales, of
products and services sold by consolidated subsidiaries as a result of ordinary
activities, after the elimination of transactions between related parties.

Revenue is recognized upon delivery of products to customers, and they assume
the risk of loss. Income from activities other than the Company's main line of
business is recognized when the revenue has been realized, through goods
delivered or services rendered, and there is no condition or uncertainty
implying a reversal thereof. Income is quantified at the fair value of the
consideration received or receivable, decreased by any trade discounts or volume
rebates granted to customers.

R)   MONETARY POSITION RESULT

The monetary position result, which represents the gain or loss from holding
monetary assets and liabilities in inflationary environments, is determined by
applying the inflation rate of the country of each subsidiary to its net
monetary position (difference between monetary assets and liabilities).

S)   OTHER EXPENSES, NET

The caption "Other expenses, net" in the statements of income, consists
primarily of revenue and expense derived from transactions or events not
directly related to the Company's main activity, or which are of unusual or
non-recurring nature. The most significant items included under this caption
are: a) goodwill amortization until 2004; b) anti-dumping duties paid and
reimbursement obtained of duties previously paid; c) results from the sale of
fixed assets and long-term investments; d) impairment losses of long-lived
assets; and e) net results from the early extinguishment of debt.

                                      F-16


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


T)   EXECUTIVE STOCK OPTION PROGRAMS (NOTE 17)

Beginning in 2005, considering its mandatory application under MFRS, CEMEX
adopted the International Financial Reporting Standard No. 2, "Share-based
Payment" ("IFRS 2"). In accordance with IFRS 2, options granted to executives
are defined as equity instruments, in which services received from employees are
settled through the delivery of shares; or as liability instruments, in which
the Company incurs a liability by committing to pay, in cash or other
instruments, the intrinsic value of the option as of the exercise date. The
intrinsic value represents the existing appreciation between the market price of
the share and the exercise price of such share established in the option. Under
IFRS 2, the cost of equity instruments represents their estimated fair value at
the date of grant and is recognized in earnings during the instruments' vesting
periods. In respect to liability instruments, these instruments should be valued
at their estimated fair value at each reporting date, recognizing the changes in
valuation through the income statement. CEMEX determines the estimated fair
value of options using the binomial financial option-pricing model.

The Company determined that the options in its "fixed program" (note 17A) are
defined as equity instruments considering that the exercise price was equal to
the CPO price at the option's date of grant, remained fixed for the life of the
option and implied the issuance of new shares upon exercise. CEMEX considers
that the options granted under its other programs (note 17B, C and D) are
defined as liability instruments.

Upon adoption of IFRS 2 in 2005, the Company did not recognize cost for those
options classified as equity instruments, considering that, as of the adoption
date, the executives' exercise rights were fully vested. In respect to the
options classified as liability instruments, CEMEX determined the estimated fair
value of the outstanding options in the different programs and recognized in the
income statement in 2005 an expense, before the related income tax benefit, of
approximately Ps1,081, resulting from the difference between the estimated fair
value of the instruments and the existing accrual related to such programs,
which was quantified through the intrinsic value of the options. This expense,
which represented the cumulative initial effect arising from the change in
accounting estimate, was recognized in the caption "Results from valuation and
liquidation of financial instruments". At December 31, 2005, in accordance with
the then effective Bulletin A-7, "Comparability", the Company did not restate
the financial information of prior years.

Until 2004, in connection with those options that are classified as liability
instruments under IFRS 2, CEMEX recognized the cost associated to these options
using the intrinsic value method. In addition, until 2004, CEMEX did not
recognize cost for those options classified as equity instruments under IFRS 2.

Had the Company used during the year ended December 31, 2004, the same
accounting rules it applied in 2005 and 2006 to measure and recognize the cost
associated with executives' stock option programs, net income and basic earnings
per share would have been as follows:

                                                                       2004
                                                              ------------------
Majority interest net income as reported................  Ps             15,224
Difference between the options' fair
   value and their intrinsic value(1)...................                  (396)
                                                             ------------------
Majority interest net income pro forma..................  Ps             14,828
                                                             ==================

Basic earnings per share as reported....................  Ps               0.77
                                                             ==================
Basic earnings per share pro forma......................  Ps               0.74
                                                             ==================

(1)  In order to determine fair value in 2004, considering the different
     exchanges of options which had previously occurred, CEMEX opted for
     simplicity to value the same portfolio of options outstanding as of the
     adoption date in 2005, as if it had been in effect in 2004, using the
     market prices and other assumptions prevailing during 2004 in the option
     pricing models.

U) EMISSION RIGHTS: EUROPEAN EMISSION TRADING SYSTEM TO REDUCE GREENHOUSE GAS
EMISSIONS

CEMEX, as a cement producer, is involved in the European Emission Trading
System, which aims to reduce carbon-dioxide emissions ("CO2"), also known as
"cap and trade" scheme. Under this directive, considering historical levels of
emissions, governments of the European Union ("EU") countries have imposed
limits to the total tons of CO2 that industries can release into the atmosphere
by granting, currently at nil cost, CO2 emission allowances ("EUAs"). If upon
conclusion of an annual review period, CO2 emissions exceeded EUAs received,
CEMEX would then be required to purchase the deficit of EUAs in the market,
which would represent an additional production cost, complementary to fines or
penalties imposed by governments. Considering this is a EU initiative, the
emission allowances granted by any member state of the EU can be used to settle
emissions in another member state. Consequently, CEMEX analyzes its portfolio of
CO2 emissions and EUAs held on a consolidated basis for its cement production
operations in Europe.

CEMEX's accounting policy to recognize the effects derived from the CO2 European
Emission Trading System is the following: a) emission rights received from
different EU country members are recognized in the balance sheet at cost; this
presently means at zero value; b) any revenues received from eventual sales of
spare EUAs are recognized by decreasing "Cost of sales"; c) purchases of EUAs in
the market are recognized at cost within "Cost of sales", when they are acquired
to cover current CO2 emissions for the period, or as intangible assets, when
they are acquired to cover emissions for future periods or for trading purposes;
d) a provision is recognized against "Cost of sales" when the estimated annual
emissions of CO2 are expected to exceed the number of emission rights received
for the period.

                                      F-17


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


As of December 31, 2005 and 2006, CEMEX maintained a consolidated surplus of
EUAs held over the total tons of CO2 emissions released through the production
process. CEMEX anticipates that it will have a consolidated surplus of EUAs
during the reminder of the first allocation period (2005-2007). During 2006,
sales or purchases of EUAs were not significant.

V)   CONCENTRATION OF CREDIT

CEMEX sells its products primarily to distributors in the construction industry,
with no specific geographic concentration within the countries in which the
Company operates. No single customer individually accounted for a significant
amount of the Company's sales in 2004, 2005 and 2006, and there were no
significant accounts receivable from a single customer for the same periods. In
addition, there is no significant concentration of a specific supplier relating
to the purchase of raw materials.

W)   NEWLY ISSUED FINANCIAL REPORTING STANDARDS WITH IMPACT IN 2007

In 2006, CINIF issued the following Mexican Financial Reporting Standards
("MFRS") that will have an effect on the Company's financial statements starting
on January 1, 2007:

MFRS B-3, "Income statement". This standard modifies the current structure of
the income statement by requiring entities to present two segments on the face
of such statement. The first segment, or "Income from ordinary operations", must
include all revenues and expenses originated by the entity's main activities.
This segment could be compared to the existing "Operating income". The second
segment corresponds to the "Result from non-ordinary operations", which will
include all revenues, expenses, gains and/or losses generated by transactions or
activities other than the entity's main activities, regardless of their unusual
or non-frequent nature. This second segment would comprise the existing captions
of "Comprehensive financing result", "Other expenses, net", as well as "Equity
in income of associates". The sum of the two new segments will represent "Income
before income tax". The new MFRS B-3 eliminates the caption "Extraordinary
items". CEMEX does not anticipate a material impact on its operating results
from the adoption of MFRS B-3.

MFRS B-13, "Events subsequent to the balance sheet date". Beginning on January
1, 2007, according to MFRS B-13, certain events that occur subsequent to the
balance sheet date but before the financial statements are issued, such as debt
refinancing, are considered for disclosure but not for recognition. New MFRS
B-13 will not affect CEMEX's reported financial statements.

MFRS C-13, "Related parties". In connection with disclosure requirements in the
notes to the financial statements of transactions occurring during the period,
from January 1, 2007, the current definition of related parties is broadened to
include: a) joint ventures; b) immediate family of stockholders, members of the
Board of Directors and key management personnel or top executives; c) companies
in which people mentioned in the previous clause (b) have control or significant
influence, or the enterprise exercises significant influence on the voting
rights of the reporting entity; and d) pension funds. Key management personnel
or top executives are defined as any persons with authority and responsibility
to plan and execute, directly or indirectly, the business activities of the
reporting entity. When transactions exist, MFRS C-13 requires the disclosure of
payment conditions, balances, guarantees given (received), uncollected balances
and charges to results. Likewise, if applicable, MFRS C-13 requires disclosing
the reasons leading to transactions with related parties not being executed on
the same conditions as those entered with other independent third parties. CEMEX
does not anticipate any material impact on its current disclosures in connection
with related party transactions resulting from the adoption of MFRS C-13.

MFRS D-6, "Capitalization of comprehensive financing results". Starting on
January 1, 2007, it is mandatory to capitalize the comprehensive financing
results (interest expense, foreign exchange fluctuations and the result from
holding monetary assets) of debt associated with significant investments in
qualifying construction projects. CEMEX does not anticipate any material impact
on its operating results and net income as a result of the adoption of MFRS D-6,
considering that is the Company's current policy to capitalize the comprehensive
financing result from debt associated with significant construction projects.

4.   CASH AND INVESTMENTS

Consolidated cash and investments as of December, 31 2005 and 2006 consists of:

                                                              2005         2006
                                                     --------------------------
Cash and bank accounts........................    Ps         3,851      13,241
Fixed-income securities ......................               2,599       3,800
Investments in marketable securities..........                 513          10
                                                     --------------------------
                                                  Ps         6,963      17,051
                                                     ==========================

The increase in cash and bank accounts in 2006 is mainly due to proceeds
obtained from the issuance of perpetual notes on December 18, 2006 for
U.S.$1,250 (note 16F). These proceeds will be used to reduce debt.

                                      F-18


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


5.   TRADE ACCOUNTS RECEIVABLE

Consolidated trade accounts receivable as of December 31, 2005 and 2006 consist
of:

                                                       2005             2006
                                                --------------------------------
Trade accounts receivable.................   Ps        19,794          16,643
Allowances for doubtful accounts..........             (1,354)         (1,407)
                                                --------------------------------
                                             Ps        18,440          15,236
                                                ================================

Allowances for doubtful accounts are established according to the credit history
and risk profile of each customer.

As of December 31, 2005 and 2006, trade receivables exclude accounts for Ps7,996
(U.S.$740) and Ps11,738 (U.S.$1,087), respectively, that were sold to financial
institutions under securitization programs for the sale of trade receivables,
established in Mexico, United States, Spain and France. Under these programs,
CEMEX effectively surrenders control, risks and the benefits associated with the
trade receivables sold; therefore, the amount of receivables sold is recognized
as a sale and removed from the balance sheet at the moment of sale, except for
the amounts owed by the counterparties, which are reclassified to other
short-term accounts receivable. Trade receivables qualifying for sale do not
include amounts over certain days past due or concentrations over certain limits
to any one customer, according to the terms of the programs. The discount
granted to the acquirers of the trade receivables is recognized as an expense in
the income statements and amounted to approximately Ps132 (U.S.$12) in 2004,
Ps229 (U.S.$21) in 2005 and Ps438 (U.S.$41) in 2006.

Changes in the valuation allowance for doubtful accounts in 2005 and 2006 are as
follows:



                                                                                 2005              2006
                                                                         --------------------------------
                                                                                             
Allowances for doubtful accounts at beginning of period............. Ps            790             1,354
  Charged to selling expenses.......................................               303               254
  Deductions........................................................              (280)             (176)
  Business combinations.............................................               504                -
  Foreign currency translation and inflation effects................                37              (25)
                                                                         --------------------------------
Allowances for doubtful accounts at end of period................... Ps          1,354             1,407
                                                                         ================================

6.   OTHER ACCOUNTS RECEIVABLE

Consolidated other accounts receivable as of December 31, 2005 and 2006 consist
of:

                                                                                 2005              2006
                                                                         --------------------------------
Non-trade accounts receivable.......................................  Ps        5,286             5,440
Current portion for valuation of derivative instruments.............            1,051               345
Interest and notes receivable.......................................            1,514             1,179
Loans to employees and others.......................................              286               874
Refundable taxes....................................................              842               650
                                                                         --------------------------------
                                                                      Ps        8,979              8,488
                                                                         ================================

Non-trade accounts receivable are mainly originated by the sale of assets.
Interest and notes receivable include Ps1,493 (U.S.$138) in 2005 and Ps1,103
(U.S.$102) in 2006, arising from securitization programs (note 5).

7.   INVENTORIES

Consolidated balances of inventories as of December 31, 2005 and 2006 are
summarized as follows:

                                                                                2005              2006
                                                                         --------------------------------
Finished goods......................................................   Ps     3,630               4,321
Work-in-process.....................................................          1,866               2,131
Raw materials.......................................................          2,794               2,106
Materials and spare parts...........................................          3,296               3,718
Advances to suppliers...............................................            383                 528
Inventory in transit................................................            584                 601
Reserve for obsolescence provision..................................           (544)               (521)
                                                                         --------------------------------
                                                                       Ps    12,009              12,884
                                                                         ================================


Impairment losses of approximately Ps198 in 2004 and Ps86 in 2006 were
recognized within other expenses, net.


                                      F-19



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


8.   OTHER CURRENT ASSETS

Other current assets in the consolidated balance sheets of as of December 31,
2005 and 2006 consist of:



                                                                                2005              2006
                                                                         --------------------------------
                                                                                            
Advance payments....................................................   Ps     1,141               1,583
Assets held for sale................................................            709                 496
                                                                         --------------------------------
                                                                       Ps     1,850               2,079
                                                                         ================================


Assets held for sale are stated at their estimated realizable value, and consist
of diverse assets, including properties acquired in business combinations or
received from customers as payment of trade receivables.

9.   INVESTMENTS AND NON-CURRENT ACCOUNTS RECEIVABLE

9A)  INVESTMENTS IN ASSOCIATES

Consolidated investments in shares of associates as of December 31, 2005 and
2006 are summarized as follows:



                                                                                2005              2006
                                                                         --------------------------------
                                                                                            
Book value at acquisition date.........................................Ps     5,488               3,490
Revaluation by equity method...........................................       4,240               4,164
                                                                         --------------------------------
                                                                       Ps     9,728               7,654
                                                                         ================================


As of December 31, 2005 and 2006,  CEMEX's main investments in associates are as
follows:



                                                                   ACTIVITY       COUNTRY          %         2005       2006
                                                                -------------------------------------    -----------------------
                                                                                                         
PT Semen Gresik, Tbk............................................    Cement       Indonesia       25.5    Ps    2,770    -
Control Administrativo Mexicano, S.A. de C.V....................    Cement         Mexico        49.0          2,716      3,162
Trinidad Cement Ltd.............................................    Cement        Trinidad       20.0            354        378
Huttig Building Products Inc....................................  Materials    United States     28.1            235        345
Cancem, S.A. de C.V.............................................    Cement         Mexico        10.0            278        322
Lime & Stone Production Co. Ltd.................................  Aggregates       Israel        50.0            175        312
Ready Mix USA...................................................   Concrete    United States     49.9            372        287
Societe des Ciments Antillais...................................    Cement    French Antilles    26.1            193        206
Societe Meridionale de Carrieres................................  Aggregates       France        33.3            185        191
Lehigh White Cement Company.....................................    Cement     United States     24.5            161        173
Societe D'exploitation de Carrieres.............................  Aggregates       France        50.0            169        136
Other companies                                                       -              -                         2,120      2,142
                                                                                                            -------------------
                                                                                                         Ps    9,728      7,654
                                                                                                            ===================



In transactions which took place in July, September and October 2006, CEMEX sold
its 25.5% equity interest in PT Semen Gresik ("Gresik") for approximately
U.S.$346 (Ps3,737), including dividends declared for approximately U.S.$7
(Ps76). The sale of Gresik's shares generated a gain, net of selling expenses
and the write off of related goodwill, of approximately Ps963 (U.S.$90), which
was recognized within other expenses, net.

In connection with the sale of the Company's interest in Gresik, it was agreed
by mutual consent with the Indonesian government to discontinue the arbitration
case filed by CEMEX in December 2003 before the International Centre for
Settlement of Investment Disputes.

9B)  OTHER INVESTMENTS AND NON-CURRENT ACCOUNTS RECEIVABLE

As of December 31, 2005 and 2006, consolidated other investments and non-current
accounts receivable are summarized as follows:



                                                                                2005            2006
                                                                         --------------------------------
                                                                                            
Non-current portion from valuation of derivative instruments...........Ps     4,568               5,294
Non-current accounts receivable........................................       2,913               3,590
Investments in private funds...........................................         221                 323
Other investments......................................................         622                 360
                                                                         --------------------------------
                                                                       Ps     8,324               9,567
                                                                         ================================


In 2005 and 2006, the amounts contributed to private funds were approximately
U.S.$9 (Ps104) and U.S.$14 (Ps151), respectively.


                                      F-20



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

10.  PROPERTIES, MACHINERY AND EQUIPMENT

Consolidated properties, machinery and equipment as of December 31, 2005 and
2006 consist of:



                                                                                2005             2006
                                                                         --------------------------------
                                                                                           
Land and mineral reserves..............................................Ps    44,130              47,596
Buildings..............................................................      52,418              55,629
Machinery and equipment................................................     197,697             200,958
Construction in progress...............................................       5,757               9,541
Accumulated depreciation...............................................    (120,060)           (128,010)
                                                                         --------------------------------
                                                                       Ps   179,942             185,714
                                                                         ================================


Changes in properties, machinery and equipment in 2005 and 2006 are as follows:




                                                                                2005             2006
                                                                         --------------------------------
                                                                                          
Cost of properties, machinery and equipment at beginning of period..... Ps  223,895             300,002
Accumulated depreciation at beginning of period........................    (111,929)           (120,060)
                                                                         --------------------------------
NET BOOK VALUE AT BEGINNING OF PERIOD..................................     111,966             179,942
  Capital investments..................................................       9,221              16,637
  Disposals............................................................        (128)             (1,823)
  Acquisition through business combinations............................      76,660                 315
  Depreciation and depletion for the period............................     (10,887)            (11,393)
  Impairment losses....................................................        (181)               (563)
  Foreign currency translation and inflation effects...................      (6,709)              2,599
                                                                         --------------------------------
  Cost of properties, machinery and equipment at end of period.........     300,002             313,724
  Accumulated depreciation at end of period............................    (120,060)           (128,010)
                                                                         --------------------------------
NET BOOK VALUE AT END OF PERIOD........................................ Ps  179,942             185,714
                                                                         ================================


During 2004, 2005 and 2006, impairment losses of fixed assets for approximately
Ps1,182, Ps181 and Ps563, respectively, were recognized within other expenses,
derived from idle assets in the United Kingdom, Mexico and the Philippines.
These assets were adjusted to their estimated realizable value.

11.  GOODWILL, INTANGIBLE ASSETS AND DEFERRED CHARGES

Consolidated goodwill, intangible assets and deferred charges as of December 31,
2005 and 2006 are summarized as follows:



                                                                      2005                                     2006
                                                   -------------------------------------   ------------------------------------
                                                                Accumulated   Carrying                  Accumulated    Carrying
                                                      Cost      Amortization   Amount          Cost     Amortization    Amount
                                                   -------------------------------------   ------------------------------------
                                                                                                        
Intangible assets of indefinite useful life:
Goodwill....................................... Ps      62,502     (10,458)      52,044   Ps   61,651      (9,516)      52,135
Intangible assets of definite useful life:
Cost of internally developed software..........          3,524      (2,812)         712         5,341      (2,540)       2,801
Industrial property and trademarks.............          2,233        (378)       1,855         1,976        (779)       1,197
Mining projects................................            651         (43)         608         1,057         (72)         985
Concessions....................................            299        (151)         148           607        (316)         291
Other intangible assets........................          4,945      (1,833)       3,112         4,387      (1,722)       2,665
Deferred Charges and others:
Deferred income taxes (note 15B)...............          3,998           -        3,998         3,797           -        3,797
Intangible asset for pensions (note14) ........            659           -          659           735           -          735
Deferred financing costs.......................            576         (81)         495           517         (98)         419
                                                   -------------------------------------   ------------------------------------
                                                Ps      79,387     (15,756)      63,631   Ps   80,068     (15,043)      65,025
                                                   =====================================   ====================================


The amortization of intangible assets and deferred charges was approximately
Ps3,000 in 2004, Ps1,750 in 2005 and Ps1,479 in 2006, of which a portion of
approximately 66% in 2004 and 14% in 2005 were recognized in other expenses,
net, and the rest within operating results. In 2006, 100% of such amortization
was recognized as part of the operating results.


                                      F-21



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


INTANGIBLE ASSETS OF DEFINITE LIFE

During 2005 and 2006, CEMEX capitalized the costs incurred in the development
stage of internal-use software for Ps194 and Ps2,197, respectively. The increase
in 2006 was attributable to the Company's decision to initiate the replacement
of the technological platform in which CEMEX executes the most important
processes of its business model. The replacement of systems under this relevant
project for the Company started in the subsidiaries located in the United
Kingdom, Germany and France, obtained through the acquisition of RMC Group
p.l.c. in 2005. The items capitalized refer to direct costs incurred in the
development phase of the software and relate mainly to professional fees, direct
labor and related travel expenses. In 2007 and 2008 CEMEX will continue the
development of the new technological platform in the rest of its subsidiaries.

GOODWILL

Goodwill is recognized at the acquisition date based on the preliminary
allocation of the purchase price. If applicable, goodwill is subsequently
adjusted for any correction to the preliminary assessment given to the assets
acquired and/or liabilities assumed, within the twelve-month period after
purchase.

Changes in goodwill by reporting unit as of December 31, 2005 and 2006 are
summarized as follows:



                                                ACQUISITIONS                              ACQUISITIONS
                                       2004     (DISPOSALS)  ADJUSTMENTS(1)     2005      (DISPOSALS)  ADJUSTMENTS(1)   2006
                                   -------------------------------------------------------------------------------------------
NORTH AMERICA
                                                                                                 
United States.................. Ps      16,809        5,721         (62)      22,468           205        (1,556)     21,117
Mexico.........................          6,158            -         405        6,563             -            82       6,645
EUROPE
Spain..........................          8,117           69          (4)       8,182           530          (764)      7,948
France.........................              -        2,408           -        2,408           305            55       2,768
United Kingdom.................              -          706         924        1,630         1,440           211       3,281
Other Europe(2)................             77          812          (6)         883            97            32       1,012
CENTRAL AND SOUTH AMERICA
  AND THE CARIBBEAN
Colombia.......................          3,785            -         227        4,012             -          (121)      3,891
Venezuela......................            692            -        (150)         542             -            20         562
Dominican Republic.............            186            -         (30)         156             -            11         167
Costa Rica.....................             51            -           3           54             -           (24)         30
Other Central and South
  America and the Caribbean(3).            598          349         (16)         931             -          (148)        783
AFRICA AND MIDDLE EAST
Egypt..........................            231            -          10          241             -           (13)        228
United Arab Emirates...........              -        1,502           -        1,502             -           (75)      1,427
ASIA
Philippines....................          1,383            -        (201)       1,182             -             2       1,184
Thailand.......................            391            -           7          398             -           (40)        358
Other Asia.....................             13            -           -           13             -            (1)         12
OTHERS
Other reporting units(4).......            718            -          45          763             -           (41)        722
Associates.....................            123          (14)          7          116          (108)          (8)           -
                                   -------------------------------------------------------------------------------------------
                                Ps      39,332       11,553       1,159       52,044         2,469        (2,378)     52,135
                                   ===========================================================================================


(1)  The amounts presented in this column refer to the effects on goodwill from
     foreign exchange fluctuations during the period between the reporting
     units' currencies and the Mexican peso, and the effect of the restatement
     into constant pesos.

(2)  "Other Europe" refers to the reporting units in the Czech Republic, Ireland
     and Latvia.

(3)  "Other Central and South America and the Caribbean" refers mainly to the
     reporting units in Panama and Puerto Rico.

(4)  This segment primarily consists of CEMEX's subsidiary in the information
     technology and software development business.


                                      F-22



A)   PRINCIPAL ACQUISITIONS AND DIVESTITURES DURING 2005 AND 2006

In January 2006, CEMEX acquired an equity interest of 51% in a cement-grinding
mill facility with capacity of 400,000 tons per year in Guatemala for
approximately U.S.$17.4 (Ps188).

SALE OF GRESIK

As mentioned in note 9A, during 2006, CEMEX sold the equity interest that it
held in Gresik. The resulting goodwill write off recognized in 2006 associated
to the sale of Gresik was of approximately Ps108.

ACQUISITION OF RMC GROUP P.L.C.

On March 1, 2005, CEMEX completed the acquisition of 100% of the outstanding
stock of RMC Group p.l.c. ("RMC"). The final purchase price of the shares,
considering the 18.8% equity interest acquired in 2004, net from the sale of
certain assets in 2005, and considering acquisition expenses incurred in 2005,
amounted to approximately U.S.$4,301 (Ps46,451). This amount does not include
approximately U.S.$2,249 (Ps26,039) of assumed debt. RMC, headquartered in the
United Kingdom, was one of Europe's largest cement producers and one of the
world's largest suppliers of ready-mix and aggregates, with operations in 22
countries, primarily in Europe and the United States, and employed over 26,000
people. The assets acquired included 13 cement plants with an approximate
installed capacity of 17 million tons, located in the United Kingdom, the United
States, Germany, Croatia, Poland and Latvia. The accompanying consolidated
financial statements of CEMEX at December 31, 2005, include the balance of RMC
at December 31, 2005 and the results of operations of the acquired businesses
for the ten-month period ended December 31, 2005.

The preliminary goodwill arising from the RMC transaction in 2005 was
approximately Ps13,535 (U.S.$1,169). In 2006, CEMEX identified other costs
directly related to the purchase of approximately Ps907 (U.S.$84). Consequently,
the final price amounted to approximately U.S.$4,301 (Ps46,451). In 2006, CEMEX
concluded the allocation of the additional direct costs to the fair values of
the assets acquired and liabilities assumed, and made certain modifications to
the amounts determined during the preliminary allocation, resulting in
adjustments to the preliminary goodwill associated with this acquisition, which
at December 31, 2006 amounted to Ps14,576 (U.S.$1,350).

The final allocation of the purchase price of RMC to the fair value, as of March
1, 2005, of the assets acquired and liabilities is presented below:

                                                                FINAL ALLOCATION
                                                                      RMC
                                                                ----------------
 Current assets..............................................Ps           22,355
 Investments and other non-current assets....................              2,429
 Properties, machinery and equipment.........................             71,144
 Other assets(A).............................................                994
 Intangible assets(B)........................................              1,879
 Goodwill....................................................             14,576
                                                                ----------------
 TOTAL ASSETS ACQUIRED.......................................            113,377
                                                                ----------------
 Current liabilities(C)......................................             27,653
 Non-current liabilities(C)..................................             14,451
 Remediation liabilities.....................................              4,828
 Pensions and other postretirement benefits..................              5,851
 Deferred income tax liabilities.............................             13,502
 Other non-current liabilities ..............................                641
                                                                ----------------
 TOTAL LIABILITIES ASSUMED...................................             66,926
                                                                ----------------
 TOTAL NET ASSETS ...........................................Ps           46,451
                                                                ================

(A)  The final allocation in 2006 includes Ps730 of deferred income tax assets.

(B)  Identified intangible assets refer mainly to trade names and brands which
     have been assigned with an average useful life of approximately 5 years.

(C)  Current liabilities include Ps13,064 of short-term debt, while long-term
     liabilities include Ps12,975 of debt.


                                      F-23



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


ACQUISITION OF CONCRETERA MAYAGUEZANA

In July 2005, CEMEX acquired 15 ready-mix concrete plants through the purchase
of Concretera Mayaguezana ("Mayaguezana"), a ready-mix concrete producer located
in Puerto Rico, for approximately Ps301 (U.S.$28). The consolidated financial
statements of CEMEX as of December 31, 2005 include the balance sheet of
Mayaguezana at December 31, 2005 and its operating results for the six-month
period ended December 31, 2005. The resulting goodwill arising from this
acquisition was approximately Ps161.

OTHER ACQUISITIONS

During 2005, CEMEX made other minor acquisitions in Central America for an
aggregate purchase price of approximately Ps231 (U.S.$21), resulting in goodwill
of approximately Ps167. The acquired entities are consolidated from the date of
acquisition.

DIVESTITURE OF READYMIX ASLAND IN SPAIN, BETECNA IN PORTUGAL AND OTHER ASSETS IN
THE UNITED STATES

In December 2005, CEMEX terminated its joint ventures with the French company
Lafarge S.A. ("Lafarge"), through the sale to Lafarge of its 50% equity interest
in ReadyMix Asland S.A. ("RMA") in Spain and Betecna Betao Pronto S.A.
("Betecna") in Portugal. Subsequent to the sale and according to the agreements,
CEMEX acquired from RMA assets in the ready-mix and aggregates sector,
representing 29 concrete plants and 5 aggregates quarries. The net sale price,
considering the purchase of assets from RMA, was approximately U.S.$61 (Ps706).
CEMEX's equity interest in RMA and Betecna was acquired with the purchase of
RMC. The consolidated income statement for the year ended December 31, 2005,
includes the operating results of RMA and Betecna from March 1 to December 22,
2005, recognized under the proportionate consolidation method (note 3C).

In addition, in connection with clearances of antitrust authorities in the
United States related to the acquisition of RMC, in August 2005, ready-mix
assets were sold to California Portland Cement Company in the area of Tucson,
AZ, for an approximate amount of U.S.$16.

DIVESTITURE OF CHARLEVOIX AND DIXON IN THE UNITED STATES

In March 2005, CEMEX sold to Votorantim Participacoes S.A. the cement plants in
Charlevoix, MI, and Dixon, IL, both in the United States. In July 2005, CEMEX
sold a cement terminal located in the Great Lakes region to the City of Detroit.
The aggregate sale price of both transactions was approximately U.S.$413. The
annual capacity of the two cement plants was approximately two million tons, and
their operations represented approximately 9% of CEMEX's annual operating cash
flow in the U.S. before the RMC acquisition. The consolidated income statement
for the year ended December 31, 2005, includes the operating results of these
plants for the three-month period ended March 31, 2005. As a result of the sale
of these assets, goodwill previously generated in the purchase of CEMEX's
operations in the U.S. was reduced by approximately Ps1,712.

ALLIANCE WITH READY MIX USA, INC. ("READY MIX USA")

In July 2005, in order to satisfy construction needs in the Southeastern United
States, CEMEX Inc., the Company's subsidiary in the United States, and Ready Mix
USA, Inc. established two limited liability companies, CEMEX Southeast, LLC and
Ready Mix USA, LLC. Pursuant to the relevant agreements, CEMEX contributed to
CEMEX Southeast, LLC the cement plants in Demopolis, AL and Clinchfield, GA and
11 cement terminals. CEMEX's contributions to CEMEX Southeast, LLC represented
approximately 98% of the contributed capital, while Ready Mix USA's
contributions represented approximately 2% of the contributed capital. To Ready
Mix USA, LLC, CEMEX contributed ready-mix, aggregates and concrete block plants
in Florida and Georgia, while Ready Mix USA contributed all its ready-mix
concrete and aggregates operations in Alabama, Georgia, the Florida Panhandle
and Tennessee, as well as its concrete block operations in Arkansas, Tennessee,
Mississippi, Florida and Alabama. CEMEX's contributions to Ready Mix USA, LLC
represented approximately 9% of the contributed capital, while Ready Mix USA's
contributions represented approximately 91% of the contributed capital. CEMEX
owns a 50.01% interest, and Ready Mix USA owns a 49.99% interest, in the profits
and losses and voting rights of CEMEX Southeast, LLC, whereas Ready Mix USA owns
a 50.01% interest, and CEMEX owns a 49.99% interest, in the profits and losses
and voting rights of Ready Mix USA, LLC.

After the third year of the strategic alliance and for an approximate 22-year
period, Ready Mix USA will have the right, but not the obligation, to sell CEMEX
its interests in both entities. As of December 31, 2005 and 2006, CEMEX has
control and fully consolidates CEMEX Southeast, LLC, while the CEMEX interest in
Ready Mix USA, LLC is accounted for by the equity method.

In September 2005, CEMEX sold to Ready Mix USA, LLC, 27 ready-mix plants and 4
concrete block facilities located in the Atlanta, GA area, as well as working
capital related to these assets, in exchange for approximately U.S.$125
(Ps1,443).

DIVESTITURE OF CEMENTOS BIO BIO

In April 2005, CEMEX divested its 11.9% interest in Cementos Bio Bio, S.A., a
cement company in Chile, for approximately U.S.$65 million (Ps753), resulting in
a net gain of Ps226 recorded within "Other expenses, net" and in the
cancellation of goodwill of approximately Ps14. Until the sale, this investment
was accounted for by the equity method.


                                      F-24



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


PURCHASE OF MINORITY INTEREST IN CEMEX ASIA HOLDINGS ("CAH")

In December 2005, for approximately U.S$8 (Ps93), CEMEX acquired the 0.9% equity
interest in CAH that remained as property of third parties. In 2004, CEMEX
acquired 20.6% of CAH common stock in exchange for a cash payment of
approximately U.S.$70 and 27,850,713 CPOs, with a value of approximately
U.S.$172 (Ps1,991), resulting in goodwill of approximately Ps1,044. In
accordance with MFRS, this goodwill was charged to equity within "Comprehensive
income", considering it was a transaction between stockholders. CAH is the
holding company of CEMEX's subsidiaries in the Philippines, Thailand and
Bangladesh, and had been the owner of the Company's equity interest in Gresik.
Through these operations, the Company's interest in CAH increased to 100%.

B)   CONDENSED PRO FORMA INCOME STATEMENT

In order to  comply  with  disclosure  requirements  pertaining  to  significant
acquisitions, CEMEX presents condensed pro forma income statements for the
twelve-month  periods ended December 31, 2004 and 2005, giving effect to the RMC
acquisition as if it had occurred on January 1, 2004.

The pro forma financial information is not indicative of the results that CEMEX
would have reported, nor should such information be taken as representative of
the Company's future results. Pro forma adjustments consider the fair values of
the net assets acquired, under certain assumptions that CEMEX considered
reasonable.



                                                            CEMEX        RMC     ADJUSTMENTS    CEMEX
    YEAR ENDED DECEMBER 31, 2004                              1           2           3       PRO FORMA
                                                         ----------------------------------------------
                                                                                    
Sales.................................................Ps      94,915      89,573  -             184,488
Operating income......................................        21,567       2,736        (830)     23,473
Comprehensive financing result........................         1,552      (1,059)      4,198      4,691
Other expenses, net...................................        (5,635)     (5,709)       (911)   (12,255)
Income taxes..........................................        (2,483)       (687)       (411)    (3,581)
Equity in income of associates........................           467         549  -               1,016
                                                         ----------------------------------------------
CONSOLIDATED NET INCOME...............................        15,468      (4,170)      2,046     13,344
Minority interest.....................................           244         249  -                 493
                                                         ----------------------------------------------
MAJORITY INTEREST NET INCOME..........................Ps      15,224      (4,419)      2,046     12,851
                                                         ----------------------------------------------
BASIC EPS.............................................Ps        0.77                               0.65
                                                         -----------                         ----------
DILUTED EPS...........................................          0.76                               0.64
                                                         -----------                         ----------

                                                           CEMEX        RMC     ADJUSTMENTS    CEMEX
YEAR ENDED DECEMBER 31, 2005                                 1           2           3       PRO FORMA
                                                        ----------------------------------------------
Sales.................................................Ps     177,385      10,995  -             188,380
Operating income......................................        28,791        (319)       (125)    28,347
Comprehensive financing result........................         2,836        (117)     (1,951)       768
Other expenses, net...................................        (3,676)          2        (41)    (3,715)
Income taxes..........................................        (3,875)        (50)        289    (3,636)
Equity in income of associates........................         1,012          11  -               1,023
                                                         ----------------------------------------------
CONSOLIDATED NET INCOME...............................        25,088        (473)     (1,828)    22,787
Minority interest.....................................           638          14  -                 652
                                                         ----------------------------------------------
MAJORITY INTEREST NET INCOME..........................Ps      24,450        (487)     (1,828)    22,135
                                                         ----------------------------------------------
BASIC EPS.............................................Ps        1.18                               1.07
                                                         -----------                         ----------
DILUTED EPS...........................................          1.17                               1.06
                                                         -----------                         ----------


1    Information derived from the consolidated income statements for the years
     2004 and 2005, as reported. In 2005, includes RMC's operating results for
     the ten-month period ended December 31, 2005.

2    In 2005, the information relates to the two-month period ended on February
     28, 2005 (unaudited), prepared under IFRS. In 2004, the information was
     obtained from the audited consolidated financial statements, prepared under
     generally accepted accounting principles in the United Kingdom ("UK GAAP")
     and include reclassifications to conform RMC amounts to CEMEX's
     presentation. RMC's information was translated into pesos at the exchange
     rates of Ps18.27 and Ps21.30, effective as of December 31, 2004 and
     February 28, 2005, respectively, per (pound)1, and was restated to constant
     pesos at December 31, 2006.

3    The pro forma adjustments determined for the two-month period of RMC in pro
     forma 2005 and the twelve-month period of RMC in pro forma 2004 include
     adjustments related to the purchase price allocation, and in 2004,
     adjustments resulting from the relevant differences between UK GAAP and
     MFRS. The main adjustments as of December 31, 2004 and February 28, 2005
     consist of:


                                      F-25



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

                        ITEM                              2004       2005
                                                       --------------------
Depreciation expense................................Ps      (830)     (125)
Financial expense D ...............................      (1,214)     (183)
Valuation of derivative instruments.................        1,608   (1,431)
Foreign exchange fluctuations D.....................        1,406     (383)
Monetary position result ...........................        2,398        46
Intangible assets amortization......................        (268)      (41)
Goodwill amortization...............................        (643)        -
Deferred income tax.................................        (411)       289
                                                       --------------------
                                                    Ps      2,046   (1,828)
                                                       ====================

D    Pro forma financial expense for the two-month period was determined on the
     basis of the U.S.$3,326 in 2004 and U.S.$3,311 in 2005 of average debt
     incurred in connection with the purchase, using the interest rates of 2.4%
     in 2004 and 2.8% in 2005.


C)   ANALYSIS OF GOODWILL IMPAIRMENT

For the years ended December 31, 2005 and 2006, CEMEX did not recognize
impairment losses of goodwill, considering that all the annual evaluations
presented an excess of the value in use over the net book value of the reporting
units. In 2004 it was determined that the net book value of the information
technology business exceeded the amount of expected discounted cash flows;
therefore, an impairment loss of goodwill was recognized within "Other expenses,
net" for Ps261.

CEMEX's methodology for testing goodwill for impairment is described in note 3K.
Goodwill amounts are allocated to the multiple cash generating units, which
comprise a geographic operating segment, commonly the operations in each country
as explained in the financial information by geographic segments presented in
note 18. The Company's geographic segments also represent its reporting units
for purposes of impairment testing.

The fair value of each reporting unit is determined through the value in use
method, considering cash flow projections over a five-year period. CEMEX uses
after-tax discount rates, which are applied to after-tax cash flows. The
following table presents the discount rates and perpetual growth rates used in
the impairment testing of those reporting units that represent a significant
portion of the consolidated goodwill in 2005 and 2006:

                                     DISCOUNT RATES      PERPETUAL GROWTH RATES
                                -----------------------  -----------------------
             REPORTING UNITS       2005        2006          2005       2006
                                -----------------------  -----------------------
United States..................      8.5%        8.9%         1.0%        2.5%
Spain..........................      8.6%        9.1%         1.5%        2.5%
Mexico.........................      9.1%       10.1%         2.5%        2.5%
Colombia.......................      9.7%       10.4%         2.0%        2.5%
France.........................       N/A        9.0%          N/A        2.5%
United Arab Emirates...........       N/A        9.4%          N/A        2.5%
United Kingdom.................       N/A        9.0%          N/A        2.5%
                                -----------------------  -----------------------

The reporting units acquired from RMC were not tested for impairment in 2005
considering that the related net assets were recorded at their estimated fair
values as of the acquisition date.

The main assumption used in the impairment testing of CEMEX's other cash
generating units, which account for the remaining portion of goodwill in 2005
and 2006, are summarized as follows:

                                                 2005              2006
                                          -------------------------------------
Range of discount rates...................     8.5% - 11.4%     8.9% - 12.7%
Range of perpetual growth rates...........      1.0% - 2.5%         2.5%
                                          -------------------------------------


                                      F-26



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


12.  FINANCIAL INSTRUMENTS

A)   SHORT-TERM AND LONG-TERM DEBT

As of December 31, 2005 and 2006, short-term and long-term consolidated debt by
interest rate, by currency (excluding effects of derivative instruments
associated to such debt) and by instrument type and maturity, are summarized as
follows:

DEBT ACCORDING TO THE INTEREST RATE IN WHICH DEBT WAS CONTRACTED:



                                             CARRYING AMOUNT                       EFFECTIVE RATE 1
                                    ---------------------------------     ---------------------------------
                                          2005             2006                 2005             2006
                                    ---------------------------------     ---------------------------------
                                                                                 
SHORT-TERM
Floating rate....................Ps           12,884           10,901             4.65%            4.14%
Fixed rate.......................                904            2,613            11.08%            3.09%
                                    ---------------------------------
                                              13,788           13,514
                                    ---------------------------------
LONG-TERM
Fixed rate.......................             46,082           36,103             5.14%            4.72%
Floating rate....................             49,862           31,824             4.01%            4.45%
                                    ---------------------------------
                                              95,944           67,927
                                    ---------------------------------
                                 Ps          109,732           81,441
                                    =================================


DEBT ACCORDING TO CURRENCY CONTRACTED:


                                                               2005
                                ------------------------------------------------------------------
         CURRENCY                  SHORT-TERM       LONG-TERM          TOTAL      EFFECTIVE RATE 1
                                ------------------------------------------------- ----------------
                                                                                
Dollar.......................Ps            5,972          50,063           56,035           5.2%
Pesos .......................              4,431          18,716           23,147          10.4%
Euros........................              2,237          20,465           22,702           2.9%
Japanese yen.................                367           4,605            4,972           1.1%
Pounds sterling..............                585           2,041            2,626           5.5%
Other currencies.............                196              54              250          10.4%
                                -------------------------------------------------
                             Ps           13,788          95,944          109,732
                                =================================================


                                                               2006
                                ------------------------------------------------------------------
         CURRENCY                  SHORT-TERM       LONG-TERM           TOTAL      EFFECTIVE RATE 1
                                -------------------------------------------------- ---------------
Dollar.......................Ps              536           26,310           26,846          5.0%
Pesos .......................              4,502           20,187           24,689          5.0%
Euros........................              7,943           16,416           24,359          3.8%
Japanese yen.................                352            4,251            4,603          1.2%
Pounds sterling..............                174              728              902          5.0%
Other currencies.............                  7               35               42          4.0%
                                --------------------------------------------------
                             Ps           13,514           67,927           81,441
                                ==================================================



1    Represents the weighted average effective interest rate and includes the
     effects of interest rate swaps and derivative instruments that exchange
     interest rates and currencies, which are denominated as cross currency
     swaps (note 12C).

DEBT BY CATEGORY OR INSTRUMENT TYPE AND MATURITY:


                       2005                         Short-term      Long-term
                                                   -----------------------------
Bank loans
Lines of credit in Mexico.......................Ps          2,223              -
Lines of credit in foreign countries............            4,319              -
Syndicated loans, 2006 to 2010..................                -         56,394
Other bank loans, 2006 to 2007..................                -          9,535
                                                   -----------------------------
                                                            6,542         65,929
                                                   -----------------------------
Notes payable
Euro medium-term notes, 2006 to 2009............                -          1,313
Medium-term notes, 2006 to 2008.................                -          6,343
Medium-term notes, 2006 to 2015.................                -         26,261
Other notes payable.............................              710          2,634
                                                   -----------------------------
                                                              710         36,551
                                                   -----------------------------
Total bank loans and notes payable..............            7,252        102,480
Current maturities..............................            6,536        (6,536)
                                                   -----------------------------
                                                Ps         13,788         95,944
                                                   =============================


                       2006                         Short-term      Long-term
                                                   -----------------------------
 Bank loans
 Lines of credit in Mexico......................Ps            216             -
 Lines of credit in foreign countries...........            8,227             -
 Syndicated loans, 2007 to 2011.................                -        34,175
 Other bank loans, 2007 to 2016.................                -         2,646
                                                   -----------------------------
                                                            8,443        36,821
                                                   -----------------------------

 Notes payable
 Euro medium-term notes, 2007 to 2009...........                -           664
 Medium-term notes, 2007 to 2012................                -        31,678
 Other notes payable............................            1,663         2,172
                                                   -----------------------------
                                                            1,663        34,514
                                                   -----------------------------
 Total bank loans and notes payable.............           10,106        71,335
 Current maturities.............................            3,408       (3,408)
                                                   -----------------------------
                                                Ps         13,514        67,927
                                                   =============================


                                      F-27



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


The most representative exchange rates to the financial debt as of December 31,
2005 and 2006 are as follows:

                                                     2005             2006
                                              -------------------------------
Mexican pesos per dollar......................           10.62           10.80
Japanese yen per dollar.......................          117.81          119.05
Euros per dollar..............................          0.8440          0.7573
Pounds sterling per dollar....................          0.5812          0.5105
                                              -------------------------------

Changes in consolidated debt during 2005 and 2006 are as follows:

                                                            2005        2006
                                                        ---------------------
Debt at beginning of year............................Ps     69,073    109,732
  Proceeds from new credits..........................      104,522     34,297
  Debt repayments....................................     (82,819)   (58,254)
  Increase from business combinations................       26,041        508
  Foreign currency translation and inflation effects.      (7,085)    (4,842)
                                                        ---------------------
Debt at end of year..................................Ps    109,732     81,441
                                                        ---------------------

The maturities of consolidated long-term debt as of December 31, 2006 are as
follows:

                                                               2006
                                                       ----------------------
2008.......................................         Ps                 14,672
2009.......................................                            17,090
2010.......................................                            11,679
2011.......................................                            14,273
2012 and thereafter........................                            10,213
                                                       ----------------------
                                                    Ps                 67,927
                                                       ----------------------

As of December 31, 2005 and 2006, there were short-term debt transactions
amounting to U.S.$505 (Ps5,847) and U.S.$110 (Ps1,188), respectively, classified
as long-term debt due to the Company's ability and the intention to refinance
such indebtedness with the available amounts of committed and unused long-term
lines of credit.

As of December 31, 2006, CEMEX has the following lines of credit, both committed
and subject to the banks' availability, at annual interest rates ranging between
0.6% and 15.5%, depending on the negotiated currency:

                                                            Lines of
                                                             Credit    Available
                                                            -------------------
Revolving credit facilities (U.S.$1,400).................Ps  15,120      3,802
Multi-currency revolving credit facility (U.S.$1,200)....    12,960      8,986
Other lines of credit in foreign subsidiaries............    39,332     10,245
Other lines of credit from banks.........................     4,914      3,063
                                                            -------------------
                                                         Ps  72,326     26,096
                                                            -------------------

In addition to the amounts mentioned above, as of December 31, 2006, CEMEX has
committed lines of credit for approximately U.S.$11,200 (Ps120,960) that would
be used for future business combinations.


COVENANTS

Certain debt contracts of CEMEX contain restrictive covenants limiting sale of
assets and requiring maintenance of a controlling interest in certain
subsidiaries. As of December 31, 2005 and 2006, CEMEX was in compliance with
such covenants.

                                      F-28



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

B)   FAIR VALUE OF ASSETS AND FINANCIAL INSTRUMENTS

The Company's carrying amounts of cash, trade accounts receivable, other
accounts receivable, trade accounts payable, other accounts payable and accrued
expenses, as well as short-term debt, approximate their corresponding estimated
fair value due to the short-term maturity and revolving nature of these
financial assets and liabilities. Temporary investments (cash equivalents) and
long-term investments are recognized at fair value, considering quoted market
prices for the same or similar instruments.

The carrying amounts of long-term debt and the related fair value is based on
estimated market prices for equal or similar instruments or on interest rates
currently available for CEMEX to negotiate debt with the same maturities, or it
is determined by discounting future cash flows using interest rates currently
available to CEMEX. The information is summarized as follows:

                                                 Carrying      Fair
                                                  Amount      Value
                                                --------------------
Bank loans.........................          Ps    45,264     45,093
Notes payable......................                36,177     35,274
                                                --------------------

C)   DERIVATIVE FINANCIAL INSTRUMENTS RELATED TO DEBT

As described in CEMEX's accounting policy for derivative instruments in note 3L,
derivative instruments are recognized as assets or liabilities in the balance
sheet at their estimated fair value. Changes in such values are recognized in
the income statement for the period in which they occur, except for those
changes originated by derivative instruments designated in a cash flow hedge
relationship, which are originally recognized within stockholders' equity and
are subsequently reflected in the income statement as adjustments to the
interest expense of the debt related to the hedge.

As of December 31, 2005 and 2006, derivative instruments related to short-term
and long-term debt are summarized as follows:

                                                 2005                 2006
                                        ----------------------------------------
       U.S. DOLLARS MILLIONS                NOTIONAL   FAIR    NOTIONAL    FAIR
                                             AMOUNT    VALUE    AMOUNT     VALUE
                                        ----------------------------------------
Interest rate swaps................U.S.$     2,725     52     3,184        39
Cross currency swaps...............          2,290    212     2,144       154
Foreign exchange forward contracts.           -                 703        (3)
                                        ----------------------------------------
                                   U.S.$     5,015    264     6,031       190
                                        ========================================

INTEREST RATE SWAP CONTRACTS

As of December 31, 2005 and 2006, in order to change the profile of the interest
rates originally negotiated on a portion of its debt, CEMEX has negotiated
interest rate swaps, which are detailed as follows:




                                                         2005                        2006
                                           -------------------------------------------------------------
        U.S. DOLLARS MILLIONS               NOTIONAL     FAIR   EFFECTIVE   NOTIONAL  FAIR   EFFECTIVE
                                             AMOUNT      VALUE    RATE      AMOUNT    VALUE    RATE
                                           -------------------------------------------------------------
                                                                          
Swaps related to long-term debt 1.....U.S.$         387     6       4.4%       363      6      4.2%
Swaps related to long-term debt 2.....            1,113     6       4.5%     1,037     10      4.9%
Swaps related to long-term debt 3.....            1,000    37       4.9%     1,584     21      4.5%
Swaps related to long-term debt 4.....              225     3       4.9%       200      2      4.5%
                                           ------------------              ---------------
                                      U.S.$       2,725    52                3,184     39
                                           ------------------              ---------------


1  CEMEX receives a floating LIBOR* rate and pays a fixed rate of 4.0%. These
   contracts were designated as hedges of contractual cash flows (interest
   payments) of the related underlying U.S. dollar floating rate debt, and
   mature in June 2009.

2  CEMEX receives a floating LIBOR* rate and pays a fixed rate of 4.7%. These
   contracts were designated as hedges of contractual cash flows (interest
   payments) of the related underlying U.S. dollar floating rate debt, and
   mature in August 2009.

3  CEMEX receives a floating LIBOR* rate and pays a fixed rate of 5.0%. These
   contracts, which mature in August 2010, were not designed as accounting
   hedges since they have optionality; nevertheless, such contracts complement
   CEMEX's financial strategy.

4  CEMEX receives a floating LIBOR* rate and pays a fixed rate of 4.3% until
   maturity in March 2010. Likewise, these contracts were not designed as
   accounting hedges since they have optionality.

*  LIBOR represents the London Interbank Offering Rate used in international
   markets for debt denominated in U.S. dollars.

During 2005 and 2006, due to changes in the interest rate mix of CEMEX's debt
portfolio, interest rate swaps were settled for notional amounts of U.S.$775 and
U.S.$459, respectively. As a result of these settlements, CEMEX recognized gains
of U.S.$8 (Ps93) in 2004, U.S.$4 (Ps46) in 2005 and U.S.$48 (Ps518) in 2006,
which were recognized in earnings of each period.

In June 2005, CEMEX settled interest rate swaps covering a notional amount of
approximately U.S.$585, assumed through the purchase of RMC, generating a gain
of approximately U.S.$8 (Ps93) recognized in earnings of the period.

                                      F-29



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

CROSS CURRENCY SWAP CONTRACTS

With the intention of reducing the financial costs, CEMEX has negotiated cross
currency swaps ("CCS") in order to change the profile of interest rates and
currencies in a portion of its short-term and long-term debt originally
contracted in dollars or pesos. These contracts are not designated as hedges;
therefore, changes in fair value are recognized in earnings as they occur.
During the tenure of the CCS and at their maturity, the cash flows related to
the exchange of interest rates and currencies under the CCS match, in interest
payment dates and conditions, those of the related debt. As of December 31, 2005
and 2006, information with respect to the CCS is summarized as follows:




      (U.S. DOLLARS MILLIONS)              2005                 (U.S. DOLLARS MILLIONS)                   2006
                               -----------------------------                                ---------------------------------
                                NOTIONAL   FAIR   EFFECTIVE                                 NOTIONAL      FAIR     EFFECTIVE
                                 AMOUNT    VALUE  RATE                                      AMOUNT        VALUE      RATE
                               -----------------------------                                ---------------------------------
                                                                                          
           SHORT-TERM                                            SHORT-TERM
Exchange Ps5,362 to dollars 1..    500       6   4.7%    Exchange Ps1,400 to dollars 1......   126             4        5.3%
Exchange Ps2,800 to dollars 2..    260       5   4.9%    Exchange Ps3,213 to dollars 2......   295            14        2.0%
                     -             -        -      -     Exchange Ps869 to dollars 3........    65            17        5.1%
                     -             -        -      -     Exchange Ps800 to dollars 4........    77            -         4.1%
                               ----------------                                              --------------------
                                   760      11                                                 563            35
                               ----------------                                              --------------------
           LONG-TERM                                              LONG-TERM
Exchange Ps2,488 to dollars 3..    142     100   4.8%    Exchange Ps3,126 to dollars 5......    271            66       3.9%
Exchange Ps6,888 to dollars 4..    618      86   4.0%    Exchange Ps2,031 to dollars 6......    181            17       7.1%
Exchange Ps2,940 to dollars 5..    270      17   4.8%    Exchange Ps2,140 to dollars 7 .....    193            17       3.3%
Exchange Ps5,281 to dollars 6..    500     (2)   4.5%    Exchange Ps7,250 to dollars 8......    664            14       5.4%
                     -             -      -        -     Exchange Ps2,950 to dollars 9......    272             5       5.3%
                               ----------------                                              --------------------
                                 1,530     201                                                1,581           119
                               ----------------                                              --------------------
                                 2,290     212                                                2,144           154
                               ----------------                                              --------------------





                                             2005                             2006
                         ------------------------------------ -----------------------------------------
            MATURITY       CEMEX RECEIVES        CEMEX PAYS    CEMEX RECEIVES        CEMEX PAYS
                         ------------------------------------ -----------------------------------------
                                                                            
  1 June 2007............ TIIE plus 25 bps     L plus 28 bps  TIIE minus 23 bps    L minus 13 bps
  2 June 2007............ TIIE plus 80 bps     L plus 55 bps      Peso 10.8%        Dollar 2.0%
  3 April 2007...........    Peso 10.8%        L plus 96 bps      Peso 10.6%       L plus 23 bps
  4 October 2007.........     Peso 9.2%         Dollar 5.1%   CETES plus 145 bps    Dollar 4.1%
  5 April 2012...........CETES plus 112 bps     Dollar 4.8%       Peso 8.7%         Dollar 3.9%
  6 March 2011...........     Peso 8.3%        L plus 25 bps      Peso 8.8%        L plus 162 bps
  7 April 2009...........        -                   -        CETES plus 99 bps     Dollar 3.3%
  8 September 2011.......        -                   -        CETES plus 52 bps    L minus 2 bps
  9 March 2012...........        -                   -         TIIE plus 9 bps    L minus 2.5 bps
                         ------------------------------------ -----------------------------------------


*  TIIE represents the Interbank Offering Rate in Mexico, and CETES are public
   debt instruments issued by the Mexican government. LIBOR or "L" represents
   the London Interbank Offering Rate used in international markets for debt
   denominated in U.S. dollars. As of December 31, 2005 and 2006, the LIBOR rate
   was 4.39% and 5.32%, respectively; the year-end TIIE was 8.56% in 2005 and
   7.37% in 2006 and the year-end CETES yield was 8.01% in 2005 and 7.10% in
   2006. The contraction "bps" means basis points. One basis point is .01 per
   cent.

The carrying amounts of CEMEX's debt as of December 31, 2005 and 2006 exclude
the valuation effects of related CCS, which are presented within other
short-term and long-term accounts receivable and/or payable, as applicable.

As of December 31, 2005 and 2006, related to the fair value of the CCS, the
Company recognized net assets of U.S.$212 (Ps2,453) and U.S.$154 (Ps1,663),
respectively, of which U.S.$138 (Ps1,598) in 2005 and U.S.$34 (Ps367) in 2006
relate to prepayments made of dollar denominated obligations under the
contracts. The estimated fair value of CCS, excluding the effects of
prepayments, resulted in a net asset of U.S.$74 (Ps857) in 2005 and a net asset
of U.S.$120 (Ps1,296) in 2006. For the years ended December 31, 2004, 2005 and
2006, changes in the estimated fair value of the CCS, before prepayments,
resulted in gains of U.S.$10 (Ps116) and U.S.$3 (Ps35) and a loss of U.S.$58
(Ps626), respectively. The periodic interest rate cash flows under the CCS were
recognized within financial expense as part of the effective interest rate of
the related debt.

In May and June 2005, CEMEX settled CCS for a notional amount of approximately
U.S.$397, assumed through the purchase of RMC, generating a gain of
approximately U.S.$21 (Ps243), which was recognized in earnings of the period.

                                      F-30



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

FOREIGN EXCHANGE FORWARD CONTRACTS RELATED TO DEBT

During 2006, in order to change the mix of currencies in its debt portfolio,
CEMEX negotiated foreign exchange forward contracts for a notional amount of
U.S.$703. These contracts had a fair value of approximately U.S.$3 at December
31, 2006. Of the aggregate notional amount, U.S.$566 exchanges euros to dollars,
U.S.$92 exchanges pounds sterling to dollars, and U.S.$45 exchanges Japanese yen
to dollars. Changes in fair values of these contracts are recognized in the
income statement.

In 2005, CEMEX settled foreign exchange options for a notional amount of
U.S.$488. These options were sold in 2003 for approximately U.S.$63. Changes in
fair value of these options generated losses of approximately U.S.$19 (Ps221) in
2004 and U.S.$6 (Ps69) in 2005, recognized in the income statement of the
corresponding period.

In September 2004, in connection with the commitment to acquire RMC that was
denominated in pounds sterling, the Company negotiated foreign exchange
forwards, collars and options, for a combined notional amount of U.S.$3,453 in
order to hedge the variability in cash flows associated with exchange
fluctuations between the U.S. dollar, the currency in which CEMEX obtained the
proceeds, and pounds sterling. These contracts were designated as accounting
hedges of the foreign exchange risk associated with the firm commitment agreed
on November 17, 2004, the date on which RMC's stockholders committed to sell
their shares at a fixed price. Changes in the estimated fair value of these
contracts from the designation date, which represented a gain of approximately
U.S.$132 (Ps1,537), was recognized in stockholders' equity in 2004. This gain
was reclassified to earnings in 2005 on the purchase date. Changes in fair value
of these contracts from their origination until their designation as hedges,
which resulted in a gain of approximately U.S.$102 (Ps1,188), was recognized in
earnings in 2004.

D)   OTHER DERIVATIVE FINANCIAL INSTRUMENTS

As of December 31, 2005 and 2006, outstanding derivative instruments, other than
those related to debt (note 12C) and those related to equity items (note 12E),
are detailed as follows:




                                                              2005              2006
                                                    -------------------  ------------------
           U.S. DOLLARS MILLIONS                       NOTIONAL   FAIR   NOTIONAL   FAIR
                                                       AMOUNT    VALUE   AMOUNT    VALUE
                                                    -------------------  ------------------
                                                                       
Equity forwards in the CEMEX's own shares..... U.S.$       -       -         171      -
Other foreign exchange instruments............            63       -          81      1
Derivatives related to energy projects........           159      (4)        159     (4)
                                                    -------------------  ------------------
                                               U.S.$     222      (4)        411     (3)
                                                    -------------------  ------------------



EQUITY FORWARDS IN CEMEX'S OWN SHARES

For the years ended December 31, 2005 and 2006, changes in the fair value of
equity forward contracts in CEMEX's own shares were recognized in the results of
the corresponding period, considering that upon liquidation, such contracts
allow for net cash settlement. In 2004, changes in valuation were recognized in
the income statement or as part of stockholders' equity, according to their
characteristics and use.

On December 20, 2006, CEMEX sold in the market 50 million CPOs that it held in
the Company's treasury for approximately Ps1,781. On the same date, CEMEX
negotiated a forward contract for the same number of CPOs with maturity in
December 2009. The notional amount of the contract as of December 31, 2006 is
approximately U.S.$171 (Ps1,847). This equity forward contract provides for net
cash settlement at its maturity.

On October 3, 2005, through a secondary equity offering agreed to by the
Company, launched simultaneously on the Mexican Stock Exchange and the NYSE,
financial institutions offered and sold 45,886,680 ADSs and 161,000,000 CPOs, at
a price of approximately U.S.$24.75 per ADS and U.S.$26.95 per CPO. Of the total
consideration of approximately U.S.$1,500 (Ps17,367), net of the offering
expenses, the financial institutions kept approximately U.S.$1,300 as payment
for the liquidation of the related forward contracts. The ADSs and CPOs subject
to the offer represented the entire amount of shares subject to the forward
contracts in the Company's own shares as of the offering date. This transaction
did not increase the number of shares outstanding. For the year ended December
31, 2005, considering the results of the secondary offering, as well as those of
the forward contracts initiated and settled during the year to hedge the
exercises of options under the stock option programs, CEMEX recognized in the
income statement a gain of approximately U.S.$422 (Ps4,886), which offset the
expenses generated by the stock option programs (note 17).

During 2004, forward contracts covering 52,264,048 CPOs were settled, generating
a gain of approximately U.S.$18 (Ps210), which was recognized in stockholders'
equity.

OTHER FOREIGN EXCHANGE INSTRUMENTS

As of December 31, 2005 and 2006, CEMEX had foreign exchange forward contracts
for notional amounts of U.S.$63 and U.S.$81, respectively, not designated as
hedges, which valuation effects are recognized in the income statement for the
period.

                                      F-31



                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


DERIVATIVES RELATED TO ENERGY PROJECTS

As of December 31, 2005 and 2006, CEMEX had an interest rate swap maturing in
May 2017 with notional amounts of U.S.$150 and U.S.$141, respectively,
negotiated to exchange floating for fixed interest rates in connection with
agreements entered into by CEMEX for the acquisition of electric energy (note
21D). During the life of the swap and based on its notional amount, CEMEX will
pay a LIBOR rate and will receive a 7.53% fixed rate until 2017. In addition,
during 2001, CEMEX sold a floor option with a notional amount of U.S.$159 in
2005 and U.S.$149 in 2006, related to the interest rate swap contract, pursuant
to which, until 2017, CEMEX will pay the difference between the 7.53% fixed rate
and the LIBOR rate. As of December 31, 2005 and 2006, the combined fair value of
the interest rate swap and the floor option represented losses of approximately
U.S.$4 (Ps46) and U.S.$3 (Ps32), respectively, recognized in earnings during the
respective periods. The notional amount of these contracts is not aggregated,
considering that there is only one notional amount with exposure to changes in
interest rates and the effects of both contracts offset each other.

In addition, in December 2006, CEMEX negotiated a derivative instrument based on
gas prices for a notional amount of U.S.$9. The instrument matures in December
2007.

E)   DERIVATIVE FINANCIAL INSTRUMENTS RELATED TO EQUITY

As of December 31, 2005 and 2006, outstanding derivative instruments that hedge
equity transactions or items, other than those related to debt (note 12C) and
those related to other transactions (note 12D), are detailed as follows:

                                                     2005              2006
                                            ------------------------------------
                                              NOTIONAL   FAIR   NOTIONAL   FAIR
                                               AMOUNT    VALUE   AMOUNT    VALUE
           U.S. DOLLARS MILLIONS            ------------------------------------
Foreign exchange forward contracts....     U.S.$  3,137    173    5,034     132
Derivatives related to perpetual
   equity instruments.................                -      -    1,250      46
                                            ------------------------------------
                                          U.S.$   3,137    173    6,284     178


FOREIGN EXCHANGE FORWARD CONTRACTS

At December 31, 2005 and 2006, in order to hedge financial risks associated with
variations in foreign exchange rates of certain net investments in foreign
countries denominated in euros and dollars vis-a-vis the peso, and consequently
reducing volatility in the value of stockholders' equity in the reporting
currency, CEMEX has negotiated foreign exchange forward contracts for notional
amounts of U.S.$3,137 and U.S.$5,034, respectively, with different maturities
until 2010. These contracts have been designated as hedges of the Company's net
investment in foreign subsidiaries. Changes in the estimated fair value of these
instruments are recorded in stockholders' equity as part of the foreign currency
translation effect.

DERIVATIVE INSTRUMENTS RELATED TO PERPETUAL EQUITY INSTRUMENTS

In connection with the issuance of U.S.$1,250 aggregate notional amount of
perpetual debentures described in note 16F, pursuant to which CEMEX pays a fixed
U.S. dollar rate of 6.196% on a notional amount of U.S.$350 and a fixed U.S.
dollar rate of 6.722% on a notional amount of U.S.$900, CEMEX decided to change
the foreign exchange exposure on the coupon payments from U.S. dollars to
Japanese yen. In order to do so, on December 18, 2006, CEMEX entered into two
CCS agreements: a U.S.$350 notional amount CCS, pursuant to which, for a
five-year period, CEMEX receives a fixed rate in dollars of 6.196% of the
notional amount and pays six-month Yen LIBOR multiplied by a factor of 4.3531,
and a U.S.$900 notional amount CCS, pursuant to which, for a ten-year period,
CEMEX receives a fixed rate in dollars of 6.722% of the notional amount and pays
six-month Yen LIBOR multiplied by a factor of 3.3878. Each CCS include an
extinguishable swap, which provides that if the relevant perpetual debentures
are extinguished for certain stated conditions but before the maturity of the
CCS, such CCS would be automatically extinguished, with no amounts payable by
the swaps counterparties. In addition, in order to eliminate variability during
the first two years in the yen denominated payments due under the CCSs, CEMEX
entered into foreign exchange forwards for a notional amount of U.S.$89, under
which CEMEX pays U.S. dollars and receives payments in yen. Changes in fair
value of all the derivative instruments associated with the perpetual debentures
are recognized in the income statement.

F)   FAIR VALUE OF DERIVATIVE INSTRUMENTS

The estimated fair value of derivative instruments fluctuates over time and is
determined by measuring the effect of future interest rates, exchange rates and
share prices, according to the yield curves shown in the market as of the
balance sheet date. These values should be viewed in relation to the fair values
of the underlying transactions and as part of CEMEX's overall exposure
attributable to fluctuations in interest rates and foreign exchange rates. The
notional amounts of derivative instruments do not necessarily represent amounts
exchanged by the parties, and consequently, there is no direct measure of
CEMEX's exposure to the use of these derivatives. The amounts exchanged are
determined based on the basis of the notional amounts and other terms included
in the derivative instruments.


                                       F-32


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

13.  OTHER CURRENT AND NON-CURRENT LIABILITIES

As of December 31, 2005 and 2006, consolidated other accounts payable and
accrued expenses are as follows:


                                                                   2005    2006
                                                                 ---------------
Provisions....................................................Ps  7,165    8,520
Other accounts payable and accrued expenses...................    4,459    3,112
Tax payable...................................................    3,009    2,456
Current liabilities for valuation of derivative instruments...    1,580       98
Advances from customers.......................................    1,228    1,282
Interest payable..............................................      593      393
Dividends payable.............................................       36       -
                                                                 ---------------
                                                              Ps 18,070   15,861
                                                                 ===============


The carrying amount of current provisions primarily consist of employee benefits
accrued at the balance sheet date, insurance payments, and accruals related to
legal and environmental assessments expected to be settled in the short-term
(note 22C). These amounts are revolving in nature and are to be settled and
replaced by similar amounts within the next 12 months.

As of December 31, 2005 and 2006, the carrying amounts of consolidated other
non-current liabilities are detailed as follows:

                                                                2005     2006
                                                              ------------------
Asset retirement obligations...............................Ps   1,254     1,315
Other remediation or environmental liabilities.............     3,869     3,178
Accruals for legal assessments and
   other responsibilities..................................     2,249     1,658
Non-current liabilities for valuation
   of derivative instruments...............................     2,067     1,859
Other non-current liabilities and provisions...............     1,788     5,566
                                                              ------------------
                                                           Ps  11,227    13,576
                                                              ==================

Non-current provisions refer to the best estimate of cash flows with respect to
diverse issues where CEMEX is determined to be responsible and which are
expected to be settled over a period greater than twelve months.

Asset retirement obligations include future estimated costs for demolition,
cleaning and reforestation of production sites at the end of their operation,
which are initially recognized against the related assets and are depreciated
over their estimated useful live and charged to results of operations.

Other remediation and environmental liabilities include future estimated costs
arising from legal or constructive obligations, related to cleaning,
reforestation and other remedial actions, in order to remedy damage caused to
the environment. The expected average period to settle these obligations is
greater than 15 years.

As of December 31, 2005 and 2006, the most significant legal proceedings that
give rise to the carrying amounts of CEMEX's other non-current liabilities are
detailed in note 22.

Changes in consolidated other non-current liabilities during 2005 and 2006 are
as follows:



                                                                                  2005     2006
                                                                                ----------------
                                                                                    
Balance at beginning of period...............................................Ps   7,588   11,227
  Current period additions due to new obligations or increase in estimates...     4,801    7,247
  Current period releases due to payments or decrease in estimates...........    (5,845)  (6,257)
  Additions through business combinations....................................     4,366      204
  Reclassification from current to non-current liabilities...................         -    1,104
  Foreign currency translation effects.......................................       317       51
                                                                                ----------------
Balance at end of period.....................................................Ps  11,227   13,576
                                                                                ----------------



                                       F-33



14.  PENSIONS, OTHER POSTRETIRMENT BENEFITS AND TERMINATION BENEFITS

As mentioned in note 3N, the costs of defined contribution pension plans are
recognized in the period in which the funds are transferred to the employees'
investment accounts, without generating future obligations. Costs of defined
benefit pension plans and other postretirement benefits, such as health care
benefits, life insurance and seniority premiums, as well as termination benefits
not associated with a restructuring event, are recognized in the income
statement as employees' services are rendered, based on actuarial calculations
of the benefits' present value.

The net periodic costs of pension plans and other benefits in 2004, 2005 and
2006 are summarized as follows:




                                                              PENSIONS        OTHER BENEFITS            TOTAL
                                                     --------------------------------------------------------------------
NET PERIODIC COST:                                   2004   2005    2006    2004   2005    2006  2004    2005     2006
                                                     --------------------------------------------------------------------
                                                                                         
Service cost..................................... Ps  322     699     735   43      88     93    365       787      828
Interest cost....................................     379   1,242   1,349   36      82     80    415     1,324    1,429
Actuarial return on plan assets..................    (415) (1,174) (1,449)  (1)     (1)    (2)  (416)   (1,175)  (1,451)
Amortization of prior service cost, transition
 liability and actuarial results.................     137     134     (15)  (9)     48     53    128       182       38
Settlements and curtailments.....................       -   1,063       -    -       -      -      -     1,063        -
                                                     --------------------------------------------------------------------
                                                  Ps  423   1,964     620   69     217     224   492     2,181      844
                                                     --------------------------------------------------------------------


The reconciliation of the actuarial benefits obligations, pension plan assets,
and the carrying amounts as of December 31, 2005 and 2006, are presented as
follows:



                                                                 PENSIONS           OTHER BENEFITS      TOTAL
                                                          --------------------------------------------------------
                                                               2005     2006       2005     2006     2005    2006
                                                          --------------------------------------------------------
                                                                                            
CHANGE IN BENEFITS OBLIGATION:
Projected benefit obligation at beginning of year..... Ps     6,770    26,571       639    1,737    7,409  28,308
Service cost..........................................          699       735        88       93      787     828
Interest cost.........................................        1,242     1,349        82       80    1,324   1,429
Actuarial results.....................................          738     2,466        90       69      828   2,535
Employee contributions................................           70        75        -        -        70      75
Addition through business combinations................       21,985        84       715       61   22,700     145
Initial valuation of other postretirement benefits....           -         -        333       -       333       -
Foreign currency translation and inflation effects....       (2,585)      843       (68)     (84)  (2,653)    759
Settlements and curtailments..........................       (1,156)       (2)        -      (27)  (1,156)    (29)
Benefits paid.........................................       (1,192)   (1,485)     (142)    (112)  (1,334) (1,597)
                                                          --------------------------------------------------------
Projected benefit obligation at end of year...........       26,571    30,636     1,737    1,817   28,308  32,453
                                                          --------------------------------------------------------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year........        6,228    21,966        22       29    6,250  21,995
Return on plan assets.................................        3,329     2,102         7        2    3,336   2,104
Foreign currency translation and inflation effects....       (1,995)      517        -        (2)  (1,995)    515
Addition through business combinations................       15,753        51        -        -    15,753      51
Employer contributions................................          929     1,171        52       80      981   1,251
Employee contributions................................           70        75        -        -        70      75
Settlements and curtailments..........................       (1,156)       (2)       -       (27)  (1,156)    (29)
Benefits paid.........................................       (1,192)   (1,485)      (52)     (57)  (1,244) (1,542)
                                                          --------------------------------------------------------
Fair value of plan assets at end of year..............       21,966    24,395        29       25   21,995  24,420
                                                          --------------------------------------------------------
AMOUNTS RECOGNIZED IN THE BALANCE SHEETS:
Funded status.........................................        4,605     6,241     1,708    1,792    6,313   8,033
Transition liability .................................         (116)     (103)     (421)    (335)    (537)   (438)
Prior service cost and actuarial results..............          455    (1,456)       76       26      531  (1,430)
                                                          --------------------------------------------------------
Accrued benefit liability.............................        4,944     4,682     1,363    1,483    6,307   6,165
Additional minimum liability (note 11)................          361       489       298      246      659     735
                                                          --------------------------------------------------------
Net projected liability recognized.................... Ps     5,305     5,171     1,661    1,729    6,966   6,900
                                                          --------------------------------------------------------



                                       F-34


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

CEMEX recognizes an additional minimum liability in those individual cases in
which actual benefit obligations ("ABO") less the plan assets (net actual
liability) is lower than the net projected liability. As of December 31, 2005
and 2006, the Company recognized minimum liabilities against intangible assets
for approximately Ps659 and Ps735, respectively.

The transition liability, prior service cost and actuarial results are amortized
over the estimated service life of the employees under plan benefits. As of
December 31, 2006, the average estimated service life for pension plans is
approximately 12.2 years, and for other postretirement benefits is approximately
13.8 years.

As of December 31, 2005 and 2006, the projected benefit obligations ("PBO")
derive from the following type of plans and benefits:

                                                        2005     2006
                                                     ------------------
Plans and benefits totally unfunded.............. Ps    1,592     1,586
Plans and benefits partially or totally funded...      26,716    30,867
                                                     ------------------
PBO at end of the period......................... Ps   28,308    32,453
                                                     ==================

As of December 31, 2005 and 2006, the consolidated plan assets are valued at
their estimated fair value and consist of:

                                               2005         2006
                                           ------------------------
Fixed-income securities..............   Ps       9,434       8,944
Marketable securities................           10,471      12,252
Private funds and other investments..            2,090       3,224
                                           ------------------------
                                        Ps      21,995      24,420
                                           ========================

As of December 31, 2006, estimated future benefit payments for pensions and
other postretirement benefits during the next ten years are as follows:

                                             2006
                                       -------------------
2007..........................      Ps              1,700
2008..........................                      1,750
2009..........................                      1,718
2010..........................                      1,875
2011..........................                      1,936
2012 - 2016...................                     10,173
                                       -------------------

CEMEX applies real rates (nominal rates discounted for inflation) in the
actuarial assumptions used to determine pensions and other postretirement
benefit liabilities. The most significant assumptions used in the determination
of the net periodic cost, are summarized as follows:




                                                 2005                                   2006
                               ---------------------------------------  ------------------------------------------
                                        UNITED   UNITED    OTHER                  UNITED   UNITED    OTHER
                               MEXICO   STATES  KINGDOM  COUNTRIES 1      MEXICO  STATES  KINGDOM  COUNTRIES 1
                               ---------------------------------------  ------------------------------------------
                                                                            
Discount rates.................5.5%     6.0%      5.3%    3.5%-12.0%        5.5%    5.8%      5.1%   3.5%-11.2%
Rate of return on plan assets..6.5%     8.0%      6.5%     4.0%-8.3%        6.5%    8.0%      6.4%    4.0%-9.0%
Rate of salary increases.......1.5%     3.5%      3.7%     2.0%-5.6%        1.5%    3.5%      3.6%    2.0%-4.0%
                               ---------------------------------------  ------------------------------------------


1  Range of rates.


                                       F-35


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

As of December 31, 2005 and 2006, the aggregate PBO for pension plans and other
benefits and the plan assets by country are as follows:




                                          2005                           2006
                             ------------------------------  ------------------------------
                                                   DEFICIT                        DEFICIT
                               PBO      ASSETS     (EXCESS)     PBO      ASSETS  (EXCESS)
                             ------------------------------  ------------------------------
                                                                  
Mexico....................Ps   3,143     2,714       429    Ps   2,825     2,142     683
United States.............     4,326     4,076       250         4,023     4,100    (77)
United Kingdom............    15,527    13,666     1,861        20,108    16,271   3,837
Other countries...........     5,312     1,539     3,773         5,497     1,907   3,590
                             ------------------------------  ------------------------------
                          Ps  28,308    21,995     6,313    Ps  32,453    24,420   8,033
                             ==============================  ==============================


OTHER INFORMATION RELATED TO EMPLOYEES' BENEFITS AT RETIREMENT

The increase in the United Kingdom's PBO in 2006 results primarily from the
growth in the life expectancy of the employees under the benefit plans, which
grew by three years despite the fact that the defined benefit plan has been
closed to new participants since January 2004. Regulation in the United Kingdom
requires entities to maintain plan assets in a level similar to that of the
obligations; consequently, it is expected that CEMEX will incur significant
contributions to the United Kingdom's pension plan in the following years. As
presented in the table above, as of December 31, 2006, the deficit in the funded
status amounted to Ps8,033. After reducing the deficit related to other
postretirement benefits, which do not require mandatory funding, the deficit as
of December 31, 2006 is approximately Ps6,241.

In January 2006, CEMEX communicated to its employees in Mexico subject to
pension benefits a new defined contribution pension plan scheme, which, from the
communication date, replaced the former defined benefit pension plan scheme. As
part of the plan conversion process, CEMEX contributed to the employees'
retirement individual accounts, with a private retirement funds manager, the
actuarial value of the PBO as of the change date. Approximately 5% of the
employees, or those with 50 years of age or more, had a period to elect between
the defined benefit plan and their migration to the new plan. For all other
employees the change was automatic. As a result of the new plan, events of
settlement and curtailment of obligations occurred, and since this was a
material event which occurred before the issuance of the financial statements,
the accounting effects arising from the change were retroactively recognized in
the consolidated financial statements as of December 31, 2005. The
administrative execution of the pension plan migration occurred during the first
quarter of 2006. The initial contributions to the employees' individual accounts
were transferred from the existing pension funds.

For purposes of the early accounting recognition in 2005 resulting from the
change of plan in Mexico, the actuarial calculations assumed that approximately
85% of the employees with 50 years of age or more would elect to remain in the
defined benefit plan. As a result of the settlement and curtailment events, the
accrued actuarial results were amortized proportionally to the decrease in the
PBO, which was estimated at Ps1,156, representing a 32% reduction, while the
unrecognized transition liability and prior service costs were amortized
proportionally to the reduction of the expected years of future service of the
employees under the plan benefits, generating in 2005 an aggregate loss of
approximately Ps1,063 recognized within "Other expenses, net". Upon finalization
of the election period in 2006 for those employees with 50 years of age or more,
approximately 78% elected the migration to the defined contribution plan.
Therefore, in 2006 the PBO decreased by approximately Ps439 in addition to the
Ps1,156 recognized in 2005, while the total contribution to the individual
accounts was approximately Ps1,499. The differences between the estimates
determined in 2005 and the final results in 2006 in connection with the PBO and
the plan assets were included within the "Actuarial results" in the
reconciliation of the actuarial value of obligations.

In addition, there are benefits paid to personnel pursuant to legal requirements
upon termination of the working relationship, based on the years of service and
the last salary received, as in the case of Mexico and Austria. The PBO of these
benefits as of December 31, 2005 and 2006 was approximately Ps464 and Ps472,
respectively.

In some countries, CEMEX has established health care benefits for retired
personnel, limited to a certain number of years after retirement. As of December
31, 2005 and 2006, the PBO related to these benefits, included in the table
above, was approximately Ps1,174 and Ps1,183, respectively. The medical
inflation rate used in 2006 to determine the PBO of these benefits was 3.0% in
Mexico, 9.0% in Puerto Rico, 11.5% in the United States and 6.9% in the United
Kingdom.


                                      F-36


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


15. INCOME TAX (IT), BUSINESS ASSETS TAX (BAT), EMPLOYEES' STATUTORY PROFIT
SHARING (ESPS) AND DEFERRED INCOME TAXES

For their Mexican operations, entities must pay the greater of IT and BAT, both
of which recognize the effects of inflation, although in a manner different from
MFRS. ESPS is calculated on similar basis as IT without recognizing the effects
of inflation.

A)   IT, BAT AND ESPS

CEMEX and its Mexican subsidiaries generate IT and BAT on a consolidated basis;
therefore, the amounts of these items included in the financial statements, with
respect to the Mexican subsidiaries, represent the consolidated result of these
taxes. For ESPS purposes, the amount presented is the sum of the individual
results of each company.

Beginning in 1999, the determination of the consolidated IT for the Mexican
companies considers a maximum of 60% of the taxable income or loss of each of
the subsidiaries. When the subsidiaries determine taxable income and have tax
loss carryforwards generated before 1999, such taxable income will be considered
by the parent company according to its equity ownership. Beginning in 2002, in
the determination of consolidated IT, 60% of the taxable result of the
controlling entity should be considered, unless it obtains taxable income, in
which case 100% should be considered, until the restated balance of the
individual tax loss carryforwards before 2001 are amortized. According to 2004
reforms to the Income Tax law, the tax rate for 2005 was established at 30%, 29%
in 2006 and 28% starting in 2007. In addition, beginning in 2005, the maximum of
60% for tax consolidation factor was eliminated, except in those situations when
the subsidiaries would have generated tax loss carryforwards in the period from
1999 to 2004, or the parent company in the period from 2002 to 2004. In those
cases, the 60% factor still prevails in the IT consolidation, until the tax loss
carryforwards are extinguished in each company. The IT expense, presented in the
income statements for the years ended December 31, 2004, 2005 and 2006, is
summarized as follows:

                                    2004           2005         2006
                                --------------------------------------
Current income tax.......... Ps    (1,040)       (2,660)       (4,094)
Deferred income tax.........       (1,097)       (1,225)       (1,160)
                                --------------------------------------
                             Ps    (2,137)       (3,885)       (5,254)
                                --------------------------------------

In 2004, 2005 and 2006, consolidated IT includes expenses of Ps1,316, Ps1,540
and Ps7,455, respectively, from foreign subsidiaries, and expenses of Ps821and
Ps2,345 and income of Ps2,201, respectively from Mexican subsidiaries. Current
income tax expense includes the tax benefits resulting from the tax
consolidation of Ps1,419 in 2004, Ps1,688 in 2005 and Ps2,044 in 2006. Tax loss
carryforwards related to Mexican operations are restated for inflation and
amortized against taxable income generated in the succeeding ten years. Tax loss
carryforwards as of December 31, 2006 are as follows:

             YEAR IN WHICH TAX LOSS OCCURRED       AMOUNT OF         YEAR OF
                                                 CARRYFORWARDS      EXPIRATION
                                                 -------------------------------
2001......................................... Ps          936          2011
2002.........................................           4,362          2012
2003.........................................             620          2013
2006.........................................           3,312          2016
                                                 ------------
                                              Ps        9,230
                                                 =============

Until December 2006, the BAT Law in Mexico established a 1.8% tax levy on
assets, restated for inflation in the case of inventory and fixed assets, and
deducting certain liabilities. BAT levied in excess of IT for the period may be
recovered, restated for inflation, in any of the succeeding ten years, provided
that the IT incurred exceeded the BAT in such period. The recoverable BAT as of
December 31, 2006 is as follows:

            YEAR IN WHICH BAT EXCEEDED IT         AMOUNT OF          YEAR OF
                                                CARRYFORWARDS       EXPIRATION
                                               ---------------------------------
1997....................................... Ps        152              2007
                                               --------------

Starting on January 1, 2007, due to amendments approved to the BAT law, the tax
levy on assets decreased to 1.25%, but entities will no longer be allowed to
deduct their liabilities from the taxable base; therefore, the new law
appreciably increases the BAT payable. The tax authorities offered to clarify
relevant aspects in connection with the deduction of liabilities; however, at
December 31, 2006, there had not been any official communication. CEMEX
considers that the BAT law, as amended, is unconstitutional, among other
reasons, because it contravenes the required equilibrium between the tax burden
and the entities' payment capacity. Therefore, CEMEX intends to challenge the
BAT law amendments through appropriate judicial action (juicio de amparo).

Notwithstanding the intended challenge to the BAT law, CEMEX will be required to
pay BAT as per the amended law, until the relevant judicial procedure is finally
resolved. Likewise, if the challenge does not succeed and/or if the Mexican tax
authorities do not modify the prohibition to offset liabilities, the BAT of
CEMEX in Mexico will rise appreciably. BAT is complementary to IT incurred, and
it is paid only when the BAT is levied in excess of the IT for the period.


                                       F-37


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

B)   DEFERRED IT AND ESPS

The valuation method for deferred income taxes is detailed in note 3O. Deferred
IT for the period represents the difference in nominal pesos between the
deferred IT initial balance and the year-end balance. All items charged or
credited directly in stockholders' equity are recognized net of their deferred
income tax effects. Deferred IT assets and liabilities relating to different tax
jurisdictions are not offset. As of December 31, 2005 and 2006, the IT effects
of the main temporary differences that generate the consolidated deferred IT
assets and liabilities are presented below:




                                                                                          2005              2006
                                                                                   ------------------ -----------------
                                                                                                            
DEFERRED TAX ASSETS:
Tax loss and tax credits carryforwards..........................................Ps             15,032            23,634
Accounts payable and accrued expenses...........................................                4,241             5,397
Trade accounts receivable.......................................................                  237                 -
Inventories.....................................................................                   -                57
Others..........................................................................                  642               937
                                                                                   ------------------ -----------------
   Total deferred tax assets....................................................               20,152            30,025
Less -  Valuation allowance.....................................................              (6,176)          (13,544)
                                                                                   ------------------ -----------------
   Net deferred tax asset.......................................................               13,976            16,481
DEFERRED TAX LIABILITIES:
Properties, machinery and equipment.............................................             (30,479)          (36,846)
Trade account receivables.......................................................                   -              (703)
Others..........................................................................              (7,723)           (2,905)
                                                                                   ------------------ -----------------
   Total deferred tax liabilities...............................................             (38,202)          (40,454)
                                                                                   ------------------ -----------------
   Net deferred tax position (liability)........................................             (24,226)          (23,973)
Less - Deferred IT of acquired subsidiaries at acquisition date.................             (18,954)          (18,954)
                                                                                   ------------------ -----------------
Total effect of deferred IT in stockholders' equity at end of year..............              (5,272)           (5,019)
Less - Total effect of deferred IT in stockholders' equity at beginning of year.              (7,013)           (5,272)
Restatement effect of beginning balance.........................................                (920)           (2,004)
                                                                                   ------------------ -----------------
Change in deferred IT for the period............................................Ps                821           (1,751)
                                                                                   ------------------ -----------------



The change in consolidated deferred IT for the period in 2004, 2005 and 2006 is
as follows:




                                                                                  2004             2005            2006
                                                                            ------------------------------------------------
                                                                                                            
Deferred IT charged to the income statement..............................Ps         (1,097)          (1,225)         (1,160)
Changes in accounting principles.........................................                -              144              -
Deferred IT of the period applied directly to stockholders' equity.......              747            1,902            (591)
                                                                            ------------------------------------------------
Change in deferred IT for the period.....................................Ps           (350)              821         (1,751)
                                                                            ------------------------------------------------



CEMEX considers that sufficient taxable income will be generated to realize the
tax benefits associated with the deferred income tax assets, and the tax loss
carryforwards, prior to their expiration. In the event that present conditions
change, and it is determined that future operations would not generate enough
taxable income, or that tax strategies are no longer viable, the valuation
allowance would be increased and reflected in the income statement.

Temporary differences between net income of the period and taxable income for
ESPS generated expense of Ps221 in 2004 and an income of Ps194 in 2005,
reflected in the income statement of such periods. Deferred ESPS was not
generated in 2006.

C)   EFFECTIVE TAX RATE

Differences between the financial reporting and the corresponding tax basis of
assets and liabilities and the different IT rates and laws applicable to CEMEX,
among other factors, give rise to permanent differences between the approximate
statutory tax rate and the effective tax rate presented in the consolidated
income statements, which in 2004, 2005 and 2006 are as follows:




                                                                     2004         2005         2006
                                                               -------------------------------------------
                                                                        %            %            %
                                                                                     
Approximate consolidated statutory tax rate....................      33.0          30.0        29.0
Non-taxable dividend income....................................      (8.1)         (7.0)      (18.2)
Other non-taxable income.......................................     (13.5)         (3.7)       (3.8)
Expenses and other non-deductible items........................       1.9          (1.4)       13.4
Non-taxable sale of marketable securities and fixed assets.....       0.4          (0.3)       (3.5)
Difference between book and tax inflation......................       1.6           1.2        (2.7)
Others (1).....................................................      (3.1)         (4.9)        2.8
                                                               -------------------------------------------
Effective consolidated tax rate................................      12.2          13.9        17.0
                                                               -------------------------------------------


(1) Includes the effects of the different income tax rates in the countries
    where CEMEX operates.


                                       F-38


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

16.      STOCKHOLDERS' EQUITY

On April 27, 2006, the annual extraordinary stockholders' meeting approved a new
stock split, which became effective on July 17, 2006. In connection with the
stock split, each of the existing series "A" shares was surrendered in exchange
for two new series "A" shares, and each of the existing series "B" shares was
surrendered in exchange for two new series "B" shares. Previously, on April 28,
2005, the annual extraordinary stockholders' meeting approved a two-for-one
stock split, which became effective on July 1, 2005, by means of which each of
the then existing series "A" shares was surrendered in exchange for two new
series "A" shares, and each of the then existing series "B" shares was
surrendered in exchange for two new series "B" shares. The proportional equity
interest of the stockholders did not change as a result of these stock splits.

For the years 2005 and 2006, all amounts in CPOs, shares and prices per share
disclosed in the stockholders' equity note, except as otherwise indicated, have
been adjusted to retroactively reflect the stock splits of July 1, 2005 and July
17, 2006.

The carrying amounts of consolidated stockholders' equity as of December 31,
2005 and 2006 for Ps119,876 and Ps159,609, respectively, exclude investments in
shares of CEMEX, S.A.B. de C.V. held by subsidiaries, which implied a reduction
to majority interest stockholders' equity of Ps21,655 (628,617,040 CPOs) in 2005
and Ps20,501 (559,984,409 CPOs) in 2006. This reduction is included within
"Other capital reserves".

A)       COMMON STOCK

As of December 31, 2005 and 2006, the common stock of CEMEX, S.A.B. de C.V. was
as follows:




                                                                        2005                               2006
                                  SHARES                   SERIES A (1)      SERIES B (2)      SERIES A (1)      SERIES B (2)
                                                      ------------------------------------------------------------------------
                                                                                                     
Subscribed and paid shares............................    15,353,143,508     7,676,571,754    15,778,133,836     7,889,066,918
Treasury shares (3)...................................       426,174,000       213,087,000       536,248,572       268,124,286
Unissued shares authorized for stock option programs..       427,061,964       213,530,982       425,823,064       212,911,532
                                                      ------------------------------------------------------------------------
                                                          16,206,379,472     8,103,189,736    16,740,205,472     8,370,102,736
                                                      ------------------------------------------------------------------------


(1)  Series "A" or Mexican shares must represent at least 64% of capital
     stock.

(2)  Series "B" or free subscription shares must represent at most 36% of
     capital stock.

(3)  Includes the shares issued as a stock dividend pursuant to the ordinary
     stockholders' meeting of April 27, 2006 that were not subscribed by
     stockholders that elected to receive the cash dividend.

Of the total number of shares, 13,068,000,000 in 2005 and 2006 correspond to the
fixed portion and 11,241,569,208 in 2005 and 12,042,308,208 in 2006 to the
variable portion.

On April 28, 2005, the annual ordinary stockholders' meeting approved: (i) a
reserve for share repurchases of up to Ps6,000 (nominal amount); (ii) an
increase in the variable common stock through the capitalization of retained
earnings of up to Ps4,815 (nominal amount), issuing shares as a stock dividend
for up to 360 million shares equivalent to up 120 million CPOs, based on a price
of Ps66.448 (nominal amount) per CPO; or instead, stockholders could have chosen
to receive Ps2.60 (nominal amount) in cash for each CPO. As a result, shares
equivalent to 66,728,250 CPOs were issued, representing an increase in common
stock of Ps2, considering a nominal value of Ps0.0333 per CPO, and additional
paid-in capital of Ps4,535, while an approximate cash payment through December
31, 2005 was made for Ps380 (nominal amount); and (iii) the cancellation of the
corresponding shares held in the Company's treasury. The amounts of CPOs and
other prices per share related to the annual ordinary stockholders' meeting held
on April 28, 2005 were not adjusted to retroactively reflect the stock splits of
July 2005 and July 2006.

On April 27, 2006, the annual ordinary stockholders' meeting approved: (i) a
reserve for share repurchases of to Ps6,000 (nominal amount); (ii) an increase
in the variable common stock through the capitalization of retained earnings of
up to Ps6,718 (nominal amount), issuing shares as a stock dividend for up to 720
million shares equivalent to up 240 million CPOs, based on a price of Ps52.5368
(nominal amount) per CPO; or instead, stockholders could have chosen to receive
Ps1.4887 (nominal amount) in cash for each CPO. As a result, shares equivalent
to 105,937,857 CPOs were issued, representing an increase in common stock of
Ps2, considering a nominal value of Ps0.01665 per CPO, and additional paid-in
capital of Ps5,740, while and approximate cash payment through December 31, 2006
was made for Ps148 (nominal amount); and (iii) the cancellation of the
corresponding shares held in the Company's treasury. The amounts of CPOs and
other prices per share related to the annual ordinary stockholders' meeting held
on April 27, 2006 were not adjusted to retroactively reflect the stock split of
July 17, 2006.

During 2005 and 2006, the new CPOs issued pursuant the exercise of options under
the "fixed program" (note 17) generated additional paid-in capital of
approximately Ps19 and Ps5, respectively, and increased the number of shares
outstanding.



                                       F-39


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

B) OTHER EQUITY RESERVES

As of December 31, 2005 and 2006, other equity reserves are summarized as
follows:

                                                            2005      2006
                                                         -------------------
Deficit in equity restatement.........................Ps  (57,953)  (59,675)
Treasury shares.......................................    (21,655)  (20,501)
Cumulative initial deferred income tax effects........     (6,378)   (6,378)
                                                         -------------------
                                                      Ps  (85,986)  (86,554)
                                                         ===================

In 2004, 2005 and 2006, the most significant items within deficit in equity
restatement, which are also elements of the comprehensive income presented in
the statement of changes in stockholders' equity, are detailed as follows:




                                                                             2004       2005       2006
                                                                          ----------------------------------
                                                                                           
Foreign currency translation adjustment 1..............................Ps   3,398      (5,641)      3,606
Capitalized foreign exchange gain (loss) 2.............................       170       1,542        (535)
Effects from holding non-monetary assets...............................    (3,005)     10,532      (4,338)
Hedge derivative instruments (notes 12C and E).........................     2,507      (1,482)        136
Deferred IT for the period recorded in stockholders' equity (note 15B).       747       1,902        (591)
Results from the purchase of minority interests (note 11A).............    (1,044)         -            -
                                                                          ----------------------------------
                                                                       Ps   2,773       6,853      (1,722)
                                                                          ==================================



1    These effects result from the translation of the financial statements of
     foreign subsidiaries and include foreign exchange fluctuations from
     financing related to the acquisition of foreign subsidiaries generated by
     CEMEX's subsidiary in Spain, representing a gain of Ps3 in 2004 and a loss
     of Ps11 in 2005. There were no exchange fluctuations in this subsidiary
     during 2006.

2    Generated by foreign exchange fluctuations of debt associated with the
     acquisition of foreign subsidiaries.

C)   RETAINED EARNINGS

Retained earnings as of December 31, 2005 and 2006 include Ps108,515 and
Ps134,298, respectively, of earnings generated by subsidiaries and associates
that are not available to be paid as dividends by CEMEX until these entities
distribute such amounts to CEMEX. Additionally, retained earnings include a
share repurchase reserve in the amount of Ps6,254 in 2005 and Ps6,152 in 2006.
Net income for the year is subject to a 5% allocation toward a legal reserve
until such reserve equals one fifth of the common stock. As of December 31,
2006, the legal reserve amounted to Ps1,663.

D)   EFFECTS OF INFLATION

The effects of inflation on certain items of stockholders' equity as of December
31, 2006 are as follows:

                                                    RESTATEMENT         TOTAL
                                              ----------------------------------
Common stock...............................Ps        66      3,890       3,956
Additional paid-in-capital.................      34,074     20,727      54,801
Cumulative initial deferred
  income tax effects.......................      (4,698)    (1,680)     (6,378)
Retained earnings..........................      80,500     60,493     140,993
Net income.................................Ps    25,056        626      25,682
                                              ----------------------------------


E)  OTHER EQUITY TRANSACTIONS

In October 2004, CEMEX liquidated the remaining capital securities for
approximately U.S.$66 (Ps769). The capital securities were issued in 1998 by a
Spanish subsidiary for U.S.$250, with an annual dividend rate of 9.66%. In April
2002, through a tender offer, U.S.$184 of capital securities were repurchased.
Pursuant to the early retirement, holders of the capital securities received a
premium in cash of approximately U.S.$20 (Ps255), which was recognized in
stockholders' equity. During 2004, resulting from the adoption of new accounting
principles, the capital securities were treated as debt. Preferred dividends
declared in 2004 of approximately U.S.$6 (Ps70) were recognized in the income
statement as part of financial expenses.

In December 2004, CEMEX recognized a loss of Ps1,129 within "Other equity
reserves" in connection with the settlement, upon maturity, of 13,772,903
appreciation warrants ("warrants") remaining from the public tender offer that
took place in December 2003, in which CEMEX repurchased approximately 86.7% of
the then outstanding warrants, including approximately 34.9 million warrants
owned by or controlled by CEMEX and its subsidiaries. These financial
instruments were originally issued in 1999 by means of a public offer on the MSE
and the NYSE, in which 105 million warrants and warrants represented by ADWs
were sold. Each ADW represented five warrants. The warrants permitted the
holders to benefit from the future increases in the market price of the
Company's CPOs above the strike price.

                                      F-40


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

F)       MINORITY INTEREST

As of December 31, 2006, minority interest stockholders' equity includes
U.S.$1,250 (Ps13,500) aggregate principal amount of perpetual debentures issued
by consolidated entities. For accounting purposes, these debentures represent
equity instruments.

On December 18, 2006, two entities denominated as Special Purpose Vehicles or
"SPVs" issued perpetual debentures for an aggregate amount of U.S.$1,250
(Ps13,500). These debentures have no fixed maturity date and do not represent a
contractual payment obligation for CEMEX. The first SPV, C5 Capital (SPV)
Limited, issued debentures for U.S.$350, which include an option that allows the
issuer to redeem the debentures at the end of the fifth anniversary. The second
SPV, C10 Capital (SPV) Limited, issued debentures for U.S.$900, which include an
option that allows the issuer to redeem the debentures at the end of the tenth
anniversary. The two SPVs have the unilateral right to indefinitely defer the
payment of interest due on the debentures. The debentures for U.S.$350 bear
interest at the annual rate of 6.196%, while the debentures for U.S.$900 bear
interest at the annual rate of 6.722%. The two SPVs, which were established
solely for purposes of issuing the perpetual debentures, are included in the
Company's consolidated financial statements. Based on their characteristics, the
debentures qualify for accounting purposes as equity instruments and are
classified within minority interest as they were issued by consolidated
entities. The definition of the debentures as equity instruments according was
made under applicable International Financing Reporting Standards ("IFRS"),
which were applied to these transactions in compliance with the supplementary
application of IFRS in Mexico. Issuance costs of approximately U.S.$10 (Ps108),
as well as the interest expense, which is recognized based on the principal
amount, are included within "Other capital reserves".

As mentioned in note 12E, there are derivative instruments associated with the
perpetual debentures, through which CEMEX changes the risk profile associated
with interest rates and foreign exchange rates in respect of the debentures from
the U.S. dollar to the yen.

17.  EXECUTIVE STOCK OPTION PROGRAMS

Between 1995 and 2004, CEMEX granted to a group of executives different types of
stock options. Starting in 2005, stock option programs were replaced by a
long-term compensation scheme through which such executives receive cash
bonuses, recognized in the operating results, which are used by the executives
to acquire CPOs in the market. The expense recognized through the income
statements during 2005 and 2006 arising from these bonuses was Ps334 and Ps397,
respectively. Pursuant to an agreement between CEMEX and the executives, the
acquired CPOs are placed in an executives' owned trust to comply with a
restriction for sale period of 4 years, which vests up to 25% at the end of each
year.

As mentioned in note 3T, in 2005, CEMEX adopted IFRS 2 to account for its stock
option programs. Under IFRS 2, the cost associated with stock options that
qualify as equity instruments is represented by the estimated fair value of the
awards as of the grant date, and should be recognized through earnings over the
options' vesting period. Likewise, IFRS 2 defines liability instruments,
comprised by those awards in which an entity incurs an obligation by committing
to pay the employee, through the exercise of the option, an amount in cash or in
other financial assets. In connection with liability instruments, IFRS 2
requires the determination of the estimated fair value of the awards at each
reporting date, recognizing the changes in valuation through the income
statement.

The stock options granted by CEMEX, except for those under the "fixed program"
described below, represent liability instruments, considering that CEMEX is
committed to pay the executive the intrinsic value of the options at the
exercise date. Starting in 2001 and until the adoption of IFRS 2, CEMEX
recognized the cost associated with those programs that under IFRS 2 qualify as
liability instruments through the intrinsic value method. Under this method,
CEMEX accrued a provision at each balance sheet date against the income
statement, for the difference between the CPO's market price and the exercise
price of such CPO established in the option. In respect to those options that
now qualify as equity instruments under IFRS 2, CEMEX did not recognize cost
considering that: 1) the CPO exercise price equaled its market price as of the
grant date; 2) the exercise price was fixed thorough the tenure of the award;
and 3) the exercise of these options implied the issuance of new CPOs.

As of December 31, 2005 and 2006, CEMEX's subsidiary in Ireland has 1,640,000
and 1,230,000 options, respectively, under stock option programs in its own
shares, with an average exercise price per share of approximately (euro)1.35 in
2005 and (euro)1.41 in 2006. As of December 31, 2005 and 2006, the market price
per share of this subsidiary was (euro)2.35 and (euro)2.60, respectively. These
programs are not periodically measured at fair value considering that the
executives' exercise rights were fully vested as of the adoption of IFRS 2.

In May 2005, as a result of change of control clauses, except for the stock
option programs of the Irish subsidiary, the existing stock option and share
programs in RMC as of the acquisition date were liquidated through the payment
of approximately (pound)40 (U.S.$69 or Ps 799). This amount was included as part
of the purchase price of RMC.


                                       F-41


The information related to options granted in respect of CEMEX, S.A.B. de C.V
shares is as follows:




       OPTIONS                                   FIXED               VARIABLE          RESTRICTED              SPECIAL
                                              PROGRAMS (A)           PROGRAMS (B)      PROGRAMS (C)           PROGRAM (D)
                                             ---------------------------------------------------------------------------------
                                                                                                    
Options at the beginning of 2005.............   2,690,869             3,112,847         152,064,600             1,925,452
CHANGES IN 2005:
Options cancelled............................  (1,141,345)                    -                   -                     -
Options granted..............................           -                     -                   -               185,900
Options exercised............................    (469,224)             (622,848)       (135,254,554)             (447,546)
                                             ---------------------------------------------------------------------------------
Options at the end of 2005...................    1,080,300            2,489,999          16,810,046             1,663,806
CHANGES IN  2006:
Options cancelled............................     (12,554)                    -                   -                    -
Options exercised............................    (118,042)             (934,885)         (1,208,373)             (433,853)
                                             ---------------------------------------------------------------------------------
Options at the end of 2006...................      949,704            1,555,114          15,601,673             1,229,953
                                             ---------------------------------------------------------------------------------
Underlying CPOs 1............................    5,075,073            7,387,468          66,410,081            24,599,060
                                             ---------------------------------------------------------------------------------
EXERCISE PRICE:
Options outstanding at the
   beginning of 2006 1, 2 ...................       Ps7.27            U.S.$1.34           U.S.$1.90             U.S.$1.31
Options exercise in the year 1, 2............       Ps7.36            U.S.$1.38           U.S.$1.93             U.S.$1.25
Options outstanding at the
   end of 2006 1, 2 .........................       Ps7.12            U.S.$1.36           U.S.$1.92             U.S.$1.33
                                             ---------------------------------------------------------------------------------
AVERAGE USEFUL LIFE OF OPTIONS:                    2.1 years          5.3 years           5.5 years             6.7 years
                                             ---------------------------------------------------------------------------------
NUMBER OF OPTIONS PER EXERCISE PRICE:        266,385 - Ps5.2   965,190 - U.S.$1.4   15,601,673 - U.S.$1.9   143,868 - U.S.$1.1
                                              46,022 - Ps5.8   221,414 - U.S.$1.5           -               221,161 - U.S.$1.4
                                             134,295 - Ps7.6    67,295 - U.S.$1.2           -               296,839 - U.S.$1.0
                                             155,099 - Ps6.8   237,473 - U.S.$1.1           -               400,590 - U.S.$1.4
                                             149,314 - Ps8.5    58,742 - U.S.$1.3           -               167,495 - U.S.$1.9
                                             198,589 - Ps8.9     5,000 - U.S.$1.6           -                     -
                                             ---------------------------------------------------------------------------------
PERCENT OF OPTIONS FULLY VESTED:
Options fully vested.........................         100%           86.2%                 100%                      55.5%
                                             ---------------------------------------------------------------------------------


1    Exercise prices and the number of underlying CPOs are technically adjusted
     for the effect of stock dividends.

2    Weighted average exercise prices per CPO. Prices include the effects of the
     stock splits detailed in note 16.


A)   FIXED PROGRAM

From June 1995 through June 2001, CEMEX granted stock options with a fixed
exercise price in pesos ("fixed program"), equivalent to the market price of the
CPO at the grant date and with a tenure of 10 years. Exercise prices are
adjusted for stock dividends. The employees' option rights vested up to 25%
annually during the first four years after having been granted.

B)   VARIABLE PROGRAM

In November 2001, by means of a voluntary exchange program for options granted
under the fixed program, CEMEX initiated a stock option program with exercise
prices denominated in U.S. dollars increasing annually at a 7% rate, through the
payment of the options' intrinsic value and the issuance of new options. As a
result of the exchanges of February and December 2004 described below,
129,075,815 options granted under the variable program were exercised.

C)   RESTRICTED PROGRAM

In February 2004, through a voluntary exchange program, 112,495,811 options from
the variable program and 1,625,547 options from other programs were redeemed
through the payment of the options' intrinsic value and the grant of 122,708,146
new options with a remaining tenure of 8.4 years. These options had an initial
exercise price of U.S.$1.265 per CPO (after the stock splits of 2005 and 2006),
increasing annually at a 7% rate, and included a mandatory exercise condition
when the CPO price reached U.S.$1.875 (after giving effect to the stock splits
of 2005 and 2006). The mandatory exercise condition was satisfied in 2004, and
the payment to the executives was made in the form of CPOs. These CPOs are
restricted for sale for an approximate period of four years. This program was
intended, by limiting the potential for gains, to be an improved hedge through
equity forward contracts. As consideration to the executives resulting from the
mandatory exercise condition and the sale restriction, CEMEX paid in 2004
U.S.$0.10 per option, net of taxes.


                                      F-42


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

In addition, in December 2004, through a voluntary exercise program, 16,580,004
options from the variable program, 120,827,370 options from the exchange of
February 2004 and 399,848 options from other programs were redeemed, through the
payment of the options' intrinsic value, and the issuance of 139,151,236 new
options with a remaining tenure of 7.5 years. These options had an initial
exercise price of U.S.$1.865 per CPO (after giving effect to the stock splits of
2005 and 2006), increasing annually at a 5.5% rate, of which 120,827,370 options
included a mandatory exercise condition when the CPO price reached U.S.$2.125
(after giving effect to the stock splits of 2005 and 2006), while the remaining
18,323,866 options did not have the exercise condition. The initial exercise
price was U.S.$0.125 higher than the CPO market price at the exercise date. The
mandatory exercise condition was satisfied in 2004, and the intrinsic value was
paid in the form of CPOs, which were restricted for sale for a period of four
years from the exercise date. This exercise program was intended to improve the
hedge efficiency through equity forward contracts. The cost of the exercise of
approximately U.S.$61 (Ps710) was recognized in earnings in the year 2004. As
consideration to the employees resulting from the initial exercise price being
above market, the mandatory exercise condition and the sale restriction, CEMEX
paid in 2005 U.S.$0.11 per option, net of taxes.

In January 2005, the 1,190,224 options then outstanding from the February 2004
exchange program and that contained a mandatory exercise condition, were
automatically exercised when the CPO market price reached the level of
U.S.$1.875 (after giving effect to the stock splits of 2005 and 2006). Likewise,
in June 2005, 131,996,243 options from the exchange program of December 2004
were automatically exercised when the CPO market price reached the level of
U.S.$2.125 (after the stock splits of 2005 and 2006). As a result of the
mandatory exercises of options occurred during 2005, CEMEX recognized a cost of
approximately U.S.$177 (Ps2,049) in the income statement of the period.

D)   SPECIAL PROGRAM

From June 2001 through June 2005, the Company's subsidiary in the United States
granted to a group of its employees a stock option program to purchase CEMEX
ADSs. The options granted have a fixed exercise price in dollars and tenure of
10 years. The employees' option rights vested up to 25% annually after having
been granted. The option exercises are hedged using ADSs currently owned by
subsidiaries, which increases stockholders' equity and the number of shares
outstanding. The amounts of these ADS programs are presented in terms of
equivalent CPOs (ten CPOs represent one ADS).

In addition, as of December 31, 2006, there are 5,000 options with an exercise
price of U.S.$1.56 (after giving effect to the stock splits of 2005 and 2006)
and a remaining tenure of less than one year.

FAIR VALUE OF OPTIONS, ACCOUNTING RECOGNITION AND OPTIONS' HEDGING ACTIVITIES

VALUATION OF OPTIONS AT FAIR VALUE AND ACCOUNTING RECOGNITION

Upon adoption of IFRS 2 in 2005, no cost was recognized in connection with the
fixed program, considering that all options were fully vested as of the adoption
date. All other programs are measured at their estimated fair value as of the
balance sheet date, recognizing changes in fair value through the income
statement. The income statement for the year ended December 31, 2005, includes
the cumulative effect from the adoption of IFRS 2, which represented a cost of
Ps1,081 (Ps938 after tax).

Changes in the provision for the executive stock option programs in 2005 and
2006 are as follows:




                                                            RESTRICTED   VARIABLE     SPECIAL
                                                              PROGRAM    PROGRAM      PROGRAM       TOTAL
                                                          -----------------------------------------------
                                                                                        
Provision as of December 31, 2004..................... Ps      (235)       (126)      (228)         (589)
 Net valuation effects in current period results......        1,458        (109)      (373)          976
 Cumulative effect from change to fair value method...         (937)       (101)       (43)       (1,081)
 Estimated decrease from options' exercises...........       (2,063)         (7)      (142)       (2,212)
 Foreign currency translation effect..................            8           -          1             9
                                                          -----------------------------------------------
Provision as of December 31, 2005.....................       (1,769)       (343)      (785)       (2,897)
 Net valuation effects in current period results......          145         176        228           549
 Estimated decrease from options' exercises...........          (86)        (68)      (128)         (282)
 Foreign currency translation effect..................          119          23         53           195
                                                          -----------------------------------------------
Provision as of December 31, 2006..................... Ps    (1,591)       (212)      (632)       (2,435)
                                                          -----------------------------------------------



                                      F-43


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

The options' fair values were determined through the binomial option-pricing
model. As of December 31, 2005 and 2006, the most significant assumptions used
in the valuations are as follows:

                  ASSUMPTIONS                     2005                2006
                                            -----------------------------------
Expected dividend yield.....................      3.8%                2.8%
Volatility..................................      35%                  35%
Interest rate...............................      4.4%                4.7%
Weighted average remaining tenure...........   6.8 years            5.9 years
                                            -----------------------------------


For the year ended December 31, 2004, the change of the provision under the
intrinsic value method generated a cost of approximately U.S.$51 (Ps589).

OPTIONS HEDGING ACTIVITIES

From 2001 until September 2005, CEMEX hedged most of its stock option programs
through equity forward contracts in its own stock (note 12D), negotiated to
guarantee that shares would be available at prices equivalent to those
established in the options, without the necessity of issuing new CPOs into the
market; therefore, these programs did not increase the number of shares
outstanding and consequently did not result in dilution to the stockholders. The
equity forward contracts were fully settled during September 2005 through a
secondary public offering of shares. Changes in the estimated fair value and
cash flows generated through the settlement of the forward contracts related to
the stock option plans, generated gains of approximately U.S.$45 (Ps524) in 2004
and U.S.$422 (Ps4,886) in 2005, which were recognized in earnings, offsetting
the cost related to stock option programs.

In December 2005, CEMEX negotiated a derivative instrument in its own shares, by
means of which, through a prepayment of U.S.$145 (Ps1,679), CEMEX secured the
appreciation rights over 25 million CPOs, sufficient to hedge cash flows from
the exercise of options in the short and medium term. As of December 31, 2005
and 2006, changes in the fair value of this instrument generated gains of
approximately U.S.$3 (Ps35) and U.S.$13 (Ps140), respectively, recognized in
earnings.

18.  SELECTED FINANCIAL INFORMATION BY GEOGRAPHIC OPERATING SEGMENT

Operating segments are defined as the components of an entity oriented to the
production and sale of goods and services, which are subject to risks and
benefits different from those associated to other business segments. CEMEX
operates principally in the construction industry segment through the
production, distribution, marketing and sale of cement, ready-mix concrete and
aggregates.

CEMEX operates geographically on regional basis. Each regional manager
supervises and is responsible for all the business activities undergoing in the
countries comprising the region. These activities refer to the production,
distribution, marketing and sale of cement, ready-mix concrete and aggregates.
The country manager, who is one level below the regional manager in the
organizational structure, reports to the regional manager the operating results
of the country manager's business unit, including all the operating sectors. In
consequence, CEMEX's management internally evaluates the results and performance
of each country and region for decision-making purposes, following a vertical
integration approach. According to this approach in the daily operations,
management allocates economic resources on a country basis rather than on an
operating component basis.

The main indicator used by CEMEX's management to evaluate the performance of
each country is operating cash flow, which CEMEX defines as operating income
plus depreciation and amortization. This indicator, which is presented in the
selected financial information by geographic operating segment, is consistent
with the information used by CEMEX's management for the decision-making
purposes.

The accounting policies applied to determine the financial information by
geographic operating segment are consistent with those described in note 3.
CEMEX recognizes sales and other transactions between related parties based on
market values.

For purposes of the tables below, in 2005, the segment "United States" and
"Spain" includes the operations acquired from RMC for the 10-month ended as of
December 31, 2005. In 2005 and 2006, the segment "Rest of Europe" refers
primarily to CEMEX's operations in Germany, France, Ireland, Czech Republic,
Austria, Poland, Croatia, Hungary and Latvia, acquired from RMC, in addition to
CEMEX's operations in Italy, which were established before the acquisition of
RMC.

In 2004, the segment "Rest of Central and South America and the Caribbean",
includes CEMEX's operations in Costa Rica, Panama, Puerto Rico, the Dominican
Republic, Nicaragua and the Caribbean; in 2005, through the purchase of RMC,
small ready-mix concrete operations in Jamaica and Argentina were incorporated
into this segment; and, in 2006, a cement-grinding mill in Guatemala was
incorporated. Likewise, in 2005 and 2006, the segment "Rest of Africa and Middle
East" includes the operations in the United Arab Emirates and Israel, acquired
from RMC. In addition, the segment "Rest of Asia" in 2004 includes the
operations in Thailand and Bangladesh; and, in 2005 and 2006, the operations in
Malaysia acquired from RMC. Finally, "Others" segment primarily refers to cement
trade maritime operations, to the subsidiary (Neoris, S.A. de C.V.) involved in
the development of information technology solutions, as well as to other minor
subsidiaries.

                                      F-44


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

Selected financial information of the income statement by geographic operating
segment for the years ended December 31, 2004, 2005 and 2006 is as follows:




                                                     NET SALES                                       DEPRECIATION   OPERATING
                                                    (INCLUDING     RELATED  CONSOLIDATED  OPERATING      AND          CASH
                      2004                       RELATED PARTIES)  PARTIES   NET SALES     INCOME    AMORTIZATION     FLOW
---------------------------------------------   --------------------------------------------------------------------------------
                                                                                                        
NORTH AMERICA
Mexico........................................  Ps.  34,010         (765)     33,245       12,763       1,838         14,601
United States ................................       23,000            -      23,000        3,026       2,042          5,068
EUROPE
Spain.........................................       16,070         (243)     15,827        3,905         874          4,779
Rest of Europe ...............................          256            -         256         (45)         20            (25)
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela.....................................        4,080         (962)      3,118        1,274         566          1,840
Colombia......................................        2,856            -       2,856        1,302         348          1,650
Rest of Central and South America and the
  Caribbean..............................             8,020         (452)      7,568        1,837         606          2,443
AFRICA AND MIDDLE EAST
Egypt.........................................        2,211         (435)      1,776          668         208            876
ASIA
Philippines...................................        1,763         (300)      1,463          315         314            629
Rest of Asia .................................          321            -         321           41          47             88
OTHERS........................................       10,965       (5,480)      5,485       (3,519)      1,099         (2,420)
                                                --------------------------------------------------------------------------------
Total Consolidated 1..........................  Ps. 103,552       (8,637)     94,915       21,567       7,962         29,529
                                                --------------------------------------------------------------------------------


                                                      NET SALES                                       DEPRECIATION   OPERATING
                                                     (INCLUDING     RELATED  CONSOLIDATED  OPERATING      AND          CASH
                      2005                        RELATED PARTIES)  PARTIES   NET SALES     INCOME    AMORTIZATION     FLOW
---------------------------------------------    --------------------------------------------------------------------------------
NORTH AMERICA
Mexico.........................................Ps     36,775       (1,055)     35,720       11,702       1,803         13,505
United States .................................       47,359            -      47,359        7,790       3,493         11,283
EUROPE
Spain..........................................       17,550         (120)     17,430        4,164         825          4,989
United Kingdom.................................       17,769            -      17,769          618       1,075          1,693
Rest of Europe ................................       31,594         (503)     31,091        1,969       1,949          3,918
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela......................................        4,795       (1,042)      3,753        1,561         611          2,172
Colombia.......................................        2,904            -       2,904          394         402            796
Rest of Central and South America and the
  Caribbean..............................              7,844         (665)      7,179          747         658          1,405
AFRICA AND MIDDLE EAST
Egypt..........................................        3,059         (160)      2,899        1,139         220          1,359
Rest of Africa and Middle East ................        3,250            -       3,250          109         107            216
ASIA
Philippines....................................        2,223         (245)      1,978          476         248            724
Rest of Asia ..................................        1,111            -       1,111          (19)         75             56
OTHERS ........................................       15,265      (10,323)      4,942       (1,859)        928           (931)
                                                 --------------------------------------------------------------------------------
Total Consolidated 1...........................Ps    191,498      (14,113)    177,385       28,791      12,394         41,185
                                                 --------------------------------------------------------------------------------


1  The consolidated amounts of depreciation and amortization in 2004 and 2005 do
   not include the portion of amortization recognized within "Other expenses,
   net".


                                      F-45


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

Selected financial information of the income statement by geographic operating
segment
 - Continued



                                                      NET SALES                                       DEPRECIATION   OPERATING
                                                     (INCLUDING     RELATED  CONSOLIDATED  OPERATING      AND           CASH
                      2006                        RELATED PARTIES)  PARTIES   NET SALES     INCOME    AMORTIZATION      FLOW
---------------------------------------------    ---------------------------------------------------------------------------------
                                                                                                         
Mexico.........................................Ps     39,256         (970)     38,286       12,180       1,680         13,860
United States .................................       45,096         (339)     44,757        9,305       3,261         12,566
EUROPE
Spain..........................................       20,131         (191)     19,940        5,197         797          5,994
United Kingdom.................................       21,993          (17)     21,976          142       1,303          1,445
Rest of Europe ................................       41,205         (824)     40,381        2,047       2,338          4,385
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela......................................        5,732         (665)      5,067        1,659         541          2,200
Colombia.......................................        3,878           (2)      3,876        1,049         367          1,416
Rest of Central and South America and the
  Caribbean..............................              8,340         (263)      8,077        1,219         644          1,863
AFRICA AND MIDDLE EAST
Egypt..........................................        3,298            -       3,298        1,360         207          1,567
Rest of Africa and Middle East ................        4,420            -       4,420          111          82            193
ASIA
Philippines....................................        2,416         (428)      1,988          669         203            872
Rest of Asia ..................................        1,562            -       1,562          (57)         42            (15)
OTHERS ........................................       18,564      (15,099)      3,465       (3,067)      1,407         (1,660)
                                                 ---------------------------------------------------------------------------------
Total Consolidated.............................Ps    215,891      (18,798)    197,093       31,814      12,872         44,686
                                                 ---------------------------------------------------------------------------------


The selected financial information of balance sheet by geographic operating
segments includes the elimination of balances between related parties. As of
December 31, 2005 and 2006, the information is as follows:



                                                    INVESTMENTS     OTHER
                                                        IN          SEGMENT   TOTAL       TOTAL      NET ASSETS     CAPITAL
              DECEMBER 31, 2005                     ASSOCIATES      ASSETS    ASSETS   LIABILITIES   BY SEGMENT   EXPENDITURE
---------------------------------------------  -------------------------------------------------------------------------------
                                                                                                    
NORTH AMERICA
Mexico.......................................   Ps      329         53,953      54,282       14,014      40,268       1,197
United States................................           535         71,414      71,949       25,982      45,967       1,876
EUROPE
Spain........................................            25         30,426      30,451       10,666      19,785         767
United Kingdom...............................             -         27,637      27,637       19,722       7,915         629
Rest of Europe ..............................           931         33,831      34,762       12,712      22,050       1,599
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela....................................           208          9,868      10,076          715       9,361         263
Colombia.....................................             -          7,937       7,937        2,105       5,832          86
Rest of Central and South America and the
  Caribbean..................................            15         14,155      14,170        3,368      10,802       1,378
AFRICA AND MIDDLE EAST
Egypt........................................             -          5,915       5,915          925       4,990         109
Rest of Africa and Middle East...............           325          2,425       2,750       1,232       1,518           80
ASIA
Philippines..................................             -          6,892       6,892          991       5,901          42
Rest of Asia.................................             -          4,987       4,987          136       4,851          58
CORPORATE....................................         2,724          5,032       7,756       89,883    (82,127)           -
OTHERS ......................................         4,636         25,666      30,302        7,539      22,763       1,137
                                               -------------------------------------------------------------------------------
Total Consolidated...........................  Ps     9,728        300,138     309,866      189,990     119,876       9,221
                                               ===============================================================================



                                       F-46


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

The selected financial information of balance sheet by geographic operating
segments - Continued



                                                    INVESTMENTS     OTHER
                                                        IN          SEGMENT   TOTAL       TOTAL      NET ASSETS     CAPITAL
              DECEMBER 31, 2005                     ASSOCIATES      ASSETS    ASSETS   LIABILITIES   BY SEGMENT   EXPENDITURE
---------------------------------------------  -------------------------------------------------------------------------------
                                                                                                      
NORTH AMERICA
Mexico.........................................Ps       405           57,674      58,079       13,803      44,276       3,908
United States..................................         459           74,088      74,547       14,706      59,841       3,824
EUROPE
Spain..........................................          23           32,852      32,875       18,549      14,326       1,790
United Kingdom.................................         547           25,780      26,327       11,114      15,213       1,107
Rest of Europe ................................         872           40,887      41,759       13,851      27,908       2,248
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela......................................         206            9,880      10,086        1,022       9,064         452
Colombia.......................................           -            8,539       8,539        2,215       6,324         343
Rest of Central and South America and the
  Caribbean....................................          16           14,980      14,996        2,527      12,469       1,006
AFRICA AND MIDDLE EAST
Egypt..........................................           -            5,919       5,919        1,279       4,640         175
Rest of Africa and Middle East.................         312            4,545       4,857        1,202       3,655         274
ASIA
Philippines....................................           -            6,645       6,645        1,256       5,389         115
Rest of Asia...................................           -            1,987       1,987          334       1,653          71
CORPORATE......................................       3,171            8,034      11,205       71,522    (60,317)
OTHERS.........................................       1,643           24,234      25,877       10,709      15,168       1,324
                                               -------------------------------------------------------------------------------
Total Consolidated.............................Ps     7,654          316,044     323,698      164,089     159,609      16,637
                                               ===============================================================================


Total consolidated liabilities include debt of Ps109,732 in 2005 and Ps81,441 in
2006. Of such debt, approximately 36% in 2005 and 42% in 2006 was in the Parent
Company, 7% and 1% in the United States, 32% and 33% in Spain, 7% and 9% in a
Dutch subsidiary, guaranteed by certain Mexican subsidiaries and the Parent
Company, 9% and 11% in finance companies in the United States, guaranteed by the
Spanish subsidiary, and 9% and 4% in other countries, respectively.

The information of net sales by sector for the years ended December 31, 2004,
2005 and 2006 is as follows:



                                                                                                                         NET
                         2004                              CEMENT    CONCRETE   AGGREGATES    OTHERS    ELIMINATIONS    SALES
------------------------------------------------------    ----------------------------------------------------------------------
                                                                                                      
NORTH AMERICA
Mexico...............................................  Ps  24,963      8,374         289       5,011      (5,392)       33,245
United States .......................................      16,076      6,252       2,090       1,526      (2,944)       23,000
EUROPE
Spain................................................      11,599      4,026         713       2,196      (2,707)       15,827
Rest of Europe ......................................           -        155          92          62         (53)          256
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela............................................       3,540        814          61          64      (1,361)        3,118
Colombia.............................................       2,113      1,112         180          87        (636)        2,856
Rest of Central and South America and The Caribbean..       6,678      1,217          32         224        (583)        7,568
AFRICA AND MIDDLE EAST
Egypt................................................       2,136        101           -           6        (467)        1,776
ASIA
Philippines..........................................       1,759          1           8           1        (306)        1,463
Rest of Asia ........................................         321          -           -           -           -           321
OTHERS ..............................................           -          -           -      10,912      (5,427)        5,485
                                                          ----------------------------------------------------------------------
Total Consolidated................................... Ps   69,185     22,052       3,465      20,089     (19,876)       94,915
                                                          ----------------------------------------------------------------------


                                       F-47


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

Net sales by sector - Continued




                         2005                             CEMENT    CONCRETE   AGGREGATES    OTHERS    ELIMINATIONS   NET SALES
-----------------------------------------------------    -----------------------------------------------------------------------
                                                                                                     
NORTH AMERICA
Mexico............................................... Ps  26,873     10,231         425       5,548      (7,357)       35,720
United States .......................................     19,958     21,514       5,377       4,725      (4,215)       47,359
EUROPE
Spain................................................     11,143      5,590       1,232       2,804      (3,339)       17,430
United Kingdom.......................................      2,723      6,970       5,037       8,195      (5,156)       17,769
Rest of Europe ......................................      7,077     17,407       6,507       6,308      (6,208)       31,091
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela............................................      4,005      1,104          74          84      (1,514)        3,753
Colombia.............................................      2,022      1,277         209         161        (765)        2,904
Rest of Central and South America and the Caribbean..      6,023      1,687          57         261        (849)        7,179
AFRICA AND MIDDLE EAST
Egypt................................................      2,889        183           -           9        (182)        2,899
Rest of Africa and Middle East ......................          -      2,970           -         280           -         3,250
ASIA
Philippines..........................................      2,223          -           1           1        (247)        1,978
Rest of Asia ........................................        319        565         117         113          (3)        1,111
OTHERS ..............................................          -          -           -      15,246     (10,304)        4,942
                                                         -----------------------------------------------------------------------
Total Consolidated...................................Ps   85,255     69,498      19,036      43,735     (40,139)      177,385
                                                         -----------------------------------------------------------------------






                         2006                              CEMENT    CONCRETE   AGGREGATES    OTHERS   ELIMINATIONS   NET SALES
------------------------------------------------------    ----------------------------------------------------------------------
                                                                                                     
NORTH AMERICA
Mexico...............................................  Ps  27,734     11,960         618       6,805     (8,831)       38,286
United States .......................................      20,691     19,471       5,764       6,029     (7,198)       44,757
EUROPE
Spain................................................      13,647      5,907       1,253       5,123     (5,990)       19,940
United Kingdom.......................................       3,550      8,899       6,977       9,698     (7,148)       21,976
Rest of Europe ......................................       9,743     22,328       8,141       8,219     (8,050)       40,381
CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN
Venezuela............................................       4,369      1,494         154         218     (1,168)        5,067
Colombia.............................................       2,758      1,424         246         678     (1,230)        3,876
Rest of Central and South America and the Caribbean..       6,574      2,058          80         358       (993)        8,077
AFRICA AND MIDDLE EAST
Egypt................................................       3,076        216           -          30        (24)        3,298
Rest of Africa and Middle East ......................           -      3,650           -       5,266     (4,496)        4,420
ASIA
Philippines..........................................       2,415          -           -           1       (428)        1,988
Rest of Asia ........................................         683        648         128         177        (74)        1,562
OTHERS ..............................................           -          -           -      18,564    (15,099)        3,465
                                                          ----------------------------------------------------------------------
Total Consolidated...................................  Ps  95,240     78,055      23,361      61,166    (60,729)      197,093
                                                          ----------------------------------------------------------------------


                                       F-48


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


19.  FOREIGN CURRENCY POSITION

As of December 31, 2006, the main balances denominated in foreign currencies are
as follows:

                                             MEXICO      FOREIGN     TOTAL
                                          -----------------------------------
Current assets...................... U.S.$         72        4,252      4,324
Non-current assets 1................            2,663       15,011     17,674
                                          -----------------------------------
    Total assets.................... U.S.$      2,735       19,263     21,998
                                          -----------------------------------
Current liabilities................. U.S.$         85        3,159      3,244
Non-current liabilities.............            1,292        6,553      7,845
                                          -----------------------------------
    Total liabilities............... U.S.$      1,377        9,712     11,089
                                          -----------------------------------

1 In the case of Mexico the amounts refer primarily to machinery and equipment
of foreign origin.

The peso to dollar exchange rate as of December 31, 2004, 2005 and 2006 was
Ps11.14, Ps10.62 and Ps10.80 pesos per dollar, respectively. The exchange rate
as of January 26, 2007 and June 26, 2007 was Ps11.05 and Ps10.86 pesos per
dollar, respectively.

The portion of the Company's Mexican operations denominated in foreign
currencies during 2004, 2005 and 2006 are summarized as follows:

                        U.S. DOLLARS MILLIONS     2004      2005    2006
                                                ----------------------------
Export sales..................................     76        124    145
Import purchases..............................     88         85    140
Financial income..............................     13         16     26
Financial expense.............................    338        337    291
                                                 ---------------------------

20.  EARNINGS PER SHARE

The amounts considered for calculations in 2004, 2005 and 2006 are summarized as
follows:




                                                                                 2004          2005         2006
                                                                           ----------------------------------------
                                                                                                
NUMERATOR
Majority interest net income............................................Ps         15,224       24,450       25,682
DENOMINATOR (THOUSANDS OF SHARES)
Weighted average number of shares outstanding...........................       19,974,730   20,757,180   21,552,250
    Effect of dilutive instruments - executives' stock options..........           31,492       20,372       12,500
    Effect of dilutive instruments - equity forwards on CEMEX's CPOs....           72,308       44,224        2,379
                                                                           ----------------------------------------
    Potentially dilutive shares.........................................          103,800       64,596       14,879
                                                                           ----------------------------------------
Weighted average number of shares outstanding - diluted.................       20,078,530   20,821,776   21,567,129
                                                                           ----------------------------------------
Basic earnings per share ("Basic EPS")..................................Ps           0.77         1.18         1.19
Diluted earnings per share ("Diluted EPS")..............................Ps           0.76         1.17         1.19
                                                                           ----------------------------------------


Basic earnings per share are calculated by dividing majority interest net income
for the year by the weighted average number of common shares outstanding during
the year. Diluted earnings per share reflect the effects of any transactions
carried out by the Company which have a potentially dilutive effect on the
weighted average number of common shares outstanding. The numbers of shares
considered for calculation include the effects of the stock splits of July 2005
and July 2006.

The difference between the basic and diluted average number of shares in 2004,
2005 and 2006 is attributable to the additional shares to be issued under the
fixed stock option program (note 17A). In addition, CEMEX includes the dilutive
effect of the number of shares resulting from equity forward contracts in
CEMEX's own stock, determined under the inverse treasury method.

21.  CONTINGENCIES AND COMMITMENTS

A)   GUARANTEES

As of December 31, 2005 and 2006, CEMEX, S.A.B. de C.V. had guaranteed loans
made to certain subsidiaries for approximately U.S.$711 and U.S.$735,
respectively.


                                       F-49


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


B)   CONTRACTUAL OBLIGATIONS

As of December 31, 2005 and 2006, the approximate cash flows that will be
required by CEMEX to meet its material contractual obligations are summarized as
follows:




                       U.S. DOLLARS MILLIONS                              PAYMENTS PER PERIOD
                                                      --------------------------------------------------------------
                                                        2005                           2006
                                                      ---------   --------------------------------------------------
                                                                  LESS THAN      1-3       3-5    MORE THAN
                                                       TOTAL        1 YEAR      YEARS     YEARS    5 YEARS    TOTAL
      CONTRACTUAL OBLIGATIONS                         ---------   --------------------------------------------------
                                                                                               
Long-term debt.................................. U.S.$    8,745       296      2,913      2,385       943     6,537
Capital lease obligations.......................            106        20         28         17         3        68
                                                      ---------   --------------------------------------------------
  Total debt 1..................................          8,851       316      2,941      2,402       946     6,605
Operating leases 2..............................            634       166        241        135       111       653
Interest payments on debt 3.....................          1,968       411        603        304       100     1,418
Estimated cash flows under interest rate
  derivatives 4.................................            330        93        127         83         8       311
Planned funding of pension plans and other
  postretirement benefits 5.....................          1,466       157        321        353       942     1,773
                                                      ---------   --------------------------------------------------
  Total contractual obligations.................U.S.$    13,249     1,143      4,233      3,277     2,107     10,760
                                                      ---------   --------------------------------------------------
                                                   Ps   153,396    12,344     45,716     35,392    22,756    116,208
                                                      ---------   --------------------------------------------------


1    The scheduling of debt payments, which includes current maturities, does
     not consider the effect of any refinancing that may occur of debt during
     the following years.

2    The amounts of operating leases have been determined on the basis of
     nominal future cash flows. In 2005, operating leases included the lease of
     the Balcones cement plant in New Braunfels, Texas, which was scheduled to
     expire in September 2009. In March 2006, by agreement with the financial
     counterparties, CEMEX terminated this lease prior to its scheduled
     expiration and purchased the related assets for approximately U.S.$61
     million (Ps659).

3    In the determination of the future estimated interest payments on the
     floating rate denominated debt, CEMEX used the interest rates in effect as
     of December 31, 2005 and 2006.

4    The estimated cash flows under interest rate derivatives include the
     approximate cash flows under CEMEX's interest rate swaps and cross currency
     swap contracts, and represent the net amount between the rate CEMEX pays
     and the rate received under such contracts. In the determination of the
     future estimated cash flows, CEMEX used the interest rates applicable under
     such contracts as of December 31, 2005 and 2006.

5    Amounts relating to planned funding of pensions and other postretirement
     benefits represent estimated annual payments under these benefits for the
     next 10 years, determined in local currency and translated into U.S.
     dollars at the exchange rates as of December 31, 2005 and 2006, and include
     the estimate of new retirees during such future years.

As mentioned in the table above, CEMEX has entered into various operating
leases, primarily for operating facilities, cement storage and distribution
facilities and certain transportation and other equipment, under which annual
rental payments are required plus the payment of certain operating expenses. As
of December 31, 2006, future minimum rental payments due under such lease
contracts are as follows:

                                                                 U.S. DOLLARS
                       FOR THE YEARS ENDED DECEMBER 31,           MILLIONS
-------------------------------------------------------------    ------------
2007.........................................................  U.S.$      166
2008.........................................................             137
2009.........................................................             104
2010.........................................................              79
2011.........................................................              56
2012 and thereafter..........................................             111
                                                                    ---------
                                                               U.S.$      653
                                                                    ---------

Rental expense for the years ended December 31, 2004, 2005 and 2006 was
approximately U.S.$114 (Ps1,328), U.S.$152 (Ps1,760) and U.S.$178 (Ps1,922),
respectively.

C)   PLEDGED ASSETS

As of December 31, 2005 and 2006, there were liabilities amounting to U.S.$100
and U.S.$62, respectively, secured by properties, machinery and equipment.

D)   COMMITMENTS

As of December 31, 2005 and 2006, the Company had commitments for the purchase
of raw materials for an approximate amount of U.S.$169 and U.S.$225,
respectively.

                                      F-50


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


During 1999, CEMEX entered into agreements with an international partnership,
which built and currently operates an electrical energy generating plant in
Mexico called Termoelectrica del Golfo ("TEG"). According to the agreements,
CEMEX is required to purchase, starting from the beginning of operations of the
plant, all the energy generated for a term of not less than 20 years. The
electrical energy generating plant started operations on April 29, 2004. In
addition, as part of the agreements, CEMEX has committed to supply the
electrical energy plant with all fuel necessary for its operations, a commitment
that has been hedged through a 20-year agreement entered into by the Company
with Petroleos Mexicanos. Through these arrangements CEMEX expects to decrease
its energy costs. CEMEX is not required to make any capital investment in the
project. By means of this transaction, for the years ended December 31, 2004,
2005 and 2006, TEG delivered energy to CEMEX Mexico's 15 cement plants,
supplying 46.9%, 57.5% and 57.1%, respectively, of such year's needs, decreasing
electricity costs by 21.2%, 28.2% and 29.1%, respectively, as compared to
industrial tariffs from the Comision Federal de Electricidad, which is the
supplier in Mexico.

22.  LEGAL PROCEDURES

A)   TAX ASSESSMENTS

CEMEX and some of its subsidiaries in Mexico have been notified by the Mexican
tax authorities of several tax assessments related to different tax periods in a
total amount of approximately Ps4,000 as of December 31, 2006. The tax
assessments are based primarily on: (i) disallowed restatement of tax loss
carryforwards in the same period in which they occurred, (ii) disallowed
determination of cumulative tax loss carryforwards, and (iii) investments made
in entities incorporated in foreign countries with preferential tax regimes. The
companies involved are using the available defense actions granted by law in
order to cancel the tax claims. The appeals are pending resolution.

Pursuant to amendments to the Mexican income tax law, which became effective on
January 1, 2005, Mexican companies with direct or indirect investments in
entities incorporated in foreign countries whose income tax liability in those
countries is less than 75% of the income tax that would be payable in Mexico,
are required to pay taxes in Mexico on income derived from such foreign
entities, provided that the income is not derived from entrepreneurial
activities in such countries. In those applicable cases, the tax payable by
Mexican companies in respect of the 2005 tax year pursuant to these amendments
will be due upon filing their annual tax returns in 2006. CEMEX believes these
amendments are contrary to Mexican constitutional principles; consequently, on
August 8, 2005 the Company filed a motion in the Mexican federal courts
challenging the constitutionality of the amendments. In this endeavor, the
Company obtained a favorable ruling on December 23, 2005 in the first stage;
however, the Mexican tax authority has appealed this ruling, and it is pending
resolution. In March 2006, CEMEX filed another motion in the Mexican federal
courts challenging the constitutionality of the amendments. On June 29, 2006,
CEMEX obtained a favorable ruling from the Mexican federal court stating that
the amendments were unconstitutional. The Mexican tax authority has appealed
this ruling, and it is pending for resolution.

As of December 31, 2006, the Philippine Bureau of Internal Revenue assessed the
Company's subsidiaries in the Philippines, for deficiencies in the amount of
income tax paid in prior tax years amounting to a total of approximately 1,947
million Philippine pesos (approximately U.S.$40). Tax assessments result
primarily from: (i) disallowed determination of certain tax benefits from 1999
to 2001, and (ii) deficiencies in the determination of national taxes. The
affected companies have appealed and in some cases, some assessments are pending
resolution or have been disregarded by the Philippine tax authorities as the
subsidiaries continue to present evidence to dispute their findings.

In addition to the assessments mentioned above, as of the balance sheet date,
the tax returns submitted by some subsidiaries of CEMEX located in several
countries are under ordinary review by the respective tax authorities. CEMEX
cannot anticipate if such reviews will originate new tax assessments, which,
should any exist, would be appropriately disclosed and/or recognized in the
financial statements.

B)   ANTI-DUMPING DUTIES

In 1990, the United States Department of Commerce ("DOC") imposed an
anti-dumping duty order on imports of gray Portland cement and clinker from
Mexico. As a result, since that year and until April 3, 2006, CEMEX paid
anti-dumping duties for cement and clinker exports to the United States at rates
that fluctuated between 37.49% and 80.75% over the transaction amount, and
beginning in August 2003, anti-dumping duties had been paid at a fixed rate of
approximately U.S.$52.4 per ton, which decreased to U.S.$32.9 per ton starting
in December 2004 and to U.S.$26.0 per ton in 2005. Through these years, CEMEX
has used all available legal resources to revoke the order from the United
States International Trade Commission ("ITC").

In January 2006, officials from the Mexican and the United States governments
announced that they had reached an agreement that will bring to an end the
longstanding dispute over anti-dumping duties on Mexican cement exports to the
United States. According to the agreement, restrictions imposed by the United
States will first be eased during a three-year transition period and completely
eliminated in early 2009, allowing cement from Mexico to enter the U.S. without
duties or other limits on volumes. During the transition period, Mexican cement
imports into the U.S. will be subject to volume limitations of three million
tons per year. This amount may be increased in response to market conditions
during the second and third year of the transition period, subject to a maximum
increase per year of 4.5%. Quota allocations to companies that import Mexican
cement into the U.S. will be made on a regional basis. The transitional
anti-dumping duty was lowered to U.S.$3.0 per ton from the previous amount of
approximately U.S.$26.0 per ton as of December 31, 2005. As a result of this
agreement, CEMEX received a cash refund from the U.S. government associated with
the historic anti-dumping duties of approximately U.S.$111 (Ps1,198) and
eliminated a provision of approximately U.S.$65, both of which were recognized
in 2006 within "Other expenses, net". At December 31, 2005, CEMEX had accrued a
provision of U.S.$68, including accrued interest, for the difference between the
anti-dumping duties paid on imports and the latest findings of the DOC in its
administrative reviews for all periods under review.

                                       F-51


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


During 2001, the Ministry of Finance ("MOF") of Taiwan, in response to the claim
of five Taiwanese cement producers, initiated a formal anti-dumping
investigation involving imported gray Portland cement and clinker from the
Philippines and South Korea. In July 2002, the MOF gave notice of a cement and
clinker import duty, from imports on South Korea and the Philippines, beginning
on July 19, 2002. The imposed tariff was 42% on imports from the Company's
Philippine subsidiaries. In September 2002, these entities appealed the
anti-dumping duty before the Taipei High Administrative Council ("THAC"). In
August 2004, the Company received an adverse response to its requests from the
THAC. CEMEX did not appeal this resolution, which became final.

C)   OTHER LEGAL PROCEEDINGS AND CONTINGENCIES

In December 2006, the Polish Competition and Consumers Protection Office (the
"Protection Office") notified CEMEX Polska, a subsidiary of the Company in
Poland, about the formal initiation of an antitrust proceeding against all
cement producers in the country, which include CEMEX's subsidiaries CEMEX Polska
and Cementownia Chelm. The Protection Office assumed in the notification that
there was an agreement between all cement producers in Poland by means of which
such cement producers agreed on market quotas in terms of production and sales,
establishment of prices and other sale conditions and the exchange of
information, which limited competition in the Polish market in respect of the
production and sale of cement. According to the Polish competition law, the
maximum fine may reach 10% of the total revenues of a fined company from the
previous year to the year, in which a fine is imposed. The theoretical estimated
penalty applicable to the Polish subsidiaries would amount to approximately
U.S.$32 (Ps346). As of December 31, 2006, CEMEX considers there are not
justified factual grounds to expect fines to be imposed on its subsidiaries;
nevertheless, at this stage of the proceeding it is not possible for CEMEX to
predict that there would not be an adverse result in the investigation.

In December 2006, the United States District Court, District of Puerto Rico,
notified CEMEX's subsidiary in Puerto Rico in connection with a civil action in
the amount of approximately U.S.$21 (Ps227) derived from injuries caused to an
individual by a truck owned by the Puerto Rican subsidiary. At this stage of the
proceeding it is not possible for CEMEX to predict that there would not be an
adverse result in the proceeding.

In 2005, through the acquisition of RMC, the Company assumed environmental
remediation liabilities in the United Kingdom, for which, as of December 31,
2006, CEMEX has generated a provision of approximately (pound)117 (U.S.$229 or
Ps2,473). The costs have been assessed on a net present value basis. These
environmental remediation liabilities refer to closed and current landfill sites
for the confinement of waste, and expenditure has been assessed and quantified
over the period in which the sites have the potential to cause environmental
harm, which has been accepted by the regulator as being up to 60 years from the
date of closure. The assessed expenditure relates to the costs of monitoring the
sites and the installation, repair and renewal of environmental infrastructure.

On August 5, 2005, Cartel Damages Claims, S.A. ("CDC"), filed a lawsuit in the
District Court in Dusseldorf, Germany against CEMEX Deutschland AG, the
Company's German subsidiary, and other German cement companies. By means of this
lawsuit, CDC is seeking (euro)102 (approximately U.S.$135 or Ps1,455) in respect
of damage claims by 28 entities relating to alleged price and quota fixing by
German cement companies between 1993 and 2002. CDC is a Belgian company
established in the aftermath of the German cement cartel investigation that took
place from July 2002 to April 2003 by Germany's Federal Cartel Office, with the
purpose of purchasing potential damage claims from cement consumers and pursuing
those claims against the cartel participants. During 2006 new petitioners
assigned alleged claims to CDC and the amount of damages being sought by CDC
increased to (euro)113.5 (approximately U.S.$150 or Ps1,619) plus interest. The
District Court in Dusseldorf will issue a final decision on February 21, 2007.
As of December 31, 2006, CEMEX Deutschland AG has accrued liabilities relating
this matter for approximately (euro)20 (approximately U.S.$26 or Ps285). Based
on the information developed to date, the subsidiary does not believe it will be
required to spend significant sums on these matters in excess of the amounts
previously recorded.

In August 2005, a lawsuit was filed against a subsidiary of CEMEX Colombia,
claiming that it was liable along with the other members of the Asociacion
Colombiana de Productores de Concreto, or ASOCRETO, a union formed by all the
ready-mix producers in Colombia, for the premature distress of the roads built
for the mass public transportation system in Bogota using ready-mix concrete
supplied by CEMEX Colombia and other ASOCRETO members. The plaintiffs allege
that the base material supplied for the road construction failed to meet the
quality standards offered by CEMEX Colombia and the other ASOCRETO members
and/or that they provided insufficient or inaccurate information in connection
with the product. The plaintiffs seek the repair of the roads and estimate that
the cost of such repair will be approximately U.S.$45. In December 2006, two
ASOCRETO officers were formally accused as participants (determiners) in the
execution of a state contract without fulfilling all legal requirements thereof.
At this stage in the proceedings, it is not possible to assess the likelihood of
an adverse result or the potential damages that could be borne by CEMEX
Colombia. Typically, proceedings of this nature continue for several years
before final resolution.


                                       F-52


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


As of December 31, 2006, CEMEX Inc., the Company's subsidiary in the United
States, has accrued liabilities specifically relating to environmental matters
in the aggregate amount of approximately U.S.$44 (Ps475). The environmental
matters relate to: a) in the past, in accordance with industry practices,
disposing of various materials, which might be currently categorized as
hazardous substances or wastes, and b) the cleanup of sites used or operated by
CEMEX Inc., including discontinued operations, regarding the disposal of
hazardous substances or wastes, either individually or jointly with other
parties. Most of the proceedings remain in the preliminary stage, and a final
resolution might take several years. For purposes of recording the provision,
the subsidiary considers that it is probable that a liability has been incurred
and the amount of the liability is reasonably estimable, whether or not claims
have been asserted, and without giving effect to any possible future recoveries.
Based on the information developed to date, the subsidiary does not believe it
will be required to spend significant sums on these matters in excess of the
amounts previously recorded. Until all environmental studies, investigations,
remediation work and negotiations with or litigation against potential sources
of recovery have been completed, the ultimate cost that might be incurred to
resolve these environmental issues cannot be assured.

During 2001, a subsidiary of the Company in Colombia received a civil liability
suit from 42 transporters, alleging that this subsidiary is responsible for
alleged damages caused by the alleged breach of provision of raw materials
contracts. The plaintiffs have asked for relief in an amount in Colombian pesos
equivalent, as of December 31, 2006, to approximately U.S.$57. In February 2006,
CEMEX was notified of the judgment of the court dismissing the claims of the
plaintiffs. The case is currently under review by the appellate court.

During 1999, several companies filed a lawsuit against two subsidiaries of the
Company in Colombia, alleging that the Ibague plants were causing damage to
their lands due to the pollution they generate. In January 2004, CEMEX Colombia,
S.A. was notified that the court's decision was that plaintiffs should be paid
in the amount in Colombian pesos equivalent, as of December 31 2006, to
approximately U.S.$9. The Company's subsidiary appealed the judgment. The appeal
was accepted and the case was sent to the Superior Court of Ibague. The case is
currently under review by the appellate court. CEMEX expects this proceeding to
continue for several years before its final resolution.

In addition to the above, as of the balance sheet date, CEMEX is involved in
various legal proceedings that have arisen in the ordinary course of business.
These proceedings involve: 1) product warranty claims; 2) claims for
environmental damages; 3) indemnification claims relating to acquisitions; 4)
claims to revoke licenses and/or concessions; and 5) other diverse civil
actions. In connection with these proceedings, CEMEX considers that in those
instances in which obligations had been incurred, CEMEX has accrued adequate
provisions to cover the related risks. CEMEX believes that these matters will be
resolved without any significant effect on its business.

23.  RELATED PARTIES

All significant balances and transactions between the entities that constitute
the CEMEX group have been eliminated in the preparation of the consolidated
financial statements. These balances with related parties result primarily from:
(i) the sale and purchase of cement, clinker and other raw materials to and from
group entities; (ii) the sale and/or acquisition of subsidiaries' shares within
the CEMEX group, (iii) the invoicing of administrative services, rentals,
trademarks and commercial names rights, royalties and other services rendered
between group entities; and (iv) loans between related parties. Transactions
between group entities are conducted on arm's length terms based on market
prices and conditions.

The definition of related parties includes entities or individuals outside the
CEMEX group, which, pursuant to their relationship with CEMEX, may take
advantage from being in a privileged situation. Likewise, this applies to cases
in which CEMEX may take advantage of such relationships and obtain benefits in
its financial position or operating results. CEMEX's transactions with related
parties are executed under market conditions. The Company has identified the
following transactions between related parties:

o  Mr. Bernardo Quintana Isaac, a member of the board of directors at CEMEX,
   S.A.B. de C.V., until December 31, 2006, was chief executive officer and
   chairman of the board of directors of Empresas ICA, S.A.B de C.V., or
   Empresas ICA, a large Mexican construction company. In the ordinary course of
   business, CEMEX extends financing to Empresas ICA for varying amounts at
   market rates, as CEMEX does for other customers.

o  In the past, CEMEX extended loans of varying amounts and interest rates to
   its directors and executives. During 2005 the maximum aggregate amount of
   loans to such persons was approximately Ps11. In 2006 these loans were fully
   paid.


                                       F-53


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


24. DIFFERENCES BETWEEN MEXICAN AND UNITED STATES ACCOUNTING PRINCIPLES

As mentioned in note 3A, beginning in 2006, the consolidated financial
statements are prepared in accordance with financial reporting standards
accepted in Mexico (Mexican FRS), which differ in certain significant respects
from generally accepted accounting principles applicable in the United States
(U.S. GAAP). The Mexican FRS replaced the generally accepted accounting
principles in Mexico (Mexican GAAP) issued by the Mexican Institute of Public
Accountants. The Mexican FRS initially adopted the former Mexican GAAP effective
in 2005 in their entirety; therefore, there were no effects in CEMEX's financial
statements resulting from the adoption of the Mexican FRS.

The Mexican FRS consolidated financial statements include the effects of
inflation as provided for under Financial Reporting Standard B-10, Recognition
of Inflation Effects on the Financial Information (integrated document) ("MFRS
B-10") and Financial Reporting Standard B-15, Foreign Currency Transactions and
Translation of Financial Statements of Foreign Operations ("MFRS B-15"), whereas
financial statements prepared under U.S. GAAP are presented on a historical cost
basis. The reconciliation to U.S. GAAP includes (i) a reconciling item for the
reversal of the effect of applying MFRS B-15 for the restatement to constant
pesos for the years ended December 31, 2004 and 2005, and (ii) a reconciling
item to reflect the difference in the carrying value of machinery and equipment
of foreign origin and related depreciation between the methodology set forth by
MFRS B-10 and the amounts that would be determined by using the historical
cost/constant currency method. As described below, these provisions of inflation
accounting under Mexican FRS do not meet the requirements of Rule 3-20 of
Regulation S-X of the Securities and Exchange Commission. The reconciliation
does not include the reversal of other Mexican FRS inflation accounting
adjustments as these adjustments represent a comprehensive measure of the
effects of price level changes in the inflationary Mexican economy and, as such,
is considered a more meaningful presentation than historical cost-based
financial reporting for both Mexican and U.S. accounting purposes. The other
principal differences between Mexican FRS and U.S. GAAP for the years ended
December 31, 2004, 2005 and 2006, and their effect on consolidated net income
and earnings per share, are presented below:




                                                                                       YEARS ENDED DECEMBER 31,
                                                                                   ----------------------------------
                                                                                      2004        2005      2006
                                                                                   ----------- ----------- ----------
                                                                                                    
    Net income reported under Mexican FRS                                       Ps   15,224      24,450    25,682
    Inflation adjustment (1)                                                            387      (1,110)        -
                                                                                   ----------- ----------- ----------
    Net income reported under Mexican FRS after inflation adjustment............     15,611      23,340    25,682
    U.S. GAAP ADJUSTMENTS:
1.  Goodwill (note 24(a))                                                               947           -         -
2.  Deferred income taxes (note 24(b))                                                  410        (208)      967
3.  Employees' statutory profit sharing (note 24(b))                                    (60)        155      (107)
4.  Employee benefits (note 24(c))                                                       29        (826)      131
5.  Minority interest - financing transactions (note 24(d)).....................          -           -      (137)
6.  Minority interest - effect of U.S. GAAP adjustments (note 24(d))............        (33)          9        13
7.  Hedge accounting (note 24(j))...............................................        198       1,119      (437)
8.  Depreciation (note 24(e))...................................................         21          19        54
9.  Accruals for contingencies (note 24(f)).....................................        (34)          -         -
10. Equity in net income of affiliated companies (note 24(g))...................         (8)          4       117
11. Inflation adjustment of fixed assets (note 24(h))...........................       (257)       (318)     (295)
12. Derivative instruments (note 24(j)).........................................      1,577      (1,531)        -
13. Equity forward contracts in CEMEX's stock (note 24(k))......................        462           -         -
14. Employee stock option programs (note 24 (o))................................          -         895         -
15. Other adjustments - Computer software development (note 24(i))..............        (30)          -         -
16. Other adjustments - Deferred charges (note 24(i))...........................         97         174       115
17. Other adjustments - Capitalized interest (note 24(i)).......................         10           4         3
18. Other adjustments - Monetary position result (note 24(i))...................        320         181       163
                                                                                   ----------- ----------- ----------
    U.S. GAAP adjustments before cumulative effect of accounting change.........      3,649        (323)      587
                                                                                   ----------- ----------- ----------
    Net income under U.S. GAAP before cumulative effect of accounting change....     19,260      23,017    26,269
    Cumulative effect of accounting change (SFAS 123R - note 24 (o))............          -           -      (895)
                                                                                   ----------- ----------- ----------
    Net income under U.S. GAAP after cumulative effect of accounting change.....  Ps 19,260      23,017    25,374
                                                                                   ----------- ----------- ----------
Basic EPS under U.S. GAAP before cumulative effect of accounting change.........  Ps   0.97        1.11      1.22
Diluted EPS under U.S. GAAP before cumulative effect of accounting change.......       0.96        1.10      1.22
                                                                                   ----------- ----------- ----------
Basic EPS under U.S. GAAP after cumulative effect of accounting change..........  Ps   0.97        1.11      1.18
Diluted EPS under U.S. GAAP after cumulative effect of accounting change........       0.96        1.10      1.18
                                                                                   ----------- ----------- ----------


                                       F-54


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006

At December 31, 2005 and 2006, the other principal differences between Mexican
FRS and U.S. GAAP, and their effect on consolidated stockholders' equity, with
an explanation of the adjustments, are presented below:




                                                                                                        AT DECEMBER 31,
                                                                                               -------------------------------
                                                                                                    2005            2006
                                                                                               ---------------  --------------
                                                                                                             
   Total stockholders' equity reported under Mexican FRS                                   Ps        119,876        159,609
   Inflation adjustment (1)..............................................................             (5,433)             -
                                                                                               ---------------  --------------
   Total stockholders' equity reported under Mexican FRS after inflation adjustment......            114,443        159,609
   U.S. GAAP ADJUSTMENTS:
1. Goodwill, net (note 24(a))............................................................              4,961          8,183
2. Deferred income taxes (note 24(b))....................................................                592          1,691
3. Deferred employees' statutory profit sharing (note 24(b)).............................             (3,026)        (3,012)
4. Employee benefits (note 24(c))........................................................               (362)          (191)
5. Minority interest - Financing transactions (note 24(d))...............................                  -        (13,500)
6. Minority interest - U.S. GAAP presentation (note 24(d))...............................             (5,963)        (7,291)
7. Depreciation (note 24(e)).............................................................                (62)           (10)
8. Investment in net assets of affiliated companies (note 24(g)).........................               (247)          (125)
9. Inflation adjustment for machinery and equipment (note 24(h)).........................              4,734          3,397
10.Employee stock option programs (note 24 (o))..........................................              1,032              -
11.Other adjustments - Deferred charges (note 24(i)).....................................               (234)          (132)
12.Other adjustments - Capitalized interest (note 24(i)).................................                 57             62
                                                                                               ---------------  --------------
   U.S. GAAP adjustments.................................................................              1,482        (10,928)
                                                                                               ---------------  --------------
   Stockholders' equity under U.S. GAAP before cumulative effect of accounting change....            115,925        148,681
   Cumulative effect of accounting change (SFAS 158 - note 24(c))........................                  -         (1,307)
                                                                                               ---------------  --------------
   Stockholders' equity under U.S. GAAP after cumulative effect of accounting change.....  Ps        115,925        147,374
                                                                                               ---------------  --------------


(1)  Adjustment that reverses the restatement of prior periods into constant
     pesos at December 31, 2006, using the CEMEX weighted average inflation
     factor (note 3B), and restates such prior periods into constant pesos at
     December 31, 2006 using the Mexican-only inflation factor, in order to
     comply with requirements of Regulation S-X. The Mexican FRS and U.S. GAAP
     prior period amounts, included throughout note 24, were restated using the
     Mexican inflation index, with the exception of those amounts of prior
     periods that are also disclosed in notes 1 to 23, which were not restated
     in note 24 using the Mexican inflation in order to have more
     straightforward cross-references between note 24 and the Mexican FRS notes.

The reconciling item cumulative effect of accounting change in the
reconciliation of net income to U.S. GAAP for the year ended December 31, 2006,
relates to the adoption of SFAS 123R Share-Based Payment ("SFAS 123R"), which
effects are described in note 24(o). The term "SFAS" as used herein refers to
U.S. Statements of Financial Accounting Standards.

The reconciling item cumulative effect of accounting change in the
reconciliation of stockholders'equity to U.S. GAAP as of December 31, 2006,
relates to the adoption of SFAS 158 Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans--an amendment of FASB Statements No. 87,
88, 106, and 132(R) ("SFAS 158"), which details are described in note 24(c).

(A)  GOODWILL

Goodwill represents the difference between the purchase price and the estimated
fair value of the acquired entity at the acquisition date. Goodwill recognized
under Mexican FRS has been adjusted for U.S. GAAP purposes for: (i) the effect
on goodwill from the U.S. GAAP adjustments as of the acquisition dates; (ii)
beginning January 1, 2002, Goodwill is not amortized under U.S. GAAP, while
under Mexican FRS goodwill was amortized until December 31, 2004; and (iii) the
difference between goodwill under U.S. GAAP, under which amounts are carried in
the reporting unit's functional currency, are restated by the inflation factor
of the reporting unit's country, and are translated into Mexican pesos at the
exchange rates prevailing at the reporting date; as compared to goodwill under
Mexican FRS, under which amounts are carried in the functional currencies of the
holding companies for the reporting units, translated into pesos and then
restated using the Mexican inflation index.

For the year ended December 31, 2004, amortization of goodwill was recorded
within other expenses under Mexican FRS. Starting January 1, 2005, Mexican FRS
ceased amortization of goodwill. Under SFAS 142 goodwill is not amortized and is
subject to impairment testing at least once a year. As a result, goodwill
amortization recorded under Mexican FRS for the year ended December 31, 2004 is
adjusted for purposes of the reconciliation of net income to U.S. GAAP.

Additionally, during 2004, CEMEX acquired CAH shares held by minority
stockholders through the exchange for CEMEX's CPOs (note 11A), resulting in an
excess in the fair value of the assets delivered over the fair value of the
assets received of approximately Ps1,044. Under Mexican FRS, this excess was
recognized as an adjustment to stockholders' equity. Under U.S. GAAP, this
amount was reclassified and charged to earnings in the reconciliation of net
income by considering that estimations of future cash flows did not support
recognition of this amount as goodwill.


                                       F-55


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


Under both Mexican FRS and U.S. GAAP, CEMEX assesses goodwill and other
indefinite-lived intangibles for impairment annually unless events occur that
require more frequent reviews. Discounted cash flow analyses are used to assess
goodwill impairment (note 11C). If an assessment indicates impairment, the
impaired asset is written down to its fair market value based on the best
information available. Estimated fair market value is generally measured using
estimated discounted future cash flows. Assumptions used for these cash flows
are consistent with internal forecasts and industry practices. For this purpose,
CEMEX identifies its reporting units and determines the carrying value of each
reporting unit as of the balance sheet date, by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units. CEMEX also determines the fair value of each reporting unit and
compares it to their related carrying amounts. As explained in note 11C, based
on the similarities of the components of the operating segments (cement,
ready-mix concrete, aggregates and other construction materials), CEMEX's
geographical segments under SFAS 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS 131"), are also the reporting units
under SFAS 142 for purposes of assessing fair value in determining potential
impairment.

Other long-lived assets, including amortizable intangibles, are tested for
impairment under both Mexican FRS and U.S. GAAP if impairment triggers occur. If
an assessment indicates impairment, the impaired asset is written down to its
fair value based on the best information available. Considerable management
judgment is necessary to estimate undiscounted and discounted future cash flows.

For the years ended December 31, 2004, 2005 and 2006, there were no impairment
charges under U.S. GAAP in addition to those recorded under Mexican FRS that are
described in notes 10 and 11, except, during 2004, for the expense of
approximately Ps1,044 reclassified from stockholders' equity under Mexican FRS
to net income under U.S. GAAP in connection with the purchase of CAH shares in
exchange for CEMEX's CPOs described above. Impairment charges are recorded as
other expenses under Mexican FRS and are reclassified to operating income under
U.S. GAAP (note 24 (l)).

(B)  DEFERRED INCOME TAXES AND EMPLOYEES' STATUTORY PROFIT SHARING

DEFERRED INCOME TAXES ("IT")

For U.S. GAAP purposes, CEMEX accounts for income taxes according to SFAS 109,
Accounting for Income Taxes ("SFAS 109"), which requires the asset and liability
method of accounting for deferred income taxes, under which deferred tax assets
and liabilities are recognized for the future tax consequences of "temporary
differences", which result from applying the enacted statutory tax rates
applicable in future years to differences between the financial statement
carrying amounts and the tax basis of existing assets and liabilities,
considering tax loss carryforwards. The deferred income tax charged or credited
to earnings is determined by the difference between the beginning and the
year-end balance of the deferred tax assets or liabilities, and is recognized in
nominal pesos. The effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date.

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities under U.S. GAAP at
December 31, 2005 and 2006 are presented below, including a deferred tax asset
for approximately Ps561 originated from the first time adoption of the SFAS 158
Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans
(see note 24c):



                                                                                                    2005             2006
                                                                                               --------------- --------------
                                                                                                          
DEFERRED TAX ASSETS:
   Tax loss and tax credits carryforwards................................................. Ps         14,351       23,634
   Trade accounts receivable..............................................................               226            -
   Accounts payable and accrued expenses                                                               4,049        5,397
    Inventories...........................................................................                 -           57
   Other..................................................................................               839        1,675
                                                                                               --------------- --------------
   Total gross deferred tax assets........................................................            19,465       30,763
   Less valuation allowance...............................................................            (5,896)      (13,544)
                                                                                               --------------- --------------
     Total deferred tax assets under U.S. GAAP............................................            13,569       17,219
                                                                                               --------------- --------------
DEFERRED TAX LIABILITIES:
   Property, plant and equipment..........................................................           (31,020)      (37,730)
   Inventories and advanced payments......................................................              (429)         (703)
   Other..................................................................................            (6,927)       (2,691)
                                                                                               --------------- --------------
     Total deferred tax liability under U.S. GAAP.........................................           (38,376)      (41,124)
                                                                                               --------------- --------------
   Net deferred tax liability under U.S. GAAP.............................................           (24,807)      (23,905)
   Less--U.S. GAAP deferred IT liability of acquired subsidiaries at date of acquisition...          (20,366)      (21,136)
                                                                                               --------------- --------------
   Net deferred IT effect in stockholders' equity under U.S. GAAP.........................             4,441         2,769
   Less-- Deferred IT effect in stockholders' equity under Mexican FRS (note 15B)..........            5,033         5,019
                                                                                               --------------- --------------
   Net income in reconciliation of stockholders' equity to U.S. GAAP...................... Ps            592         2,250
                                                                                               --------------- --------------


                                       F-56


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


Management considers that there is existing evidence that, in the future, CEMEX
will generate sufficient taxable income to realize the tax benefits associated
with the deferred tax assets, and the tax loss carryforwards that are expected
to be utilized prior to their expiration. In the event that present conditions
change, and it is determined that future operations would not generate enough
taxable income, or that tax strategies are no longer viable, the deferred tax
assets' valuation allowance would be increased by a charge to income.

CEMEX records a valuation allowance for the estimated amount of the deferred tax
assets, which may not be realized due to the expiration of tax loss
carryforwards. Through its continual evaluation of the effects of tax
strategies, among other economic factors, during 2004, 2005 and 2006 CEMEX
increased the valuation allowance by approximately Ps461, Ps1,283 and Ps7,648,
respectively.

Under Mexican FRS, CEMEX determines deferred income tax in a manner similar to
U.S. GAAP (notes 3O and 15B). Nonetheless, there are specific differences as
compared to the calculation under SFAS 109, resulting in adjustments in the
reconciliation to U.S. GAAP. These differences arise from: (i) the recognition
of the accumulated initial effect of the asset and liability method under
Mexican FRS, which was recorded directly to stockholders' equity and therefore,
did not consider the provisions of APB Opinion 16 for the deferred tax
consequences in business combinations made before January 1, 2000; and (ii) the
effects of deferred tax on the reconciling items between Mexican FRS and U.S.
GAAP. For Mexican FRS presentation purposes, deferred tax assets and liabilities
are long-term items, while under U.S. GAAP, deferred tax assets and liabilities
should be classified as short-term or long-term items (note 24(l)) depending on
the nature of the caption that gives rise to such deferred tax assets and
liabilities.

CEMEX has not recognized a deferred tax liability for the undistributed earnings
generated by its foreign subsidiaries under Mexican FRS or U.S. GAAP, as it
considers these earnings to be indefinitely reinvested. A deferred tax liability
will be recognized when CEMEX can no longer demonstrate that it plans to
indefinitely reinvest such undistributed earnings. As of December 31, 2006, the
balance of undistributed earnings of subsidiaries amounted to approximately
Ps134,298. It is impracticable to determine the additional taxes payable when
these earnings are remitted.

EMPLOYEES' STATUTORY PROFIT SHARING ("ESPS")

CEMEX has recorded a deferred tax liability for U.S. GAAP purposes, related to
ESPS in Mexico, under the asset and liability method at the statutory rate of
10%. The principal effects of temporary differences that give rise to
significant portions of the deferred ESPS liabilities at December 31, 2005 and
2006 are presented below:


                                                        2005          2006
                                                   -------------   ------------
DEFERRED ASSETS:
   Employee benefits.......................... Ps           234        199
   Trade accounts receivable and other........              109        138
                                                   -------------   ------------
Gross deferred assets under U.S. GAAP.........              343        337
                                                   -------------   ------------
DEFERRED LIABILITIES:
   Property, plant and equipment..............            3,086      3,105
   Other......................................              283        244
                                                   -------------   ------------
Gross deferred liabilities under U.S. GAAP....            3,369      3,349
                                                   -------------   ------------
Net deferred liabilities under U.S. GAAP...... Ps         3,026      3,012
                                                   -------------   ------------

In the condensed financial information presented under U.S. GAAP in note 24(l),
ESPS effect, both current and deferred, is included in the determination of
operating income. For Mexican FRS presentation, ESPS effect, both current and
deferred, is considered as a separate line item equivalent to income tax. Under
Mexican FRS, CEMEX recognizes deferred ESPS for those temporary differences
arising from the reconciliation of net income of the period and the taxable
income for ESPS. In the reconciliation of net income to U.S. GAAP, deferred ESPS
expense of Ps221 in 2004 and income of Ps194 in 2005, determined under Mexican
FRS, were reversed. In 2006, there was no deferred ESPS determined under Mexican
FRS.

(C)  EMPLOYEE BENEFITS

SEVERANCE PAYMENTS

Under U.S. GAAP, post-employment benefits for former or inactive employees,
including severance payments which are not part of a specific event of
restructuring, are accrued over an employee's service life. Until December 31,
2004 under Mexican FRS, severance payments, which were not part of a business
restructuring or a substitution for pension benefits, were recognized in
earnings in the period in which they were paid. Beginning January 1, 2005,
according to newly issued Mexican FRS, severance payments are accrued over the
employee's service life according to actuarial computations, in a manner similar
to U.S. GAAP (note 14).

In connection with the purchase of RMC, as of December 31, 2005, for purposes of
the financial statements under Mexican FRS, CEMEX recorded restructuring costs,
mainly consisting of severance payments, for approximately Ps619 against
goodwill. For purposes of the reconciliation to U.S. GAAP, such restructuring
costs were deemed not to comply with the rules of SFAS 141, "Business
Combinations", for recognition as part of the purchase price of RMC under U.S.
GAAP. As a result, such restructuring costs under Mexican FRS for approximately
Ps619 (Ps439 after tax) were charged to earnings in the 2005 reconciliation of
net income to U.S. GAAP and removed from goodwill in the condensed financial
information under U.S. GAAP (note 24(l)).


                                       F-57


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006


The reconciliation of net income to U.S. GAAP for the year ended December 31,
2004, includes a reconciling item referring to the difference between the amount
of severance payments recognized under Mexican FRS as incurred, and the change
during the period of the accrual under U.S. GAAP. For the years ended December
31, 2005 and 2006, the reconciling item includes the amortization of the
cumulative initial effect from the accounting change under Mexican FRS,
recognized as of January 1, 2005 as part of the unrecognized net transition
obligation (note 14).

PENSION AND OTHER POSTRETIREMENT BENEFITS

In connection with the change from a defined benefit scheme to a defined
contribution scheme for a portion of CEMEX's employees in Mexico effective
January 10, 2006 (note 14), considering that such change was a material event
which occurred before the issuance of the financial statements, under Mexican
FRS, CEMEX recognized, at December 31, 2005, a net loss of approximately Ps1,016
related to: 1) an event of settlement of obligations, which represented a gain
of approximately Ps102; and 2) an event of curtailment, which represented a loss
of approximately Ps1,118. The results from the change in the pension plans were
determined using a methodology consistent with the rules set forth by SFAS 88,
"Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits". However, according to SFAS 88,
settlement events should be recognized in the year in which the settlement
occurred and not in the year in which the change is authorized. As a result of
this timing difference between Mexican FRS and U.S. GAAP, in the reconciliation
of net income to U.S. GAAP, the settlement gain of approximately Ps102 (Ps77
after tax) recognized under Mexican FRS in 2005 was canceled against the
provision of pensions and other postretirement benefits under U.S. GAAP at
December 31, 2005, and recognized in 2006, the year in which the change of plan
occurred.

CEMEX has established defined contribution plans in several countries (note 14),
which costs are recognized in the periods in which the funds are transferred to
the employees' individual accounts. The expense recognized under Mexican FRS
during the years ended December 31, 2005 and 2006 arising from defined
contribution schemes amounted to approximately Ps227 and Ps375, respectively,
and includes, in 2006, the cost of the new defined contribution scheme in Mexico
described in the paragraph above.

CEMEX accounts for employee pension and other postretirement benefits based on
the net present value of the obligations determined by independent actuaries
(notes 3N and 14), in a manner similar to SFAS 87, Employers' Accounting for
Pensions, under U.S. GAAP; therefore, no reconciling item is necessary. The
information of pensions and other postretirement benefits, presented in note 14,
include the obligations for these items in all Mexican and foreign subsidiaries.

CEMEX has established self-insured health care benefits plans in several
operations. These plans, which are administered on cost plus fee arrangements
with major insurance companies or provided through health maintenance
organizations, contain stop-loss limits per employee. At December 31, 2005 and
2006, in certain plans, CEMEX has established stop-loss limits for continued
medical assistance derived from a specific cause (e.g. an automobile accident,
illness, etc.) ranging from U.S.$23 thousand to U.S.$140 thousand; while in
other plans, CEMEX has established stop-loss limits per employee regardless the
number of events ranging from U.S.$300 thousand to U.S.$1 million. In theory,
there is a risk that all employees qualifying for health care benefits may
require medical services simultaneously; in that case, the contingency for CEMEX
would be significantly larger. However, this scenario while possible is not
probable. The amount expensed for the year ended December 31, 2005 and 2006
through self-insured health care benefits was approximately US$50 (Ps540) and
US$57 (Ps616), respectively.

Effective December 31, 2006, for purposes of the reconciliation of stockholders'
equity under U.S. GAAP, CEMEX adopted SFAS 158, Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans. SFAS 158 requires
companies to recognize the funded status of defined benefit pension and other
postretirement plans as a net asset or liability and to recognize changes in
that funded status in the year in which the changes occur through other
comprehensive income to the extent those changes are not included in the net
periodic cost. The funded status represents the difference between the fair
value of plan assets and the benefit obligation on a plan-by-plan basis. The
reconciliation of pension and other postretirement benefits' assets and
liabilities between Mexican FRS and U.S. GAAP in connection with the adoption of
SFAS 158 as of December 31, 2006 is as follows:




                                                                              BALANCES UNDER    SFAS 158     BALANCES UNDER
                                    AT DECEMBER 31, 2006                       MEXICAN FRS     ADJUSTMENTS     U.S. GAAP
                                                                             ---------------  -------------  --------------
                                                                                            
 Long-term assets for pension and other postretirement benefits........  Ps         735           (735)              -
                                                                             ---------------  -------------  --------------
 Long-term liabilities for pension and other postretirement benefits....          6,900          1,133           8,033
 Deferred income taxes (non-current)....................................         (2,050)          (561)         (2,611)
                                                                             ---------------  -------------  --------------
    Total liabilities...................................................          4,850            572           5,422
 Acumulated other comprehensive income, net of tax......................              -          1,307           1,307
                                                                             ---------------  -------------  --------------


The recognition provisions of SFAS 158 had no effect on the condensed statements
of income under U.S. GAAP presented in note 24(l) for the years ended December
31, 2004, 2005 and 2006.


                                       F-58


                     CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                     AS OF DECEMBER 31, 2004, 2005 AND 2006
          ((Millions of constant Mexican pesos as of December 31, 2006



(D)  MINORITY INTEREST

FINANCING TRANSACTIONS

In connection with the perpetual debentures issued by consolidated entities
described in note 16F for a notional amount U.S.$1,250 (Ps13,500) and which are
included as part of minority interest under Mexican FRS, for purposes of the
reconciliation of stockholders' equity under U.S. GAAP, the balance of such
debentures was reclassified to long-term debt under U.S. GAAP, thereby, reducing
stockholders' equity under U.S. GAAP in the amount of Ps13,500. Likewise, Ps137
of interest due on the perpetual debentures and issuance costs recognized within
"Other capital reserves" under Mexican FRS were treated as financing expense in
the reconciliation of net income to U.S. GAAP. Under Mexican FRS, the perpetual
debentures are recognized within equity considering their characteristics of
equity instruments described in note 16F. SFAS 150 under U.S. GAAP, establishes
that instruments having characteristics of both liability and equity instruments
that are mandatorily redeemable should be classified as debt; but does not
provide specific guidance on the accounting treatment for perpetual debentures.
However, according to current trends and applications of U.S. GAAP, perpetual
debt instruments are recognized as debt.

U.S. GAAP ADJUSTMENTS TO MINORITY INTEREST

Under Mexican FRS, the minority interest in consolidated subsidiaries is
presented as a separate component within stockholders' equity. Under U.S. GAAP,
minority interest is classified separately from stockholders' equity (note
24(l)). At December 31, 2005 and 2006, the amount presented in the
reconciliation of stockholders' equity to U.S. GAAP includes the share of
minority interest of the adjustments to U.S. GAAP determined in the consolidated
subsidiaries, as well as in 2006 the reclassification of perpetual debentures
mentioned above.

(E)  DEPRECIATION

A subsidiary of CEMEX in Colombia records depreciation expense utilizing the
sinking fund method. This methodology for depreciation was in place before CEMEX
acquired the subsidiary in 1997. For U.S. GAAP purposes, depreciation is
calculated on a straight-line basis over the estimated useful lives of the
assets. As a result, for the years ended December 31, 2004, 2005 and 2006,
depreciation expense under Mexican FRS was reduced in the reconciliation of net
income to U.S. GAAP resulting in income of Ps21, Ps19 and Ps54, respectively.

(F)  ACCRUALS FOR CONTINGENCIES

In prior years, CEMEX recorded accruals for contingent items related primarily
to guarantees given and other responsibilities that did not meet the accrual
criteria of SFAS 5, Accounting for Contingencies, under U.S. GAAP. Since the
likelihood of a loss occurring from these contingencies was considered to be
possible but not probable, the accruals under Mexican FRS were reversed for U.S.
GAAP purposes. During 2004, as a result of the adoption of new Bulletin C-9,
Liabilities, accruals, contingent assets and liabilities and commitments, which
is similar to SFAS 5 in respect to the accounting for contingencies, CEM