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, 2004
                                      OR
         |_|    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

                For  the transition period from __________ to _______________

         Commission file number  1-14946 _____________________________________


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

                          CEMEX MEXICO, S.A. de C.V.
                   EMPRESAS TOLTECA DE MEXICO, S.A. de C.V.
-------------------------------------------------------------------------------
(Exact names of co-registrants and guarantors as specified in their respective
charters)

                               CEMEX CORPORATION
-------------------------------------------------------------------------------
                (Translation of registrant's name into English)

                           CEMEX MEXICO CORPORATION
                    EMPRESAS TOLTECA DE MEXICO CORPORATION
-------------------------------------------------------------------------------
      (Translation of co-registrants' and guarantors' names 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.




                      Title of each class                                    Name of each exchange on which registered
                                                                       
  American Depositary Shares ("ADSs"), each ADS representing five
     Ordinary Participation Certificates (Certificados de
     Participacion Ordinarios) ("CPOs"), each CPO representing
     two Series A shares and one Series B share(1)                                      New York Stock Exchange
----------------------------------------------------------------          ------------------------------------------------


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

                                Not applicable
-------------------------------------------------------------------------------
                               (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)

Guarantees of the 9.625% Notes due 2009 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.


                  1,789,730,511 CPOs (1)
                  3,703,634,244 Series A shares (including Series A shares
                  underlying CPOs) (1)
                  1,851,817,122 Series B shares (including Series B shares
                  underlying CPOs) (1)

         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 which financial statement item the registrant
has elected to follow.

         Item 17         Item 18  |X|
                 -----          -----

(1) This information does not give effect to the stock split approved by
shareholders on April 28, 2005, which is expected to be effected in July 2005.
For further description of the stock split, see "Presentation of Financial
Information."







                                       TABLE OF CONTENTS

                                                                                                                   Page
                                                                                                                   ----
                                                                                                                  
PART I................................................................................................................3

   Item 1 -  Identity of Directors, Senior Management and Advisors....................................................3

   Item 2 -  Offer Statistics and Expected Timetable..................................................................3

   Item 3 -  Key Information..........................................................................................3
     Risk Factors.....................................................................................................3
     Mexican Peso Exchange Rates......................................................................................8
     Selected Consolidated Financial Information......................................................................9

   Item 4 -  Information on the Company..............................................................................13
     Business Overview...............................................................................................13
     RMC Business Overview...........................................................................................16
     Our Production Processes........................................................................................18
     User Base.......................................................................................................18
     Our Business Strategy...........................................................................................19
     Our Corporate Structure.........................................................................................21
     North America...................................................................................................22
     Europe, Asia and Africa.........................................................................................29
     South America, Central America and the Caribbean................................................................34
     Our Trading Operations..........................................................................................40
     Description of RMC Operations...................................................................................41
     Regulatory Matters and Legal Proceedings........................................................................45

   Item 5 -  Operating and Financial Review and Prospects............................................................52
     Cautionary Statement Regarding Forward Looking Statements.......................................................52
     Overview........................................................................................................52
     Critical Accounting Policies....................................................................................53
     Results of Operations...........................................................................................56
     Liquidity and Capital Resources.................................................................................69
     Research and Development, Patents and Licenses, etc.............................................................75
     Trend Information...............................................................................................76
     Summary of Material Contractual Obligations and Commercial Commitments..........................................77
     Off-Balance Sheet Arrangements..................................................................................78
     Qualitative and Quantitative Market Disclosure..................................................................78
     Investments, Acquisitions and Divestitures......................................................................83
     U.S. GAAP Reconciliation........................................................................................85
     Newly Issued Accounting Pronouncements Under U.S. GAAP..........................................................85

   Item 6 - Directors, Senior Management and Employees...............................................................87
     Senior Management and Directors.................................................................................87
     Board Practices.................................................................................................92
     Compensation of Our Directors and Members of Our Senior Management..............................................92
     Employees.......................................................................................................98
     Share Ownership.................................................................................................98

   Item 7 -  Major Shareholders and Related Party Transactions.......................................................99
     Major Shareholders..............................................................................................99
     Related Party Transactions.....................................................................................100


                                      i



   Item 8 -  Financial Information..................................................................................100
     Consolidated Financial Statements and Other Financial Information..............................................100
     Legal Proceedings..............................................................................................100
     Dividends......................................................................................................100
     Significant Changes............................................................................................101

   Item 9 -  Offer and Listing......................................................................................102
     Market Price Information.......................................................................................102

   Item 10 -  Additional Information................................................................................103
     Articles of Association and By-laws............................................................................103
     Material Contracts.............................................................................................110
     Exchange Controls..............................................................................................112
     Taxation.......................................................................................................112
     Documents on Display...........................................................................................115

   Item 11 -  Quantitative and Qualitative Disclosures About Market Risk............................................115

   Item 12 -  Description of Securities Other than Equity Securities................................................115

PART II.............................................................................................................116

   Item 13 -  Defaults, Dividend Arrearages and Delinquencies.......................................................116

   Item 14 -  Material Modifications to the Rights of Security Holders and Use of Proceeds..........................116

   Item 15 -  Controls and Procedures...............................................................................116

   Item 16A -  Audit Committee Financial Expert.....................................................................117

   Item 16B -  Code of Ethics.......................................................................................117

   Item 16C -  Principal Accountant Fees and Services...............................................................117

   Item 16E -  Purchases of Equity Securities by the Issuer and Affiliated Purchasers...............................118

PART III............................................................................................................119

   Item 17 -  Financial Statements..................................................................................119

   Item 18 -  Financial Statements..................................................................................119

   Item 19 -  Exhibits..............................................................................................119

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-11



                                      ii





                                 INTRODUCTION

         CEMEX, S.A. de C.V. is incorporated as a stock corporation with
variable capital organized under the laws of the United Mexican States. Except
as the context otherwise may require, references in this annual report to
"CEMEX," "we," "us" or "our" refer to CEMEX, S.A. 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. 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 Generally Accepted
Accounting Principles in Mexico ("Mexican GAAP"), which differ in significant
respects from U.S. GAAP. We are required, pursuant to Mexican GAAP, 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, 2004. See note 24 to our consolidated financial statements
included elsewhere in this annual report for a description of the principal
differences between Mexican GAAP 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 28, 2005, our shareholders approved a new stock split, which
we expect to occur in July 2005. In connection with the stock split, each of
our existing series A shares will be surrendered in exchange for two new
series A shares, and each of our existing series B shares will be 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. The number of our existing ADSs will not change as a
result of the stock split; instead the ratio of CPOs to ADSs will be modified
so that each existing ADS will represent ten new CPOs following the stock
split and the CPO trust amendment. The proportional equity interest
participation of existing shareholders will not change as a result of the
stock split. The financial data set forth in this annual report have not been
adjusted to give retroactive effect to 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, 2004. 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 Ps11.14 to U.S.$1.00, the
CEMEX accounting rate as of December 31, 2004. 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 31, 2004 was Ps 11.15 to
U.S.$1.00 and on April 29, 2005 was Ps11.08 to U.S.$1.00.

                                CO-REGISTRANTS

         Our co-registrants are wholly-owned subsidiaries that have provided a
corporate guarantee guaranteeing payment of our 9.625% Notes due 2009. These
subsidiaries, which we refer to as our guarantors, are 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. The 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


                                      1


Securities Exchange Act of 1934 (the "Exchange Act"), no separate financial
statements or other disclosures concerning the guarantors other than the
narrative disclosures and financial information set forth in note 24(x) to our
consolidated financial statements have been presented in this annual report.


                                      2



                                    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 may not be able to realize the expected benefits from our acquisition of
RMC or the expected benefits from future acquisitions.

         A key element of our growth strategy is to integrate our recently
acquired operations with 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 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 March 1, 2005, we completed our acquisition of RMC Group p.l.c.,
or RMC, a leading international producer and supplier of cement, ready-mix
concrete and aggregates, for a total purchase price of approximately U.S.$5.8
billion, which included approximately U.S.$1.7 billion of assumed debt. RMC,
which is headquartered in the United Kingdom, has significant operations in
the United Kingdom, Germany, France and the United States, as well as
operations in other European countries and globally. At that time, we
estimated that we would achieve approximately U.S.$200 million of annual
savings by 2007 through cost-saving synergies. See Item 4 "Information on the
Company -- Description of RMC Operations." 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.

         In addition, although we have realized our expected benefits from
acquisitions in the past, the acquired companies were primarily engaged in
cement operations, which have traditionally been the focus of our business.
Also, the companies we have acquired in the past have had significant
operations in only one country. The integration of RMC's worldwide operations,
which consist primarily of ready-mix concrete and aggregates operations,
presents new challenges as it requires us to simultaneously integrate
operations in many different countries and focus on ready-mix concrete and
aggregates operations on a global scale, in addition to our traditional focus
on cement operations. See Item 4 "Information on the Company -- Our Business
Strategy."

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.


                                      3


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, 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, 2004, we had outstanding debt
equal to Ps66.1 billion (U.S.$5.9 billion), not including obligations under
equity derivative transactions in our own stock. The aggregate amount of debt
we incurred in connection with the RMC acquisition was approximately U.S.$5.8
billion, including our assumption of debt of approximately US$1.7 billion.
Approximately U.S.$819 million of the U.S.$5.8 billion of debt incurred in
connection with the RMC acquisition was included in our outstanding debt as of
December 31, 2004.

We have to service our Dollar and Yen denominated debt with revenues generated
in Pesos or other currencies, as we do not generate sufficient revenue in
Dollars and Yen from our operations to service all our Dollar and Yen
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.

         A substantial portion of our outstanding debt is denominated in
Dollars and Yen; as of March 31, 2005, the portions were 58% and 7%,
respectively. This 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 and Yen from our operations to service
all our Dollar and Yen denominated debt. Consequently, we have to use revenues
generated in Pesos or other currencies to service our Dollar and Yen
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, or any of the other currencies of
the countries in which we operate, compared to the Dollar or the Yen could
adversely affect our ability to service our debt. During 2004, Mexico and
Spain, our main non-U.S. Dollar denominated operations, generated
approximately half of our sales (approximately 33% and 16%, respectively),
before eliminations resulting from consolidation. In 2004, approximately 22%
of our sales were generated in the United States, with the remaining 29% of
our sales being generated in several countries, with a number of currencies
having material depreciations against the Dollar and the Yen. During 2004, the
Peso appreciated 0.9% against the Dollar and depreciated 3.9% against the Yen,
while the Euro appreciated 7.1% against the Dollar and appreciated 2.6%
against the Yen.

         In connection with our acquisition of RMC, we incurred a substantial
amount of debt denominated in Pounds. As of March 31, 2005, approximately
U.S.$1.3 billion, or 12%, of our outstanding indebtedness was Pound
denominated. However, we believe that our generation of revenues in Pounds
will be sufficient to service these obligations.

Our derivative instruments may have adverse effects on the market for our
securities.

         We have equity forward contracts in our own stock, which we entered
into as a means of meeting our obligations that may require us to deliver
significant numbers of shares of our stock under our employee stock option
programs. The estimated fair value of these equity forward contracts is linked
to the market price of our CPOs or ADSs. As of December 31, 2004, the notional
amount of our outstanding obligations under our equity forward contracts was
approximately U.S.$1.2 billion, with an estimated fair value gain of U.S.$66.2
million. Pursuant to the terms of our equity forward contracts, if the shares
underlying our equity forward agreements suffer a substantial decrease in
market value, we could be required to compensate for the decrease in market
value. If we default on this obligation, the counterparties to our equity
forward contracts have the option of either requiring us to repurchase the
underlying shares or selling the underlying shares into the market, which may
adversely affect the price of our CPOs and ADSs.


                                      4


We are disputing some tax claims, an adverse resolution of which may result in
a significant additional tax expense.

         We have received notices from the Mexican tax authorities of tax
claims in respect of the tax years from 1992 through 1996 for an aggregate
amount of approximately Ps3.6 billion, including interest and penalties
through December 31, 2004. An adverse resolution of these claims could
materially reduce 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.

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.

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.

         In 2004, the largest percentage of our net sales (33%) and total
assets (23%), at year-end, were in Mexico. 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.

         As of and for the year ended December 31, 2004, we had operations in
the United States (22% of net sales and 16% of total assets), Spain (16% of
net sales and 12% of total assets), Venezuela (4% of net sales and 3% of total
assets), Central America and the Caribbean (8% of net sales and 5% of total
assets), Colombia (3% of net sales and 3% of total assets), the Philippines
(2% of net sales and 3% of total assets), other Asian countries, including
Thailand (2% of total assets), and Egypt (2% of net sales and 2% of total
assets). With the recent acquisition of RMC, our geographic diversity has
significantly increased. In addition to Spain and the United States, RMC has
operations in 20 countries including the United Kingdom, France, Germany,
Croatia, Poland and Latvia. As in the case of Mexico, adverse economic
conditions in any of these countries may produce a negative impact on our net
income from our operations in that country.

         In recent years, Venezuela has experienced considerable volatility
and depreciation of its currency, high interest rates, political instability
and declining asset values. Additionally, Venezuela has experienced increased
inflation, decreased gross domestic product and labor unrest, including a
general strike. In response to this situation, and in an effort to shore up
the economy and control inflation, Venezuelan authorities have imposed foreign
exchange and price


                                      5


controls on specified products, including cement. Although the political
uncertainty in Venezuela has diminished since the August 2004 referendum on
President Chavez's presidency, following which President Chavez has
consolidated his majority in Congress and his control over the Supreme Court,
these foreign exchange and price controls remain in place. These developments
have had and may continue to have an impact on cement prices and an adverse
effect on the construction sector in Venezuela, reducing demand for cement and
ready-mix concrete, which may continue to affect our sales and net income
adversely.

         We believe that Egypt also represents an important market for our
future growth. Rising instability in the Middle East, however, has resulted
from, among other things, civil unrest, extremism, the continued deterioration
of Israeli-Palestinian relations and the recent 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, will not be
drawn into the conflict. In Egypt, extremists have engaged in a sometimes
violent campaign against the government in recent years. There can be no
assurance that extremists will not escalate their opposition in Egypt or that
the government will continue to be successful in maintaining the prevailing
levels of domestic order and stability. Since 2000, the Egyptian government
devalued the pound four times, and in January 2003, it decided to let the
pound trade as a freely floating currency. During 2003, the Egyptian pound
depreciated approximately 35% against the Dollar; while during 2004, the
Egyptian pound appreciated against the Dollar by approximately 1%. The
potential impact of the floating exchange rate system and of measures by the
Egyptian government aimed at improving Egypt's investment climate continues to
be uncertain. Weakened investor confidence as a result of currency instability
as well as any of the other foregoing circumstances could have a material
adverse effect on the political and economic stability of Egypt and
consequently on our Egyptian operations.

         The September 11, 2001 terrorist attacks on the World Trade Center
and the Pentagon temporarily disrupted the trading markets in the United
States and caused declines in major stock markets around the world. Since
those attacks, there have been terrorist attacks in Indonesia and Spain and
ongoing threats of future terrorist attacks in the United States and abroad.
In response to these terrorist attacks and threats, the United States has
instituted several anti-terrorism measures, most notably, the formation of the
Office of Homeland Security, a formal declaration of war against terrorism and
the ongoing armed conflicts in Iraq and Afghanistan. Although it is not
possible at this time to determine the long-term effect of these terrorist
threats and attacks and the consequent response by the United States,
including the conflicts in Iraq and Afghanistan, 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. In addition, current and projected United States budget
deficits may have an adverse effect on the public construction sector.
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.

         PT Semen Gresik (Persero) Tbk., or Gresik, an Indonesian cement
producer in which we own a 25.5% interest, has experienced ongoing
difficulties at PT Semen Padang , or Semen Padang, the subsidiary of Gresik
that owns and operates the Padang plant, including the effective loss of
operational and financial control of Semen Padang, the inability to prepare
consolidated financial statements that include Semen Padang's operations and
the inability of its independent auditors to provide an unqualified audit
opinion on such financial statements. After the failure of several attempts to
reach a negotiated or mediated solution to these problems involving Gresik, on
December 10, 2003, CEMEX Asia Holdings, Ltd., or CAH, our subsidiary through
which we hold our interest in Gresik, filed a request for arbitration against
the Republic of Indonesia and the Indonesian government before the
International Centre for Settlement of Investment Disputes, or ICSID, based in
Washington D.C. CAH is seeking, among other things, rescission of the purchase
agreement entered into with the Republic of Indonesia in 1998, plus repayment
of all costs and expenses, and compensatory damages. ICSID has accepted and
registered CAH's request for arbitration and issued a formal notice of
registration on January 27, 2004. On May 10, 2004, an Arbitral Tribunal was
established to hear the dispute. The Indonesian government has objected to the
Tribunal's jurisdiction over the claims asserted in CAH's request for
arbitration, and a hearing to resolve these jurisdictional objections is
expected to take place during 2005. We cannot predict what effect, if any,
this action will have on our investment in Gresik, how the Tribunal will rule
on the Indonesian government's jurisdictional objections or the merits of the
dispute, or the time-frame in which the Tribunal will rule. See Item 4 --
"Information on the Company -- Europe, Asia and Africa -- Our Asian Operations
-- Our Indonesian Equity Investment" and "-- Regulatory Matters and Legal
Proceedings -- Other Legal Proceedings."


                                      6


You may be unable to enforce judgments against us.

         You may be unable to enforce judgments against us. We are a stock
corporation with variable capital, or sociedad anonima 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.


                                      7



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
1.2% in 2000, appreciated against the Dollar by 4.7% in 2001, depreciated
against the Dollar by 13% in 2002, depreciated against the Dollar by 8.3% in
2003 and appreciated against the Dollar by 0.9% in 2004. 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
                                                                                ----------  -----------  ------    -------
                                                                                             
2000.....................       9.62         9.46       10.10       9.19           9.62          9.46     10.09      9.18
2001.....................       9.17         9.33        9.99       8.95           9.16          9.34      9.97      8.95
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

Monthly (2004-2005)
    October..............      11.54          --         11.54      11.24          11.54         --         11.54     11.24
    November.............      11.23          --         11.53      11.23          11.24         --         11.53     11.24
    December.............       11.14         --         11.35      11.11          11.15         --         11.33     11.11
    January..............      11.19          --         11.39      11.17          11.21         --         11.41     11.17
    February.............      11.10          --         11.21      11.08          11.09         --         11.21     11.04
    March................      11.16          --         11.31      10.99          11.18         --         11.33     10.98
    April................      11.06          --         11.25      11.04          11.08         --         11.23     11.04


(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 April 29, 2005, the noon buying rate for Pesos was Ps11.08 to
U.S.$1.00 and the CEMEX accounting rate was Ps11.06 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."



                                      8



Selected Consolidated Financial Information

         The financial data set forth below as of and for each of the five
years ended December 31, 2004 have been derived from our audited consolidated
financial statements. The financial data set forth below as of December 31,
2004 and 2003 and for each of the three years ended December 31, 2004, 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 2004 annual general
meeting, which took place on April 28, 2005.

         Our consolidated financial statements included elsewhere in this
annual report have been prepared in accordance with Mexican GAAP, which
differs in significant respects from U.S. GAAP. We are required, pursuant to
Mexican GAAP, 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, 2004.
See note 24 to our consolidated financial statements included elsewhere in
this annual report for a description of the principal differences between
Mexican GAAP 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 GAAP, 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, 2004:




                                                              Annual Weighted         Cumulative Weighted
                                                               Average Factor          Average Factor to
                                                                                        December 31, 2004
                                                             ---------------------  -------------------------
                                                                                    
           2000......................................             0.9900                     1.2686
           2001......................................             1.0916                     1.2814
           2002......................................             1.1049                     1.1738
           2003......................................             1.0624                     1.0624
           --------------------------------------------- -------------------------- -------------------------


         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 Ps11.14 to U.S.$1.00, the CEMEX accounting rate as of
December 31, 2004. 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, 2004 was Ps11.15 to
U.S.$1.00 and on April 29, 2005 was Ps11.08 to U.S.$1.00. From December 31,
2004 through April 29, 2005, the Peso appreciated by approximately 0.6%
against the Dollar, based on the noon buying rate for Pesos.



                                      9





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

                                                                     As of and for the year ended December 31,
                                                   -----------------------------------------------------------------------------
                                                     2000        2001         2002          2003          2004          2004
                                                   ---------- ---------    ----------    ---------    ----------     -----------
                                                            (in millions of constant Pesos as of December 31, 2004 and
                                                              Dollars, except ratios and share and per share amounts)
                                                                                                   
Income Statement Information:
Net sales....................................      Ps  68,595 Ps 81,350     Ps 79,725    Ps 85,553     Ps 90,784     U.S.$ 8,149
Cost of sales(1).............................         (38,329)  (45,758)      (44,541)     (49,319)      (51,092)         (4,586)
Gross profit.................................          30,266    35,592        35,184       36,234        39,692           3,563
Operating expenses...........................         (10,081)  (16,165)      (19,217)     (18,857)      (19,064)        (1,711)
Operating income.............................          20,185    19,427        15,967       17,377        20,628           1,852
Comprehensive financing income (cost), net(2)          (2,122)    3,110        (4,013)      (3,194)        1,485             133
Other income (expense), net..................          (2,860)   (4,899)       (4,744)      (5,454)       (5,390)          (484)
Income before income tax, business assets tax,
     employees' statutory profit sharing and
     equity in income of affiliates..........          15,203     17,638        7,210        8,729        16,723           1,501
Minority interest............................             952      1,802          452          363           233              21
Majority interest net income.................          12,195     13,840        6,339        7,508        14,562           1,307
Earnings per share(3)(4).....................            2.95       3.24         1.41         1.58          2.92            0.26
Dividends per share(3)(5)(6).................            0.77       0.82         0.85         0.82          0.87            0.08
Number of shares outstanding(3)(7)...........           4,169      4,379        4,562        4,861         5,093           5,093

Balance Sheet Information:
Cash and temporary investments...............           3,760      5,034        4,400        3,479         3,814             342
Net working capital investment(8)............          11,301     10,959        8,523        6,875         5,850             525
Property, machinery and equipment, net.......         110,247    105,051      109,212      110,642       107,094           9,613
Total assets.................................         192,320    190,707      194,154      191,250       193,623          17,381
Short-term debt..............................          36,144     12,074       16,977       15,870        11,627           1,044
Long-term debt...............................          33,060     51,053       53,294       54,176        54,439           4,887
Minority interest(9).........................          29,261     23,211       14,704        6,352         4,333             389
Stockholders' equity (excluding minority
     interest)(10)...........................          64,082     72,577       69,992       74,445        87,234           7,831
Book value per share(3)(7)...................           15.36      16.57        15.34        15.32         17.13            1.53

Other Financial Information:
Operating margin.............................           29.4%      23.9%        20.0%        20.3%         22.7%           22.7%
EBITDA(11)                                             24,769     26,505       23,359       25,173        28,276           2,538
Ratio of EBITDA to interest expense, capital
     securities dividends and preferred equity
     dividends...............................            4.00       4.39         5.23         5.27          6.82            6.82
Investment in property, machinery and equipment,
     net.....................................           4,860      6,002        5,166        4,703         4,835             434
Depreciation and amortization................           5,968      9,314        9,324        9,850         9,551             857
Net resources provided by operating
     activities(12)..........................          21,237     27,733       20,271       18,704        24,828           2,229
Basic earnings per CPO(3)(4).................            8.85       9.72         4.23         4.74          8.76            0.79


                                                                     As of and for the year ended December 31,
                                                   -----------------------------------------------------------------------------
                                                     2000        2001         2002         2003          2004          2004
                                                   ---------- ---------    ----------    ---------    ----------     -----------
                                                    (in millions of constant Pesos as of December 31, 2004 and Dollars, except
                                                                                   per share amounts)
US. GAAP (13):
Income Statement Information:
Majority net sales...........................       Ps 64,631  Ps 72,753    Ps 73,649   Ps 84,047     Ps  89,857      U.S.$8,066
Operating income.............................          15,731     11,629        11,904    14,340          16,512           1,482
Majority net income..........................          10,037     11,640         6,182         8,720      17,965           1,613
Basic earnings per share.....................            2.44       2.90          1.38          1.84        3.60            0.32
Diluted earnings per share...................            2.40       2.87          1.38          1.80        3.58            0.32

Balance Sheet Information:
Total assets.................................         190,718    178,789       185,611       196,340     206,359          18,524
Total long-term debt.........................          33,150     43,088        45,125        47,204      43,639           3,917
Shares subject to mandatory redemption (14)..              --         --            --           782          --              --
Minority interest............................           7,811      8,783         5,689         5,711       4,536             407
Other mezzanine items (14)...................          26,865     18,611        14,331            --          --              --
Total majority stockholders' equity..........          50,436     53,788        56,591        74,955      92,633           8,315

                                                                                      (footnotes on next page)



                                      10




______________
(1)  Cost of sales includes depreciation.
(2)  Comprehensive financing income (cost), net, 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, 2004, approximately 96.6% of our outstanding share capital
     was represented by CPOs. On April 28, 2005, our shareholders approved a
     new stock split, which we expect to occur in July 2005. In connection
     with the stock split, each of our existing series A shares will be
     surrendered in exchange for two new series A shares, and each of our
     existing series B shares will be 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. The proportional equity interest participation of
     existing shareholders will not change as a result of the stock split.
     Although earnings per share, dividends per share, book value per share,
     earnings per CPO and the number of shares outstanding for the years ended
     December 31, 2000 through 2004 were not adjusted to give retroactive
     effect to the stock split, the following table presents such line items
     on a pro forma basis giving effect to the stock split.




                                                               As of and for the year ended December 31,
                                              -------------------------------------------------------------------------
                                                 2000         2001        2002         2003        2004          2004
                                              --------     ---------  ----------    ---------  ---------    -----------
                                                 (in constant Pesos as of December 31, 2004 and Dollars, except share
                                                                                  amounts)
                                                                                          
     Pro forma per share information under
          Mexican GAAP:
     Earnings per share.....................   Ps  1.48    Ps   1.62   Ps   0.71   Ps    0.79   Ps   1.46    U.S.$ 0.13
     Dividends per share....................       0.39         0.41        0.43         0.41        0.44          0.04
     Book value per share...................       7.68         8.29        7.67         7.66        8.57          0.77
     Basic earnings per CPO................        4.43         4.86        2.12         2.37        4.38          0.40

     Pro forma per share information under
          U.S. GAAP:
     Basic earnings per share...............       1.22         1.45        0.69         0.92        1.80          0.16
     Diluted earnings per share.............       1.20         1.44        0.69         0.90        1.79          0.16

     Pro forma number of shares:
     Number of shares outstanding...........      8,338        8,758       9,124        9,722      10,186        10,186



(4)  Earnings per share are calculated based upon the weighted average number
     of shares outstanding during the year, as described in note 21 to the
     consolidated financial statements included elsewhere in this annual
     report. Basic earnings per CPO is determined by multiplying each year's
     basic earnings per share 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 GAAP.
(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 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 these years, expressed in constant Pesos
     as of December 31, 2004, were as follows: 2001, Ps2.31 per CPO (or Ps0.77
     per share); 2002, Ps2.46 per CPO (or Ps0.82 per share); 2003, Ps2.55 per
     CPO (or Ps0.85 per share); and 2004, Ps2.46 per CPO (or Ps0.82 per
     share). As a result of dividend elections made by shareholders, in 2001,
     Ps99 million in cash was paid and approximately 70 million additional
     CPOs were issued in respect of dividends declared for the 2000 fiscal
     year; in 2002, Ps273 million in cash was paid and approximately 64
     million additional CPOs were issued in respect of dividends declared for
     the 2001 fiscal year; in 2003, Ps71 million in cash was paid and
     approximately 99 million additional CPOs were issued in respect of
     dividends declared for the 2002 fiscal year; and in 2004, Ps167 million
     in cash was paid and approximately 75 million additional CPOs were issued
     in respect of dividends declared for the 2003 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 2004 annual shareholders' meeting, which was held on April
     28, 2005, our shareholders approved a dividend of Ps2.60 per CPO (Ps0.87
     per share) for the 2004 fiscal year. Shareholders will be entitled to
     receive the dividend in either stock or cash consistent with our past
     practices.
(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, 2000, 2001 and
     2002 includes a notional amount of U.S.$1.5 billion (Ps16.7 billion),
     U.S.$900 million (Ps10.0 billion) and U.S.$650 million (Ps7.2 billion),
     respectively, 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 (Ps735 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 GAAP, 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.$17 million
     (Ps207.4 million) in 2000, U.S.$76.1 million (Ps913.8 million) in 2001,
     U.S.$23.2 million (Ps275.9 million) in 2002 and U.S.$12.5 million
     (Ps153.6 million) in 2003. As of January 1, 2004, as a result of new
     accounting pronouncements under Mexican GAAP, 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
     (Ps66.1 million), were recorded as part of financial expenses in our
     income statement.


                                      11


(10) 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 (Ps1,095.1 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 (Ps201.6 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.
(11) EBITDA equals operating income before amortization expense and
     depreciation. Under Mexican GAAP, amortization of goodwill is not
     included in operating income, but instead is 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 the 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, which we consider to be the most comparable measure
     as determined under Mexican GAAP. We are not required to prepare a
     statement of cash flows under Mexican GAAP and therefore do not have such
     Mexican GAAP cash flow measures to present as comparable to EBITDA.



                                                                       For the year ended December 31,
                                                   -------------------------------------------------------------------------
                                                      2000        2001         2002        2003        2004         2004
                                                   ----------   ---------   ----------  ----------   ---------    ----------
                                                     (in millions of constant Pesos as of December 31, 2004 and Dollars)
                         
    Reconciliation of EBITDA to operating income
    EBITDA........................................  Ps 24,769   Ps 26,505    Ps 23,359   Ps 25,173   Ps 28,276    U.S.$2,538
    Less:
         Depreciation and amortization expense....      4,584       7,078        7,392       7,796       7,648          686
    Operating income..............................     20,185      19,427       15,967      17,377      20,628        1,852



(12) 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.
(13) We have restated the information at and for the years ended December 31,
     2000, 2001, 2002 and 2003 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 GAAP
     and applied to the information presented under Mexican GAAP 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 GAAP and U.S. GAAP as they relate to CEMEX.
(14) 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
     relate 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 10 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 a
     more detailed description of these elements, as they related to us, see
     notes 15(E), 15(F) and 24(m) to our consolidated financial statements
     included elsewhere in this annual report.



                                      12



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 stock corporation with variable capital, or sociedad anonima
de capital variable, organized under the laws of the United Mexican States
("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 the 2002 annual
shareholders' meeting, this period was extended to the year 2100. CEMEX's full
legal and commercial name is CEMEX, Sociedad Anonima de Capital Variable.

         CEMEX is the third largest cement company in the world, based on
installed capacity as of December 31, 2004 of approximately 81.7 million tons.
We are one of the world's largest traders of cement and clinker, having traded
over 10 million tons of cement and clinker in 2004. 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. We are a global cement manufacturer with operations in North, Central
and South America, Europe, the Caribbean, Asia and Africa. Following the March
2005 acquisition of RMC, based on year-end 2004 numbers, CEMEX had an
installed capacity of approximately 98.7 million tons of cement, enhancing its
position as the third largest cement company in the world. CEMEX, with RMC, is
now the largest ready-mix concrete company in the world with an annual
production in 2004 of of 75 million cubic meters of ready-mix concrete and is
the fourth largest aggregates company in the world with an annual production
in 2004 of 170 million tons of aggregates. As of December 31, 2004, we had
worldwide assets of approximately Ps193.6 billion (U.S.$17.4 billion) (without
giving effect to the RMC acquisition or the recent sale of several U.S. assets
described below). On April 29, 2005, we had an equity market capitalization of
approximately Ps135.2 billion (U.S.$12.2 billion).

         As of December 31, 2004, our main cement production facilities were
located in Mexico, Spain, Venezuela, Colombia, the United States, Egypt, the
Philippines, Thailand, Costa Rica, the Dominican Republic, Panama, Nicaragua
and Puerto Rico. As of December 31, 2004, our assets, cement plants and
installed capacity, on an unconsolidated basis, were as set forth below.
Installed cement capacity, which refers to theoretical annual cement
production capacity, represents gray cement equivalent capacity, which counts
each ton of white cement capacity as approximately two tons of gray cement
capacity. It also includes, generally, our proportional interest in the
installed capacity of companies in which we hold a minority interest, but does
not include our proportional interest in installed capacity derived from our
18.8% interest in RMC as of December 31, 2004.


                                      13




                                                                                     As of December 31, 2004(1)
                                                                          ----------------------------------------------
                                                                             Assets                       Installed
                                                                          (in billions                     Capacity
                                                                           of constant       Number of    (millions of
                                                                              Pesos)       Cement Plants  tons per annum)
                                                                          ------------     -------------  ---------------
                                                                                                 
North America
     Mexico........................................................          Ps  64.4             15           27.2
     United States.................................................              44.8             13           14.3
Europe, Asia and Africa
     Spain.........................................................              32.8              8           11.0
     Asia..........................................................              12.2              4           10.9
     Egypt.........................................................               6.0              1            4.9
South America, Central America and the Caribbean
     Venezuela.....................................................               8.5              3            4.6
     Colombia......................................................               9.2              5            4.8
     Central America and the Caribbean.............................              13.6              5            3.7
Cement and Clinker Trading Assets and Other Operations.............              83.5             --            0.3


__________
(1)  The information in the table does not give effect to the following
     transactions, which described below: (i) the acquisition of RMC that was
     completed on March 1, 2005, (ii) the sale of U.S. assets completed on
     March 31, 2005 and (iii) the sale of our 11.92% interest in Cementos Bio
     Bio, S.A. announced on April 26, 2005.

         In the above table, "Asia" includes our Asian subsidiaries, and, for
purposes of the columns labeled "Assets" and "Installed Capacity," includes
our 25.5% interest, as of December 31, 2004, in Gresik. As of December 31,
2004, in addition to the four cement plants owned by our Asian subsidiaries,
Gresik operated four cement plants with an installed capacity of 17.3 million
tons. In the above table, "Central America and the Caribbean" includes our
subsidiaries in Costa Rica, the Dominican Republic, Panama, Nicaragua, Puerto
Rico and other assets in the Caribbean region. In the above table, "Cement and
Clinker Trading Assets and Other Operations" includes our 11.9% interest as of
December 31, 2004 in Cementos Bio Bio, S.A., a Chilean cement producer having
three cement plants with an installed capacity of approximately 2.25 million
tons, and intercompany accounts receivable of CEMEX (the parent company only)
in the amount of Ps33.8 billion, which are eliminated in consolidation.

         During the last 15 years, 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:

         o    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 our
              acquisition of RMC. The transaction value of this acquisition,
              including our assumption of approximately U.S.$1.7 billion of
              RMC's debt, was approximately U.S.$5.8 billion.

         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.$99.7 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.


                                      14


         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., or PRCC. The aggregate value of the
              transaction was approximately U.S.$281.0 million, including
              approximately U.S.$100.8 million of assumed net debt.

         o    In July 2002, we increased our equity interest in CEMEX Asia
              Holdings, Ltd., or CAH, a subsidiary originally created to
              co-invest with institutional investors in Asian cement
              operations, to 77.7%. Through quarterly share exchanges (CAH
              shares for CEMEX CPOs) with CAH investors in 2003 and 2004, we
              further increased our equity interest in CAH to 92.3%. In August
              2004, we acquired an additional 6.83% interest in CAH for
              approximately U.S.$70 million, thereby increasing our total
              equity interest in CAH to 99.1%.

         o    In July 2002, we purchased, through a wholly-owned indirect
              subsidiary, the remaining 30% economic interest that was not
              previously acquired by CAH in the Phillipine cement company
              Solid Cement Corporation, or Solid, for approximately U.S.$95
              million.

         o    In May 2001, we acquired, through CAH, a 100% economic interest
              in Saraburi Cement Company Ltd., a cement company based in
              Thailand with an installed capacity of approximately 700,000
              tons, for a total consideration of approximately U.S.$73
              million. In July 2002, Saraburi Cement Company changed its legal
              name to CEMEX (Thailand) Co. Ltd., or CEMEX (Thailand).

         o    In November 2000, through a tender offer and subsequent merger,
              we acquired 100% of the outstanding shares of common stock of
              Southdown, Inc., or Southdown, a U.S. cement producer. The total
              cost of the acquisition of Southdown was approximately U.S.$2.8
              billion. In March 2001, through a corporate restructuring, we
              integrated the Southdown operations with our other U.S.
              operations and "Southdown" changed its legal name to CEMEX, Inc.

         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.

         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 10% of our
U.S. operations' operating cash flow for the year ended December 31, 2004.

         On April 26, 2005, we announced the divestiture of our 11.92%
interest in Cementos Bio Bio, S.A., a cement company in Chile, for
approximately U.S.$65 million. The proceeds from the sale will be applied to
reduce debt.

         For the year ended December 31, 2004, our net sales, before
eliminations resulting from consolidation, were divided among the countries in
which we operate as follows:


                                      15




                              [GRAPHIC OMITTED]



         For a description of a breakdown of total revenues by geographic
markets for each of the years ended December 31, 2002, 2003 and 2004, please
see Item 5 -- "Operating and Financial Review and Prospects."

RMC Business Overview

         RMC is a leading international producer and supplier of materials,
products and services used primarily in the construction industry. It has
operating units in 22 countries, primarily in Europe and the United States,
and it employs over 26,000 people worldwide. The geographic distribution of
RMC's cement operations is shown in the following table.




                                                                             As of December 31, 2004
                                                                        ---------------------------------
                                                                                             Installed
                                                                                              Capacity
                                                                           Number of        (millions of
                                                                         Cement Plants    tons per annum)
                                                                        ---------------   ---------------
                                                                                     
North America
     United States.................................................              1                 0.9
Europe, Asia and Africa
     United Kingdom................................................              3                 2.7
     Germany.......................................................              3                 6.4
     Croatia.......................................................              3                 2.6
     Latvia........................................................              1                 0.4
     Poland........................................................              2                 3.1
     Lithuania(1)..................................................             --                 0.9
                                                                        ---------------   ---------------
Total                                                                           13                17.0



__________

(1) Includes our proportional interest in a cement plant (34.5%).


                                      16


         RMC is one of Europe's largest producers of cement and one of the
world's largest suppliers of ready-mix concrete and aggregates. In 2004, it
sold 14.4 million tons of cement, 51.4 million cubic meters of ready-mix
concrete and 131.6 million tons of aggregates.

         RMC's cement assets include 13 cement plants and 8 cement grinding
mills. The cement plants are located in Croatia, Germany, Latvia, Poland, the
U.K. and the U.S. RMC's total cement capacity is 17 million tons.

         CEMEX and RMC both have operations in the U.S. and Spain. In the
U.S., RMC's primary businesses are in California (aggregates, cement and
concrete), the Carolinas and Georgia (concrete), Florida (aggregates and
concrete) and the southwest states of Arizona, New Mexico and Texas
(aggregates and concrete). In Spain (aggregates and concrete), the business is
predominantly located around Madrid, Barcelona, Valencia and Alicante.

         The revenue information set forth below with respect to RMC's
operations for the year ended December 31, 2004 has been derived from RMC's
audited annual financial statements for 2004. RMC's financial statements were
prepared by RMC in accordance with U.K. GAAP, which differs in significant
respects from Mexican GAAP.

         For the year ended December 31, 2004, RMC's revenues from continuing
operations, before revenues from unconsolidated joint ventures and associated
entities of approximately (pound)351.7 million, were approximately
(pound)4,121.1 million and were divided by geographic region as follows:






                              [GRAPHIC OMITTED]





         For further description of RMC's operations, see "--Description of
RMC Operations."



                                      17



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 used in some
construction applications. Ready-mix concrete is the mixture of cement,
aggregates such as sand and gravel and water.||

         Aggregates are naturally occurring sand and gravel or crushed stone
such as granite, limestone and sandstone and are used in the production of
ready-mixed concrete, roadstone, concrete products, lime, cement and mortar in
the construction industry. Aggregates are obtained either 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 in different proportions in a large storage area. The mix is
usually dried by the application of heat in order to remove humidity acquired
in the quarry. The crushed raw materials are fed in pre-established
proportions, which vary depending on the type of cement to be produced, into a
grinding process, which mixes the various materials more thoroughly and
reduces them further in size in preparation for the kiln. In the kiln, the raw
materials are calcined, or processed, at a very high temperature, to produce
clinker. Clinker is the intermediate product used in the manufacture of cement
obtained from the mixture of limestone and clay with iron oxide.

         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, 2004, 47 of our 54 operative production plants used the dry
process, five used the wet process and two used both processes. Three of the
seven production plants that use the wet process are located in Venezuela. The
remaining four production plants that use the wet process are located in
Colombia, Nicaragua, and the Philippines. In addition, nine of RMC's cement
plants used the dry process, and four used the wet process. In the wet
process, the raw materials are mixed with water to form slurry which is fed
into the 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. Finally, 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

         The production of ready-mix concrete is made of cement, with fine and
coarse aggregate, water and admixtures (which control properties of the
concrete including plasticity, pumpability, freeze-thaw resistance, strength
and setting time). The hardening of concrete occurs due to the chemical
reaction of hydration -- the addition of water fills the voids in the mixture,
turning it into a solid mass.

User Base

         In most of the markets in which we compete, cement is the primary
building material in the industrial and residential construction sectors. 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.


                                      18



Our Business Strategy

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

Focus on our core business of cement, ready-mix and aggregates

         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 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 managing our cement,
ready-mix and aggregates operations as an integrated business can make them
more efficient and more profitable than if they were run separately.

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

         We normally consider opportunities for, and routinely engage in
preliminary discussions concerning, acquisitions.

Allocate capital effectively

         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.

Leverage platforms to achieve optimal operating standards and quickly
integrate acquisitions

         By continuing to produce cement at 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
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 aforementioned platforms has allowed us to integrate our
acquisitions more rapidly and efficiently.

         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.


                                      19


         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 lower cost combined
with our higher quality service has allowed us to make significant inroads in
these areas.

         We believe our Construrama branding and our other marketing
strategies in Mexico will strengthen our distribution network, foster greater
loyalty among distributors and further fortify our commercial network. With
Construrama, we are enhancing the operating and service standards of our
distributors, providing them with training, a standard image and national
publicity. Our other strategy, which we call "Multiproductos," helps our
distributors offer a wider array of construction materials and reinforces the
subjective value of our products in their customers.

         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 cement, 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:

         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 senior 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.



                                      20



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, 2004. 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.|






                               [OBJECT OMITTED]






                                      21


North America

         As of and for the year ended December 31, 2004, North America, which
includes our operations in Mexico and the United States, represented
approximately 55% of our net sales, 50% of our total installed capacity and
39% of our total assets.

Our Mexican Operations

Overview

         Our Mexican operations represented approximately 33% of our net sales
in 2004.

         At December 31, 2004, 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.

         At December 31, 2004, CEMEX Mexico owned approximately 100% of the
outstanding capital stock of Empresas Tolteca de Mexico. Empresas Tolteca de
Mexico is a holding company for some of our operating companies in Mexico.

         CEMEX Mexico and Empresas Tolteca de Mexico, together with their
subsidiaries, account for substantially all the revenues and operating income
of our Mexican operations.

         Since the early 1970s, we have pursued a growth strategy designed to
strengthen our core operations and to expand our activities beyond our
traditional market in northeastern Mexico. This strategy has transformed our
Mexican operations from a regional participant into the leading Mexican cement
manufacturer. The process was largely completed with our acquisition of
Cementos Tolteca, S.A. de C.V. in 1989, which increased our installed capacity
for cement production by 6.5 million tons. Since the Cementos Tolteca
acquisition, we have added 7.0 million tons of installed capacity in Mexico
through acquisitions, expansion, modernization and the construction of new
plants. Our largest new construction project in Mexico in the 1990s was the
Tepeaca plant, which began operations in 1995 and had an installed capacity as
of December 31, 2004 of 3.3 million tons. During the second quarter of 2002,
the production operations at our oldest plant (Hidalgo) were halted and remain
suspended due to concerns about cost effectiveness. We do not anticipate
resuming production operations at this plant in 2005. We do not presently
anticipate any significant capacity expansion in our Mexican operations in
2005.

         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. By the
end of 2004, 700 independent concessionaries with close to 2,100 stores were
integrated into the Construrama program in more than 610 towns and cities
throughout Mexico. By the end of 2005, we expect to have approximately 2,250
stores under the Construrama program.

The Mexican Cement Industry

         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 of concrete 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 2004 accounted for
around 74% 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 50% 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.



                                      22


Competition

         In the early 1970s, the Mexican cement industry was regionally
fragmented. However, over the last 30 years, the Mexican cement industry has
consolidated into a national market, thus becoming increasingly competitive.
As of December 31, 2004, according to publicly available information, 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; 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.


Our Mexican Operating Network




                              [GRAPHIC OMITTED]





         (1)  In 2002, production operations at the Hidalgo cement plant were
              halted and remain suspended. We do not anticipate resuming
              production operations at this plant in 2005.


         Currently, we operate 14 plants (not including Hidalgo) and 78
distribution centers (70 land terminals and 8 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.



                                      23


         We believe that geographic diversification in Mexico is important
         because:

         o    it decreases the effect of regional cyclicality on total demand
              for our Mexican operations' products;

         o    it places our Mexican operations in physical proximity to
              customers in each major region of Mexico, allowing more
              cost-effective distribution; and

         o    it allows us to optimize production processes by shifting output
              to those facilities better suited to service the areas with the
              highest demand.

Products and Distribution Channels

         Our domestic cement sales represented approximately 97% in 2002, 97%
in 2003 and 96% in 2004 of our total Mexican cement sales revenues.

         Cement. 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 2004, our Mexican operations sold approximately 74% of their cement sales
volume through more than 6,000 distributors throughout the country, most of
whom work on a regional basis. The five most important distributors in the
aggregate accounted for approximately 4% of our Mexican operations' total
sales by volume for 2004.

         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 in the commodity market. 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. Our domestic cement sales
volumes increased 4% in 2002, 4% in 2003 and 2% in 2004. In addition, we own
the registered trademark for the "Construrama" brand name for construction
material stores.

         Ready-Mix Concrete. Ready-mix concrete sales volumes by our Mexican
operations increased 10% in 2002, 13% in 2003 and 16% in 2004. For the year
ended December 31, 2004, ready-mix concrete sales represented 23% of our
Mexican operations' total cement sales volume.

         Demand for ready-mix concrete in Mexico depends on various factors
over which we have no control. These include the overall rate of growth of the
Mexican economy and plans of the Mexican government regarding major
infrastructure and housing projects.

         Exports. Our Mexican operations export a portion of their cement
production. Exports of cement and clinker by our Mexican operations decreased
25% in 2002 and 24% in 2003 and increased 37% in 2004. In 2004, approximately
79% of our exports from Mexico were to the United States, 20% to Central
America and the Caribbean and 1% 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. Imports of cement and clinker into the U.S. from Mexico are subject to
anti-dumping duties. See "Regulatory Matters and Legal Proceedings -- U.S.
Anti-Dumping Rulings -- Mexico" below.

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 with Petruleos Mexicanos,
or PEMEX, pursuant to which PEMEX agreed to supply us with 1,750,000 tons of
petcoke per year, 850,000 tons per year coming from PEMEX's refinery in Madero
commencing in 2002 with respect to the first contract and 900,000 tons per
year coming from PEMEX's Cadereyta refinery commencing in 2003 with respect to
the second contract. Petcoke is petroleum coke, a solid or fixed carbon
substance that remains after the distillation of hydrocarbons in petroleum and



                                      24


that may be used as fuel in the production of cement. 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. 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 almost 2% (based on a yearly average) of the
total fuel consumption for our Mexican operations in 2004, and we expect to
increase this percentage to around 3% during 2005.

         In 1999, we reached an agreement with ABB Alstom Power and Sithe
Energies, Inc. 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. 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. As of December 31,
2004, after eight months of operation, the power plant has supplied
electricity to 10 of our cement plants in Mexico covering 83% of their needs
for electricity and has represented an approximate 21% decrease in the cost of
electricity.

         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, 2004, we operated 14 wholly-owned cement plants
(not including Hidalgo) located throughout Mexico, with a total installed
capacity of 27.2 million tons per year. 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 remaining 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 2004 production
levels. As of December 31, 2004, all our production plants in Mexico utilized
the dry process.

         As of December 31, 2004, we had a network of 70 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 237 ready-mix concrete plants throughout 79
cities in Mexico and 1,701 ready-mix concrete delivery trucks.

Capital Investments

         We made capital expenditures of approximately U.S.$94.8 million in
2002, U.S.$109.4 million in 2003 and U.S.$90.3 million in 2004 in our Mexican
operations. We currently expect to make capital expenditures of approximately
U.S.$74.7 million in our Mexican operations during 2005.

Our U.S. Operations

Overview

         As of December 31, 2004, we held 100% of CEMEX, Inc., our operating
subsidiary in the United States.

         Our U.S. operations represented approximately 22% of our net sales in
2004. As of December 31, 2004, we had a cement manufacturing capacity of
approximately 14.3 million tons per year in our United States operations,
including nearly 0.7 million tons in proportional interests through minority
holdings. RMC's U.S. operations, which are being incorporated into our U.S.
operations following our acquisition of RMC in March 2005, are described
below.

         As of December 31, 2004, we operated a geographically diverse base of
13 cement plants located in Alabama, California, Colorado, Florida, Georgia,
Illinois, Kentucky, Michigan, Ohio, Tennessee and Texas. As of that date, we
also had 53 rail or water served active cement distribution terminals in the
United States and one in Canada. We also market ready-mix concrete products in
four of our largest cement markets, California, Arizona, Texas, and Florida,
and mine, process and sell construction aggregates in these four states as
well. In addition, with the acquisition of Mineral Resource Technologies, Inc.
in August 2003, CEMEX, Inc. has achieved a competitive position in the growing
fly ash



                                      25


market. 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.

         On March 31, 2005, CEMEX, Inc. sold its Charlevoix, Michigan and
Dixon, Illinois cement plants and several distribution terminals located in the
Great Lakes region to Votorantim Participacoes S.A., or Votorantim, a cement
company in Brazil, for an aggregate purchase price of approximately U.S.$389
million. The distribution terminals sold to Votorantim are located in Green
Bay, Manitowoc and Milwaukee, Wisconsin; Chicago, Illinois; Ferrysburg,
Michigan; Cleveland and Toledo, Ohio; and Owen Sound, Ontario, Canada. The
combined capacity of the two cement plants sold to Votorantim was approximately
two million tons per year, and the operations of these plants represented
approximately 10% of CEMEX, Inc.'s operating cash flow for the year ended
December 31, 2004.

         RMC operates one cement plant in Davenport, California as well as two
nearby terminals in northern California, one of them in a port facility. It
has more than 200 ready-mix plants located in the Carolinas, Florida, Georgia,
Texas, New Mexico, Nevada, Arizona and northern California and aggregates
facilities in the Carolinas, Arizona, California, Florida, Georgia, Missouri,
New Mexico, Nevada and Texas. RMC owns regional pipe and precast businesses,
along with block and paver plants in the Carolinas, Georgia and Florida. CEMEX
believes that by combining the acquired assets of RMC with its installed
cement capacity in the United States, it will be the largest cement and
ready-mix supplier in the United States, based on volumes sold, and an
important supplier of aggregates.

         For the year ended December 31, 2004, RMC's operations in the United
States generated revenues of approximately (pound)935 million.

The Cement Industry in the United States

         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. CEMEX, Inc.'s 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 70% 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 2004 U.S. Geological Survey, approximately 4,000
companies operated approximately 6,500 quarries and pits.

Our United States Cement Operating Network



                                      26




                              [GRAPHIC OMITTED]



         The map reflects our cement plants and cement terminals as of the
date of this annual report, after giving effect to the acquisition of RMC and
the sale of assets in the Great Lakes region.

Products and Distribution Channels

         CEMEX, Inc. delivers 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 CEMEX, Inc. delivers 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. As
discussed below, cement demand in the United States has become less dependent
upon the more cyclical residential and commercial sectors since the mid 1980s
as the public sector has grown significantly. Because of the distribution of
operations across the U.S., we are able to achieve stability of cash flows
should market conditions deteriorate in any one region of the U.S.

         Cement. Our cement operations represented approximately 62% of our
2004 U.S. operations revenues. Our U.S. operations sales volumes decreased
5.3% in 2002 due to the economic downturn in the United States, increased 2%
in 2003 and increased 9% in 2004 due to strong demand from the residential
sector, increased demand from the public sector and a recovery in industrial
and commercial construction.

         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, industrial and commercial and public sectors. 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 counter-cyclical public sector, particularly cement-intensive public
infrastructure spending. In 2004, according to our estimates, public sector
spending accounted for approximately 52% 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, domestic capacity utilization has been over 90% in the last 3
years.


                                      27


         Ready-Mix Concrete. Concrete operations represented approximately 27%
of our 2004 revenues in the U.S. We have ready-mix operations in California,
Arizona, Texas and Florida. Our concrete operations in those states purchase
most of their cement requirements from our cement operations in the U.S.

         Aggregates. Our aggregates operations include mining, processing and
selling construction aggregates in California, Arizona, Texas and Florida.
Aggregates operations represented approximately 6% of our 2004 U.S. revenues.
At 2004 production levels, it is anticipated that over 80% of our construction
aggregates reserves in the U.S. will last for 10 years or more.

Production Costs

         The largest cost components of our plants are electricity and fuel,
which accounted for approximately 36% of CEMEX, Inc.'s total production costs
in 2004. CEMEX, Inc. is 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 2004, the use of alternative fuels offset the effect on our fuel
costs of a significant increase in coal prices. Power costs in 2004
represented approximately 18% of Cemex, Inc.'s cash manufacturing cost, which
represents production cost before depreciation. We have improved the
efficiency of CEMEX, Inc.'s 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, 2004, we operated 13 cement manufacturing plants
in the U.S., with a total installed capacity of 14.3 million tons per year,
including nearly 0.7 million tons in proportional interests through minority
holdings. All our cement production facilities are wholly owned except for the
Balcones plant, which is leased, and the Louisville plant, which is owned by
Kosmos Cement Company, a joint venture in which CEMEX, Inc. owns a 75%
interest and a subsidiary of Dyckerhoff AG owns a 25% interest.

         As of the date of this annual report, after giving effect to the
acquisition of RMC and the sale of assets in the Great Lakes region, we
operated 12 cement plants in the U.S., with a total installed capacity of
approximately 13.2 million tons per year.

         As of December 31, 2004, we operated a distribution network of 97
ready-mix concrete plants, 54 cement terminals, six of which are deep-water
terminals, and 24 aggregate locations throughout the U.S. Also, we distributed
fly ash through 20 terminals and 13 third-party-owned utility plants, which
operate both as sources of fly ash and distribution terminals.

Capital Investments

         We made capital expenditures of approximately U.S.$95.9 million in
2002, U.S.$96.6 million in 2003 and U.S.$111.1 million in 2004 in our U.S.
operations. We currently expect to make capital expenditures of approximately
U.S.$96.5 million in our U.S. operations during 2005, excluding those related
to RMC's U.S. operations.



                                      28



Europe, Asia and Africa

         As of December 31, 2004, our business in Europe, Asia and Africa,
which included our majority-owned operations in Spain, the Philippines,
Thailand and Egypt, as well as our minority interests in Indonesia and other
Asian investments, represented approximately 20% of our net sales, 33% of our
total installed capacity and 19% of our total assets.

Our Spanish Operations

Overview

         As of December 31, 2004, we held 99.7% of CEMEX Espana, S.A., or
CEMEX Espana. Our Spanish operations represented approximately 16% of our net
sales in 2004. We conduct our Spanish operations through our operating
subsidiary CEMEX Espana, S.A. or CEMEX Espana. CEMEX Espana is also a holding
company for most of our international operations. Our cement activities in
Spain are conducted by CEMEX Espana itself and Cementos Especiales de las
Islas, S.A. a joint venture 50% owned by Cemex Espana. 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. This does not include the aggregates and
ready-mix concrete activities of RMC's subsidiaries.

The Spanish Cement Industry

         In 2004, the construction sector of the Spanish economy grew 4.4%,
primarily as a result of the growth of construction in the residential sector
of the Spanish economy. Cement consumption in Spain increased 4.7% in 2002,
4.4% in 2003 and 3.9% in 2004. Our domestic cement and clinker sales volumes
in Spain increased approximately 2.5% in 2002, 4.5% in 2003 and 3.3% in 2004.

         During the past several years, the level of cement imports into Spain
has been influenced by the strength of domestic demand. Cement imports
increased 5.5% in 2002, decreased 25% in 2003 and decreased 14.6% in 2004.
Clinker imports have demonstrated an intense dynamism, with increases of 18.2%
in 2002, 25.6% in 2003 and 6.3% in 2004. 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. Nonetheless, sales from imports have
been increasing in the center of Spain.

         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.
Nevertheless, exports of producers in Spain have been reduced in recent years
to 1.5 million tons in 2004 to meet strong domestic demand. Our Spanish
operations' cement and clinker export volumes increased 5% in 2002, decreased
21% in 2003 and decreased 23% in 2004.

         Competition

         According to the Asociaciun de Fabricantes de Cemento de Espana, or
OFICEMEN, the Spanish cement trade organization, as of December 31, 2004,
approximately 60% of installed capacity for production of cement in Spain was
owned by five multinational groups, including CEMEX.

         Competition in the ready-mix concrete industry is particularly
intense in large urban areas. Our subsidiary Hormicemex has achieved a sizable
market presence in areas such as Baleares, Canarias, Levante and Aragon. In
other areas, such as the central and Cataluna 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.

         OFICEMEN reported that, based on 2004 sales, CEMEX Espana had a
market share of 21.8% in gray and white cement, making us the leader in the
Spanish cement industry. We believe that we maintain this leading market
position because of our customer service and our geographic diversification,
which includes extensive distribution channels that enable us to cope with
downturns in demand more effectively than many of our competitors because we
are able to shift our production to serve areas with the strongest demand and
prices.



                                      29


Our Spanish Operating Network (Including RMC Assets)






                              [GRAPHIC OMITTED]






         Products and Distribution Channels. CEMEX Espana offers various types
of cement, targeting specific products to specific markets and users. In 2004,
approximately 20% 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.

         Exports. In general, despite increases in domestic demand in recent
years, we have been able to export excess capacity through collaboration
between CEMEX Espana and our trading network. Export prices, however, are
usually lower than domestic market prices, and costs are usually higher for
export sales. Of our total exports from Spain in 2004, 91.4% consisted of
white cement and 8.6% consisted of gray cement. In 2004, 71% of our exports
from Spain were to the United States, 15% to Europe and 14% to Africa.

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 policy. Additionally, the increased capacity in 2002 of the San
Vicente plant (approximately 400,000 tons) has allowed us to reduce the
clinker transportation costs between plants and the need for imported clinker.
In 2004, we burned meal flour, organic waste and tires as fuel, achieving in
2004 a 2.1% substitution rate for petcoke. During 2005, we expect to increase
the quantity of those alternative fuels and initiated the burning of rice
husks and plastics.

Description of Properties, Plants and Equipment

         As of December 31, 2004, our Spanish operations operated eight plants
located in Spain, with a cement equivalent capacity of 11.0 million tons,
including 860,000 tons of white cement. We also operated 77 ready-mix concrete
plants, including 16 aggregate and 10 mortar plants. CEMEX Espana also owns
two cement mills, one of





                                      30


which is operated through a joint venture 50%-owned by CEMEX Espana, and 31
distribution centers, including 11 land and 19 marine terminals.

         As of December 31, 2004, CEMEX Espana owned 8 limestone quarries
located in close proximity to its plants, which have useful lives ranging from
10 to 30 years, assuming 2004 production levels. Additionally, we have rights
to expand those reserves to 50 years of limestone reserves, assuming 2004
production levels.

         RMC has ready-mix concrete and aggregates operations in Spain through
a joint-venture association with another producer. The joint venture operates
a network of 121 ready-mix concrete plants and 12 aggregates quarries, which
are predominantly located around Madrid, Barcelona, Valencia and Alicante.

Capital Investments

         We made capital expenditures of approximately U.S.$61.1 million in
2002, U.S.$53.9 million in 2003 and U.S.$54.5 million in 2004 in our Spanish
operations. We currently expect to make capital expenditures of approximately
U.S.$48.2 million in our Spanish operations during 2005, excluding those
related to RMC's Spanish operations.

Our Asian Operations

         As of December 31, 2004, our business in Asia, which includes our
operations in the Philippines and Thailand, as well as our minority interests
in Indonesia and other assets in Asia, represented approximately 2% of our net
sales, 13% of our total installed capacity and 4% of our total assets.

Our Philippine Operations

         As of December 31, 2004, we held through CAH, 99.1% of the economic
benefits of our two operating subsidiaries in the Philippines, Solid, and APO
Cement Corporation, or APO.

         During 2004, cement consumption in the Philippine market, which is
primarily retail, totaled 12.4 million tons. Although the Philippines has
largely recovered from the 1997 Asian economic recession, industry demand for
cement decreased by 2.1% in 2004 compared to 2003.

         As of December 31, 2004, the Philippine cement industry had a total
of 20 cement plants and three cement grinding mills. Annual installed capacity
is 26.8 million tons, according to the Cement Manufacturers' Association of
the Philippines. Major global cement producers own approximately 88% of this
capacity. Our major competitors in the Philippine cement market are Holcim,
which has interests in seven local cement plants, and Lafarge, which has
interests in eight local cement plants.

         Our Philippine operations include three plants with a total capacity
of 5.8 million tons per year and two marine distribution terminals. Our cement
plants include two Solid plants, with five wet process production lines and
one dry process production line and an installed capacity of 2.8 million tons,
serving the Manila metropolitan region; and the APO plant, with two dry
process production lines and a jetty terminal for local and export markets
with installed capacity of 3.0 million tons, serving the Visayas, North
Mindanao and South of Luzon regions.

         We made capital expenditures of approximately U.S.$12.1 million in
2002, U.S.$1.7 million in 2003 and U.S.$2.4 million in 2004 in our Philippine
operations. We currently expect to make capital expenditures of approximately
U.S.$4.7 million in our Philippine operations during 2005.

Our Indonesian Equity Investment

         As of December 31, 2004, our proportionate economic interest through
CAH in Gresik, Indonesia's largest cement producer, was approximately 25.5%.
The Republic of Indonesia has a 51% interest in Gresik. Currently, we hold two
seats on both the board of directors and the board of commissioners of Gresik,
as well as the right to approve Gresik's business plan jointly with the
Indonesian government.


                                      31


         On October 31, 2001, certain individuals purporting to represent the
people of the Indonesian province of West Sumatra, in which the Padang plant
of Gresik is located, issued a declaration which stated that, commencing
November 1, 2001, PT Semen Padang, or Semen Padang, the 99.99%-owned
subsidiary of Gresik that owns and operates the Padang plant, was placed under
the temporary control of the people of West Sumatra. The declaration ordered
the management of Semen Padang to report to the local government of the West
Sumatra Province, under the supervision of the People's Representative
Assembly of West Sumatra, pending a "spin-off" of the Semen Padang subsidiary.
On November 1, 2001, the People's Representative Assembly of West Sumatra
issued a decision approving this declaration. We believe the provincial
administration lacks legal authority to direct or interfere with the affairs
of Semen Padang. Since the attempt by the West Sumatra provincial
administration in November 2001 to arrogate to itself the management of Semen
Padang, several groups opposed to any further sale of Indonesia's stock
ownership in Gresik have threatened strikes and other actions that would
affect our Indonesian operations. Further attempts to reassume control at
Semen Padang, including shareholder-approved changes in management, have been
met with resistance and lawsuits by various interest groups. The former
management of Semen Padang refused to relinquish control until September 2003
when the newly-appointed management was finally permitted to enter the Padang
Facility and assume control of Semen Padang. However, we believe that the
newly-appointed management was admitted on condition that it encourage a
spin-off of Semen Padang, and in October 2003, it explicitly agreed to do so.

         Gresik has experienced other ongoing difficulties at Semen Padang,
including the effective loss of operational and financial control of Semen
Padang, the inability to prepare consolidated financial statements that
include Semen Padang's operations and the inability of its independent
auditors to provide an unqualified audit opinion on such financial statements.
As a result of these difficulties, we have not been able to independently
verify certain information with respect to Semen Padang's facilities and
operations and thus, the overall description of Gresik's facilities and
operations below assumes the validity and accuracy of the information provided
by Semen Padang's management.

         For a description of legal proceedings relating to Gresik, please see
"Regulatory Matters and Legal Proceedings -- Other Legal Proceedings."

         The Indonesian cement industry was the largest in South East Asia in
2004, accounting for about 24% of the approximately 126 million tons of cement
consumed in South East Asia in 2004, according to our estimates. Indonesian
domestic cement demand increased approximately 6.8% in 2002, 1.0% in 2003 and
9.8% in 2004. As of December 31, 2004, the Indonesian cement industry had 13
cement plants, including the four plants owned by Gresik, with a combined
installed capacity of approximately 47.5 million tons. Gresik, with an
installed capacity of 17.3 million tons, is Indonesia's largest cement
producer.

         As of December 31, 2004, Gresik had four cement plants, 25 land
distribution centers and 10 marine terminals. Gresik's cement plants include
the Padang plant, with one production line that utilizes the wet process and
four production lines that utilize the dry process and an installed capacity
of 5.6 million tons; the Gresik plant, which has two production lines that
utilize the dry process and an installed capacity of 1.3 million tons; the
Tuban plant, which has three production lines that utilize the dry process and
an installed capacity of 6.9 million tons; and the Tonasa plant, which has
three production lines that utilize the dry process and an installed capacity
of 3.5 million tons. As of December 31, 2004, Gresik was operating at
approximately 91% capacity utilization, including export sales. During 2004,
Gresik exported approximately 14% of its total sales volume, mainly through
its own efforts and, to a lesser extent, through CEMEX's trading operations.
Gresik exports mainly to Bangladesh and Africa.

         Despite the continuing economic and political problems experienced by
Indonesia and the difficulties involving Gresik described above, the
Indonesian cement market has been important to our Asian expansion strategy
due to its strategic location, size, potential as an anchor for our South East
Asian trading network and the significant growth potential of the Indonesian
economy.

Our Thai Operations

         According to our estimates, at December 31, 2004, the cement industry
in Thailand had a total of 13 cement plants, with an aggregate annual
installed capacity of approximately 54.5 million tons. We estimate that there
are five major cement producers in Thailand, four of which represent 99% of
installed capacity and 97% of the market. Our major competitors in the
Thailand market, which have a significantly larger presence than CEMEX
(Thailand), are Siam Cement, Holcim, TPI Polene and Italcementi.


                                      32


         CEMEX (Thailand) owns one dry process cement plant located north of
Bangkok which has been operating at full capacity. As of December 31, 2004,
CEMEX (Thailand) had an installed capacity of approximately 720,000 tons.

         We made capital expenditures of approximately U.S.$7.1 million in
2002, U.S.$1.72 million in 2003 and U.S.$2.7 million in 2004 in our Thai
operations. We currently expect to make capital expenditures of approximately
U.S.$3.6 million in our Thai operations during 2005.

Other Asian Investments

         Since April 2001, we have been operating a grinding mill with cement
milling production capacity of 520,000 tons per year near Dhaka, Bangladesh. A
majority of the supply of clinker for the mill is produced by our operations
in the region.

Our Egyptian Operations

Overview

         As of December 31, 2004, we had a 95.8% interest in Assiut, which has
an installed capacity of approximately 4.9 million tons.

The Egyptian Cement Industry

         The Egyptian cement market consumed approximately 23.6 million tons
of cement during 2004. Cement consumption decreased by 8.4% in 2004, despite
the beginning of an economic recovery.

         Competition. As of December 31, 2004, the Egyptian cement industry
had a total of ten cement producers, with an aggregate annual installed cement
capacity of approximately 39 million tons. According to the Egyptian Cement
Council, during 2004, Holcim (Egyptian Cement Company), Lafarge (Alexandria
Portland Cement and Beni Suef Cement) and CEMEX (Assiut Cement Company), the
three largest cement producers in the world, constituted approximately 40% of
the total cement sales in Egypt. Other significant competitors in the Egyptian
market are Suez and Tourah Cement Companies (Italcementi), and Helwan Portland
Cement Company, Ameriyah (Cimpor), National, Sinai, Misr Beni Suef and Misr
Quena Cement Companies.

Products and Distribution Channels

         We have followed a diversification strategy that focuses on
manufacturing cement products with higher margins and have invested in
building our brand. As part of our brand strategy, we have had success selling
value-added cement products for specialized use.

         As a result of the retail nature of the Egyptian market, over 90% of
our cement sales volumes are typically sold in bags. Through our commercial
strategy we have been able to serve retail customers throughout the country
directly without having to depend on wholesalers and distributors.

Description of Properties, Plant and Equipment

         As of December 31, 2004, Assiut operated one cement plant with an
installed capacity of approximately 4.9 million tons with three dry process
production lines. The plant is located approximately 200 miles south of Cairo.
Assiut's cement plant serves the upper Nile region of Egypt, as well as Cairo
and the delta region, Egypt's main cement market.

Capital Investments

         We made capital expenditures of approximately U.S.$27.2 million in
2002, U.S.$14.1 million in 2003 and U.S.$8.5 million in 2004 in our Egyptian
operations. We currently expect to make capital expenditures of approximately
U.S.$10.7 million in our Egyptian operations during 2005.


                                      33


South America, Central America and the Caribbean

         As of December 31, 2004, our business in South America, Central
America and the Caribbean, which includes our operations in Venezuela,
Colombia, Costa Rica, the Dominican Republic, Panama, Nicaragua and Puerto
Rico, as well as other assets in the Caribbean, represented approximately 15%
of our net sales, 17% of our total installed capacity and 11% of our total
assets.

Our Venezuelan Operations

Overview

         Our Venezuelan operations represented approximately 4% of our net
sales in 2004. As of December 31, 2004, we held a 75.7% interest in CEMEX
Venezuela, S.A.C.A., or CEMEX Venezuela, a company listed on the Caracas Stock
Exchange. CEMEX Venezuela also serves as the holding company for our interests
in the Dominican Republic, Panama and Trinidad. CEMEX Venezuela is the largest
cement producer in Venezuela, based on an installed capacity of 4.6 million
tons as of December 31, 2004.

The Venezuelan Cement Industry

         Cement consumption in Venezuela grew 31.3% in 2004 compared to 2003
according to the Venezuelan Cement Producer Association as the Venezuelan
economy began to recover from Venezuela's political and economic turmoil
during 2003. A nation-wide general strike that began in December 2002 caused a
significant reduction in oil production and had a material adverse effect on
Venezuela's oil-dependent economy in 2003. In 2004, average inflation in
Venezuela reached 19.2%, the Venezuelan Bolivar depreciated 20% against the
Dollar and gross domestic product (GDP) increased 17.3%. In February 2003,
Venezuelan authorities imposed foreign exchange controls and implemented price
controls on many products, including cement.

         Competition. As of December 31, 2004, the Venezuelan cement industry
included five cement producers, with a total installed capacity of
approximately 10.1 million tons, according to our estimates. We estimate that
CEMEX Venezuela's installed capacity in 2004 represented approximately 46% of
that total, almost twice that of its next largest competitor. Our global
competitors, Holcim and Lafarge, own controlling interests in Venezuela's
second and third largest cement producers, respectively.

         In 2004, the ready-mix concrete market accounted for only about 11%
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.

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.|



                                      34



                              [GRAPHIC OMITTED]



         As of December 31, 2004, 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 2004 with 30 ready-mix production plants
throughout Venezuela.

Distribution Channels

         Transport by land is handled partially by CEMEX Venezuela. During
2004, approximately 33% 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.

Exports

         During 2004, exports from Venezuela represented approximately 30% 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 2004, 75% of our exports from Venezuela were to the United States, and 25%
were to the Caribbean.

Description of Properties, Plants and Equipment

         As of December 31, 2004, CEMEX Venezuela operated three wholly-owned
cement plants, Lara, Mara and Pertigalete, with a combined installed cement
capacity of approximately 4.6 million tons. CEMEX Venezuela also operates the
Guayana grinding facility with a cement capacity of 375,000 tons. All the
plants are strategically located to serve both domestic areas with the highest
levels of cement consumption and export markets. CEMEX Venezuela also owns 30
ready-mix concrete production facilities, one mortar plant and 12 distribution
centers. CEMEX Venezuela owns four limestone quarries with reserves sufficient
for over 100 years at 2004 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 natural gas as fuel. CEMEX Venezuela
has its own electricity generating facilities, which are powered by natural
gas and diesel fuel.

         As of December 31, 2004, 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 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. CEMEX Venezuela's cement is
transported either in bulk or in bags.



                                      35


Capital Investments

         We made capital expenditures of approximately U.S.$13.6 million in
2002, U.S.$10.8 million in 2003 and U.S.$13.6 million in 2004 in our
Venezuelan operations. We currently expect to make capital expenditures of
approximately U.S.$12.9 million in our Venezuelan operations during 2005.

Our Colombian Operations

Overview

         As of December 31, 2004, we owned approximately 99.6% of the ordinary
shares of CEMEX Colombia, S.A., or CEMEX Colombia. Our Colombian operations
represented approximately 3% of our net sales in 2004.

         As of December 31, 2004, CEMEX Colombia was the second-largest cement
producer in Colombia, based on installed capacity of 4.8 million tons,
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 2004, these three metropolitan
areas accounted for approximately 50% of Colombia's cement consumption. CEMEX
Colombia's Ibague plant, which uses the dry process and is strategically
located between Bogota, Cali and Medellin, is Colombia's largest and had an
installed capacity of 2.5 million tons as of December 31, 2004. 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 aggregate deposits in the Bogota area.

The Colombian Cement Industry

         Competition. The Sindicato Antioqueno, or Argos, which either owns or
has interests in eight of Colombia's eighteen cement plants, has dominated the
Colombian cement industry. Argos has established a leading position in the
Colombian coastal markets through Cementos Caribe in Barranquilla, Compania
Colclinker in Cartagena and Tolcemento in Sincelejo. The other principal
cement producer is Cementos Boyaca, an affiliate of Holcim.



                                      36



Our Colombian Operating Network


[GRAPHIC OMITTED]



         CEMEX Colombia owns quarries with minimum reserves sufficient for
over 100 years at 2004 production levels. In addition to mining its own raw
materials, CEMEX Colombia also purchases raw materials from third parties. The
majority of CEMEX Colombia's cement is distributed through independent
distributors.

         CEMEX Colombia's principal concrete product is ready-mix concrete,
produced to client specifications and delivered directly to job sites. CEMEX
Colombia also produces other specialized cement-based building materials.

         CEMEX Colombia operates its ready-mix concrete business through 22
ready-mix plants. CEMEX Colombia also uses 11 portable ready-mix plants, which
allow concrete to be mixed at major building sites, reducing transportation
costs and eliminating the need to acquire additional permanent ready-mix
concrete sites.

Description of Properties, Plants and Equipment

         As of December 31, 2004, CEMEX Colombia owned five cement plants, one
clinker facility, and one grinding mill, having a total installed capacity of
4.8 million tons per year. Two of these plants and the clinker facility
utilize the wet process and three plants utilize the dry process. The Ibague
plant serves the Urban Triangle, while Cucuta and Bucaramanga plants, located
in the northeastern part of the country, serve local and coastal markets. The
La Esperanza cement plant and the Santa Rosa clinker mill are close to Bogota.
CEMEX Colombia also has an internal electricity generating capacity of 24.7
megawatts through a leased facility. In addition, CEMEX Colombia owns two land
distribution centers, one mortar plant, 22 ready-mix concrete plants, one
concrete products plant, eight aggregate mines and six aggregates operations.

Capital Investments

         We made capital expenditures of approximately U.S.$5.2 million in
2002, U.S.$6.0 million in 2003 and U.S.$9.3 million in 2004 in our Colombian
operations. We currently expect to make capital investments of approximately
U.S.$6.7 million in our Colombian operations during 2005.



                                      37


Other South American Investments

Our Equity Investment in Chile

         As of December 31, 2004, we held an 11.9% interest in Cementos Bio
Bio, S.A., or Cementos Bio Bio, with an installed capacity of approximately
2.3 million tons. On April 26, 2005, we announced the sale of our interest in
Cementos Bio Bio. Cementos Bio Bio owns and operates three cement plants and
has 24 ready-mix concrete plants.

Central America and the Caribbean

         As of and for the year ended December 31, 2004, Central America and
the Caribbean, which includes our operations in Costa Rica, the Dominican
Republic, Panama, Nicaragua, Puerto Rico and other assets in the Caribbean,
represented approximately 8% of our net sales, 5% of our total installed
capacity and 5% of our total assets.

         Through our investments in Costa Rica, Panama and Nicaragua, we have
established a strategic presence in the mainland markets of Central America.

Our Costa Rican Operations

         As of December 31, 2004, we owned a 98.7% interest in CEMEX (Costa
Rica), S.A., or CEMEX (Costa Rica). Approximately 1.1 million tons of cement
were sold in Costa Rica during 2004, 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.

         The Costa Rican cement industry includes two producers, CEMEX (Costa
Rica) and Industria Nacional de Cemento, an affiliate of Holcim. We estimate
that the two companies control roughly equal proportions of the market.

         Our Costa Rican operations' cement plant has one dry process
production line with an installed capacity of 850,000 tons. Our grinding mill
in northwest Costa Rica has a grinding capacity of 657,000 tons. Our second
grinding mill in San Jose has a capacity of 163,000 tons. During 2004, exports
of cement by our Costa Rican operations represented approximately 31% of our
total cement production in Costa Rica. In 2004, 45% of our exports from Costa
Rica were to Nicaragua, 28% to El Salvador, and 27% to Guatemala.

         We made capital expenditures of approximately U.S.$5.2 million in
2002, U.S.$7.1 million in 2003 and U.S.$3.1 million in 2004 in our Costa Rican
operations. We currently expect to make capital expenditures of approximately
U.S.$3.6 million in our Costa Rican operations during 2005.

Our Dominican Republic Operations

         As of December 31, 2004, we owned 99.9% of Cementos Nacionales, a
cement producer in the Dominican Republic with an installed capacity of 2.4
million tons of cement, seven distribution centers and seven ready-mix
concrete plants. We also have a 25 year lease arrangement with the Dominican
Republic government related to the mining of gypsum, which enables us to
supply all local and regional gypsum requirements.

         In June 2003, Cementos Nacionales 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 would increase
our total clinker production capacity in the Dominican Republic to 2.2 million
tons per year, is expected to begin operations by the end of 2005. As of
December 31, 2004, we have invested approximately U.S.$52 million in this
project, and we expect to invest the remaining U.S.$78 million during 2005.

         In 2004, Dominican Republic cement consumption reached 2.9 million
tons, and some cement imports were necessary to fulfill domestic demand.
Cementos Nacionales serves the cement market throughout the Dominican
Republic. Its principal competitors are Cementos Cibao, a local competitor,
Cemento Colon, an affiliate of Holcim, Cenentos Andinos, a competitor of
Colombian origin and Domicen, a competitor of Italian origin.


                                      38


         As of December 31, 2004, Cementos Nacionales was the leading cement
producer in the Dominican Republic, based on installed capacity as reported by
International Cement Review in the Global Cement Report. Cementos Nacionales'
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.

         Cementos Nacionales currently owns one dry process cement plant in
San Pedro de Macoris with an installed capacity of 0.7 million tons per year
of clinker, in addition to seven ready-mix concrete production plants, three
grinding mills with an installed capacity of 2.4 million tons per year, 7
distribution centers located throughout the country and two marine terminals.
During 2004, our Dominican Republic clinker production facilities operated at
full capacity and our grinding mills operated at 75% capacity.

         We made capital expenditures of approximately U.S.$9.0 million in
2002, U.S.$13.4 million in 2003 and U.S.$56.3 million in 2004 in our Dominican
Republic operations. We currently expect to make capital investments of
approximately U.S.$85.8 million in our Dominican Republic operations during
2005.

Our Panamanian Operations

         As of December 31, 2004, we owned a 99.3% interest in Cemento Bayano.

         Approximately one million cubic meters of ready-mix concrete were
sold in Panama during 2004, according to the General Comptroller of the
Republic of Panama (Contraloria General de la Republica de Panama). Panamanian
cement consumption increased 17% in 2004, according to our estimates. The
Panamanian cement industry includes two cement producers, Cemento Bayano and
Cemento Panama, an affiliate of Holcim and Cementos del Caribe.

         Our operations in Panama include one dry production process cement
plant, with an installed capacity for cement production of approximately
402,000 tons per year. In addition, Cemento Bayano owns and operates eleven
ready-mix concrete plants located in Panama City, Colon, Aguadulce, Arraijan
and in Chiriqui. In December 2003, Cemento Bayano acquired a new quarry to
supply aggregates for its ready-mix operations for approximately U.S.$4
million.

         We made capital expenditures of approximately U.S.$3.9 million in
2002, U.S.$7.6 million in 2003 and U.S.$6.3 million in 2004 in our Panamanian
operations. We currently expect to make capital expenditures of approximately
U.S.$8.5 million in our Panamanian operations during 2005.

Our Nicaragua Operations

         CEMEX Nicaragua leases and operates one cement plant with five kilns
utilizing the wet production process and an installed milling capacity of
470,000 tons. Since March 2003, we have leased a 100,000 ton milling plant in
Managua, which has been used exclusively for pet-coke milling.

         According to our estimates, Nicaraguan cement production during 2004
grew 16.9% compared to 2003. The increase was a result of increased public
sector investment and increased private investment attributable to an
improvement in the perceived business climate.

         According to our estimates, approximately 600,000 tons of cement were
sold in Nicaragua during 2004. Two market participants compete in the
Nicaraguan cement industry: CEMEX Nicaragua and Holcim.

         We made capital expenditures of approximately U.S.$3.9 million in
2002, U.S.$4.6 million in 2003 and U.S.$2.8 million in 2004 in our Nicaraguan
operations. We currently expect to make capital expenditures of approximately
U.S.$8.2 million in our Nicaraguan operations during 2005.

Our Puerto Rico Operations

         Our Puerto Rican operations represented approximately 20.7% of our
cement sales volumes in the Caribbean region in 2004. As of December 31, 2004,
we owned 100% of Puerto Rican Cement Company, Inc., or PRCC.


                                      39


         In 2004, Puerto Rican cement consumption reached 1.8 million tons.
PRCC serves the cement market throughout Puerto Rico. The Puerto Rican cement
industry in 2004 was comprised of two cement producers, PRCC, and San Juan
Cement Co., an affiliate of Italcementi.

         Our operations in Puerto Rico include one cement plant utilizing the
dry production process, with an installed cement capacity of approximately 1.1
million tons per year. In addition, PRCC owns and operates ten ready-mix
concrete facilities, mainly serving the sector of the Puerto Rican market
located on the eastern part of the island.

         We made capital expenditures of approximately U.S.$14.8 million in
2002, U.S.$26.0 million in 2003 and U.S.$8.3 million in 2004 in our Puerto
Rican operations. We currently expect to make capital investments of
approximately U.S.$9.2 million in our Puerto Rican operations during 2005.

Our Other Caribbean Operations

         We believe that the Caribbean region holds considerable strategic
importance because of its geographic location. Our network of seven marine
terminals in the region facilitates 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 and one is in the
Cayman Islands.

Our Trading Operations

         We traded more than 10 million tons of cement and clinker in 2004.
Approximately 60% of this amount consisted of exports from our operations in
Venezuela, Mexico, Egypt, Philippines, Costa Rica, Spain, Puerto Rico and
Nicaragua. Approximately 40% was purchased from third parties in countries
such as South Korea, China, Turkey, Egypt, Israel, Thailand, Venezuela,
Cyprus, Indonesia, Portugal, Spain, Colombia and Tunisia. During 2004, we
conducted trading activities in 75 countries.

         To enhance our trading operations in the Mediterranean region, we are
currently building three grinding mills in Italy, two of which will have an
installed capacity of approximately 750 thousand tons per year and the third
of which will have an installed capacity of 450 thousand tons per year. Two
mills [are expected to begin] operating during the second quarter of 2005,
while the third mill, with an installed capacity of 450 thousand tons per
year, is expected to start operating in 2006. With respect to these
operations, we made capital investments of approximately U.S.$13 million
during 2003 and approximately U.S.$33 million during 2004. We currently expect
to make capital investments of approximately U.S.$44 million in Italy during
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.

         RMC traded around 3 million tons of cement and clinker during 2004.
Approximately 60% of this amount was traded among its subsidiaries and the
remaining 40% was purchased from third parties not affiliated with RMC or
CEMEX.



                                      40



Description of RMC Operations

         Set forth below is a brief description of RMC's world-wide
operations, which include significant operations in the United Kingdom, the
United States, Germany and France, as well as operations in other countries in
Europe and the rest of the world. As described above, we completed our
acquisition of RMC on March 1, 2005, and we are currently involved in the
post-merger integration process for these operations.

         The revenue information set forth below with respect to RMC's
operations for the year ended December 31, 2004 has been derived from RMC's
audited annual financial statements for 2004. RMC's financial statements were
prepared by RMC in accordance with U.K. GAAP, which differs in significant
respects from Mexican GAAP.

         For the year ended December 31, 2004, RMC's revenues from continuing
operations, before revenues from unconsolidated joint ventures and associated
entities of approximately (pound)351.7 million, were (pound)4,121.1 million.

         As of the date of this annual report, we have not finalized our
budget for capital expenditures related to RMC's operations for 2005. However,
we do not expect RMC-related capital expenditures to exceed U.S. $450 million
in 2005.

United Kingdom

Overview

         RMC is a leading provider of building materials in the United Kingdom
with vertically integrated cement, ready-mix concrete and aggregates
operations. RMC is also an important asphalt producer in the United Kingdom,
with a significant share of the roof tile, concrete-block paving, and
concrete-block segments.

         For the year ended December 31, 2004, RMC's operations in the United
Kingdom generated revenues of approximately (pound)1,071 million.

The U.K. Cement Industry

         According to Cembureau, the representative organization of the cement
industry in Europe, total construction output in the U.K. grew 3.5% in 2004
compared to 2003. The increase in total construction output in 2004 was
primarily driven by an increase in residential construction. In addition,
total cement consumption remained flat at approximately 13.6 million tons.

Competition

         RMC's primary competitors in the U.K. are Lafarge, Castle, Hanson,
Tarmac and Aggregate Industries, each with varying regional and product
strengths. The high-volume south-eastern market is well-served by RMC's
raw-material sources and manufacturing plants.

RMC's U.K. Operating Network



                              [GRAPHIC OMITTED]





                                      41


Description of Properties, Plants and Equipment

         As of December 31, 2004, RMC operated three cement plants located in
the United Kingdom, with an installed cement capacity of 2.7 million tons per
year. RMC also operated 323 ready-mix concrete plants and 134 aggregate
quarries in the United Kingdom. RMC also owns a grinding mill and six marine
import terminals in the United Kingdom. In addition, RMC has operating units
dedicated to the asphalt, block, tile and paving businesses in the United
Kingdom.

United States

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

Germany

Overview

         RMC is a leading provider of building materials in Germany, with
vertically integrated cement, ready-mix concrete and aggregates operations.
RMC maintains a nationwide network for ready-mix concrete and aggregates in
Germany. RMC's German operations provide its customers with high-quality raw
materials, versatile concrete products, and intelligent building solutions.

         For the year ended December 31, 2004, RMC's operations in Germany
generated revenues of approximately (pound)570 million.

The German Cement Industry

         According to Cembureau, total construction in Germany declined 17% in
2004 compared to 2003. The decrease was primarily driven by a decrease in
non-residential construction. Total cement consumption in 2004 was 28 million
tons, a decline of 3% compared to 2003.

Competition

         RMC's 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.

RMC's German Operating Network



                              [GRAPHIC OMITTED]





                                      42


Description of Properties, Plants and Equipment

         As of December 31, 2004, RMC operated three cement plants in Germany,
with an installed cement capacity of 6.4 million tons per year. RMC also
operated three cement grinding mills, 182 ready-mix concrete plants, 44
aggregate quarries and two land terminals in Germany.

France

Overview

         RMC is a leading ready-mix concrete producer in France. RMC is also a
leading producer of aggregates in France and transports a significant quantity
of materials by waterway.

         For the year ended December 31, 2004, RMC's operations in France
generated revenues of approximately (pound)432 million.

The French Cement Industry

         According to Cembureau, total construction output in France grew by
3.3% in 2004 compared to 2003. The increase was primarily driven by an
increase in residential construction. Cement consumption grew 3.0% to 21.3
million tons compared to the prior year.

Competition

         RMC's main competitors in the ready-mix market in France include
Lafarge, Holcim, Italcementi and Vicat. RMC's main competitors in the
aggregates market in France include Lafarge, Italcementi, Colas and Eurovia.
Many of RMC's major competitors benefit from manufacturing their own supply of
cement within France, while RMC must rely on third party cement producers in
France.

Description of Properties, Plants and Equipment

         As of December 31, 2004, RMC operated 223 ready-mix concrete plants
in France, one maritime cement terminal located in LeHavre, on the northern
coast of France, and 48 aggregates quarries.

Rest of Europe

         For the year ended December 31, 2004, RMC's operations in the rest of
Europe, which consist of its operations in 13 European countries other than
the U.K., Germany and France, generated revenues of approximately (pound)918
million.

         In Austria, RMC is a leading participant in the concrete, pumping,
aggregates and pre-cast concrete markets and also produces ready-mix concrete
and admixtures. RMC operates 38 ready-mix concrete plants and 26 aggregate
quarries in Austria.

         RMC is the largest cement producer in Croatia based on installed
capacity. Its three cement plants, with an installed capacity of 2.6 million
tons per year, and six cement terminals serve predominantly the coastal and
the central northwest region of the country. RMC's ready-mix concrete
operations in Croatia are located in the western part of the country with two
ready-mix facilities and an aggregates quarry.

         RMC is a leading provider of building materials in Poland serving the
cement, ready-mix concrete and aggregates markets. RMC operates two cement
plants in Poland, with a total installed cement capacity of 3.1 million tons
per year. RMC operates two grinding mills, three aggregates quarries, and 28
ready-mix concrete plants in Poland.

         RMC is Latvia's only cement producer and operates one cement plant
with an installed cement capacity of 0.4 million tons per year. RMC is a
leading ready-mix producer and supplier in Latvia with three ready-mix
concrete plants. RMC's Latvian operations also produce other concrete products
and limestone flour.



                                      43


         RMC is a leading producer of ready-mix concrete and aggregates
markets in the Czech Republic where it operates 46 ready-mix concrete plants
and seven aggregates quarries. RMC also distributes cement in the Czech
Republic and operates two cement grinding mills, with an installed milling
cement capacity of 336 thousand tons per year, and one cement terminal.

         RMC's operations in Ireland produce and deliver sand, stone and
gravel as well as ready-mix concrete, mortar, and concrete products. RMC owns
44 ready-mix concrete plants and 23 aggregate quarries in Ireland. RMC is also
involved in the production and distribution of pre-cast, pre-stressed and
architectural pre-cast products for distribution throughout Ireland. In
addition, RMC is involved in waste management in Northern Ireland and owns
three maritime cement terminals for cement importation and distribution for
Northern Ireland and the Isle of Man.

         RMC has aggregates and ready-mix concrete operations in Spain,
Hungary and Portugal. In addition, RMC operates 18 ready-mix concrete plants
in Denmark. In Finland, Norway and Sweden, RMC, through Embra, a leading
bulk-cement importer in the Nordic region, operates 11 maritime cement
terminals.

Rest of the World

         For the year ended December 31, 2004, RMC's operations outside the
United Kingdom, the United States and Europe, generated revenues of
approximately (pound)195 million.

         RMC is a leading producer and supplier of raw materials for the
construction industry in Israel. In addition to ready-mix concrete products,
RMC produces a diverse range of building materials and infrastructure products
in Israel. RMC operates 62 ready-mix concrete plants and 13 aggregates
quarries in Israel.

         In the United Arab Emirates (UAE), RMC operates 16 ready-mix concrete
plants serving the markets of Dubai, Abu Dhabi, Ras Al Khaimah and Sharjah. In
addition, RMC operates an aggregates quarry in the UAE.

         RMC is a leading ready-mix concrete producer in Malaysia, with a
significant share in the country's major urban hubs. RMC operates 26 ready-mix
concrete plants and five aggregates quarries in Malaysia.

         RMC's ready-mix concrete operations in Argentina, consist of three
ready-mix concrete plants. In Jamaica, RMC has operations related to the
production of calcined lime.



                                      44



Regulatory Matters and Legal Proceedings

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

Tariffs

         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 13% 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.

         Spain, as a member of the European Union, is subject to the uniform
European Union commercial policy. There is no tariff on cement imported into
Spain from another European Union country or on cement exported from Spain 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
who export cement into Spain currently pay no tariff.

Environmental Matters

         We use processes that are designed to protect 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.

         European Union directives imposing stricter environmental standards
are expected to be implemented in Spain by 2007. For the purpose of adopting
the directives, on July 3, 2002, Spain promulgated Law 16/2002, which
establishes mechanisms for the prevention and integrated control of pollution.
The new law requires that factories operating in Spain receive an integrated
environmental authorization from the relevant regulatory body at the
autonomous region level, generally the department of the environment. This new
law came into force on July 3, 2002; however, due to a transitional period,
existing industries need not comply until October 30, 2007. In anticipation of
our compliance by this date, one of our eight plants in Spain has already
received the required authorization. With respect to our other plants, we
already comply or believe that we would be able to comply with the requisite
standards, if necessary, without significant expenditures. In addition, we are
not aware of any material environmental liabilities with respect to our
Spanish operations. We are currently evaluating the impact of the European
Union directives on RMC's European operations.

         CEMEX Venezuela's cement production plants are subject to and comply
with Venezuelan environmental regulations. The Ministerio del Ambiente y los
Recursos Naturales, or Ministry of the Environment and Natural Resources, is
the regulatory body in Venezuela with jurisdiction over environmental matters.
CEMEX Venezuela has decreased the emission levels of cement dust, through dust
extraction equipment installed in all its cement plants.

         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, including our
Hidalgo plant, which temporarily halted operations in 2002, 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 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
Indusrty Certificate. The Certificates for Atotonilco, Huichapan, Merida,
Yaqui, Hermosillo, Tamuin, Valles and Zaptoltic were renewed in 2004; the
Certificates for Barrientos, Torreon





                                      45


and Guadalajara are scheduled to be renewed in 2005; and the Certificates for
Monterrey, Ensenada and Tepeaca are scheduled to be renewed in 2006. The
Certificate of the Hildalgo plant has expired, and since the plant is no
longer in operation, the Certificate will not be renewed. 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. 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. During 2004, the Ensenada, Yaqui, Hermosillo, Guadalajara,
Zapotiltic, Merida, Monterrey, Torreon, Valles, Tamuin, Barrientos,
Atotonilco, Tepeaca and Huichapan plants substituted with alternative fuels
approximately 5.76%, 3.43%, 2.65%, 0.74%, 0.03%, 2.56%, 1.34%, 6.02%, 0.02%,
1.26%, 4.75%, 0.58%, 0.01% and 3.90%, respectively, of their total fuel used.
Overall, approximately 1.98% of the total fuel used in the 14 cement plants
was comprised of alternative substituted fuels.

         Between 1999 and 2004, our Mexican operations have invested 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. Currently, our 14 operating cement
plants in Mexico and an aggregates plant in Monterrey have the ISO 14001
certification for environmental management systems.

         As of December 31, 2004, our eight cement plants in Spain and our
cement mill in Tenerife, Spain have received the ISO 14001 certification for
environmental management systems.

         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.

         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 does not believe that the ultimate resolution of such matters
will have a material adverse effect on our financial results.

U.S. Anti-Dumping Sunset Reviews

         Under the U.S. anti-dumping and countervailing duty laws, the
Commerce Department and the International Trade Commission, or ITC, are
required to conduct "sunset reviews" of outstanding anti-dumping and
countervailing duty orders and suspension agreements every five years. At the
conclusion of these reviews, the Commerce Department is required to terminate
the order or suspension agreement unless the agencies have found that
termination is likely to lead to continuation or recurrence of dumping, or a
subsidy in the case of countervailing duty orders, and material injury. Under
special transition rules, the first sunset reviews commenced in August 1999
for cases involving gray Portland cement and clinker from Mexico and Venezuela
(described below), which had orders and agreements issued before 1995, and
were concluded by the Commerce Department in July 2000 and by the ITC in
October 2000.



                                      46


         In July 2000, the Commerce Department determined not to revoke the
anti-dumping order on imports from Mexico. On October 5, 2000, the ITC found
likelihood of injury to the U.S. industry and determined not to revoke this
anti-dumping order. Thus, the order remains in place. On September 19, 2001,
CEMEX filed a petition for a "changed circumstances" review. The ITC decided
in December 2001 not to initiate such a review. CEMEX has appealed the ITC's
decision in the "sunset review" and the "changed circumstances" review to
NAFTA. In January 2005, a NAFTA Panel was formed to review the ITC's sunset
review determination. On April 7, 2005, the NAFTA Panel heard oral arguments,
but had not issued its determination as of the date of this annual report.

         On May 21, 1991, U.S. producers of gray cement and clinker filed
petitions with the Department of Commerce and the ITC claiming that imports of
gray cement and clinker from Venezuela were subsidized by the Venezuelan
government and were being dumped into the U.S. market. The producers asked the
U.S. government to impose anti-dumping and countervailing duties on these
imports. The Commerce Department initially found that CEMEX Venezuela had a
dumping margin of 49.2%. Rather than proceeding with the final Commerce
Department and ITC determinations, CEMEX Venezuela and the Commerce Department
entered into an Anti-Dumping Suspension Agreement on February 11, 1992. Under
the Anti-Dumping Suspension Agreement, CEMEX Venezuela agreed not to sell gray
cement or clinker in the United States at a price less than the "foreign
market value." On October 5, 2000, the ITC determined that terminating the
Anti-Dumping Suspension Agreement involving imports from Venezuela would not
likely lead to a continuation or recurrence of injury to the U.S. market, and
voted to terminate such agreement. Consequently, on November 8, 2000, the
Commerce Department issued a notice terminating the Anti-Dumping Suspension
Agreement covering imports of cement from Venezuela. On July 28, 2003, the
United States Court of International Trade, or CIT, upheld the Commerce
Department's decision to terminate the Suspension Agreement. The U.S. cement
industry appealed the decision of the Court of International Trade to the
Court of Appeals for the Federal Circuit. On December 14, 2004, the Court of
Appeals for the Federal Circuit upheld the CIT's decision affirming the
Commerce Department's termination of the Suspension Agreement. Thus, all
litigation involving the Venezuelan Suspension Agreement has been completed
and imports of cement from Venezuela are free of all antidumping restrictions.

U.S. Anti-Dumping Rulings--Mexico

         Our exports of Mexican gray cement from Mexico to the United States
are 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.

         Mexican importers' deposits are being liquidated in stages, as
appeals are exhausted for each annual review period. When the final
anti-dumping rate for any review period causes the amount due to exceed the
amount that was deposited, the Mexican importers are required to pay the
difference with interest. When the final anti-dumping rate for any review
period is lower than the amount that was deposited, the U.S. Customs Service
refunds the difference, with interest, to the Mexican importers.

         As of December 31, 2004, CEMEX Corp., as the parent company of our
U.S. subsidiaries that import Mexican cement into the United States, had
accrued liabilities of U.S.$103.6 million, including accrued interest, for the
difference between the amount of anti-dumping duties paid on imports and the
latest findings by the Commerce Department in its administrative reviews.

         The Commerce Department has published its final dumping
determinations for the first, second, third, fourth, fifth and seventh review
periods. The Commerce Department's final results of its final determinations
for the sixth, eighth, ninth, tenth, eleventh, twelfth and thirteenth review
periods have also been published, but have been suspended pending review by
NAFTA panels.

         On October 20, 2003, the NAFTA Extraordinary Challenge Committee
upheld the NAFTA Panel reviewing the final results of the fifth administrative
review, covering the period August 1, 1994 -- July 1, 1995. The NAFTA Panel
upheld the Commerce Department's remand results which lowered the antidumping
duty margin for imports during the fifth review period to 44.9% ad valorem.
The Customs Service has completed liquidating entries of cement from Mexico
made during the fifth review period.



                                      47


         On November 25, 2003, the NAFTA Panel reviewing the final results of
the seventh review period upheld the Commerce Department's remand results of
the seventh review period. The remand results lowered the antidumping margin
for imports made during the seventh review period to 37.3% ad valorem. The
Customs Service has begun liquidating all entries of cement from Mexico made
during the seventh review period.

         On September 16, 2003, the Commerce Department issued its final
determination covering the twelfth review period, commencing on August 1, 2001
and ending on July 31, 2002. The Commerce Department determined that the
antidumping margin was 80.75% ad valorem. The final results for the twelfth
review period established a cash deposit rate for imports of gray Portland
cement and cement clinker from Mexico made on or after September 16, 2003. The
cash deposit rate was established at $52.41 per ton, which remained in effect
until the final results of the thirteenth review period were published.

         The latest final determination by the Commerce Department covering
the thirteenth review period, commencing on August 1, 2002 and ending on July
31, 2003, was issued on December 29, 2004. The Commerce Department determined
that the antidumping margin was 54.97% ad valorem. The final results for the
thirteenth review period set the cash deposit rate for imports of gray
Portland cement and cement clinker from Mexico made on or after December 29,
2004. The cash deposit rate was set at $32.85 per ton, which will remain in
effect until the final results of the fourteenth review period are published.

         The status of each period still under review or appeal is as follows:




         Period                  Cash Deposits                                     Status
-----------------------   --------------------------  -----------------------------------------------------------
                                                

8/1/95-7/31/96             61.85%                      37.49% determined by the Commerce Department upon review.
                           (effective 5/5/1997)        Liquidation suspended pending NAFTA panel review.
8/1/97-7/31/98             73.69%, 35.88% and 37.49%   45.98% determined by the Commerce Department upon review.
                           (effective 5/4/1998)        Liquidation suspended pending NAFTA panel review.
8/1/98-7/31/99             37.49%, 49.58% (effective   38.65% determined by the Commerce Department upon review.
                           3/17/1999)                  Liquidation suspended pending NAFTA panel review.
8/1/99-7/31/00             49.58%, 45.98% (effective   50.98% determined by the Commerce Department upon review.
                           3/16/2000)                  Liquidation suspended pending appeal to NAFTA panel review.
8/1/00-7/31/01             49.58%, 38.65% (effective   73.74% determined by the Commerce Department upon review.
                           5/14/2001)                  Liquidation suspended pending appeal to NAFTA panel review.
8/1/01-7/31/02             38.65%, 50.98%              80.75% determined by the Commerce Department upon review.
                           (effective 3/19/2002)       Liquidation suspended pending appeal to NAFTA panel review.
8/1/02 - 7/31/03           50.98%, 73.74% (effective   54.97% determined by the Commerce Department upon review.
                           1/14/2003)                  Liquidation suspended pending appeal to NAFTA Panel.
8/1/03 - 7/31/04           73.74%, U.S.$52.41 per      Subject to review by the Commerce Department.
                           ton
                           (effective 10/15/2003)
8/01/04 - to date          U.S.$52.41 per ton,         Subject to review by the Commerce Department.
                           U.S.$32.85 per ton
                           (effective 12/29/2004)


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.



                                      48


         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 are APO, Rizal and Solid,
indirect subsidiaries of CEMEX.

         In June 2002, the International Trade Commission under the Ministry
of Economic Affairs (ITC-MOEA) notified respondent producers that its final
injury investigation concluded that the imports from South Korea and the
Philippines have caused material injury to the domestic industry in Taiwan.

         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 commencing from July 19, 2002. The duty rate
imposed on imports from APO, Rizal and Solid was 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.

Tax Matters

         As of December 31, 2004, we and some of our Mexican subsidiaries have
been notified of several tax assessments determined by the Mexican tax office
with respect to the tax years from 1992 through 1996 in a total amount of
Ps3,638.6 million. The tax assessments are based primarily on: (i)
recalculations of the inflationary tax deduction, since the tax authorities
claim that "Advance Payments to Suppliers" and "Guaranty Deposits" are not by
their nature credits, (ii) disallowed restatement of tax loss carryforwards in
the same period in which they occurred, (iii) disallowed determination of tax
loss carryforwards, and (iv) disallowed amounts of business asset tax,
commonly referred to as BAT, creditable against the controlling entity's
income tax liability on the grounds that the creditable amount should be in
proportion to the equity interest that the controlling entity has in its
relevant controlled entities. We have filed an appeal for each of these tax
claims before the Mexican federal tax court, and the appeals are pending
resolution.

         As of December 31, 2004, the Philippine Bureau of Internal Revenue,
or BIR, assessed APO and Solid, our operating subsidiaries in Philippines, for
deficiencies in the amount of income tax paid in prior tax years amounting to
a total of approximately PhP3,069.1 million (approximately U.S.$54.8 million
as of December 31, 2004, based on an exchange rate of PhP56.702 to U.S.$1.00,
which was the Philippine Peso/Dollar exchange rate on December 31, 2004 as
published by the Bangko Sentral ng Pilipinas, the central bank of the Republic
of the Philippines). The tax assessments result primarily from: (i) the
disallowance of APO's income tax holiday related income from 1998 to 2001; and
(ii) deficiencies in national taxes paid by APO for the 1999 tax year and by
Solid for the 2000 tax year. In the first case, we have contested the BIR's
assessment with the Court of Tax Appeal, or CTA. In the second case, both APO
and Solid continue to submit relevant evidence to the BIR to contest these
assessments and intend to contest these assessments with the CTA in case the
BIR issues a final collection letter. In addition, Solid's 1998 tax year and
APO's 1997 and 1998 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. However, an
adverse resolution of these assessments could have a material adverse effect
on our results of operations in the Philippines.

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 CoP21,114 million (U.S.$9.09 million as of February 28, 2005, based
on an exchange rate of CoP2,323.77 to U.S.$1.00, which was the Colombian
Peso/Dollar exchange rate on February 28, 2005 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


                                      49


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 content that these subsidiaries are responsible for alleged
damages caused by breach of raw material transportation contracts. The
plaintiffs asked for relief in the amount of CoP127,242 million (U.S.$54.76
million as of February 28, 2005). This proceeding has reached the evidentiary
stage. Typically, proceedings of this nature continue for several years before
final resolution.

         As of December 31, 2004, CEMEX, Inc. had accrued liabilities
specifically relating to environmental matters in the aggregate amount of
U.S.$28.3 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, in regard
to 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. 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.

         In March 2003, a lawsuit was filed in the Indonesian province of West
Sumatra in the Padang District Court against (i) Gresik, an Indonesian cement
producer in which we own a 25.5% interest through CAH and the Republic of
Indonesia owns a 51% interest, (ii) Semen Padang, a 99.9%-owned subsidiary of
Gresik that owns and operates Gresik's Padang cement plant, and (iii) several
Indonesian government agencies. The lawsuit, which was filed by a foundation
purporting to act in the interest of the people of West Sumatra, challenged
the validity of the sale of Semen Padang by the Indonesian government to
Gresik in 1995 on the grounds that the Indonesian government did not obtain
the necessary approvals for such sale. On May 9, 2003, the Padang District
Court issued an interim decision suspending Gresik's rights as a shareholder
in Semen Padang on the grounds that ownership of Semen Padang was an issue in
dispute. On March 31, 2004, the Padang District Court announced its final
decision in favor of the foundation. On April 12, 2004, Gresik filed an appeal
of this decision with the Padang District Court, which will in turn forward
the appeal to the High Court of the West Sumatra province.

         In addition to the case outlined in the preceding paragraph, there
are two other formal legal proceedings relating to the change of management at
PT Semen Padang in May 2003. In one case, filed by the Employees' Cooperative
of PT Semen Padang, the District Court of Padang ruled that the replacement of
management at PT Semen Padang was legally valid. An appeal of that decision by
the former management is currently pending before the High Court for West
Sumatra. In the other proceeding, certain members of the former management of
PT Semen Padang have filed a request for consideration with the Supreme Court
in regard to its decision in March 2003 to permit the general meeting of
shareholders of PT Semen Padang which led to the replacement of the former
management. This request is still pending.

         After the failure of several attempts to reach a negotiated or
mediated solution to these problems involving Gresik, on December 10, 2003,
CAH filed a request for arbitration against the Republic of Indonesia and the
Indonesian government before the International Centre for Settlement of
Investment Disputes, or ICSID, based in Washington D.C. CAH is seeking, among
other things, rescission of the purchase agreement entered into with the
Republic of Indonesia in 1998, plus repayment of all costs and expenses, and
compensatory damages. ICSID has accepted and registered CAH's request for
arbitration and issued a formal notice of registration on January 27, 2004. On
May 10, 2004, an Arbitral Tribunal was established to hear the dispute. The
Indonesian government has objected to the Tribunal's jurisdiction over the
claims asserted in CAH's request for arbitration, and a hearing to resolve
these jurisdictional objections is expected to take place during 2005. We
cannot predict what effect, if any, this action will have on our investment in
Gresik, how the Tribunal will rule on the Indonesian government's
jurisdictional objections or the merits of the dispute, or the time-frame in
which the Tribunal will rule. For a more detailed description of our
investment in Gresik and the ongoing difficulties with Semen Padang, please
see "Europe, Asia and Africa -- Our Asian Operations -- Our Indonesian Equity
Investment" above.


                                      50


         During 2004, four lawsuits filed in protection of the public
interest, which include a subsidiary of CEMEX Colombia as a codefendant, were
filed; the first was filed on April 14 and the last was filed on December 16.
The plaintiffs argue that the use of a base material sold by the ready-mix
industry resulted in premature distress of the roads built for the mass public
transportation system of Bogota. The lawsuits allege that the base material
supplied by CEMEX Colombia and the other suppliers failed to meet technical
standards offered by the producers (quality deficiencies) and/or that they
provided insufficient or inaccurate information in connection with the
product. The four lawsuits seek the repair of the road in a manner which
guarantees its service during the 20-year period for which it was originally
designed. However, the lawsuits do not estimate the alleged damages, in this
case, cost of repairs. CEMEX Colombia has vigorously defended itself and will
continue to do so. One of the lawsuits was dismissed based on arguments
presented to the court by CEMEX Colombia; each of the others are in the
initial stage of proceedings. CEMEX Colombia has timely contested each of the
lawsuits of which have been notified. At this early stage it is not possible
to estimate the potential damages or the portion thereof which could be borne
by CEMEX Colombia. Typically, proceedings of this nature continue for several
years before final resolution.

         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 RMC that have arisen in the ordinary course of business. We
believe we have made adequate provisions to cover both current or 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.



                                      51



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    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
Securties and Exchange Commission.

         This annual report also includes statistical data regarding the
production, distribution, marketing and sale of cement, ready-mix concrete and
clinker. 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 RMC, which
occurred on March 1, 2005, or asset sales subsequent to December 31, 2004. Our
financial statements have been prepared in accordance with Mexican GAAP, 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 GAAP and U.S. GAAP as
they relate to us.

         Mexico experienced annual inflation rates of 5.6% in 2002, 3.9% in
2003 and 5.4% in 2004. Mexican GAAP 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, 2004. 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.

         The percentage changes in cement sales volumes described in this
annual report for our operations in a particular country include the number of
s of cement sold to our operations in other countries. Likewise, unless
otherwise indicated, the net sales financial information presented in this
annual report for our operations in each country




                                      52


include the Mexican Peso amount of sales derived from sales of cement to our
operations in other countries, 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, 2002, 2003, and 2004 by
principal geographic area expressed as an approximate percentage of our total
consolidated group before eliminations resulting from consolidation. We
operate in countries 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 in which we operate compared
to the Mexican Peso and the rate of inflation of each of these countries. 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.




                                                                                Central
                              %                                                 America
                     %     United   %      %          %        %       %        and the     %
                  Mexico   States Spain Venezuela  Colombia  Egypt Philippines Caribbean  Others  Combined Elimination Consolidated
                                    (in millions of constant Mexican Pesos as of December 31, 2004, except percentages)
                                                                                   
Net Sales For the
Period Ended:

December 31, 2002   34%     24%    14%     4%         3%      2%       2%         7%        10%    88,383    (8,658)     79,725
December 31, 2003   34%     22%    16%     4%         3%      2%       2%         8%         9%    93,331    (7,778)     85,553
December 31, 2004   33%     22%    16%     4%         3%      2%       2%         8%        10%    99,045    (8,261)     90,784

Operating Income
For the Period
Ended:

December 31, 2002   72%     21%    18%     8%         6%      1%       --         7%       -33%    15,967        --      15,967
December 31, 2003   70%     14%    18%     7%         6%      2%       --         7%       -24%    17,377        --      17,377
December 31, 2004   60%     16%    18%     6%         6%      3%       1%         9%       -16%    20,628        --      20,628

Total Assets at:

December 31, 2002   24%     19%     9%     3%         3%      2%       4%         5%        31%   278,868   (84,714)    194,154
December 31, 2003   22%     18%    14%     3%         3%      2%       3%         5%        30%   272,444   (81,194)    191,250
December 31, 2004   23%     16%    12%     3%         3%      2%       3%         5%        33%   274,977   (81,354)    193,623



Critical Accounting Policies

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

Income Taxes

         Our operations are subject to taxation in many different
jurisdictions throughout the world. Under Mexican GAAP, 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. Our overall strategy is to structure our
worldwide operations to take greatest advantage of opportunities provided
under the tax laws of the various jurisdictions 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


                                      53


current tax assessments will be judged in our favor. Significant judgment is
required to appropriately assess the amounts of tax assets. 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.

Recognition of the effects of inflation

         Under Mexican GAAP, 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. The result is reflected as an increase in the carrying value of each
item. 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
difference between the inflation of the country and the factor utilized to
restate a fixed asset of foreign origin 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 U.S. 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 U.S. Dollars, will show a
decrease in value, in terms of Dollars, by the difference between the rate of
depreciation against the U.S. Dollar and the Mexican inflation rate.

Derivative financial instruments

         As mentioned in note 3N 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 and as a vehicle to reduce financing costs, as well as: (i) hedges
of contractual cash flows and forecasted transactions, (ii) hedges of CEMEX's
net investments in foreign subsidiaries, and (iii) hedges of the future
exercise of options under our 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. Some of these instruments have been
designated as hedges of our debt or equity instruments. In other cases,
although some derivatives complement our financial strategy, they have not
been designated as hedge instruments because accounting hedge requirements
were not met.

         Effective January 1, 2001, in accordance with Bulletin C-2 "Financial
Instruments", we recognize all derivative financial instruments as assets or
liabilities in the balance sheet at their estimated fair value and the changes
in such values in the income statement for the period in which they occurred.
There are several exemptions to the general rule



                                      54


for transactions that we designate and that meet several hedging requirements
(see note 3N to our consolidated financial statements included elsewhere in
this annual report). Premiums paid or received on hedge derivative instruments
are deferred and amortized over the life of the underlying hedged instrument
or immediately when they are settled; in other cases, premiums are recorded in
the income statement, at the time that they are received or paid. See notes 12
and 17 to our consolidated financial statements included elsewhere in this
annual report.

         Pursuant to the accounting principles established by Bulletin C-2,
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 a valuation effect at the reporting date, and the final cash
inflows or outflows that we will receive or make to our counterparties will
not be known until settlement of the derivative instruments occurs. The
estimated fair values of derivative instruments determined for us and used by
us for recognition and disclosure purposes in the financial statements and
their notes, are supported by 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 may
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 items 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. We assess the recoverability of our long-lived assets
periodically or whenever events or circumstances arise that we believe trigger
a requirement to review such carrying values. This determination requires
substantial judgment and is highly complex when considering the myriad of
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.

Transactions in our own stock

         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 view 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. Also, in some
cases, the obligations



                                      55


underlying the related transactions are required to be reflected at market
value, with the changes in such value reflected in our income statement. There
is 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.

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, 2002, 2003 and 2004, our
consolidated results reflect the following transactions:

         o    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. The acquisition
              of the remaining 81.2% of RMC, which as of December 31, 2004 was
              subject to clearances by several regulatory agencies, was
              consummated on March 1, 2005.

         o    In August 2004, we acquired 6.83% (695,065 shares) of equity in
              CEMEX Asia Holdings, Ltd., or CAH, a subsidiary originally
              created to co-invest with institutional investors in Asian
              cement operations for approximately U.S.$70 million. In
              addition, in 2004, 1,398,602 CAH shares were exchanged for
              27,850,713 CPOs with an approximate value of U.S.$172 million
              (Ps1,916.0 million). In 2003, 84,763 CAH shares were exchanged
              for 1,683,822 CPOs, with an approximate value of U.S.$7.8
              million (Ps93.2 million). In July 2002, we increased our equity
              interest in CAH to 77.7%. Exchanges during 2003 and 2004
              resulted from agreements entered into on July 12, 2002, through
              which, in 2003, 1,483,365 CAH shares were acquired by a forward
              exchange requiring delivery of 28,195,213 CPOs. In April 2003,
              the original settlement date was modified regarding 1,398,602
              CAH shares which were acquired during 2004. In 2002, 25,429 CAH
              shares were acquired for U.S.$2.3 million. For accounting
              purposes, the 1,483,365 CAH shares have been consolidated since
              July 2002, recognizing an account payable of U.S.$140 million,
              equivalent to the price of 28,195,213 CPOs as of the date of the
              exchange agreements. In 2004, we recorded a loss in
              stockholders' equity of approximately Ps1,000.4 million
              representing the excess in the price paid over the book value of
              the CAH shares held by minority interests. Through the
              transactions mentioned above, our stake in CAH increased to
              99.1%.

         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.$99.7 million. Located in
              Dixon, Illinois, the single cement facility 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
              elsewhere in this document.

         o    In July and August 2002, through a tender offer and subsequent
              merger, we acquired 100% of the outstanding shares of PRCC. The
              aggregate value of the transaction was approximately U.S.$281.0
              million, including approximately U.S.$100.8 million of assumed
              net debt.

         o    In July 2002, we purchased, through a wholly-owned indirect
              subsidiary, the remaining 30% economic interest that was not
              previously acquired by CAH in Solid, for approximately U.S.$95
              million.



                                      56


Selected Consolidated Income Statement Data

         The following table sets forth selected consolidated income statement
data for CEMEX for each of the three years ended December 31, 2002, 2003, and
2004 expressed as a percentage of net sales.




                                                                                       Year Ended December 31,
                                                                                --------------------------------------
                                                                                 2002            2003            2004
                                                                                ------         -------         -------
                                                                                                       
Net sales............................................................           100.0           100.0           100.0
Cost of sales........................................................           (55.9)          (57.6)          (56.3)
                                                                                ------         -------         -------
     Gross profit....................................................            44.1            42.4            43.7
Operating expenses:..................................................
   Administrative....................................................           (12.6)          (11.1)          (10.2)
   Selling...........................................................           (11.5)          (11.0)          (10.8)
                                                                                ------         -------         -------
      Total operating expenses.......................................           (24.1)          (22.1)          (21.0)
                                                                                ------         -------         -------
   Operating income.................................................             20.0            20.3            22.7
Net comprehensive financing income (cost):
   Financial expense.................................................            (5.1)           (5.3)           (4.6)
   Financial income..................................................             0.7             0.2             0.3
   Foreign exchange gain (loss), net.................................            (1.2)           (2.4)           (0.3)
   Gain (loss) on valuation of marketable securities and other
      Investments....................................................            (4.8)           (0.8)            1.5
   Monetary position gain............................................             5.4             4.6             4.7
                                                                                ------         -------         -------
   Net comprehensive financing income (cost).........................            (5.0)           (3.7)            1.6
                                                                                ------         -------         -------
Other expenses, net..................................................            (5.9)           (6.4)           (5.9)
   Income before income tax, business assets tax, employees'
     Statutory profit sharing and equity in income of affiliates.....             9.1            10.2            18.4
                                                                                ------         -------         -------
Income tax and business assets tax, net..............................            (0.8)           (1.3)           (2.3)
Employees' statutory profit sharing..................................            (0.2)           (0.2)           (0.4)
   Total income taxes, business assets tax and employees' statutory
                                                                                ------         -------         -------
     Profit sharing..................................................            (1.0)           (1.5)           (2.7)
   Income before equity in income of affiliates......................             8.1             8.7            15.7
Equity in income of affiliates.......................................             0.5             0.5             0.6
                                                                                ------         -------         -------
Consolidated net income..............................................             8.6             9.2            16.3
                                                                                ------         -------         -------
Minority interest net income.........................................             0.6             0.4             0.3
                                                                                ------         -------         -------
Majority interest net income.........................................             8.0             8.8            16.0
                                                                                ------         -------         -------


Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Overview

         Summarized in the table below are the percentage (%) increases (+)
and decreases (-) in 2004 compared to 2003 in our net sales, before
eliminations resulting from consolidation, sales volumes and prices for the
major countries in which we have operations. Variations in net sales
determined on the basis of constant Mexican Pesos include the appreciation or
depreciation which occurred during the period between the country's local
currency 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 country's local currency:


                                      57




------------------ ------------------------------------------- ------------------------- ----------- ------------------------
                                   Net Sales
------------------ ------------ ----------------- ------------ ------------------------- ----------- ------------------------
                                   Approximate                                             Export       Average Domestic
                                    currency                         Domestic Sales         Sales        Prices in local
                                  fluctuations,    Variations           Volumes            Volumes         currency
                    Variations       net of        in constant
                    in local        inflation        Mexican
    Country         currency         effects          Pesos       Cement     Ready-Mix      Cement     Cement     Ready-Mix
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
                                                                                          
Mexico                +4.5%          -0.9%           +3.6%        +2%          +16%         +37%        -3%         -1%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
United States        +14.0%          -7.6%           +6.4%        +9%          +8%          N/A         +5%         +11%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
Spain                 +5.6%          +0.4%           +6.0%        +3%          +2%          -23%        +3%         +5%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
Venezuela            +10.6%          -8.1%           +2.5%        +20%         +13%         +26%       -12%         -2%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
Colombia             +11.7%          -8.1%           +3.6%        +8%          +13%         N/A         -8%         +8%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
Central America
and the Caribbean     +4.7%          +3.6%           +8.3%        Flat         -1%          N/A         +7%         +5%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
Philippines          +19.8%          -14.5%          +5.3%        -2%          -95%         -49%       +35%         -14%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
Egypt                +42.3%          -10.8%         +31.5%        -6%          +86%         +173       +32%         13%
------------------ ------------ ----------------- ------------ ----------- ------------- ----------- ---------- -------------
N/A = Not Applicable
------------------------------------------------------------------------------------------------------------------------------------


         On a consolidated basis, our cement sales volumes increased
approximately 2%, from 64.7 million tons in 2003 to 65.8 million tons in 2004,
and our ready-mix concrete sales volumes increased approximately 10%, from
21.7 million cubic meters in 2003 to 23.9 million cubic meters in 2004. Our
net sales increased approximately 6% from Ps85,553 million in 2003 to Ps90,784
million in 2004, and our operating income increased approximately 19% from
Ps17,377 million in 2003 to Ps20,628 million in 2004.

Net Sales

         Our net sales increase of 6% during 2004 was primarily attributable
to higher sales volumes in most of our markets, which were partially offset by
a decrease in domestic cement sales volumes in the Philippines and Egypt and
lower domestic cement prices in Mexico, Venezuela and Colombia. Of our
consolidated net sales in 2003 and 2004, approximately 73% and 71%,
respectively, were derived from sales of cement, approximately 22% and 24%,
respectively, from sales of ready-mix concrete and approximately 5% and 5%,
respectively, from sales of other construction materials and services.

         Additionally, set forth below is a quantitative and qualitative
analysis of the effects of the various factors affecting our net sales on a
country-by-country basis.

         Mexico
         ------

         Our Mexican operations' domestic gray cement sales volumes increased
approximately 2% in 2004 compared to 2003, and ready-mix concrete sales
volumes increased approximately 16% during the same period. The increases in
sales volumes resulted primarily from increased demand in the public sector,
particularly from infrastructure projects and low- and middle-income housing,
as compared to flat self-construction sector during the year. Our Mexican
operations' cement export volumes, which represented 7% of our Mexican cement
sales volumes in 2004, increased approximately 37% in 2004 compared to 2003,
due mainly to an increase in public sector spending. Of our Mexican
operations' cement export volumes during 2004, 79% was shipped to the United
States, 20% to Central America and the Caribbean and 1% to South America. The
average cement price in Mexico decreased approximately 3% in constant Peso
terms in 2004 compared to 2003, and the average ready-mix concrete price
decreased approximately 1% in constant Peso terms over the same period (these
prices increased 2% and 4%, respectively, in nominal Peso terms). For the year
ended December 31, 2004, sales of ready-mix concrete in Mexico represented
approximately 25% of our Mexican operations' total net sales.

         As a result of the increases in cement and ready-mix concrete sales
volumes and the increase in cement export volumes, partially offset by
decreases in average cement and ready-mix prices, net sales in Mexico, in
constant Peso terms, increased approximately 4% in 2004 compared to 2003.



                                      58


         United States
         -------------

         Our United States operations' cement sales volumes, which include
cement purchased from our other operations, increased approximately 9% in 2004
compared to 2003, and ready-mix concrete sales volumes increased approximately
8% over the same period. The increases in sales volumes are primarily
attributable to strong demand from the residential sector due to a low
interest rate environment and from the cement-intensive public works sector,
as well as favorable weather conditions during December. The industrial and
commercial sectors, which declined in 2003, made a strong recovery and grew in
2004. The average sales price of cement increased approximately 5% in Dollar
terms during 2004 compared to 2003, and the average price of ready-mix
concrete increased approximately 11% during the same period. For the year
ended December 31, 2004, sales of ready-mix concrete in the U.S. represented
approximately 27% of our U.S. operations' total net sales.

         As a result of the increases in cement and ready-mix concrete sales
volumes and the increases in average cement and ready-mix prices, net sales in
the United States, in U.S. Dollar terms, increased approximately 14% in 2004
compared to 2003.

         Spain
         -----

         Our Spanish operations' domestic cement sales volumes increased
approximately 3% in 2004 compared to 2003, and ready-mix concrete sales
volumes increased approximately 2% during the same period. The increases in
sales volumes were primarily driven by strong residential construction
activity due to a favorable mortgage environment and by increased spending in
public works due to Spain's infrastructure program, as well as favorable
weather conditions during November and December. Our Spanish operations'
cement export volumes, which represented 2% of our Spanish cement sales
volumes in 2004, decreased approximately 23% in 2004 compared to 2003
primarily due to increased domestic demand. Of our Spanish operations' total
cement export volumes during 2004, 71% was shipped to the United States, 15%
to Europe and 14% to Africa. The average sales price of cement increased
approximately 3% in Euro terms during 2004 compared to 2003, and the average
price of ready-mix concrete increased approximately 5% in Euro terms over the
same period. For the year ended December 31, 2004, sales of ready-mix concrete
in Spain represented approximately 25% of our Spanish operations' total net
sales.

         As a result of the increases in cement and ready-mix concrete sales
volumes and the increases in average cement and ready-mix prices, net sales in
Spain, in Euro terms, increased approximately 6% in 2004 compared to 2003,
despite the decline in cement export volumes.

         Venezuela
         ---------

         Our Venezuelan operations' domestic cement sales volumes increased
approximately 20% in 2004 compared to 2003, while ready-mix concrete sales
volumes also increased approximately 13% during the same period. The increases
in sales volumes and ready-mix concrete sales volumes were mainly driven by
the self-construction and commercial sectors, while government spending
remained stable. Construction in the private sector is increasing as
confidence in the economy recovers.

         Our Venezuelan operations' cement export volumes, which represented
56% of our Venezuelan cement sales volumes in 2004, increased approximately
26% in 2004 compared to 2003. The increase in cement export volumes was due to
increases in sales to the United States, Guadalupe, Haiti, Martinique and
Panama. Of our Venezuelan operations' total cement export volumes during 2004,
74.6% was shipped to the United States and 25.4% to the Caribbean and South
America. For the year ended December 31, 2004, sales of ready-mix concrete in
Venezuela represented approximately 20% of our Venezuelan operations' total
net sales.

         Our Venezuelan operations' average domestic sales price of cement
decreased approximately 12% in Bolivar terms in 2004 compared to 2003, while
the average domestic sales price of ready-mix concrete decreased approximately
2% in Bolivar terms over the same period.

         As a result of the growth in domestic cement and ready-mix sales
volumes, net sales in Venezuela, in Bolivar terms, increased approximately 11%
in 2004 compared to 2003.


                                      59


         Colombia
         --------

         Our Colombian operations' domestic cement sales volumes increased
approximately 8% in 2004 compared to 2003, and ready-mix concrete sales
volumes increased approximately 13% during the same period. The increases in
sales volumes were primarily a result of increased demand from the commercial
sector and, to a lesser extent, from the residential sector. Our Colombian
operations' average sales price of cement decreased 8% in Colombian Peso terms
in 2004 compared to 2003, while the average domestic sales price of ready-mix
concrete increased approximately 8% in Colombian Peso terms over the same
period. For the year ended December 31, 2004, sales of ready-mix concrete in
Colombia represented approximately 36% of our Colombian operations' total net
sales.

         As a result of the increases in domestic cement and ready-mix
concrete sales volumes and the increase in the average sales price of
ready-mix concrete, partially offset by the decrease in the average sales
price of cement, net sales in Colombia, in Colombian Peso terms, increased
approximately 12% in 2004 compared to 2003.

         Central America and the Caribbean
         ---------------------------------

         Our Central American and Caribbean operations consist of our
operations in Costa Rica, the Dominican Republic, Panama, Nicaragua and Puerto
Rico, as well as several cement terminals 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 Central American and Caribbean
operations' domestic cement sales volumes remained flat in 2004 compared to
2003. Our Caribbean region trading operations' cement sales volumes increased
approximately 7% in 2004 compared to 2003, primarily as a result of sales to
Panama and Guadaloupe. Our Central American and Caribbean operations'
ready-mix concrete sales volumes decreased approximately 1% in 2004 compared
to 2003, primarily due to a decrease in sales in the Dominican Republic. For
the year ended December 31, 2004, sales of ready-mix concrete in Central
America and the Caribbean represented approximately 16% of our Central
American and Caribbean operations' total net sales.

         Our Central American and Caribbean operations' average domestic
cement sales price increased approximately 7% in Dollar terms in 2004 compared
to 2003, while the average ready-mix concrete sales price increased
approximately 5% in Dollar terms over the same period.

         As a result of the increases in domestic cement and ready-mix
concrete sales average price, net sales in our Central American and Caribbean
region, in Dollar terms, increased approximately 5% in 2004 compared to 2003,
due in part to the appreciation of the Dominican peso.

         The Philippines
         ---------------

         Our Philippine operations' domestic cement sales volumes decreased
approximately 2% in 2004 compared to 2003, primarily as a result of decreased
demand in the public works sector due to reductions in government spending on
infrastructure, which was offset by a 35% increase, in Philippine Peso terms,
in the average domestic sales price of cement over the same periods. Our
ready-mix concrete sales volumes in the Philippines decreased approximately
95% in 2004 compared to 2003, while the average ready-mix concrete price
decreased approximately 14% in Philippine Peso terms over the same periods.
The decrease in ready-mix concrete sales volumes was primarily attributable to
a decrease in public sector spending. Our Philippine operations' ready-mix
concrete business, which began in 2001, is still under development and
represents a relatively small portion of our overall Philippine operations.
For the year ended December 31, 2004, sales of ready-mix concrete in the
Philippines represented less than 1% of our Philippine operations' total net
sales.

         Primarily as a result of the increase in the average cement sales
prices which were partially offset by the decrease in domestic cement volumes,
net sales in the Philippines, in Philippine Peso terms, increased
approximately 20% in 2004 compared to 2003.

         Egypt
         -----

         Our Egyptian operations' domestic cement sales volumes decreased
approximately 6% in 2004 compared to 2003, primarily as a result of the
decrease in cement volume resulting from a slowdown in government
infrastructure


                                      60


spending. However, this lower domestic volume was partially offset by a more
than 173% increase in exports compared to 2003. Our Egyptian operations'
export volumes represented 30% of their total volume in 2004. During 2004, 23%
of our Egyptian exports were directed to Africa while 77% were sold to Europe.
Furthermore, our Egyptian operations' ready-mix sales volumes increased 86% in
2004 compared to 2003, primarily due to increases in market share achieved by
our ready-mix operations in the local market. For the year ended December 31,
2004, sales of ready-mix concrete in Egypt represented approximately 5% of our
Egyptian operations' total net sales.

         In 2004, net sales in Egyptian pound terms from our Egyptian
operations increased 42% compared to 2003 net sales primarily due to a 32%
increase in domestic prices, as well as an increase in exports and ready-mix
sales.

Cost of Sales

         Our cost of sales, including depreciation, increased 4% from Ps49,319
million in 2003 to Ps51,092 million in 2004 in constant Peso terms, primarily
as a result of the increase in our net sales, primarily attributable to higher
average prices in most of our markets, which more than offset higher worldwide
energy costs. As a percentage of sales, cost of sales decreased 1.3% from
57.6% in 2003 to 56.3% in 2004.

Gross Profit

         Our gross profit increased by 10% from Ps36,234 million in 2003 to
Ps39,692 million in 2004 in constant Peso terms. Our gross margin increased
from 42.4% in 2003 to 43.7% in 2004, as a result of higher average prices in
most of our markets. The increase in our gross profit is primarily
attributable to the 6% increase in our net sales in 2004 compared to 2003 and
the increase of only 4% in our cost of sales in 2004 compared to 2003.

Operating Expenses

         Our operating expenses increased 1% from Ps18,857 million in 2003 to
Ps19,064 million in 2004 in constant Peso terms, primarily as a result of
increased transportation costs due to higher worldwide energy costs, partially
offset by our continuing cost-reduction efforts, including reductions in
corporate overhead and travel expenses. As a percentage of sales, our
operating expenses decreased from 22.1% in 2003 to 21.0% in 2004.

Operating Income

         For the reasons mentioned above, our operating income increased 19%
from Ps17,377 million in 2003 to Ps20,628 million in 2004.

Comprehensive Financing Income (Expense)

         Pursuant to Mexican GAAP, 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 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


                                      61


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



                                                                   Year Ended December 31,
                                                               --------------------------------
                                                                   2003               2004
                                                               --------------     -------------
                                                               (in millions of constant Pesos)
Net comprehensive financing income (expense):
                                                                                 
Financial expense.......................................          Ps (4,545)        Ps (4,147)
Financial income........................................                199               261
Results from valuation and liquidation of financial instruments        (712)            1,335
Foreign exchange gain (loss), net ......................             (2,049)             (263)
Monetary position gain..................................              3,913             4,299
                                                               --------------     -------------
    Net comprehensive financing income (expense)........          Ps (3,194)         Ps 1,485
                                                               ==============     =============


         Our net comprehensive financing result improved from an expense of
Ps3,194 million in 2003 to an income of Ps1,485 million in 2004. The
components of the change are shown above. Our financial expense was Ps4,545
million for 2003 compared to Ps4,147 million for 2004, a decrease of 9%. The
decrease was primarily attributable to lower average levels of debt
outstanding during the year, since the majority of the borrowings related to
the RMC acquisition were incurred in the first quarter of 2005. Our financial
income increased 31% from Ps199 million in 2003 to Ps261 million in 2004
primarily as a result of an increase in interest rates. Our results from
valuation and liquidation of financial instruments improved from a loss of
Ps712 million in 2003 to a gain of Ps1,335 million in 2004, primarily
attributable to valuation improvements from our derivative financial
instruments portfolio (discussed below) during 2004. Our net foreign exchange
results improved from a loss of Ps2,049 million in 2003 to a loss of Ps263
million in 2004. The foreign exchange loss in 2004 was primarily attributable
to the appreciation of the Japanese Yen against the Dollar, which was
partially offset by the appreciation of the Peso against the Dollar, as
compared to the foreign exchange loss in 2003, which was primarily
attributable to the depreciation of the Peso against the Dollar and the
appreciation of the Japanese Yen against the Dollar. See notes 12 and 17 to
our consolidated financial statements included elsewhere in this annual
report. Our monetary position gain (generated by the recognition of inflation
effects over monetary assets and liabilities) increased from a gain of Ps3,913
million during 2003 to a gain of Ps4,299 million during 2004, mainly as a
result of an increase in the weighted average inflation index used in the
determination of the monetary position result in 2004 compared to 2003.

Derivative Financial Instruments

         For the years ended December 31, 2003 and 2004, our derivative
financial instruments that have a potential impact on our comprehensive
financing result consist of equity forward contracts entered into to hedge
potential exercises under our executive stock option programs (see notes 16
and 17 to our consolidated financial statements included elsewhere in this
annual report), 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, interest rate
swap options (swaptions), and interest rate derivatives related to energy
projects. Of the gain of Ps1,335 million in 2004 recognized in the item
results from valuation and liquidation of financial instruments, a net
valuation loss of approximately Ps585 million is 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, and an approximate
valuation gain of Ps130 million is attributable to changes in the fair value
of our marketable securities. These losses were offset by an approximate gain
of Ps673 million resulting from changes in the fair value of our interest rate
derivatives, and an approximate gain of Ps1,118 million resulting from changes
in the fair value of our foreign currency derivatives. These valuation effects
accounted for substantially all the gain recorded in 2004 under the line item
results from valuation and liquidation of financial instruments presented
above. We experienced valuation improvements in most of these financial
derivatives in 2004 compared to 2003. See "-- Qualitative and Quantitative
Market Disclosure -- Our Derivative Financial Instruments" and "-- Qualitative
and Quantitative Market Disclosure -- Interest Rate Risk, Foreign Currency
Risk and Equity Risk." See also notes 12 and 17 to our consolidated financial
statements included elsewhere in this annual report. The estimated net gain
mentioned above, determined by the excess between the fair value gain of our
equity forward



                                      62


contracts that hedge the potential exercise of our executive stock option
programs over the costs associated with the intrinsic value of our executives'
options, is primarily attributable to slight differences in the strike price
established in the forward contracts as compared to those of the options. The
fair value gain of our equity forward contracts and the costs associated with
the stock options both are attributable to the increase, during 2004, in the
market price of our listed securities (ADSs and CPOs) as compared to 2003. The
estimated fair value gain of our foreign currency derivatives is primarily
attributable to the contracts that were designated as accounting hedges of the
foreign exchange risk associated with the firm commitment agreed to on
November 17, 2004. On this date, RMC's shareholders committed to sell their
RMC 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.$132.1 million (Ps1,471.6 million), were recognized in stockholders'
equity. See note 17B to our consolidated financial statements included
elsewhere in this annual report.

Other Expenses, Net

         Our other expenses, net for 2004 were Ps5,390 million compared to
Ps5,454 million in 2003, a decrease of 1%. The decrease was primarily
attributable to the recognition of gains on the sale of fixed assets during
2004 of approximately Ps643 million compared with Ps153 million in 2003. See
notes 7, 10 and 11 to our consolidated financial statements included elsewhere
in this annual report.

Income Taxes, Business Assets Tax and Employees' Statutory Profit Sharing

         Our effective tax rate was 12.2% in 2004 compared to 12.3% in 2003.
Our tax expense, which primarily consists of income taxes and business assets
tax, increased 91% from Ps1,070 million in 2003 to Ps2,044 million in 2004.
The increase was attributable to higher taxable income in 2004 as compared to
2003. Our average statutory income tax rate was approximately 33% in 2004 and
approximately 34% in 2003.

         Employees' statutory profit sharing increased from Ps203 million
during 2003 to Ps330 million during 2004 due to higher taxable income for
profit sharing purposes in Mexico. See note 18B to our consolidated financial
statements included elsewhere in this annual report.

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 2004 increased 88%,
from Ps7,872 million in 2003 to Ps14,795 million in 2004. The percentage of
our consolidated net income allocable to minority interests decreased from
4.6% in 2003 to 1.6% in 2004, as a result of the 6.83% (695,065 shares) of CAH
equity we acquired for approximately U.S.$70 million. Majority interest net
income increased by 94%, from Ps7,508 million in 2003 to Ps14,562 million in
2004, mainly as a result of our increase in net sales, our valuation gains on
derivative financial instruments, the decrease in our foreign exchange loss
and a lower portion of consolidated net income allocable to minority
interests, partially offset by higher income taxes. As a percentage of net
sales, majority interest net income increased from 8.8% in 2003 to 16.0% in
2004.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Overview

         Summarized in the table below are the percentage (%) increases (+)
and decreases (-) in 2003 compared to 2002 in our net sales, before
eliminations resulting from consolidation, sales volumes and prices for the
major countries in which we have operations. Variations in net sales
determined on the basis of constant Mexican Pesos include the appreciation or
depreciation which occurred during the period between the country's local
currency 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 country's local currency:



                                      63






---------------------------------------------------------------------------------------------------------------------------
                                  Net Sales
---------------------------------------------------------------------------------------------------------------------------
                                 Approximate                                             Export        Average Domestic
                                   currency     Variations   Domestic Sales Volumes      Sales     Prices in local currency
                                fluctuations,       in                                  Volumes
                   Variations      net of       constant
                    in local      inflation       Mexican
    Country         currency       effects         Pesos     Cement      Ready-Mix       Cement      Cement       Reasy-Mix
---------------------------------------------------------------------------------------------------------------------------
                                                                                            
Mexico               +15.3%         -11.6%         +3.7%       +4%         +13%           -24%         +2%         -2%
---------------------------------------------------------------------------------------------------------------------------
United States        -1.0%          -2.0%          -3.0%       +2%          +4%           N/A          -2%        Flat
---------------------------------------------------------------------------------------------------------------------------
Spain                +3.5%          +17.5%        +21.0%       +5%          +5%           -21%         -1%        Flat
---------------------------------------------------------------------------------------------------------------------------
Venezuela            -5.7%          +8.7%          +3.0%       -13%         -6%           +17%         +3%         +6%
---------------------------------------------------------------------------------------------------------------------------
Colombia             +11.4%         +0.2%         +11.6%       +1%         +34%           N/A          +6%         +4%
---------------------------------------------------------------------------------------------------------------------------
Central America
and the
Caribbean            +14.1%         +1.90%        +16.0%       +7%         +72%           N/A          -1%         -4%
---------------------------------------------------------------------------------------------------------------------------
Philippines          +6.1%          -5.3%          +0.8%      -2.3%        +86%           +44%         +4%         -9%
---------------------------------------------------------------------------------------------------------------------------
Egypt                +20.6%         -32.5%        -11.9%       -12%        +193%          N/A         +22%        +13%
---------------------------------------------------------------------------------------------------------------------------
N/A = Not Applicable


         On a consolidated basis, our cement sales volumes increased
approximately 5%, from 61.8 million tons in 2002 to 64.7 million tons in 2003,
and our ready-mix concrete sales volumes increased approximately 13%, from
19.2 million cubic meters in 2002 to 21.7 million cubic meters in 2003. Our
net sales increased approximately 7% from Ps79,725million in 2002 to Ps85,553
million in 2003, and our operating income increased approximately 9% from
Ps15,967 million in 2002 to Ps17,377 million in 2003.

Net Sales

         Our net sales increase of 7% during 2003 was primarily attributable
to higher sales volumes in most of our markets, and the consolidation of the
results of operations of PRCC for the entire year in 2003 compared to just
five months in 2002, which were partially offset by a decrease in domestic
cement sales volumes in Venezuela, the Philippines and Egypt and lower
domestic cement prices in the United States and Central America and the
Caribbean. Of our consolidated net sales in 2002 and 2003, approximately 76%
and 73%, respectively, were derived from sales of cement, approximately 19%
and 22%, respectively, from sales of ready-mix concrete and approximately 5%
in both years from sales of other construction materials and services.

         Additionally, set forth below is a quantitative and qualitative
analysis of the effects of the various factors affecting our net sales on a
country-by-country basis.

         Mexico
         ------

         Our Mexican operations' domestic gray cement sales volumes increased
approximately 4% in 2003 compared to 2002, and ready-mix concrete sales
volumes increased approximately 13% during the same period. The increase in
sales volumes resulted primarily from increased demand in the public sector,
particularly from infrastructure projects and social housing, while the
industrial and commercial sectors remained stable during the year. However,
the sales volumes increases were partially offset by a significant decrease in
cement export volumes. Our Mexican operations' cement export volumes, which
represented 5% of our Mexican cement sales volumes in 2003, decreased
approximately 24% in 2003 compared to 2002, despite stable exports to the U.S.
market, due mainly to a reduction in our exports from Mexico to the Caribbean
region. Responsibility for exports to the Caribbean region has been assumed by
our Venezuelan operations. Of our Mexican operations' cement export volumes
during 2003, 71.4% was shipped to the United States, 27.4% to Central America
and the Caribbean and 1.2% to South America. The average cement price in
Mexico increased approximately 2% in constant Peso terms in 2003 compared to
2002, and the average ready-mix concrete price decreased approximately 2% in
constant Peso terms over the same period (these prices increased 6% and 0.1%,
respectively, in nominal Peso terms). For the year ended December 31, 2003,
sales of ready-mix concrete in Mexico represented approximately 22% of our
Mexican operations' total net sales.

         As a result of the increases in cement and ready-mix concrete sales
volumes and the increase in the average domestic cement price, partially
offset by a decrease in the average ready-mix prices, net sales in Mexico, in
constant Peso terms, increased approximately 4% in 2003 compared to 2002,
despite the decline in cement export volumes.


                                      64


         United States
         -------------

         Our United States operations' cement sales volumes, which include
cement purchased from our other operations, increased approximately 2% in 2003
compared to 2002, and ready-mix concrete sales volumes increased approximately
4% over the same period. The increases in sales volumes was primarily
attributable to strong demand from the cement-intensive public works sector,
in particular street and highway construction, and the residential sector
during the second half of 2003, while the industrial and commercial sectors
reversed their downward trend. The average sales price of cement decreased
approximately 2% in Dollar terms during 2003 compared to 2002. The average
price of ready-mix concrete remained flat during 2003 compared to 2002. For
the year ended December 31, 2003, sales of ready-mix concrete in the U.S.
represented approximately 26% of our U.S. operations' total net sales.

         As a result of the decrease in the average sales price of cement and
the sale of some of our mineral products businesses, net sales in the United
States declined approximately 1% in U.S. Dollar terms in 2003 compared to
2002, despite the increases in cement and ready-mix concrete sales volumes.

         Spain
         -----

         Our Spanish operations' domestic cement sales volumes increased
approximately 5% in 2003 compared to 2002, and ready-mix concrete sales
volumes increased approximately 5% during the same period. The increase in
sales volumes was primarily driven by strong residential construction activity
and increased spending in public works due to Spain's infrastructure program.
Our Spanish operations' cement export volumes, which represented 3% of our
Spanish cement sales volumes in 2003, decreased approximately 21% in 2003
compared to 2002 primarily due to increased domestic demand. Of our Spanish
operations' total cement export volumes during 2003, 47.8% was shipped to the
United States, 31.4% to Africa and 20.8% to Europe and the Middle East. The
average sales price of cement decreased approximately 1% in Euro terms during
2003 compared to 2002, and the average price of ready-mix concrete remained
flat in Euro terms over the same period. For the year ended December 31, 2003,
sales of ready-mix concrete in Spain represented approximately 25% of our
Spanish operations' total net sales.

         As a result of the increases in cement and ready-mix concrete sales
volumes, net sales in Spain, in Euro terms, increased approximately 3.5% in
2003 compared to 2002, despite the decline in cement export volumes and in
domestic cement prices.

         Venezuela
         ---------

         Our Venezuelan operations' domestic cement sales volumes decreased
approximately 13% in 2003 compared to 2002, while ready-mix concrete sales
volumes decreased approximately 6% during the same period. The decreases in
sales volumes and ready-mix concrete sales volumes were mainly driven by the
downturn in construction activity in Venezuela and limited government spending
on infrastructure as a result of the continuing political and economic turmoil
in Venezuela, which were partially offset by increased demand from the
self-construction sector.

         Our Venezuelan operations' cement export volumes, which represented
56% of our Venezuelan cement sales volumes in 2003, increased approximately
17% in 2003 compared to 2002. The increase in cement export volumes was due to
an increased focus on the export market to offset the contraction of the local
market. Of our Venezuelan operations' total cement export volumes during 2003,
63.6% was shipped to the United States and 36.4% to the Caribbean and South
America. For the year ended December 31, 2003, sales of ready-mix concrete in
Venezuela represented approximately 20% of our Venezuelan operations' total
net sales.

         Our Venezuelan operations' average domestic sales price of cement
increased approximately 3% in Bolivar terms in 2003 compared to 2002, while
the average domestic sales price of ready-mix concrete increased approximately
6% in Bolivar terms over the same period.

         As a result of the decreases in domestic cement and ready-mix sales
volumes, net sales in Venezuela, in Bolivar terms, decreased approximately
5.7% in 2003 compared to 2002.


                                      65


         Colombia
         --------

         Our Colombian operations' domestic cement sales volumes increased
approximately 1% in 2003 compared to 2002, primarily as a result of increased
demand from the private residential construction sector. Our Colombian
operations' ready-mix concrete sales volumes increased approximately 34% in
2003 compared to 2002, primarily as a result of an increase in government
spending on infrastructure, particularly on transportation. For the year ended
December 31, 2003, sales of ready-mix concrete in Colombia represented
approximately 33% of our Colombian operations' net sales.

         Our Colombian operations' average sales price of cement increased 6%
in Colombian Peso terms in 2003 compared to 2002, while the average domestic
sales price of ready-mix concrete increased approximately 4% in Colombian Peso
terms over the same period.

         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 Colombia, in Colombian Peso
terms, increased approximately 11.4% in 2003 compared to 2002.

         Central America and the Caribbean
         ---------------------------------

         Our Central American and Caribbean operations consist of our
operations in Costa Rica, the Dominican Republic, Panama, Nicaragua and Puerto
Rico, as well as several cement terminals 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 Central American and Caribbean
operations' domestic cement sales volumes increased approximately 7% in 2003
compared to 2002, primarily as a result of the inclusion of our Puerto Rican
operations in our consolidated results for the entire year in 2003
(representing approximately 22% of our total cement sales volume in the region
during 2003) and just five months (August through December) for 2002.
Excluding our trading operations in the Caribbean region, domestic cement
sales volumes increased 7% in 2003 compared to 2002. Our Caribbean region
trading operations' cement sales volumes increased approximately 36% in 2003
compared to 2002, primarily as a result of exports to the United States from
the Caribbean region instead of from Venezuela for several months in the
beginning of 2003 due to the political and economic turmoil and general labor
strikes in Venezuela at that time, as well as increased sales of white cement
to several Central American countries during the third quarter of 2003. Our
Central American and Caribbean operations' ready-mix concrete sales volumes
increased approximately 72% in 2003 compared to 2002, primarily due to the
inclusion of our Puerto Rican operations for the entire year in 2003, which
operations represented approximately 60% of our total ready-mix concrete sales
volumes in the region. We also benefited from higher volumes in most of our
markets in the region during 2003 and the inclusion of a full year of
ready-mix concrete sales in Costa Rica, since these ready-mix operations in
Costa Rica only began in the third quarter of 2002. For the year ended
December 31, 2003, sales of ready-mix concrete in Central America and the
Caribbean represented approximately 16% of our Central American and Caribbean
operations' total net sales.

         Our Central American and Caribbean operations' average domestic
cement sales price decreased approximately 1% in Dollar terms in 2003 compared
to 2002, while the average ready-mix concrete sales price decreased
approximately 4% in Dollar terms over the same period.

         As a result of the increases in domestic cement and ready-mix
concrete sales volumes, net sales in our Central American and Caribbean
region, in Dollar terms, increased approximately 14.1% in 2003 compared to
2002, despite the decline in the average sales price of both domestic cement
and ready-mix concrete prices.

         The Philippines
         ---------------

         Our Philippine operations' domestic cement sales volumes decreased
approximately 2.3% in 2003 compared to 2002, primarily as a result of
decreased demand in the public works sector due to reductions in government
spending on infrastructure, which was offset by a 4% increase, in Philippine
Peso terms, in the average domestic sales price of cement over the same
periods. Our ready-mix concrete sales volumes in the Philippines increased
approximately 86% in 2003 compared to 2002, while the average ready-mix
concrete price decreased approximately 9% in Philippine Peso terms over the
same periods. The increase in ready-mix concrete sales volumes was primarily
attributable to a weak economic


                                      66


environment during 2002 and new construction contracts in 2003. For the year
ended December 31, 2003, sales of ready-mix concrete in the Philippines
represented approximately 1% of our Philippine operations' total net sales.

         As a result of the increases in ready-mix concrete sales volumes and
in the average 777cement sales price, which were partially offset by decreases
in domestic cement volumes and in the average ready-mix concrete sales price,
net sales in the Philippines, in Philippine Peso terms, increased approximately
6% in 2003 compared to 2002.

         Egypt
         -----

         Our Egyptian operations' domestic cement sales volumes decreased
approximately 12% in 2003 compared to 2002, primarily as a result of
exceptionally high cement volumes in 2002 and decreased demand in the
commercial and tourism sectors. These factors, however, were partially offset
by increased government spending on infrastructure and a strong
self-construction sector. The decrease in domestic sales volumes was also
partially offset by a 22% increase, in Egyptian pound terms, in the average
domestic sales price of cement in 2003 compared to 2002, which was primarily
due to our commercial strategy. Our Egyptian operations' cement export volumes
represented 13% of our Egyptian cement sales volumes in 2003. We only began
exporting cement from Egypt during the second quarter of 2003. Of our Egyptian
operations' cement export volumes during 2003, 61% was shipped to Africa and
39% was shipped to Europe and the Middle East. Our Egyptian operations'
ready-mix sales volumes increased 193% in 2003 compared to 2002, primarily
because sales volumes in 2002 were negligible. For the year ended December 31,
2003, sales of ready-mix concrete in Egypt represented approximately 3% of our
Egyptian operations' total net sales.

         As a result of the decrease in cement sales volumes combined with the
offsetting increase in domestic cement sales prices, net sales in Egypt, in
Egyptian pound terms, increased approximately 21% in 2003 compared to 2002.

Cost of Sales

         Our cost of sales, including depreciation, increased 11% from
Ps44,541 million in 2002 to Ps49,319 million in 2003 in constant Peso terms,
primarily as a result of a higher percentage of sales of ready-mix concrete
and other products, which have a higher cost of sales as compared to cement,
as well as increased energy and insurance costs, and the consolidation of our
Puerto Rican operations for the entire year in 2003 compared to just five
months in 2002, which represented approximately 13% of the increase. As a
percentage of sales, cost of sales increased 1.7% from 55.9% in 2002 to 57.6%
in 2003.

Gross Profit

         Our gross profit increased by 3% from Ps35,184 million in 2002 to
Ps36,234 million in 2003 in constant Peso terms. Our gross margin decreased
from 44.1% in 2002 to 42.4% in 2003, as a result of the changes in our product
mix described above. The increase in our gross profit is primarily
attributable to the 7% increase in our net sales in 2003 compared to 2002,
partially offset by the 11% increase in our cost of sales in 2003 compared to
2002.

Operating Expenses

         Our operating expenses decreased 2% from Ps19,217 million in 2002 to
Ps18,857 million in 2003 in constant Peso terms, primarily as a result of our
continuing cost-reduction efforts, including reductions in corporate overhead
and travel expenses. As a percentage of sales, our operating expenses
decreased from 24.1% in 2002 to 22.1% in 2003.

Operating Income

         For the reasons mentioned above, our operating income increased 9%
from Ps15,967 million in 2002 to Ps17,377 million in 2003.

Comprehensive Financing Income (Expense)

         The following table indicates the break down of our comprehensive
financing result in 2002 and 2003.


                                      67




                                                                   Year Ended December 31,
                                                               --------------------------------
                                                                   2002               2003
                                                               --------------     -------------
                                                               (in millions of constant Pesos)
Net comprehensive financing income (expense):

                                                                                
Financial expense.......................................         Ps (4,052)       Ps  (4,545)
Financial income........................................               543               199
Results from valuation and liquidation of financial
    instruments.........................................            (3,856)             (712)
Foreign exchange gain (loss), net.......................              (939)           (2,049)
Monetary position gain..................................             4,291             3,913
                                                               --------------     -------------
    Net comprehensive financing result..................       Ps   (4,013)       Ps  (3,194)

                                                               ==============     =============


         Our net comprehensive financing result improved from an expense of
Ps4,013 million in 2002 to an expense of Ps3,194 million in 2003. The
components of the change are shown above. Our financial expense was Ps4,052
million in 2002 compared to Ps4,545 million for 2003, an increase of 12%. The
increase was primarily attributable to a higher level of interest rates swaps
at a level above current market rates during 2003, which were entered into in
an effort to shift our interest rate profile to more fixed rates. Our
financial income decreased 63% from Ps543 million in 2002 to Ps199 million in
2003 as a result of the decline in interest rates. Our net foreign exchange
results deteriorated from a loss of Ps939 million in 2002 to a loss of Ps2,049
million in 2003. The foreign exchange loss in 2003 is primarily attributable
to the depreciation of the Peso against the Dollar and the appreciation of the
Japanese Yen against the Dollar as compared to the foreign exchange loss in
2002, which also was primarily attributable to the depreciation of the Peso
against the Dollar, but was partially offset by the depreciation of the
Japanese Yen against the Dollar. Our results from valuation and liquidation of
financial instruments improved from a loss of Ps3,856 million in 2002 to a
loss of Ps712 million in 2003, primarily attributable to valuation
improvements from our derivative financial instruments portfolio (discussed
below) during 2003. See notes 12 and 17 to our consolidated financial
statements included elsewhere in this annual report. Our monetary position
gain (generated by the recognition of inflation effects over monetary assets
and liabilities) decreased from a gain of Ps4,291 million during 2002 to a
gain of Ps3,913 million during 2003, mainly as a result of the decrease in the
weighted average inflation index used in the determination of the monetary
position result, combined with the decrease in our monetary liabilities in
2003 compared to 2002.

Derivative Financial Instruments

         For the years ended December 31, 2002 and 2003, our derivative
financial instruments that have a potential impact on our comprehensive
financing result consist of equity forward contracts entered into to hedge
potential exercises under our executive stock option programs (see notes 16
and 17 to our consolidated financial statements included elsewhere in this
annual report), 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, interest rate
swap options (swaptions), other interest rate derivatives and interest rate
derivatives related to energy projects. Of the loss of Ps712 million in 2003
recognized in the item results on valuation and liquidation of financial
instruments, an approximate loss of Ps1,045 million is attributable to changes
in the fair value of our interest rate derivatives, while an approximate loss
of Ps85 million resulted from changes in the fair value of our foreign
currency derivatives. These losses were partially offset by a net valuation
gain of approximately Ps364 million resulting from changes in the fair value
of our equity forward contracts that hedge our stock option programs, net of
the costs generated by such programs, and an approximate valuation gain of
Ps54 million resulting from changes in the fair value of our marketable
securities. These valuation effects accounted for substantially all the loss
recorded in 2003 under the line item results from valuation and liquidation of
financial instruments presented above. We experienced valuation improvements
in most of these financial derivatives in 2003 compared to 2002. See "--
Qualitative and Quantitative Market Disclosure -- Our Derivative Financial
Instruments" and "-- Qualitative and Quantitative Market Disclosure --
Interest Rate Risk, Foreign Currency Risk and Equity Risk." See also notes 12
and 17 to our consolidated financial statements included elsewhere in this
annual report. The estimated net gain mentioned above, determined by the
excess between the fair value gain of our equity forward contracts that hedge
the potential exercise of our executive stock option programs over the costs
associated with the intrinsic value of our executives' options, is primarily
attributable to slight differences in the strike price established in the
forward contracts as compared to those of the options. The fair value gain of
our equity forward contracts and the costs associated with the stock options
both are attributable to the increase, during 2003, in the market price of our
listed securities (ADSs and CPOs) as compared to 2002. The estimated fair value


                                      68


loss of our interest rate derivatives is primarily attributable to the
continuing decline in market interest rates, as we had fixed our interest rate
profile at a level above current market rates.

Other Expenses, Net

         Our other expenses, net were Ps5,454 million in 2003 compared to
Ps4,744 million in 2002, a 15% increase. The increase was primarily
attributable to the recognition of impairment charges on several long-lived
assets during 2003 of approximately Ps1,188 million compared with Ps109
million in 2002. See notes 10 and 11 to our consolidated financial statements
included elsewhere in this annual report.

         Excluding impairment charges, other expenses decreased approximately
8% in 2003 as compared to 2002, mainly as a result of lower anti-dumping duty
expense during 2003 compared to 2002 and also the absence of the extraordinary
expense incurred during 2002 as a result of the premium paid on our cash
tender offer for our 12 3/4% notes due 2006, the consent fee paid in
connection with our consent solicitation for our 9.625% notes due 2009 and a
non-recurring expense related to the termination of our distribution agreement
in Taiwan. See notes 12 and 22F to our consolidated financial statements
included elsewhere in this annual report.

Income Taxes, Business Assets Tax and Employees' Statutory Profit Sharing

         Our effective tax rate was 12.3% in 2003 compared to 9.3% in 2002.
Our tax expense, which primarily consists of income taxes and business assets
tax, increased 60% from Ps668 million in 2002 to Ps1,070 million in 2003. The
increase was attributable to higher taxable income in 2003 as compared to
2002. Our average statutory income tax rate was approximately 34% in 2003 and
approximately 35% in 2002.

         Employees' statutory profit sharing increased from Ps126 million
during 2002 to Ps203 million during 2003 due to higher taxable income for
profit sharing purposes in Mexico. See note 18B to our consolidated financial
statements included elsewhere in this annual report.

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 2003 increased 16%,
from Ps6,791 million in 2002 to Ps7,872 million in 2003. The percentage of our
consolidated net income allocable to minority interests decreased from 6.6% in
2002 to 4.6% in 2003, as a result of our prepayment in October 2003 of the
remaining portion of the preferred equity balance of the preferred equity
transaction related to the financing of our acquisition of Southdown, Inc.,
now CEMEX, Inc., in 2000. Majority interest net income increased by 18%, from
Ps6,339 million in 2002 to Ps7,508 million in 2003, mainly as a result of our
increase in net sales, the decrease in our valuation losses on derivative
financial instruments and a lower portion of consolidated net income allocable
to minority interests, partially offset by the increases in our foreign
exchange loss, the decrease in our monetary position gain, the increase in our
other expenses and higher income taxes. As a percentage of net sales, majority
interest net income increased from 8.0% in 2002 to 8.8% in 2003.

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 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


                                      69


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 Ps20.3 billion in 2002,
Ps18.7 billion in 2003 and Ps24.8 in 2004. See our Statement of Changes in the
Financial Position included elsewhere in this annual report.

Our Indebtedness

         As of December 31, 2004, we had approximately U.S.$5.9 billion
(Ps66.1 billion) of total debt, of which approximately 18% was short-term and
82% was long-term. Approximately 36% of our long-term debt at December 31,
2004, or U.S.$1.8 billion (Ps19.9 billion), is to be paid in 2006, unless
extended. As of December 31, 2004, after giving effect to our cross currency
swap arrangements discussed elsewhere in this annual report, 56% of our
consolidated debt was Dollar-denominated, 15% was Euro-denominated, 14% was
Pound-denominated, 14% was Japanese Yen-denominated, and immaterial amounts
were denominated in other currencies, The weighted average interest rates paid
by us in 2004 in our main currencies were 4.9% on our Dollar-denominated debt,
1.5% on our Yen-denominated debt, 3.5% on our Euro-denominated debt and 5.5%
on our British Pound-denominated debt.

         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,
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 and
Empresas Tolteca de Mexico, two of our principal Mexican subsidiaries, have
provided guarantees of our indebtedness in the amount of U.S.$3.1 billion
(Ps34.4 billion), as of December 31, 2004. 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(x) to our
consolidated financial statements included elsewhere in this annual report.

         As of December 31, 2004, we and our subsidiaries had lines of credit
totaling Ps38.2 billion at annual rates of interest ranging from 0.5% to
15.5%, in accordance with the currency in which they were negotiated. The
unused amounts of those lines of credit totaled approximately Ps20.9 billion
as of December 31, 2004. In addition to these lines of credit, from time to
time we borrow money from banks and other financial institutions. This credit
line information as of December 31, 2004, does not include lines of credit
agreed to with financial institutions for approximately U.S.$5.1 billion in
connection with the acquisition of RMC. See note 2 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. 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, 2004, we were in
compliance with all the financial covenants in our own and our subsidiaries'
debt instruments.

         In addition, a considerable amount of our debt is subject to credit
ratings triggers that require us to pay a step-up in the coupon rate of the
affected notes in the event that certain minimum credit ratings are not
maintained. Significantly, the CEMEX, Inc. Note and Guarantee Agreement, dated
March 15, 2001, described under Item 10


                                      70


"Additional Information -- Material Contracts," requires us to make all
reasonable efforts to ensure that the notes issued pursuant to that agreement
maintain a private letter rating of at least BBB- by Standard & Poor's and Baa3
by Moody's. If the notes fail to maintain this required rating, we would have
to pay a step-up in the coupon rate and, if, after a continuous period of two
years, the notes have not re-attained these ratings, we would have to repay
them or obtain a waiver of this requirement. As of December 31, 2004, the notes
were rated BBB- by Standard & Poor's and Baa3 by Moody's.

         In order to finance the acquistion of RMC, we used the proceeds of
three credit facilities, each dated September 24, 2004, with an initial total
aggregate amount of US$5.8 billion and with weighted average life of 3.0
years. However, some of these credit facilities were intended to be temporary
arrangements. In these cases, we have already begun refinancing the original
indebtedness. The following is a description of these three credit facilities.

         o        On September 24, 2004, we entered into a 364 day credit
                  agreement with CEMEX Mexico and Empresas Tolteca de Mexico as
                  joint obligors, for a total aggregate principal amount of
                  U.S.$500 million. The proceeds of this credit agreement were
                  used in connection with the acquisition of RMC. On March 7,
                  2005, this facility was reduced to U.S.$300 million.

         o        On September 24, 2004, New Sunward Holding B.V. entered into
                  a series of agreement facilities. The facility was a
                  U.S.$1.25 billion multi-currency term loan guaranteed by
                  CEMEX, CEMEX Mexico and Empresas Tolteca de Mexico and
                  consists of two tranches. The first tranche was a
                  multi-currency one-year U.S.$500 million term loan
                  denominated in Dollars, Euros or Pounds (or a combination
                  thereof) with an optional six-month extension. The second
                  tranche was a multi-currency three-year U.S.$750 million term
                  loan denominated in Dollars, Euros, or Pounds (or a
                  combination thereof). The proceeds of the facility were used
                  in connection with the RMC acquisition. This facility was
                  fully repaid on April 13, 2005.

         o        On September 24, 2004, CEMEX Espana entered into a series of
                  agreement facilities. The facility is a U.S.$3.8 billion
                  multi-currency term loan. The indebtedness is guaranteed by
                  Cemex Caracas Investments, B.V., Cemex Caracas II
                  Investments, B.V. Cemex Egyptian Investments, B.V., Cemex
                  Manila Investments, B.V. and Cemex American Holdings, B.V.
                  and consists of three tranches. The first tranche is a
                  multi-currency one-year U.S.$1.5 billion back-up term loan
                  denominated in Dollars, Euros or Pounds (or a combination
                  thereof) with an optional twelve month extension. The second
                  tranche is a multi-currency three-year U.S.$1.15 billion term
                  loan denominated in Dollars, Euros or Pounds (or a
                  combination thereof). The third tranche is a multi-currency
                  five-year U.S.$1.15 billion term loan denominated in Dollars,
                  Euros or Pounds (or a combination thereof). Proceeds from the
                  first tranche of the CEMEX Espana facility will be used, as
                  required, to refinance RMC debt. All other proceeds were used
                  to finance the acquisition of RMC.

         As of March 31, 2005, after the completion of our acquisition of RMC,
we reported U.S.$11.8 billion of outstanding indebtedness, including
indebtedness assumed from RMC. The following is a description of the material
indebtedness assumed from RMC.

         o        On October 18, 2002, RMC entered into a (pound)1,000,000,000
                  Term and Revolving Credit Agreement relating to a
                  multi-currency five-year (pound)600,000,000 revolving credit
                  facility and a multi-currency five-year (pound)400,000,000
                  term loan facility. On March 16, 2005, CEMEX Espana and RMC
                  entered into an amended and restated agreement relating to
                  these facilities. The amendments to the original agreement
                  include a waiver of the provision requiring mandatory
                  prepayment in the event of a change of control, the inclusion
                  of CEMEX Espana, Cemex Caracas Investments B.V., Cemex
                  Caracas II Investments B.V., Cemex Manila Investments B.V.,
                  Cemex Egyptian Investments B.V., Cemex American Holdings B.V.
                  and Cemex Shipping B.V, as guarantors, amendments to the
                  financial covenants applicable to CEMEX Espana on a
                  consolidated basis and the extension of the termination date
                  of the revolving credit facility to six years from the date
                  of the amended and restated agreement. Simultaneous with the
                  execution of the amended and restated agreement, the total
                  amount of the facilities was reduced to (pound)604,354,196;
                  the revolving credit facility was reduced to
                  (pound)425,558,038 and the term loan facility was reduced to
                  (pound)178,796,154.

         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.$120,000,000


                                      71


                  aggregate principal amount of 8.40% Senior Notes due 2010,
                  U.S.$90,000,000 aggregate principal amount of 8.50% Senior
                  Notes due 2012 and U.S.$45,000,000 aggregate principal amount
                  of 8.72% Senior Notes due 2020.

         On April 5, 2005, we entered into a U.S.$1 billion 180-day term 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 New Sunward Holding B.V.,
dated September 24, 2004, described above.

Our Preferred Equity Arrangements

         In November 2000, we formed a Dutch subsidiary which issued preferred
equity for an amount of U.S.$1.5 billion (Ps16.7 billion) to provide funds for
our acquisition of CEMEX, Inc., formerly Southdown. The preferred equity
granted its holders 10% of the subsidiary's voting rights, as well as the
right to receive a preferred dividend. Under the terms of the preferred equity
financing arrangements, Sunward Acquisitions N.V., or Sunward Acquisitions,
our indirect Dutch subsidiary, contributed its 85.2% interest in CEMEX Espana
to New Sunward Holding B.V., or New Sunward Holding, in exchange for all its
ordinary shares. A special purpose entity, which was neither owned nor
controlled by us, borrowed U.S.$1.5 billion from a syndicate of banks and New
Sunward Holding issued preferred equity to the special purpose entity in
exchange for the U.S.$1.5 billion, which was used to subscribe for further
shares in CEMEX Espana. During 2001, we redeemed a portion of the
then-outstanding preferred equity in the amount of U.S.$600 million, and at
year-end 2001, the balance outstanding was U.S.$900 million. In February 2002,
we refinanced this preferred equity transaction, pursuant to which we redeemed
U.S.$250 million of the outstanding preferred equity and extended the
termination dates on the remaining U.S.$650 million. In October 2003, in
connection with the establishment of the new U.S.$1.15 billion senior
unsecured term loan facility by our Dutch subsidiary described under Item 10
"Additional Information Material Contracts," we redeemed before maturity all
the U.S.$650 million (Ps7,241 million) of preferred equity outstanding.

         For accounting purposes under Mexican GAAP, the preferred equity was
recorded as a minority interest on our balance sheet until its liquidation.
Dividends paid on the preferred equity were recorded as a minority interest on
our income statement. For the years ended December 31, 2002 and 2003 preferred
equity dividends amounted to approximately U.S.$23.2 million and U.S.$12.5
million respectively.

         In October 2004, we liquidated the remaining 9.66% Putable Capital
Securities for approximately U.S.$66 million (Ps735.2 million). These capital
securities were issued in 1998 by one of our Spanish subsidiaries in an
aggregate liquidation amount of U.S.$250 million, with an annual dividend rate
of 9.66%. In April 2002, through a tender offer, U.S.$184 million of the
capital securities were redeemed. The amount paid to holders in excess of the
nominal amount of the capital securities pursuant to the early redemption of
approximately U.S$20 million (Ps238.8 million) was recognized against
stockholders' equity. The balance outstanding as of December 31, 2003 was
U.S.$66 million (Ps788.1 million). Until January 1, 2004, for accounting
purposes under Mexican GAAP, 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. For the
years ended December 31, 2002 and 2003, capital securities dividends amounted
to approximately U.S.$11.9 million and U.S.$6.4 million, respectively. As of
January 1, 2004, as a result of new accounting pronouncements under Mexican
GAAP, 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 (Ps66.1 million), were recorded as part of financial expenses
in our income statement.

Our Equity Arrangements

         In December 1995, we entered into a transaction in which one of our
Mexican subsidiaries transferred some of its cement assets to a trust, while,
simultaneously, a third party purchased a beneficial interest in the trust for
approximately U.S.$123.5 million in exchange for notes issued by the trust. We
had the right to reacquire these assets on various dates until 2007. In
December 2003, we acquired the remaining assets for approximately U.S.$75.9
million.

         From inception of the transaction until repurchase of the assets, the
assets related to this transaction were considered as owned by third parties;
therefore, for accounting purposes under Mexican GAAP, this transaction was
included as minority interest in our balance sheet. For the years ended
December 31, 2002 and 2003, the expense


                                      72


generated by retaining the option to re-acquire the assets amounted to
approximately U.S.$13.2 million and U.S.$14.5 million, respectively, and was
included as financial expense in our income statements.

         In December 1999, by means of a public offer on the Mexican Stock
Exchange, or MSE, and the New York Stock Exchange, or NYSE, we issued to our
shareholders, members of our board of directors and other executives 105
million appreciation warrants ("warrants") maturing on December 13, 2002, at a
subscription price in pesos of Ps3.2808 per appreciation warrant. A portion of
the appreciation warrants was subscribed as American Depositary Warrants, or
ADWs, each ADW representing five warrants.

         In November 2001, we launched a voluntary public exchange offer of
new warrants and new ADWs maturing on December 21, 2004, for our existing
warrants and our existing ADWs on a one-for-one basis. Of the total 105
million warrants originally issued, 103,790,945, or 98.9%, were tendered in
exchange for the new warrants. Both the old warrants and the new warrants were
designed to allow the holder to benefit from future increases in the market
price of our CPOs, with any appreciation value to be received in the form of
our CPOs or ADSs, as applicable. The old warrants expired on December 13, 2002
in accordance with their terms without any payments to the holders. Until
September 2003, the CPOs and ADSs required to cover potential exercises of
warrants were held through equity forward contracts with financial
institutions. These forward contracts were settled in October 2003 through
simultaneous secondary equity offerings on the MSE and the NYSE made by us and
the banks holding the shares. See note 17A to our consolidated financial
statements included elsewhere in this annual report and "-- Our Equity
Derivative Forward Arrangements."

         In November and December 2003, we announced a simultaneous public
offer in the MSE and the NYSE that was concluded during January 2004 by means
of which we repurchased for cash 90,018,042 warrants, or 86.7%, of the then
outstanding warrants and warrants represented by ADWs, which included
approximately 34.9 million warrants owned by or controlled by us and our
subsidiaries. The price at which the warrants were purchased was Ps8.10 per
warrant (Ps40.50 per ADW). In addition, in December 2004, the remaining
outstanding 13,772,903 warrants were automatically exercised upon expiration
of the warrants in accordance with their terms. Considering the results of the
purchase of warrants in January 2004, the exercise in December 2004 and the
direct expenses related to these transactions, approximately Ps1,053 million
was paid. This amount was recognized against stockholders' equity within
additional paid-in-capital. See note 15F to our consolidated financial
statements included elsewhere in this annual report and "-- Our Equity
Derivative Forward Arrangements."

Our Equity Derivative Forward Arrangements

         In connection with our appreciation warrants transaction, during
1999, we entered into equity forward contracts with a number of banks and
other financial institutions with an original maturity in December 2002,
pursuant to which the banks purchased our ADSs and shares of common stock of
CEMEX Espana, our Spanish subsidiary. In December 2002, we agreed with the
banks to settle the forward transactions for cash and simultaneously enter
into new forward transactions with the same banks on similar terms to the
original forward transactions with respect to the underlying ADSs and CEMEX
Espana shares, maturing on December 12, 2003. Under the new forward contracts,
the banks retained the 24,008,313 ADSs and 33,751,566 CEMEX Espana shares
underlying the original forward contracts, for which they agreed to pay us an
aggregate price of approximately U.S.$828.5 million, or the notional amount.
We agreed with the banks that the purchase price payable to us under the new
forward contracts would be netted against the adjusted forward settlement
price of the original forward contracts and any advance payments made by us in
connection with the closing of the new forward contracts. Upon closing of the
new forward transactions, we made an advance payment to the banks of
approximately U.S.$380.1 million of the forward purchase price, U.S.$285
million of which represented payment in full of the portion of the forward
purchase price relating to the CEMEX Espana shares and U.S.$95.1 million of
which was an advance payment against the final forward purchase price. As of
December 13, 2002, the adjusted forward settlement price of the new forward
contracts was U.S.$448.4 million. In December 2002, as a result of the net
settlement and renegotiation of the forward contracts, we recognized, in
accordance with Mexican GAAP, a loss of approximately U.S.$98.3 million
(Ps1,104.9 million) in our stockholders' equity, arising from changes in the
valuation of the underlying shares.

         In October 2003, in connection with a non-dilutive equity offering by
the banks of all the ADSs underlying those forward contracts, which had
increased to 25,457,378 ADSs as a result of stock dividends through June 2003,
we agreed with the banks to settle those forward contracts for cash. As a
result of the final settlement in October 2003, we


                                      73



recognized a gain of approximately U.S.$18.1 million (Ps203.4 million) in our
stockholders' equity, arising from changes in the valuation of the ADSs from
December 2002 through October 2003.

         For accounting purposes under Mexican GAAP, 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. With respect to the portion of the
forward contracts relating to CEMEX Espana shares, the sale of the CEMEX
Espana shares to the banks was not considered to be a sale under Mexican GAAP
because we continued to retain the economic and voting rights associated with
these shares and were obligated to repurchase them upon termination of the
forward contracts, and because our obligations to the banks relating to those
shares were prepaid. As a result, the transaction did not have any effect on
minority interests, in either our income statements or our balance sheets.

         As of December 31, 2003 and 2004, we were also subject to equity
forward contracts with different maturities until October 2006, for notional
amounts of U.S.$789.3 million and U.S.$1,112 million, respectively, covering
29,314,561 ADSs in 2003 and 30,644,267 ADSs in 2004. These equity forward
contracts were entered into to hedge the future exercise of the options
granted under our executive programs (see notes 16 and 17). Starting in 2001,
changes in the estimated fair value of these contracts have been recognized in
the balance sheet against the income statement, as a component of the costs
generated by the option programs. As of December 31, 2003 and 2004, the
estimated fair value of these contracts was a gain of approximately U.S.$28.0
million (Ps334.3 million) and a gain of approximately U.S.$44.8 million
(Ps499.1 million), respectively.

         As of December 31, 2003 we had forward contracts maturing in August
and September 2004, for a notional amount of U.S.$122.9 million that covered
23,622,500 CPOs and presented a fair value gain of approximately U.S.$1.8
million (Ps21.5 million). These contracts were negotiated to hedge the
purchase of CAH shares through the exchange for our CPOs (see note 9A). During
2004, the contracts were liquidated, resulting in gains of U.S.$14.5 million
(Ps161.5 million) that were recognized in stockholders' equity.

         In addition, as of December 31, 2003 and 2004, we had forward
contracts for notional amounts of U.S.$172.8 million and U.S.$45.2 million,
respectively, with varying maturities until January 2006, covering a total of
5,268,939 ADSs in 2003 and 1,364,061 ADSs in 2004. Until December 31, 2004,
these contracts were treated as equity instruments; therefore, changes in
their fair value were recognized in stockholders' equity when settled.
Starting in 2005, changes in the fair value of these contracts will be
recognized in earnings. As of December 31, 2004 and 2003, the estimated fair
value of these contracts was a gain of U.S.$6.0 million (Ps66.8 million) and a
loss of U.S.$27.1 million (Ps323.6 million), respectively. During 2004,
contracts representing 2,509,524 CPOs that were held to meet our obligations
to deliver shares under the warrants program (see note 16F) were settled,
resulting in a gain of U.S.$2.6 million (Ps29.0 million) which was recognized
in stockholders' equity.

Our Receivables Financing Arrangements

         We have established sales of trade accounts receivable programs with
financial institutions, referred to as securitization programs. These programs
were negotiated by our subsidiaries in Mexico during 2002, our subsidiary in
the United States during 2001 and our subsidiary in Spain during 2000. 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 these securitization programs as of December 31,
2003 and 2004 were Ps6,507 million (U.S.$584.1 million) and Ps7,114 million
(U.S.$638.6 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 Ps127 million (U.S.$11.4 million) in
2002, Ps114 million (U.S.$10.2 million) in 2003 and Ps126 million (U.S.$11.3
million) in 2004. The proceeds obtained through these programs have been used
primarily to reduce net debt.


                                      74


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 2003 annual shareholders' meeting held on
April 29, 2004, our shareholders approved a stock repurchase program in an
amount of up to Ps6 billion (approximately U.S.$539 million) to be implemented
between April 2004 and April 2005. See note 15A to our consolidated financial
statements included elsewhere in this annual report. This program expired in
April 2005 and no CPOs were repurchased under this program.

         In connection with our 2004 annual shareholders' meeting held on
April 28, 2005, our shareholders approved a stock repurchase program in an
amount of up to Ps6 billion (approximately U.S.$539 million) to be implemented
between April 2005 and April 2006.

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 businesses that respond to our
clients' needs. The department of the Vice President of Energy also has the
responsibility for developing new processes, equipment and methods to optimize
operational efficiencies and reduce our costs. For example, we have developed
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. We believe this has
helped us to keep or increase our market share in many of the markets in which
we operate.

         We have five laboratories dedicated to our R&D efforts. Four of these
laboratories are strategically located in close proximity to our plants to
assist our operating subsidiaries with troubleshooting, optimization
techniques 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 technology,
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 cementitious materials and products, concretes, and aggregates, as
well as the production processes related to them.

         Our Information Technology divisions have developed information
management systems and software relating to cement and ready-mix 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 4 years.

         In 2003 and 2004, 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 U.S.$40.9 million and U.S.$34.7 million,
respectively. In addition, in 2003 and 2004, we capitalized approximately
U.S.$11.3 million and U.S.$9.9 million, respectively, related to internal use
software development. See note 11 to our consolidated financial statements
included elsewhere in this annual report.

Trend Information

Overview

         We believe 2004 was a successful year, and our actual performance
exceeded our expectations. Our average price for both cement and ready-mix
products increased, partly as a result of stronger exchange rates. Therefore,
we are entering 2005 with higher average dollar prices, which should maintain
our positive pricing momentum.


                                      75


         We took proactive steps to minimize our energy cost per ton. These
efforts -- including a shift to fuels whose prices are less correlated to spot
markets and the development of self-supply power-generation projects -- have
paid off. Despite significant increases in the price of various energy inputs,
our average energy cost per ton in 2004 increased by only 3 percent, which was
more than offset by improving prices in many of our markets. We believe that
energy prices will increase by about 12 percent per ton in 2005, or about one
dollar per ton of cement produced. We expect this increase to be more than
offset by our ongoing efficiency programs and, to a lesser extent, higher
average prices.

         Demand in markets such as Spain, whose outlook was negative at the
beginning of 2004, grew significantly during the second half of the year. The
housing and public-works sectors continued to be primary drivers of demand.

         Our cement volumes in the United States exceeded our initial
expectations, growing in 2004 at close to three times the pace of GDP. Led by
strong fundamentals, construction spending was driven by the residential and
street-and-highway sectors. The U.S. economic expansion continues to offer
good prospects for the year ahead.

         Domestic demand and prices improved for most of the markets in our
portfolio, and we feel we are well positioned for mid-cycle organic growth
during 2005.

Outlook for Our Major Markets

         The following is a discussion of our outlook for our three major
markets, Mexico, the United States and Spain, which together generated
approximately 71% of our net sales in 2004.

         In Mexico, we expect GDP to grow driven in part by the healthy
recovery in the U.S. manufacturing sector, which has been the main driver of
exports from Mexico. Remittances from workers abroad, which in 2004 reached a
record U.S.$16 billion, should also contribute to greater consumer spending.
For 2005, we expect foreign direct investments and remittances from the United
States to remain at the same high levels that we saw in 2004, contributing to
greater economic activity.

         In 2004, cement and ready-mix volumes grew over 2003 driven mainly by
government infrastructure spending and by an increase in the construction of
low- and middle-income housing, both of which offset a flat self-construction
sector. The lack of growth in self-construction is primarily due to the fact
that the moderate increase in aggregate disposable income was offset by the
significant price increases in other building materials such as steel.

         We are optimistic that a positive trend in cement consumption will
occur. For 2005, we expect cement volumes to increase over 2004 and to be
driven mainly by government spending on streets and highways, public
buildings, and other infrastructure projects and by an increase in the
construction of low- and middle-income housing as the electoral cycle shifts
into high gear with the 2006 presidential election approaching.

         We also expect the Mexican government's financial condition to remain
sound as a result of fiscal prudence and robust oil prices.

         In the United States, the increase in volumes in 2004 exceeded our
expectations. The main drivers of demand were the residential and the public
sector. We expect cement volumes to grow in 2005 over 2004 driven by
infrastructure and industrial-and-commercial sector. The residential sector is
expected to decline during 2005 due to stronger buying last year and moderate
mortgage interest-rate increases in 2005.

         We expect cement volumes to grow in 2005 in line with, or slightly in
excess, GDP growth, with an adjustment for the sale of assets in the Great
Lakes region.

         2004 was a very favorable year for CEMEX in the United States, and
the price outlook for 2005 indicates a continuation of this trend due to
favorable demand conditions and relatively low inventories as a result of the
mild winter conditions during December.

         In Spain, GDP experienced one of the strongest growth rates in Europe
in 2004 and is expected to grow at a similar rate in 2005. The
stronger-than-expected GDP growth, combined with a robust construction sector
during


                                      76


the year and better-than-expected weather in November and December, led
to a full-year increase in cement volumes, which exceed our expectations.

         The residential sector was a stellar performer and was one of the
main drivers of cement demand. This growth has been driven by a favorable
mortgage environment, positive economic performance, and migration dynamics.
For 2005, the residential sector is expected to slightly decline, although
housing starts are expected to remain at high levels.

         Public-works spending remains an important component of cement
consumption in Spain. The successor to the 2000 infrastructure plan is being
finalized and is expected to start this year and run until 2020. The new
program contemplates increases in spending compared to the previous one. For
2005 we expect a slight decrease as the new government revises its own
infrastructure plan for the coming years.

         We are encouraged by the government's plan to legalize immigrants who
can document their employment and speak Spanish. This plan will have a
positive impact on demographics that will benefit cement consumption in the
medium term.

Summary of Material Contractual Obligations and Commercial Commitments

         As of December 31, 2004, our subsidiaries had future commitments for
the purchase of raw materials for an approximate amount of U.S.$172.3 million.

         In March 1998, we entered into a 20-year contract with PEMEX
providing that PEMEX's refinery in Cadereyta would supply us with 900,000 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 850,000 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.

         In 1999, we reached an agreement with ABB Alstom Power and Sithe
Energies, Inc. 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 1,200,000 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 to Alstom
and Sithe 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 April
29, 2004. As of December 31, 2004, after eight months of operations, the power
plant has supplied electricity to 10 of our cement plants in Mexico covering
83% of their needs for electricity and representing an approximately 21%
decrease in the cost of electricity.

         In March 2002, the distribution contract in Taiwan that we had
entered into with Universe Company on March 31, 2000, was terminated. As a
result, for the year ended December 31, 2002, we recognized a loss of
approximately U.S.$17.3 million (Ps209.1 million) within other expenses, net.

         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, 2004:


                                      77




                                                                            Payments Due by Period
                                                        ----------------------------------------------------------------
                                                                         (In millions of U.S. Dollars)
                                                                       Within       2-3          4-5          After
             Contractual Obligations (1)                   Total       1 Year      Years        Years        5 Years
-----------------------------------------------------   ---------     -------     ------       ------       ------------
                                                                                                  
Long-Term Bank Loans and Notes Payable............          5,448        561       3,018        1,321            548
Capital Lease Obligations.........................              2          2           -            -              -
                                                        ---------     -------     ------       ------       ------------
      Total Debt (2)..............................          5,450        563       3,018        1,321            548

Operating Leases (3)..............................            485        110         173          112             90
 Unconditional Purchase Obligations Under Equity
    Forward Contracts (4).........................          1,157        531         626            -              -


(1)  The data set forth in this table are expressed in nominal terms and do not
     include financing expenses.
(2)  Total long-term debt including maturities is presented in note 12 to our
     consolidated financial statements included elsewhere in this annual
     report. In addition, as of December 31, 2004, we had lines of credit
     totaling approximately U.S.$3.8 billion, of which the available portion
     amounted to approximately U.S.$2.1 billion.
(3)  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 22D to our consolidated financial statements included
     elsewhere in this annual report. Our operating leases include the lease
     of a cement plant in New Braunfels, Texas, which expires on September 9,
     2009. We have an option to purchase this plant at the termination of the
     lease for fair value and an early buy-out option that can be exercised in
     January 2007 for a fixed amount.
(4)  The scenario under which the amounts presented under this line item are
     determined assumes that, upon settlement of our equity forward contracts,
     we will repurchase all the underlying CPOs or ADSs. Even when this
     scenario is possible, we consider that it is not probable considering
     that in order for such a repurchase to take place, all the underlying
     transactions to which the equity forward contracts are related, such as
     our employee stock option programs, would expire unexercised (out of the
     money). Also, the scenario does not take into account that we may elect
     net cash settlement at maturity of the equity forward contracts and
     permit our counterparties to sell the underlying CPOs into the market, in
     which case, the expected cash flow would be materially different. As of
     December 31, 2004, the aggregate estimated fair value of these contracts
     was a gain of approximately U.S.$66.2 million. The total amount of
     U.S.$531 million due in the short term is related to the contracts that
     hedge our employee stock option programs. We expect that these contracts
     will be refinanced from time to time relative to the underlying hedged
     items. In addition, we have provided third party standby letters of
     credit for the benefit of our counterparties in the equity forward
     contracts and other financial transactions in the amount of U.S.$25.8
     million at December 31, 2004. For accounting purposes these letters of
     credit represent contingent obligations. See note 22A to our consolidated
     financial statements included elsewhere in this annual report.

Off-Balance Sheet Arrangements

         The only off-balance sheet arrangements we have that are reasonably
likely to have a material effect on our financial condition, operating
results, liquidity or capital resources are a portion of our equity forward
contracts with a notional amount of approximately U.S.$45.2 million as of
December 31, 2004, which are not recognized on the balance sheet at fair
value. See "--Liquidity and Capital Resources -- Our Equity Derivative
Financing Transactions" and note 17A to our consolidated financial statements
included elsewhere in this annual report.

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 are 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.

                                      78




                                                            (U.S.$ millions)
                                   -----------------------------------------------------------------
                                    At December 31, 2003    At December 31, 2004
                                   ----------------------  -----------------------
                                   Notional    Estimated    Notional    Estimated
     Derivative Instruments         amount     fair value    amount     fair value    Maturity Date
------------------------------     --------    ----------   --------    ----------    -------------
                                                                           
Equity forward contracts......      1,085.0       16.4      1,157.2        66.2       Jan 05-Sep 06
Foreign exchange forward
contracts.....................      1,445.9     (191.6)      4,897.9       63.4       Jan 05-Nov 07
Interest rates swaps..........      1,850.0     (228.1)      1,950.0     (174.2)      Jan 08-Oct 09
Cross currency swaps..........      1,446.6      262.0       1,118.0      208.5       Apr 05-Dec 08
Interest rate swap options....          200      (24.9)           --         --                --
Derivatives related to energy.        174.5       (7.4)        168.1       (6.3)        May 2017



Our Equity Derivative Forward Contracts

         A substantial portion of our equity derivative forward contracts held
as of December 31, 2003 and 2004, with notional amounts of U.S.$789.3 million
and U.S.$1,112 million, respectively, were entered into to hedge the potential
exercises of options under our U.S. dollar denominated executive programs (see
notes 16 and 17 to our consolidated financial statements included elsewhere in
this annual report). Beginning in 2001, the changes in the estimated fair
value of these forwards have been recognized in the income statement as a
component of the costs generated by the stock option programs. The estimated
fair value of these forward contracts represented a gain of approximately
U.S.$28.0 million and a gain of approximately U.S.$44.8 million as of December
31, 2003 and 2004, respectively.

         In addition, as of December 31, 2003 and 2004, we held equity forward
contracts, including the appreciation warrant related forward contracts at
December 31, 2003, for notional amounts of U.S.$295.7 million and U.S.$45.2
million, respectively. These are accounted for as equity instruments, and
gains and losses are recognized as an adjustment to stockholders' equity upon
settlement. See "-- Liquidity and Capital Resources -- Our Equity Derivative
Forward Arrangements" and notes 16 and 17 to our consolidated financial
statements included elsewhere in this annual report.

Our Foreign Exchange Forward Contracts

         A portion of our foreign exchange forward contracts held as of
December 31, 2003 and 2004, with notional amounts of U.S.$559.3 million and
U.S.$956.6 million, respectively, are accounted for at their estimated market
value as hedge instruments for our net investments in foreign subsidiaries.
Gains or losses are recognized as an adjustment to stockholders' equity within
the related foreign currency translation adjustment. In addition, as of
December 31, 2003 and 2004, we held foreign exchange options for notional
amounts of U.S.$886.6 million and U.S.$488.4 million, respectively, which
mature on different dates until June 2005. These accounted for estimated fair
value losses of approximately U.S.$57.2 million (Ps683.0 million) in 2003 and
U.S.$19.2 million (Ps213.9 million) in 2004, recognized in the income
statement.

         As of December 31, 2004, we held structured foreign exchange forward
contracts, collars and digital options for a notional amount of U.S.$3,452.9
million that were entered into in September 2004 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 is 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.$132.1 million (Ps1,471.6 million),
was recognized in stockholders' equity in 2004, and was reclassified to
earnings on 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 hedges in 2004 was a gain of approximately
U.S.$102.4 million (Ps1,140.7million) and was recognized in earnings. See note
17 to our consolidated financial statements included elsewhere in this annual
report.

Our Interest Rate Swaps

         As of December 31, 2003 and 2004, we were parties to interest rate
swaps for notional amounts of U.S.$1,850 million and U.S.$1,950.0 million,
respectively, entered into in order to hedge contractual cash flows (interest
payments)


                                      79


of underlying debt negotiated at floating rates. These interest rate
swaps, are part of, and complement, our financial strategy. However, they do
not meet the accounting hedge criteria. Consequently, changes in the estimated
fair value of these instruments were recognized in earnings, with the
exception of changes in the fair value of contracts with a notional amount of
U.S.$800 million as of December 31, 2003, which were designated as accounting
hedges of contractual cash flows (interest payments) of the related floating
rate debt. Therefore, changes in the estimated fair value of these instruments
were recognized in stockholders' equity and will be reversed in the income
statement as the financial expense of the related debt is accrued. Periodic
payments under the contracts are recognized in the income statements 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.

         During 2004, the notional amount of interest rate swaps increased by
U.S.$100 million as compared to 2003. This increase was mainly due to new
interest rate swaps for notional amounts totaling U.S.$200 million, negotiated
upon the exercise of our interest rate options ("swaptions"), which was
partially offset by the early settlement of interest rate swaps and cap
options for notional amounts totaling U.S.$100 million. See "-- Our Interest
Rate Swap Options," "-- Our Other Interest Rate Swap Options" and note 12A to
our consolidated financial statements included elsewhere in this annual
report.

Our Cross Currency Swaps

         As of December 31, 2003 and 2004, we held cross currency swap
contracts related to our short-term and long-term financial debt portfolio.
See the table above. 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 12B 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, 2003 and 2004, we recognized net
assets of U.S.$262.0 million (Ps3,128.7 million) and U.S.$208.5 million
(Ps2,322.7 million), respectively, related to the estimated fair value of the
short-term and long-term cross currency swap contracts, of which,

         o  U.S.$364.5 million (Ps4,352.7 million) as of December 31, 2003 and
            U.S.$300.7 million (Ps3,349.8 million) as of December 31, 2004
            relate to prepayments made to Yen and Dollar denominated
            obligations under our cross currency swaps, thereby decreasing the
            carrying amounts of the related debt, and

         o  A loss of approximately U.S.$102.5 million (Ps1,224.0 million) in
            2003 and a loss of approximately U.S.$92.2 million (Ps1,027.1
            million) in 2004 represented the contracts' estimated fair value
            before prepayment effects and includes:

               o  Losses of approximately U.S.$171.9 million (Ps2,052.8
                  million) in 2003 and approximately U.S.$131.8 million
                  (Ps1,468.3 million) in 2004, which are directly related to
                  variations in exchange rates between the inception of the
                  contracts and the balance sheet date, and which were offset
                  for presentation purposes as part of the related debt
                  carrying amount,


                                      80


               o  Gains of approximately U.S.$12.2 million (Ps145.7 million) in
                  2003 and approximately U.S.$10.9 million (Ps121.4 million) in
                  2004, 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.$57.2 million
                  (Ps683.0 million) in 2003 and approximately U.S.$28.7 million
                  (Ps319.7 million) in 2004, which were recognized within other
                  short-term and long-term assets and liabilities, as
                  applicable. See note 12B to our consolidated financial
                  statements included elsewhere in this annual report.

         As of December 31, 2003 and 2004, the effect on our balance sheet,
arising from the accounting assets and liabilities offset, was that the book
value of the financial liabilities directly related to the cross currency swap
contracts is presented as if such financial liabilities had been effectively
negotiated in the exchange currency instead of in the originally contracted
currency. For the years ended December 31, 2003 and 2004, the changes in the
estimated fair value of our cross currency swap contracts, excluding
prepayment effects in 2003 and 2004, resulted in a loss of approximately
U.S.$149.7 million (Ps1,787.6 million) and a loss of approximately U.S.$192.2
million (Ps2,341.8 million), respectively, which were recognized within the
comprehensive financing result.

Our Interest Rate Swap Options

         As of December 31, 2003, we held call option contracts negotiated
with financial institutions to exchange floating for fixed interest rates
(swaptions) for a notional amount of U.S.$200 million. For the sale of these
options, we received premiums of approximately U.S.$25 million (Ps297.3
million) in 2003. During 2003, U.S.$800 million of the U.S.$1,000 million
notional amount of the swaptions held by us as of December 31, 2002 matured,
and we entered into interest rate swaps for a notional amount of U.S.$800
million in connection with the counterparties' elections under the swaptions
to receive from us fixed interest rates and pay to us floating interest rates
for a five-year period. The remaining swaptions for notional amounts totaling
U.S.$200 million were scheduled to mature in October 2004. However, these
options were exercised in July 2004, and the counterparties elected to
negotiate new interest rate swaps with us. Under the new interest rate swaps,
they receive from us fixed interest rates and pay to us floating interest
rates for a five-year period. These swaptions granted the counterparties the
option to elect, at maturity of the options and at current market rates, to
receive from us fixed rates and pay us variable rates for a five-year period
or request net settlement in cash. For the year ended December 31, 2003,
premiums received, as well as the changes in the estimated fair value of these
contracts, which represented a gain of approximately U.S.$1.6 million (Ps19.1
million), were recognized in the comprehensive financing result. During 2003,
the call options that expired resulted in a loss of approximately U.S.$23.9
(Ps285.4 million), respectively, which were recognized in the comprehensive
financing result. See note 12A to our consolidated financial statements
included elsewhere in this annual report.

Our Derivatives Related to Energy Projects

         As of December 31, 2003 and 2004, we had an interest rate swap
maturing in May 2017, for a notional amount of U.S.$162.1 million and
U.S.$159.0 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. See
note 22F to our consolidated financial statements included elsewhere in this
annual report. During the life of the derivative contract and over its
notional amount, we will pay LIBOR 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.$174.5 million and U.S.$168.1 million in 2003 and 2004,
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 LIBOR rates. Through the sale of this option, we received a
premium of approximately U.S.$22 million (Ps262.7 million) in 2001. As of
December 31, 2003 and 2004, the combined estimated fair value of the swap and
floor contracts, amounting to approximate losses of U.S.$7.4 million (Ps88.4
million) and U.S.$6.3 million (Ps70.2 million), respectively, were recorded in
the comprehensive financing result for each period. As of December 31, 2003
and 2004, 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 18C to our consolidated financial
statements included elsewhere in this annual report.



                                      81


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,
2004. 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 Mexican Pesos and U.S. Dollars.
See note 12 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, 2004. 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, 2004 and is summarized as follows:




                                             Expected maturity dates as of December 31, 2004
                                  ---------------------------------------------------------------------
                                                                                      After                 Fair
             Debt                   2005      2006      2007      2008      2009      2010      Total       Value
------------------------------    -------   -------   -------   -------   -------    -------   -------     -------
                                  (Millions of U.S. Dollars equivalents of debt denominated in foreign currencies)
                                                                                    
Variable rate.................      559      1,348      1,147       59       216         37      3,366      3,366
Average interest rate.........     3.89%     4.27%      4.70%     5.15%     5.55%      6.20%       --         --
Fixed rate....................        4       441         82       663       383        511      2,084      2,316
Average interest rate.........     5.55%     5.45%      5.35%     5.24%     5.38%      5.65%       --         --



         As of December 31, 2004, 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, 2004, 62% of
our foreign currency denominated long-term debt bears floating rates at a
weighted average interest rate of LIBOR plus 45 basis points, after giving
effect to our interest rate swaps and cross currency swaps. As of December 31,
2004 we also held interest rate swaps for a notional amount of U.S.$1,950.0
million and with a fair value loss of approximately U.S.$174.2 million during
2004. Pursuant to these interest rate swaps, we receive variable rates and
deliver fixed rates over the notional amount. These derivatives, even when 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, 2004 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.$23.2 million (Ps258.4 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, 2004, approximately 33% of our
sales, before eliminations resulting from consolidation, were generated in
Mexico, 22% in the United States, 16% in Spain, 4% in Venezuela, 8% in Central
America and the Caribbean, 3% in Colombia, 2% in the Philippines, 2% in Egypt
and 10% from other regions and our cement and clinker trading activities. As
of December 31, 2004, our debt, considering the effects in the original
currencies generated by our cross currency swaps, amounted to Ps66.1 billion,
of which approximately 56% was Dollar-denominated, 15% was Euro-denominated,
14% was Yen-denominated and 14% was British Pound-denominated; therefore, we
have a foreign currency exposure arising from the Dollar-denominated debt, the
Euro-denominated debt, the Yen-denominated debt and the British
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 -- "Additional Information -- Material
Contracts" and "Risk Factors -- As of December 31, 2004, we have to pay our
Dollar, Yen and Pound denominated debt with revenues generated in Pesos or
other currencies, as we do not generate sufficient revenue in Dollars and Yen
from our operations to service all our Dollar and Yen denominated debt, which
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." 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. In March
2005, we concluded our acquisition of RMC, an entity that will have


                                      82


substantial revenues denominated in Pounds and Euros. Consequently, we believe
that we will generate sufficient reserves in these currencies to mitigate our
foreign currency risk.

         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, 2004, the estimated fair value of
these instruments was a gain of approximately U.S.$208.5 million (Ps2,322.7
million). The potential change in the fair value of these contracts as of
December 31, 2004 that would result from a hypothetical, instantaneous
appreciation of 10% in the exchange rate of the Yen against the Dollar,
combined with a depreciation of 10% in the exchange rate of the Mexican Peso
against the Dollar, would be a loss of approximately U.S.$96.3 million
(Ps1,072.8 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, 2004, excluding our foreign exchange derivatives for notional
amounts totaling U.S.$3,452.9 million entered into to hedge the firm
commitment for our acquisition of RMC, was a loss of approximately U.S.$171.1
million (Ps1,906.1 million). The potential change in the fair value of these
derivatives as of December 31, 2004 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.$143.2 million (Ps1,595.2 million), which would be partially
offset by a corresponding foreign translation gain as a result of our net
investment in foreign subsidiaries.

Equity Risk

         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
until December 31, 2004, the effects were recognized in the income statement
or as part of stockholders' equity, depending upon their designation and the
underlying instrument or program being hedged. 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 and our subsidiaries'
stock market price.

         As previously discussed, we have entered into equity forward
contracts on our own stock, pursuing different goals such as hedging our
several Dollar denominated stock option programs. See "-- Liquidity and
Capital Resources." As of December 31, 2004, the estimated fair market value
of our equity forward contracts was a gain of approximately U.S.$66.2 million.
The potential change in the fair value as of December 31, 2004 that would
result from a hypothetical, instantaneous decrease of 10% in the market value
of our stock would be a loss of approximately U.S.$116.6 million (Ps1,298.9
million).

Investments, Acquisitions and Divestitures

         The transactions described below represent our principal investments,
acquisitions and divestitures completed during 2002, 2003, and 2004.

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 the applicable regulators,
CEMEX UK Limited purchased the remaining 81.2% of RMC's outstanding shares and
completed our acquisition of RMC. The transaction value of this acquisition,
including our assumption of approximately U.S.$1.7 billion of RMC's debt, was
approximately U.S.$5.8 billion.

         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.$99.7 million. Located in Dixon, Illinois, the single cement facility has
an annual production capacity of 560,000 tons. This


                                      83


cement plant was sold on March 31, 2005 in connection with our sale of U.S.
assets in the Great Lakes region, as described below.

         In June 2003, Cementos Nacionales 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 would increase
our total clinker production capacity in the Dominican Republic to 2.2 million
tons per year, is expected to start operations by the end of 2005. We have
invested approximately U.S.$52 million in this project as of year end 2004 and
we expect to invest the remaining U.S.$78 million during 2005.

         In July and August 2002, through a tender offer and subsequent
merger, we acquired 100% of the outstanding shares of PRCC. The aggregate
value of the transaction was approximately U.S.$281.0 million, including
approximately U.S.$100.8 million of assumed net debt.

         On July 12, 2002, we purchased 25,429 shares of common stock
(approximately 0.3% of the outstanding share capital) of CAH from a CAH
investor for a purchase price of approximately U.S.$2.3 million, increasing
our equity interest in CAH to 77.7%. At the same time, we entered into
agreements to purchase an additional 1,483,365 shares of CAH common stock
(approximately 14.6% of the outstanding share capital) from several other CAH
investors in exchange for 28,195,213 CEMEX CPOs (subject to anti-dilution
adjustments), which exchange was originally scheduled to take place in four
equal quarterly tranches commencing on March 31, 2003. The exchange of 84,763
of these CAH shares took place in four quarterly tranches in 2003 as
originally scheduled. In April 2003, we amended the terms of the July 12, 2002
agreements with respect to the remaining 1,398,602 of the CAH shares. Instead
of purchasing those CAH shares in four equal quarterly tranches during 2003,
we agreed to purchase those CAH shares in four equal quarterly tranches
commencing on March 31, 2004. In 2004, 1398,602 CAH shares were exchanged for
27,850,713 CPOs with an approximate value of U.S.$172 million (Ps1,916.0
million). In August 2004, a subsidiary acquired a 6.83% equity interest in CAH
(695,065 shares) for approximately U.S.$70 million. Notwithstanding the
amendments, for accounting purposes, the CAH shares to be received by us in
exchange for CEMEX CPOs were considered to be owned by us effective as of July
12, 2002. As a result of these transactions, we have increased our stake in
CAH to 99.1%.

         On July 31, 2002, we purchased, through a indirect wholly-owned
subsidiary, the remaining 30% economic interest that was not previously
acquired by CAH in Solid, for approximately U.S.$95 million. At December 31,
2004, as a consequence of this transaction and the increase of our stake in
CAH, as described above, our proportionate economic interest in Solid was
approximately 99.1%.

         In May 2001, we acquired through CAH a 100% economic interest in
Saraburi Cement Company, now known as CEMEX (Thailand) Co. Ltd. or CEMEX
(Thailand), which then had an installed capacity of approximately 700,000
tons, for a total consideration of approximately U.S.$73 million. As a result
of the increase of our stake in CAH, as described above, at December 31, 2004,
our proportionate economic interest in CEMEX (Thailand) through CAH was
approximately 99.1%.

         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
affiliates, was approximately Ps5,166 million (U.S.$463.7 million) in 2002,
Ps4,703 million (U.S.$422.2 million) in 2003 and Ps4,835 million (U.S.$434
million) in 2004. 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.

Divestitures

         During 2002, CEMEX, Inc. sold its specialty mineral products
business, composed of one quarry in each of Virginia, New Jersey and
Massachusetts and two quarries in Pennsylvania, and other related assets for
approximately U.S.$49 million.

         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


                                      84


sold was approximately two million tons per year and the operations of these
plants represented approximately 10% of our U.S. operations' operating cash
flow for the year ended December 31, 2004.

         On April 26, 2005, we announced the divestiture of our 11.92%
interest in Cementos Bio Bio, S.A., a cement company in Chile, for
approximately U.S.$65 million. The proceeds from the sale will be applied to
reduce debt.

         See note 9A 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 GAAP, which differ
in some significant respects from U.S. GAAP. The Mexican GAAP 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 years ended December 31,
2002 and 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 GAAP 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 GAAP 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 GAAP 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,
2002, 2003, and 2004 amounted to Ps6,182 million, Ps8,720 million and Ps17,965
million, respectively, compared to majority net income under Mexican GAAP for
the years ended December 31, 2002, 2003 and 2004 of approximately Ps6,339
million, Ps7,508 million and Ps14,562 million, respectively. See note 24 to
our consolidated financial statements included elsewhere in this annual report
for a description of the principal differences between Mexican GAAP 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 December 2004, the Financial Accounting Standards Board ("FASB")
issued SFAS 123R, Share-Based Payment, a revision of Statement 123,
"Accounting for Stock Issued to Employees", which establishes standards for
the accounting of all share-based payment transactions, with a primary focus
on transactions in which an entity obtains employee services in share-based
payment transactions, also clarifies and expands guidance in several areas,
including measuring fair value, classifying an award as equity or as a
liability, and attributing compensation cost to reporting periods. SFAS123R
requires the entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award and eliminates the alternative to use APB Opinion 25's intrinsic
value method of accounting, permitted by Statement 123 as originally issued
(see note 24(r) to our financial statements included elsewhere in this annual
report), under which, upon compliance with certain rules, issuing stock
options to employees resulted in recognition of no compensation cost. The cost
under SFAS123R should be recognized over the period during which an employee
is required to provide service in exchange for the award (usually the vesting
period). The grant-date fair value of employee share awards will be estimated
using option-pricing models, unless observable market prices for the same or
similar instruments are available.

         SFAS 123R will be effective for CEMEX as of January 1, 2006 and will
apply to all awards granted after the effective date and to awards modified,
repurchased, or cancelled after that date. The cumulative effect of initially
applying this statement, if any, will be recognized as of the effective date.
As of the effective date, entities that used the fair-value-based method for
either recognition or disclosure under Statement 123 (see note 24(r) to our
financial


                                      85


statements included elsewhere in this annual report) will apply SFAS123R using
a modified version of prospective application. Under this transition method of
adoption, compensation cost is recognized for the portion of outstanding awards
for which the requisite service has not yet been rendered, based on the
grant-date fair value of those awards calculated under Statement 123 for either
recognition or pro forma disclosures. For periods before the effective date,
entities may elect to apply a modified version of retrospective application
under which financial statements for prior periods are adjusted on a basis
consistent with the pro forma disclosures required for those periods by
Statement 123.

         In connection with the adoption of SFAS 123R in 2006, if we elect to
grant new equity awards to employees, SFAS 123R may have a material impact in
our net income under U.S. GAAP (see pro forma historical information on
footnote 24(r) to our financial statements included elsewhere in this annual
report). In respect of expected non-vested awards as of the adoption date, we
consider that their cost will not have a material effect given that they are
very few outstanding after the restructuring process of employee' stock option
programs undertaken during 2004.

         In December 2004, the FASB issued SFAS 151, Inventory Costs, which
clarifies the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). Under this statement,
such items will be recognized as current-period charges. In addition, this
statement requires that allocation of fixed production overheads to the costs
of conversion be based on the normal capacity of the production facilities.
This statement will be effective for us for inventory costs incurred on or
after January 1, 2006. We do not expect any material impact from the adoption
of this statement.

         In December 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary
Assets, which eliminates an exception in APB 29 for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. The
exception provides that those exchanges should be measured based on the
recorded amount of the nonmonetary assets relinquished, rather than on the
fair values of the exchanged assets. A nonmonetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. This statement will be effective
for us for nonmonetary asset exchanges occurring on or after January 1, 2006.
We do not expect any material impact from the adoption of this statement.



                                      86




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, 2004. Where applicable, we have indicated recently
announced appointments that became effective as of March 1, 2005. The terms of
office of the executive officers are indefinite.

Lorenzo H. Zambrano,                        Joined CEMEX in 1968. During his
         Chief Executive Officer            career with CEMEX, Mr. 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, the International Advisory
                                            Board of Citigroup, and the
                                            Chairman's Council of Daimler
                                            Chrysler AG. He is also a member of
                                            the board of directors of Fomento
                                            Economico Mexicano, S.A. de C.V.,
                                            Empresas ICA, S.A. de C.V., Alfa,
                                            S.A. de C.V., Grupo Financiero
                                            Banamex, S.A. de C.V., Vitro, S.A.
                                            and Grupo Televisa, S.A. 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 Stanford Business
                                            School's advisory board.

                                            In addition, he is member of the
                                            board of directors of Museo de Arte
                                            Contemporaneo de Monterrey A.C
                                            (MARCO), Conservacion
                                            Internacional, and the Americas
                                            Society, Inc. 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 Villareal and
                                            Mauricio Zambrano Villareal, both
                                            members of our board of directors.

Hector Medina,                              Joined CEMEX in 1988.  He has held
         Executive Vice President of        several positions in CEMEX,
         Planning and Finance               including director of strategic
                                            planning from 1991 to 1994,
                                            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 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. Mr. Medina
                                            is a member of the board of
                                            directors of Cementos Chihuahua,
                                            Cia 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.

                                      87



Armando J. Garcia Segovia,                  Initially joined CEMEX in 1975
         Executive Vice President           and rejoined CEMEX in 1985.  He has
         of Development                     served as director of operational
                                            and strategic planning 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. 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.

                                            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 Materiales
                                            Industriales de Chihuahua, S.A. de
                                            C.V., Calhidra y Mortero de
                                            Chihuahua, S.A. de C.V., Grupo
                                            Cementos de Chihuahua, S.A. de
                                            C.V., Construcentro de Chihuahua,
                                            S.A. de C.V., Control
                                            Administrativo Mexicano, S.A. de
                                            C.V., Compania Industrial de
                                            Parras, S.A. de C.V., Fabrica La
                                            Estrella, S.A. de C.V., Prendas
                                            Textiles, S.A. de C.V., Telas de
                                            Parras, S.A. de C.V., Canacem,
                                            Confederacion Patronal de la
                                            Republica Mexicana, Centro Patronal
                                            de Nuevo Leon, and Instituto
                                            Mexicano del Cemento y del
                                            Concreto. 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.

Victor Romo,                                Joined CEMEX in 1985 and has served
         Executive Vice President of        as director of administration of
         Administration                     CEMEX Espana from 1992 to 1994,
                                            general 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
         President of CEMEX                 as director of trading from 1988 to
         North America Region and           1992, president of CEMEX USA
         Trading                            from 1992 to 1994, 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 of ITESM and holds
                                            an M.B.A. from the Johnson School
                                            of Management at Cornell
                                            University.

Fernando Gonzalez,                          Joined CEMEX in 1989 and has served
         President of the European          as vice-president-human resources
         Region, Effective March 1,         from 1992 to 1994, vice-president-
         2005                               strategic planning from 1994 to
                                            1998, president of CEMEX Venezuela
                                            from 1998 to 2000, president of
                                            CEMEX Asiafrom 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. He is a
                                            graduate in business administration
                                            and holds a master's degree in
                                            administration from ITESM.
                                            Previously, he worked for Grupo
                                            Industrial Alfa, S.A. de C.V. from
                                            1976 to 1989.

                                      88


Jose Luis Saenz de Miera,                   Joined CEMEX Espana in 1993 as
         President of the Iberia, Middle    general manager of administration
         East, Africa and Asia Region,      and finance, and in 1994 he was
         Effective March 1, 2005            appointed president of CEMEX Espana.
                                            Mr. Saenz de Miera has served as
                                            president of the Europe, Africa and
                                            Asia region from October 1998 to
                                            February 2005. Since March 1, 2005,
                                            Mr. Saenz de Miera has been
                                            responsible for the Iberian
                                            Peninsula, Italy, Africa, and Asia,
                                            including the United Arab Emirates
                                            and Malaysia. He studied economic
                                            sciences in Universidad Complutense
                                            de Madrid and is a certified public
                                            accountant from Instituto de
                                            Censores Jurados de Cuentas in
                                            Spain. Previously, he was employed
                                            from 1973 to 1993 at KPMG Peat
                                            Marwick, since 1982 as partner and
                                            between 1988 and 1993 as deputy
                                            senior partner. Mr. Saenz de Miera
                                            is a citizen of Spain.

Juan Romero,                                Joined CEMEX in 1992 and has
         President of CEMEX South           occupied several senior management
         America and the Caribbean,         positions, including commercial
         Effective March 1, 2005            director for CEMEX Espana, 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 and Mexico. Mr. Romero
                                            graduated from Universidad de
                                            Comillas in Spain, where he studied
                                            Law and Economics and Enterprise
                                            Sciences. Previously, Mr Romero
                                            worked for Cementos Sanson and
                                            Cementos Portland Morata de Jalon.
                                            Mr. Romero is a citizen of Spain.

Rodrigo Trevino,                            Joined CEMEX in 1997 and has served
         Chief Financial Officer            as 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
         General Counsel                    as general counsel since 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 the our board of
directors. The members of our board of directors serve for one-year terms. At
our 2004 annual shareholders' meeting held on April 28, 2005, 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
                                            general director 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,
                                            and a first cousin of Rogelio
                                            Zambrano Lozano, a member of our
                                            board of directors.

Armando J. Garcia Segovia                   See "-- Senior Management."

                                      89


Rodolfo Garcia Muriel                       Has been a member of our board of
                                            directors since 1985. He is also
                                            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, S.A. de
                                            C.V. Zona Norte, director of Carza,
                                            S.A. de C.V. and Parque Plaza
                                            Sesamo, S.A. de C.V., and a member
                                            of the board of directors of
                                            Hospital San Jose is a first cousin
                                            of Lorenzo H. Zambrano, chairman of
                                            our board of directors and our
                                            chief executive officer, and of
                                            Lorenzo Milmo Zambrano, a member of
                                            our board of directors.

Roberto Zambrano Villarreal                 Has been a member of our board of
                                            directors since 1987 and president
                                            of our audit committee since 2002.
                                            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 chief
                                            executive officer and chairman of
                                            the board of directors of Empresas
                                            ICA Sociedad Controladora, S.A. de
                                            C.V., and a member of the board of
                                            directors of Telefonos de Mexico,
                                            S.A. de C.V., Grupo Financiero
                                            Banamex, S.A. de C.V., Grupo Carso,
                                            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 and,
                                            Fundacion ICA. He is a founding
                                            associate of Fundacion Letras
                                            Mexicanas and is currently
                                            president of Patronato UNAM.

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. 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
                                            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. He is
                                            chairman of the board and chief
                                            executive officer of Savia, S.A. de
                                            C.V. and


                                      90


                                            member of the board of Nacional de
                                            Drogas, S.A. de C.V., Grupo Maseca,
                                            S.A. de C.V., and Grupo Comercial
                                            Chedraui, S.A. de C.V. He is an
                                            external advisor of the World Bank
                                            Board for Latin America and the
                                            Caribbean, and a member of the
                                            board of The Donald Danforth Plant
                                            Science Center.

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,
                                            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 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 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., and Grupo Herdez, S.A. de
                                            C.V., and member of the board of
                                            directors of Grupo Transportacion
                                            Ferroviaria Mexicana, S.A. de C.V.,
                                            Grupo Cuervo, S.A. de C.V.,
                                            Laboratorio Sanfer-Hormona, and
                                            Alexander Forbes Mexico. Mr. Rincon
                                            Gallardo is a member of
                                            Pro-Dignidad, A.C., 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.

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., Consorcio Industrial
                                            de Exportacion, S.A. de C.V., and
                                            an alternate member of the board of
                                            directors of Vitro, S.A. He is the
                                            father of Tomas Brittingham
                                            Longoria, a member of our board of
                                            directors.

Tomas Milmo Santos                          Has been an alternate member of our
                                            board of directors since 2001. 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 Coparmex, Cemex
                                            Mexico, HSBC Mexico, and ITESM. Mr.
                                            Milmo Santos holds a degree in
                                            economics from Stanford University.

                                      91



                                            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, 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. de C.V. He is a
                                            brother of Armando J. Garcia
                                            Segovia and a first cousin of
                                            Rodolfo Garcia Muriel, both members
                                            of our board of directors.

Board Practices

         In compliance with amendments to Mexican securities laws enacted in
2001, our shareholders approved, at a general extraordinary meeting of
shareholders held on April 25, 2002, a proposal to amend various articles of
CEMEX's by-laws, or estatutos sociales, in order to improve our standards of
corporate governance and transparency, among other matters. The amendments
require that at least 25% of our directors qualify as independent directors;
that our board of directors, at its first meeting after the adoption of the
amendments, establish an audit committee; and that shareholders representing
at least 10% of our shares have the right to designate an examiner and an
alternate examiner.

         We have not entered into any service contracts with our directors
that provide for benefits upon termination of employment.

         The Audit Committee

         The audit committee is responsible for reviewing related party
transactions and is required to submit an annual report of its activities to
our board of directors. The audit committee is also responsible for the
appointment, compensation and oversight of our external auditors. The audit
committee has also adopted procedures for handling complaints regarding
accounting and auditing matters, including anonymous and confidential methods
for addressing concerns raised by employees. Under our by-laws, the majority
of the members of the audit committee, including its president, are required
to be independent directors.

         Set forth below are the names of the members of our audit committee.
The terms of the members of our audit committee are indefinite, and they may
only be 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."

        Lorenzo Milmo Zambrano                 See "--Board of Directors."

        Alfonso Romo Garza                     See "--Board of Directors."

        Tomas Brittingham Longoria             See "--Board of Directors."

Compensation of Our Directors and Members of Our Senior Management

         For the year ended December 31, 2004, 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 Ps221.8 million. Approximately Ps26 million of this
amount was paid pursuant to the bonus plan described below under "-- Employee
Stock Option Plan (ESOP)." During 2004, as part of their compensation, the
members of our board of directors, alternate members of our board of directors
and senior managers, as a group, received options to acquire 8,248,489 CPOs at
a weighted average exercise price of U.S.$5.08 per CPO. These options expire
in 2013 and 2014. As of December 31, 2004, the members of our board of
directors, alternate members of our board of directors and senior managers had
exercised options covering 6,105,227 of these CPOs. After these exercises and
giving


                                      92


effect to anti-dilution provisions in the options, the number of underlying
CPOs was 2,427,588, and the adjusted weighted average exercise price per CPO
was U.S.$5.79 as of December 31, 2004.

         In addition, approximately Ps11.7 million was set aside or accrued to
provide pension, retirement or similar benefits.

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,
2004, after giving effect to the exchange program implemented in November 2001
described below, options to acquire 3,410,155 CPOs remain outstanding under
this program, with a weighted average exercise price of approximately Ps30.11
per CPO. As of December 31, 2004, the outstanding options under this program
had a weighted average remaining tenure of approximately 3.0 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 2004, starting with the 2004 voluntary exchange program
described below, we further amended our ESOP. The amendments provide, among
other things, that the options will be automatically exercised at a
predetermined price of U.S.$7.50 per CPO if, at any time during the life of
the options, the CPO closing market price reaches or exceeds that
predetermined price. Any gains realized through exercise of the options,
whether automatic or voluntary, will be invested in restricted CPOs. The
restricted CPOs received upon exercise of the options will be held in a trust
on behalf of each employee. The restrictions will gradually lapse, at which
time the CPOs will become freely transferable and the employee may withdraw
them from the trust.

         Certain key executives participate in a bonus plan that pays a
percentage of the median salary of their corresponding pay-grade. This bonus
is calculated and paid annually, 50% in cash and 50% in CPOs under an ESOP.

CEMEX, Inc. ESOP

         As a result of the acquisition of CEMEX, Inc. (formerly Southdown) 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 U.S. Dollars equivalent to the market price of
one ADS as of the grant date and have a 10-year term. Twenty-five percent of
the options vest 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, 2004, considering the options granted as a
result of the exchange program implemented in 2001, the options granted
thereunder, and the exercise of options that has occurred through that date,
options to acquire 1,925,452 ADSs, remain outstanding under this program.
These options have a weighted average exercise price of approximately
U.S.$4.89 per CPO or U.S.$24.45 per ADS as each ADS currently represents five
CPOs. The number of options under these ADS programs are presented below in
terms of CPO equivalents and do not give effect to the 2-for-1 stock split we
expect to occur in July 2005.

         Stock options activity during 2003 and 2004, the balance of options
outstanding as of December 31, 2003 and 2004 and other general information
regarding our stock option programs, is presented in note 16 to our
consolidated financial statements included elsewhere in this annual report.

         As of December 31, 2004, the following ESOP options to purchase our
securities were outstanding:


                                      93





                         Number of CPOs or                          Range of exercise prices
  Title of security       CPO equivalents                                per CPOs or CPO
  underlying options     underlying options     Expiration Date            equivalents
---------------------   --------------------    ---------------     ------------------------
                                                           
     CPOs (Pesos)            3,410,155             2005-2011        Ps14.97 - 37.84

 CPOs (Dollars) (may
     be instantly
    cash-settled)            3,455,402             2011-2013        U.S.$4.22 - 5.82

    CPOs (Dollars)
 (US$7.50 knock-out;
  receive restricted
       CPOs)(1)              1,240,689                2012          U.S.$5.13

    CPOs (Dollars)
 (US$8.50 knock-out;
  receive restricted
        CPOs)              137,673,590             2012-2014        U.S.$5.79 - 7.47

    CPOs (Dollars)
  (Unlimited upside;
  receive restricted
        CPOs)               18,323,866                2012          U.S.$7.47

   CEMEX, Inc. ESOP          9,627,260             2011-2013        U.S.$3.89 - 5.58


         __________________
          (1)     On January 17, 2005, the closing CPO market price reached
                  U.S.$7.50, and, as a result, all existing options were
                  automatically exercised.

         As of December 31, 2004, our senior management and directors held the
following ESOP options to acquire our securities:




                         Number of CPOs or                         Range of exercise prices
  Title of security       CPO equivalents                               per CPOs or CPO
 underlying options     underlying options      Expiration Date           equivalents
-------------------     ------------------      ---------------    ------------------------
                                                           
   CPOs (Dollars)
 (US$8.50 knock-out;
 receive restricted
        CPOs)               43,833,077             2012-2014       U.S.$5.79 - 7.47

   CPOs (Dollars)
 (Unlimited upside;
 receive restricted
        CPOs)                6,182,954               2012          U.S.$7.47



                                      94



         As of December 31, 2004, our employees and former employees, other
than senior management and directors, held the following ESOP options to
acquire our securities:




                         Number of CPOs or                         Range of exercise prices
  Title of security       CPO equivalents                               per CPOs or CPO
 underlying options     underlying options      Expiration Date           equivalents
--------------------    ------------------      ---------------    ------------------------
                                                            
    CPOs (Pesos)             3,410,155             2005-2011       Ps14.97 - 37.84
 CPOs (Dollars) (may
    be instantly
    cash-settled)            3,455,402             2011-2013       U.S.$4.22 - 5.82

   CPOs (Dollars)
 (US$7.50 knock-out;
 receive restricted
      CPOs)(1)               1,240,689               2012          U.S.$5.13

   CPOs (Dollars)
 (US$8.50 knock-out;
 receive restricted
        CPOs)               93,840,513             2012-2014       U.S.$5.79 - 7.47

   CPOs (Dollars)
 (Unlimited upside;
 receive restricted
        CPOs)               12,140,912               2012          U.S.$7.47

  CEMEX, Inc. ESOP           9,627,260             2011-2013       U.S.$3.89 - 5.58


         __________________
          (1)     On January 17, 2005, the closing CPO market price reached
                  U.S.$7.50, and, as a result, all existing options were
                  automatically exercised.

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 have an escalating strike price in U.S. Dollars and
are 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, 2004, 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, 1,876,830 options to acquire 2,154,413 CPOs remained
outstanding under this program, with an exercise price of approximately
U.S.$5.22 per CPO. As of December 31, 2004, the outstanding options under this
program had a remaining tenure of approximately 7.4 years.

The February 2004 Voluntary Exchange Program

         In February 2004, we implemented a voluntary exchange program to
offer ESOP and voluntary employee stock option plan, or VESOP, participants
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. 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 reaches U.S.$7.50.


                                      95


         Any gain realized through the exercise of these options was required
to be invested in restricted CPOs at a 20% discount to market. 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, which was scheduled to grow annually at a 10% rate.

         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.

         As of December 31, 2004, considering the options granted under the
exchange offer, the exercise of options through that date, and the result of
the 2004 voluntary early exercise program described below, 1,190,224 options
to acquire 1,240,689 CPOs remained outstanding under this program, with an
exercise price of approximately U.S.$5.13 per CPO. As of December 31, 2004,
the outstanding options under this program had a remaining tenure of
approximately 7.5 years.

         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 have an initial
strike price of US$7.4661, which is US$0.50 above the closing CPO market price
on the date on which the old options were exercised, and which will grow at a
rate of 5.5% per annum. The new options will expire after 7.5 years. All gains
from the exercise of these new options will be paid in restricted CPOs. The
restrictions will be removed gradually within a period of between two and four
years, depending on the exercise date.

         The new options may be exercised at any time at the discretion of
their holders. Of the 139,151,236 new options, 120,827,370 will be
automatically exercised if the closing CPO market price reaches U.S.$8.50,
while the remaining 18,323,866 options will not have an automatic exercise
threshold. Holders of these options will receive an annual payment of
U.S.$0.11 net of taxes per option outstanding as of the payment date. This
payment will grow annually at a 10% rate.

         For accounting purposes under Mexican and U.S. GAAP, as of December
31, 2004, we accounted for the new options, including the U.S.$0.11 per option
payment made to employees, under the February 2004 voluntary exchange program,
under the intrinsic value method through earnings in the same manner as we
currently do under existing plans. See notes 3W and 16 to our consolidated
financial statements included elsewhere in this annual report.

Voluntary Employee Stock Option Plan (VESOP)

         During 1998 and 1999, we established voluntary employee stock option
plans, or VESOPs, pursuant to which managers and senior executives elected to
purchase options to acquire up to 36,468,375 CPOs. These VESOP options,
exercisable quarterly over a period of five years, had a predefined exercise
price in U.S. Dollars which increased quarterly, thereby taking into account
the funding cost in the market. As of December 31, 2004, all these options had
expired.

         During 2002, we established an additional VESOP, pursuant to which
managers and senior executives were entitled to purchase, on a monthly basis,
new options for up to an aggregate number equal to the total number of options
exercised during the same period by other executives under the November 2001
ESOP voluntary exchange program. During 2002, we sold 2,120,395 of these VESOP
options and received a premium equivalent to a percentage of the CPO price,
which amounted to approximately U.S.$1.5 million (Ps17.8 million). As of
December 31, 2004, after giving effect to exercises of these options and
anti-dilution provisions, the number of CPOs underlying these options was
40,177, with a weighted average exercise price of approximately U.S.$5.92 per
CPO.


                                      96


         In January 2003, we established a new VESOP through which our
employees who held options under our old VESOPs, as well as members of our
senior management and other eligible executives, elected to purchase
38,583,989 new options for a premium of approximately U.S.$9.7 million
(Ps107.0 million). The new options, which had an increasing U.S. Dollar
exercise price of approximately U.S.$3.58 per CPO, equal to the closing market
price of one CPO at the date of sale, and a five-year term, contained an
automatic mandatory exercise condition that would be triggered when the CPO
market price reached a certain level. The CPO market price reached this level
in September 2003 and, as a result, all the options were exercised. Employees
and directors who exercised their options under the new VESOP received the
corresponding gain in CPOs, which they were obligated to hold in their
entirety for a period of two years after exercise. Following the second
anniversary of the exercise date, one half of the CPOs acquired under the
VESOP may be sold by the holder, and the remaining CPOs may be sold following
the third anniversary of the exercise date.

         In connection with the new VESOP, in March 2003 we repurchased
29,001,358 appreciation warrants from several of the eligible executives, at a
price per appreciation warrant of Ps3.70, the market price for our
appreciation warrants on February 6, 2003, the date of the offer to purchase
appreciation warrants from the executives. Executives with then outstanding
loans from CEMEX used the proceeds from the repurchase of 5,942,724
appreciation warrants to repay these loans. The remaining proceeds were used
to partially pay for the subscription for options under our new VESOP program.
Also, as part of the new VESOP program, in March 2003 we repurchased from some
of the eligible executives and directors options covering 294,074 CPOs under
our old VESOPs at a price per option of U.S.$0.0096, and options covering
8,158,574 CPOs under our old VESOPs at a price per option of U.S.$0.1164.
These prices represented a fraction of the theoretical value of the options on
January 6, 2003, the date of the offer to purchase the options from the
executives and directors. The proceeds from the repurchase of the options
under the old VESOPs were used to subscribe for options under our new VESOP,
as mandated by the new VESOP program.

         As of December 31, 2004, all options under the new VESOP had been
exercised and no options remained outstanding thereunder.

         As of December 31, 2004, the following VESOP options to acquire our
securities were outstanding.





  Title of security       Number of CPOs                                 Option            Range of exercise
  underlying options    underlying options    Expiration Date        Purchase Price          price per CPO
---------------------   ------------------    ---------------     ------------------      -------------------

                                                                                       
         CPOs                 40,177                2011            U.S.$0.76 - 0.63           U.S.$5.92


         As of December 31, 2004, no member of our senior management or board
of directors held any VESOP options to acquire our securities.




                                      97




Employees

         The information set forth in this section does not take into account
the RMC acquisition or the sale of U.S. assets in the Great Lakes region, both
of which occured after December 31, 2004.

         As of December 31, 2004, we had approximately 26,679 employees
worldwide, which represented an increase of 2.75% from year-end 2003.

         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:




                                                                                       Central
                                                                                       America
                    United                                                             and the
          Mexico    States*   Spain  Venezuela  Colombia  Egypt  Philippine  Thailand  Caribbean   Others    Total
          ------    -------   -----  ---------  --------  -----  ----------  --------  ---------   ------    -----

                                                                            
2002      9,184     4,608     3,035    2,334      858       891      692       220        2,569     2,361    26,752
2003      8,942     4,709     2,963    1,700      800       873      669       224        2,599     2,486    25,965
2004      9,857     4,977     2,833    1,770      743       929      603       233        2,593     2,141    26,679


*  2003 and 2004 include Dixon-Marquette Cement

         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. Approximately
one-fourth of our employees in the United States are represented by unions,
with the largest number being members of the International Brotherhood of
Boilermakers. With the exception of the non-union facility located in Florida,
collective bargaining agreements are in effect at all our U.S. cement plants
and have various expiration dates ending from 2005 through 2011. During 2004,
we reached agreements with two of our plants, and one plant agreement
(Clinchfield, Georgia) is pending. Our Spanish union employees have contracts
that are renewable every two to three years on a company-by-company basis.
Each of our subsidiary companies operating CEMEX Venezuela's plants has its
own union, and each company has separately negotiated three-year labor
contracts with the union employees of the relevant plants. A single union
represents the union employees of the Bucaramanga and Cucuta cement plants in
Colombia. There are also collective agreements with non union workers at the
Caracolito cement plant, Santa Rosa cement plant and all ready-mix plants in
Colombia. Our relationships with both union representatives and non union
workers are good. Our Panamanian union, which is the only autonomous union in
the country that is not affiliated with any union confederation or official
group, has one labor contract that is renewable every four years. Our
Philippine union employees are represented by four unions and have collective
bargaining agreements that have a term of five years, which are typically
renegotiated in the third and fifth years of the term. Our Egyptian union
employees are represented by one union. We consider labor relations with our
employees to be satisfactory. In 2003, approximately 1,800 former union
employees in Egypt filed individual lawsuits against Assiut, claiming unfair
employment practices relating to the implementation of an employee early
retirement program. A total of 850 of these lawsuits have already been
dismissed by the court, and we do not consider the amount sought by the
remaining plaintiffs to be material to our operations.

Share Ownership

         As of March 31, 2005, our senior management and directors and their
immediate families owned, collectively, approximately 6.34% 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.



                                      98





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 May 9, 2005, as of March 31,
2005, Southeastern Asset Management, Inc., an investment adviser registered
under the U.S. Investment Advisers Act of 1940, as amended, beneficially owned
35,289,836 ADSs and 12,540,300 CPOs, representing 188,989,480 CPOs or
approximately 10.2% of our outstanding capital stock. Southeastern Asset
Management, Inc. does not have voting rights different from our other
shareholders.

         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, 2005, our outstanding capital stock consisted of
3,704,060,248 Series A shares and 1,852,030,124 Series B shares, in each case
including shares held by our subsidiaries.

         As of March 31, 2005, a total of 3,580,343,222 Series A shares and
1,790,171,611 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, 2005, through our subsidiaries, we owned
approximately 153.8 million CPOs, representing approximately 8.3% of our
outstanding CPOs and 8.6% of our outstanding voting stock. An additional 162
million CPOs, representing approximately 8.7% of our outstanding CPOs and 9%
of our outstanding voting stock, were held subject to equity derivative and
other transactions. 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.

         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 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 31, 2005, we had 359 ADS holders of record in the United
States, holding approximately 53% of our outstanding CPOs.

         On April 28, 2005, our shareholders approved a new stock split, which
we expect to occur in July 2005. In connection with the stock split, each of
our existing Series A shares will be surrendered in exchange for two new
Series A shares, and each of our existing Series B shares will be 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. The number of our existing ADSs will not change as a
result of the stock split; instead the ratio of CPOs to ADSs will be modified
so that each existing ADS will represent ten new CPOs following the stock
split and the CPO trust amendment.

                                      99


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 2004, the largest aggregate
amount of loans we had outstanding to our directors and members of senior
management was Ps1,654,384. As of March 31, 2005, the amount outstanding was
Ps10,743,274, with an average interest rate of 1.9% per annum. The increase is
a result of the appointment of an additional executive officer who had a
pre-existing loan from us.

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, 2004, 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"
and "-- Our use of equity derivative financing may have adverse effects on the
market for our securities and our subsidiaries' securities and may adversely
affect our ability to achieve operating efficiencies as a combined group."

         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. 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.

                                      100


         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,
2004:

                                                   Dividends Per Share
                                              ----------------------------
                                              Constant Pesos       Dollars
                                              --------------       -------
2000..................................             0.66             0.06
2001..................................             0.77             0.07
2002..................................             0.82             0.07
2003..................................             0.85             0.08
2004..................................             0.82             0.07


         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, 2004, were as follows: 2000, Ps1.98 per CPO (or
Ps0.66 per share); 2001, Ps2.31 per CPO (or Ps0.77 per share); 2002, Ps2.46
per CPO (or Ps0.82 per share); 2003, Ps2.55 per CPO (or Ps0.85 per share); and
2004, Ps2.46 per CPO (or Ps0.82 per share). As a result of dividend elections
made by shareholders, in 2000, Ps331 million in cash was paid and 59 million
additional CPOs were issued in respect of dividends declared for the 1999
fiscal year; in 2001, Ps99 million in cash was paid and 70 million additional
CPOs were issued in respect of dividends declared for the 2000 fiscal year; in
2002, Ps273 million in cash was paid and 64 million additional CPOs were
issued in respect of dividends declared for the 2001 fiscal year; in 2003,
Ps71 million in cash was paid and 99 million additional CPOs were issued in
respect of dividends declared for the 2002 fiscal year; and in 2004, Ps167
million in cash was paid and 75 million additional CPOs were issued in respect
of dividends declared for the 2003 fiscal year.

         At our 2004 annual shareholders' meeting, which was held on April 28,
2005, our shareholders approved a dividend of Ps2.60 per CPO (Ps0.87 per
share) for the 2004 fiscal year. Shareholders will be entitled to receive the
dividend in either stock or cash consistent with our past practices. In order
to have sufficient shares to issue to those shareholders who choose to receive
the dividend in stock, our shareholders approved an increase in the variable
part of our capital stock through the capitalization of retained earnings in
an amount up to Ps4,815,278,332, through the issuance of up to 240 million
series A shares and 120 million series B shares, to be represented by new
CPOs. Our shareholders delegated to our board of directors the determination
of the final amount of the capital increase, which will be determined once the
final number of CPOs required to be issued in connection with the dividend is
established and will be based on the then current market price of our CPO on
the Mexican Stock Exchange, minus the 20% discount at which those CPOs will be
issued.

Significant Changes

         Except as described herein, no significant change has occurred since
the date of our consolidated financial statements included in this annual
report.




                                      101




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 five CPOs,
are listed on the NYSE and trade under the symbol "CX." Until their expiration
on December 21, 2004, our appreciation warrants were listed on the Mexican
Stock Exchange and our ADWs, each of which represented five appreciation
warrants, were listed on the NYSE. Following our November 2001 exchange offer
of new appreciation warrants and new ADWs for our old appreciation warrants
and old ADWs, the trading of our old appreciation warrants and old ADWs
substantially declined and formally ceased upon their expiration on December
13, 2002. The following table sets forth, for the periods indicated, the
reported highest and lowest market quotations in nominal Pesos for CPOs, old
appreciation warrants and new appreciation warrants on the Mexican Stock
Exchange and the high and low sales prices in Dollars for ADSs, old ADWs and
new ADWs on the NYSE.



                                                                    Old                          New
                                                                appreciation                appreciation
     Calendar Period        CPOs(1)             ADSs(2)         warrants(3)   Old ADWs(4)    warrants(5)         New ADWs(6)
-----------------------  -------------      --------------      ------------  -----------   -------------      ---------------
Yearly                   High      Low      High       Low       High    Low   High   Low    High     Low      High        Low
------                   ----      ---      ----       ---       ----    ---   ----   ---    ----     ---      ----        ---
                                                                                       
2000................... Ps53.80 Ps32.50 U.S.$28.75 U.S.$17.19  Ps8.50 Ps2.00 Ps4.75 Ps1.00       --      --        --        --
2001...................   51.65   34.50      28.30      17.63    4.85   2.00   2.85   1.00       --      --        --        --
2002...................   61.82   39.10      33.00      19.25    6.00   3.00   3.88   0.01  Ps 8.50 Ps 3.00 U.S.$4.60 U.S.$1.22
2003...................   59.50   35.65      26.64      16.31      --     --     --     --     7.00    2.50      3.20      0.95
2004...................   82.00   58.30      36.56      25.97                                 20.60    6.80      9.60      2.80
Quarterly
      2003
      First quarter       48.66   35.65      23.35      16.31      --     --     --     --     4.00    2.50      1.80      0.95
      Second quarter      48.58   37.62      23.10      17.44      --     --     --     --     3.80    2.50      1.65      1.00
      Third quarter       57.70   46.20      26.20      22.06      --     --     --     --     5.30    3.10      2.25      1.35
      Fourth quarter      59.50   51.49      26.64      23.20      --     --     --     --     7.00    4.90      3.20      2.05
      2004
      First quarter (7)   66.50   58.30      29.96      26.20                                  9.40    6.80      3.75      2.80

      Second quarter      70.50   60.39      31.35      25.97                                 11.00    7.20      4.30      3.00
      Third quarter       71.25   62.21      31.31      26.95                                 10.50    9.50      4.25      3.60
      Fourth quarter      82.00   62.39      36.56      27.14                                 20.60    9.00      9.60      3.61
      Monthly
      2004-2005
           October        67.60   62.39      29.96      27.14      --     --     --       --   9.50    9.00      3.70      3.61
           November       72.40   66.50      32.21      28.85      --     --     --       --  14.50    9.00      6.20      3.70
           December       82.00   72.20      36.56      32.23      --     --     --       --  20.60   15.00      9.60      6.29
           January        85.00   78.00      37.72      34.55      --     --     --       --     --      --        --        --
           February       90.80   83.80      40.97      37.50      --     --     --       --     --      --        --        --
           March          93.50   80.51      42.52      35.83      --     --     --       --     --      --        --        --
           April          84.40   75.50      38.30      34.13      --     --     --       --     --      --        --        --



___________
Source: Based on data of the Mexican Stock Exc hange and the NYSE.
(1)    As of December 31, 2004, approximately 96. 6% of our outstanding share
       capital was represented by CPOs.
(2)    The ADSs began trading on the NYSE on September 15, 1999.
(3)    The old appreciation w arrants began trading on the Mexican Stock
       Exchange on December 13, 1999 an d expired on December 13, 2002.
(4)    The old ADWs began trading on the NYSE on December 13, 1999 and expired
       on December 13, 2002.
(5)    The new appreciation warrants began trading on the Mexican Stock
       Exchange on December 24, 2001 and expired on Decem ber 21, 2004.
(6)    The new ADWs were initially listed for tr ading on the NYSE on December
       24, 2001, but were not actually traded un til January 4, 2002. The new
       ADWs expired on December 21, 2004.
(7)    In January 2004, we purchased 90,018,042 new appreciation warrants
       (including new appreciation warrants repr esented by new ADWs) through a
       modified "Dutch Auction" cash tender offe r we launched in November
       2003, which allowed holders to tender their new appreciation warrants
       and new ADWs at a price in Pesos not greater than Ps8.10 per new
       appreciation warrant (Ps40.50 per new ADW) nor less th an Ps5.10 per new
       appreciation warrant (Ps25.50 per new ADW), as specifi ed by them.
       Pursuant to the terms of the offer, which expired on Janu ary 26, 2004,
       we purchased such new appreciation warrants and new ADWs on a pro rata
       basis (except for odd lot tenders, which were purchased on a priority
       basis) at a final purchase price of Ps8.10 per new apprecia tion warrant
       (Ps40.50 per new ADW). All new appreciation warrants and new ADWs not
       accepted because of proration were promptly returned. Following the
       completion of the offer, approximately 11,668,132 new appreciation
       warrants (including new appreciation warrants represented by new ADWs)
       were held by persons other than CEMEX and its subsidiaries.


         On April 29, 2005, the last reported closing price for CPOs on the
Mexican Stock Exchange was Ps79.62 per CPO and the last reported closing price
for ADSs on the NYSE was U.S.$36.00 per ADS.




                                      102


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 the 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 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 the 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.

         Each of our fixed and variable capital accounts are comprised of A
shares and B shares. Under Mexican law and our by-laws, any holder of shares
representing variable capital is entitled to have those shares redeemed at
that holder's option for a price equal to the lower of:

         o  95% of the market value of those shares 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 on
            which the exercise of the redemption option is effective, for a
            period not to exceed six months; and

         o  the book value of those shares at the end of the fiscal year
            immediately prior to the effective date of the redemption option
            exercise by that shareholder as set forth in our annual financial
            statements approved at the ordinary meeting of shareholders.

         If the period used in calculating the quoted share price as described
above consists of less than 30 trading days, the number of days when shares
were actually traded will be used. If shares have not been traded during this
period, the redemption price will be the book value of those shares as
described above. If a shareholder exercises its redemption option during the
first three quarters of a fiscal year, that exercise is effective at the end
of that fiscal year, but if a shareholder exercises its redemption option
during the fourth quarter, that exercise is effective at the end of the next
succeeding fiscal year. The redemption price is payable as of the day
following the annual ordinary meeting of shareholders at which the relevant
annual financial statements were approved.

         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, we effected a further stock split. 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


                                      103


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, 2004, approximately 96.6% of our outstanding
share capital was represented by CPOs, a portion of which is represented by
ADSs.

         As of December 31, 2004, our capital stock consisted of 6,091,092,807
issued shares. As of December 31, 2004, series A shares represented 66.6% of
our capital stock, or 4,060,728,538 shares, of which 3,703,634244 shares were
subscribed and paid, 249,133,670 shares were treasury shares and 107,960,624
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, 2004, series B shares
represented 33.4% of our capital stock, or 2,030,364,269 shares, of which
1,851,817,122 shares were subscribed and paid, 124,566,835 shares were
treasury shares and 53,980,312 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, 2004, 3,267,000,000 shares
corresponded to the fixed portion of our capital stock and 2,824,092,807
shares corresponded to the variable portion of our capital stock.

         At the 2004 annual shareholders' meeting held on April 28, 2005, in
connection with their approval of a dividend for the 2004 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
Ps4,815,278,332, through the issuance of up to 240 million series A shares and
120 million series B shares, to be represented by new CPOs. The final amount
of the capital increase will be determined by our board of directors once the
final number of CPOs required to be issued in connection with the dividend is
established and will be based on the then current market price of our CPO on
the Mexican Stock Exchange, minus the 20% discount at which those CPOs will be
issued. See Item 8 -- "Financial Information -- Dividends" above. In addition,
at the 2004 annual shareholders' meeting, our shareholders approved the
cancellation of 249,133,670 series A treasury shares and 124,566,835 series B
treasury shares.

         In addition, at a general extraordinary meeting of shareholders held
on April 28, 2005, our shareholders approved a new stock split, which we
expect to occur in July 2005. In connection with the stock split, each of our
existing series A shares will be surrendered in exchange for two new series A
shares, and each of our existing series B shares will be 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. The number of our existing ADSs will not change as a
result of the stock split; instead the ratio of CPOs to ADSs will be modified
so that each existing ADS will represent ten new CPOs following the stock
split and the CPO trust amendment.

         As of 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.

         On April 24, 2003, our shareholders approved changes to our by-laws,
incorporating additional provisions and removing some restrictions. The
changes were as follows:


                                      104

         o  The restriction that prohibits our subsidiaries from acquiring
            shares in companies that own our shares was amended to remove a
            condition that our subsidiaries have knowledge of such ownership.

         o  The limitation on our variable capital was removed. Formerly, our
            variable capital was limited to ten times our minimum fixed
            capital, which is currently set at Ps38.3 million.

         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  Amendments were made to the calculation of the redemption price for
            our variable capital shares, which is described above.

         o  Approval by the board of directors is now required for transactions
            by us or any of our subsidiaries involving: (i) transactions not in
            the ordinary course of business with third parties related to us or
            to any of our subsidiaries, (ii) purchases or sales of assets
            having a value equal to or exceeding 10% or more of our total
            consolidated assets, (iii) the granting of security interests in an
            amount exceeding 30% of our total consolidated assets, and (iv) any
            other transaction that exceeds 1% of our total consolidated assets.

         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.

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 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, except in the case of shares
previously acquired by us or if the shareholders waive their preemptive
rights, in the context of a public offer, as set forth in the Mexican
securities law. 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. With the
prior approval of the Mexican securities authority, an extraordinary
shareholders' meeting may approve the issuance of our stock in connection with
a public offering, without the application of the preemptive rights described
above. At that meeting, holders of our stock must waive preemptive rights by
the affirmative vote of 50% of the capital stock, and the resolution duly
adopted in this manner will be effective for all shareholders. If holders of
at least 25% of our capital stock vote against the resolution, the issuance
without the application of preemptive rights may not be effected. The Mexican
securities authority may only approve the issuance if we maintain policies
that protect the rights of minority shareholders. Any shareholder voting
against the relevant resolution will have the right to have its shares placed
in the public offering together with our shares and at the same market price.

         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. If our board of
directors denies that authorization, it must designate an alternative buyer
for those shares, at a price equal to the price quoted on the Mexican Stock
Exchange. Any acquisition of shares of our capital stock

                                      105


representing 20% 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 that class of capital stock being purchased.
In the event the requirements described above 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 and we will not record such persons as holders of such
shares in our shareholder ledger.

         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 whenever their
shareholdings exceed 5%, 10%, 15% and 20% of the outstanding shares of a
particular class of our capital stock. We are required to maintain a
shareholder ledger that records the names, nationality and domicile 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.

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.

         Five business days prior to the commencement of the offering, our
board of directors must make a determination with respect to the fairness of
the offer, taking into account the interests of the minority shareholders and
disclose its opinion, which must refer to the justifications of the offer
price; if the board of directors is precluded from making such determination
as a result of a conflict of interest, the resolution of the board of
directors must be based upon a fairness opinion issued by an expert selected
by the audit committee in which emphasis must be placed on minority rights.

         Following the expiration of this offer, if the majority shareholders
do not acquire 100% of the paid-in share 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 investment units in Mexico that
reflect inflation variations. If these conditions are met, we must create a
trust as described above and provide electronic notice to the Mexican Stock
Exchange. For purposes of these provisions, majority shareholders are
shareholders that own a majority of our shares, have voting power sufficient
to control decisions at general shareholders' meetings, or that 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 statutory auditors;

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         o  shareholders representing at least 10% of the then outstanding
            shares of our capital stock by requesting our board of directors or
            the statutory auditors to call a meeting;

         o  any shareholder 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

         o  a Mexican court in the event our board of directors or the
            statutory auditors do not comply with the valid request of the
            shareholders 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 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 the profits for the preceding year. At the annual general
shareholders' meeting, any shareholder or group of shareholders representing
10% or more of our outstanding voting stock has the right to appoint one
regular and one alternate director in addition to the directors elected by the
majority and the right to appoint a statutory auditor. The alternate director
appointed by the minority holders may only substitute for the director
appointed by that minority.

         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.

         The above-mentioned matters may only be dealt with at extraordinary
shareholders' meetings.

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         In order to vote at a meeting of shareholders, shareholders must
appear on the list that Indeval, the Mexican securities depositary, and the
Indeval participants holding shares on behalf of the shareholders, prepare
prior to the meeting or must deposit prior to that meeting 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.

         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 22 of our by-laws (which specifies the list of persons who
are not eligible to be appointed as a director or a statutory auditor) the
affirmative vote of at least 75% of the voting stock is needed. Our by-laws
also require the approval of 75% of the voting shares of our capital stock to
amend provisions in our by-laws relating to the prior approval of the board of
directors for share transfers and the requirements for recording share
transfers in our corporate ledger.

         The quorum for a first ordinary meeting of shareholders is 50% of our
outstanding and fully paid shares, and for the second ordinary meeting of
shareholders 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
shareholders' meeting the quorum is 50% of our outstanding and fully paid
shares.

Rights of Minority Shareholders

         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 adequately 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 15% 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.

         Any recovery of damage with respect to these actions will be for our
benefit and not that of the shareholders bringing the action.

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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
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 our shareholders decide at a general shareholders' meeting that we
should do so, 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 would be 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 without submitting bids during the first
and the last 30 minutes of each trading session and 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 that 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 voting on that transaction. Any director who violates this
prohibition will be liable for damages. Additionally, our directors and
statutory auditors may not represent shareholders in the 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 that has voted against it may withdraw from CEMEX and
receive the amount calculated as specified by Mexican law attributable to its
shares, provided that it exercises that right within 15 days following the
adjournment of the meeting at which the change was approved.
For further details on the calculation of the withdrawal right, see "-
General."

Dividends

         At the annual ordinary general meeting of shareholders, our board of
directors submits our financial statements together with a report on them by
our board of directors and the statutory auditors, to our shareholders for
approval. The holders of our shares, 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 and fully
paid at the time a dividend or other distribution is declared are entitled to
share equally in that dividend or other distribution.

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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 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.

Material Contracts

         On March 15, 2001, CEMEX, Inc., as issuer, CEMEX Espana S.A. (formerly
Compania Valenciana de Cementos Portland, S.A.), as parent guarantor and
Sandworth Plaza Holding B.V., Cemex Caracas Investments B.V., Cemex Caribe
Investments B.V., Cemex Manila Investments B.V., Valcem International B.V., as
subsidiary guarantors, and several institutional purchasers, entered into a
Note and Guarantee Agreement in connection with the private placement and
issuance by CEMEX, Inc. of U.S.$315,000,000 aggregate principal amount of
Series A 7.66% Guaranteed Senior Notes due 2006, (euro)50,000,000 aggregate
principal amount of Series B 6.89% Guaranteed Senior Notes due 2006 and
U.S.$396,000,000 aggregate principal amount of Series C 7.91% Guaranteed Senior
Notes due 2008. The proceeds of the private placement were used to repay debt.

         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.$103,000,000 aggregate principal amount of 4.77% Senior Notes due 2010,
U.S.$96,000,000 aggregate principal amount of 5.36% Senior Notes due 2013 and
U.S.$201,000,000 aggregate principal amount of 5.51% Senior Notes due 2015.
The proceeds of the private placement were used to repay debt.

         On August 8, 2003, we entered into a First Amended and Restated
Reimbursement and Credit Agreement and a related Depositary Agreement with
several lenders to increase the amount available under our U.S. commercial
paper program from U.S.$275 to U.S.$400 million. CEMEX Mexico and Empresas
Tolteca de Mexico, two of our Mexican subsidiaries, are guarantors of our
obligations under the First Amended and Restated Reimbursement and Credit
Agreement. This program was cancelled on July 8, 2004.

         On October 15, 2003, New Sunward Holding B.V. entered into a
U.S.$1.15 billion multi-tranche Term Loan Agreement. The indebtedness incurred
under the agreement was guaranteed by CEMEX, CEMEX Mexico and Empresas Tolteca
de Mexico and was composed of three different tranches. The first tranche is a
two-year Euro denominated loan in the amount of (euro)256,365,000. The second
tranche is a three-year Dollar denominated loan in the amount of
U.S.$550,000,000. The third tranche is a three-year Yen denominated loan in
the amount of (Y)32,688,000,000. The terms of the second and third tranches
can be extended for an additional period of six months, subject to certain
conditions. The proceeds were used to repurchase U.S.$650 million of preferred
equity and to refinance other outstanding debt. On July 7, 2004 the three-year
Dollar denominated loan in the amount of U.S.$550,000,000 was completely
prepaid. On July 12, 2004, the three-year Yen denominated loan in the amount
of (Y)32,688,000,000 was reduced to (Y)16,288,000,000.

         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)250,000,000 and (Y)19,308,000,000. The first facility is a five-year
multi-currency term loan facility with a variable interest rate; the second
facility is a 364-day multi-currency revolving credit facility; and the third
facility is a five-year Yen denominated term loan facility with a fixed
interest rate. The proceeds of these facilities were used to prepay CEMEX
Espana's outstanding revolving credit facility and for general corporate
purposes. On February 17, 2005, CEMEX, as borrower, requested a 364-day
extension of the 364-day multi-currency revolving credit facility (up to an
aggregate amount of (euro)100,000,000). As of March 18, 2005, the term of the
facility was extended.

                                      110


         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,
(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 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 September 24, 2004, New Sunward Holding B.V., entered into a
series of agreement facilities. The facility is a U.S.$1.25 billion
multi-currency term loan guaranteed by CEMEX, CEMEX Mexico and Empresas
Tolteca de Mexico and consists of two tranches. The first tranche is a
multi-currency one-year U.S.$500 million term loan denominated in Dollars,
Euros or Pounds (or a combination thereof) with an optional six-month
extension. The second tranche is a multi-currency three-year U.S.$750 million
term loan denominated in Dollars, Euros, or Pounds (or a combination thereof).
The proceeds of the facility were used in connection with the RMC acquisition.
This facility was fully repaid on April 13, 2005.

         On September 24, 2004, CEMEX Espana entered into a series of
agreement facilities. The facility is a U.S.$3.8 billion multi-currency term
loan. The indebtedness is guaranteed by Cemex Caracas Investments, B.V., Cemex
Caracas II Investments, B.V. Cemex Egyptian Investments, B.V., Cemex Manila
Investments, B.V. and Cemex American Holdings, B.V. and consists of three
tranches. The first tranche is a multi-currency one-year U.S.$1.5 billion
back-up term loan denominated in Dollars, Euros or Pounds (or a combination
thereof) with an optional twelve month extension. The second tranche is a
multi-currency three-year U.S.$1.15 billion term loan denominated in Dollars,
Euros or Pounds (or a combination thereof). The third tranche is a
multi-currency five-year U.S.$1.15 billion term loan denominated in Dollars,
Euros or Pounds (or a combination thereof). Proceeds from the first tranche of
the CEMEX Espana facility will be used, as required, to refinance RMC debt.
All other proceeds were used to finance the acquisition of RMC.

         On September 27, 2004, CEMEX UK Limited and RMC entered into an
Implementation Agreement, pursuant to which the parties agreed to implement a
scheme of arrangement under U.K. law for the acquisition of RMC by CEMEX UK
Limited. The agreement contained assurances and confirmations between the
parties regarding the implementation of the scheme of arrangement on a timely
basis and the conduct of RMC's business in the ordinary course. On the same
date, CEMEX UK Limited 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 the applicable regulators,
the scheme of arrangement became effective and CEMEX UK Limited purchased the
remaining 81.2% of RMC's outstanding shares completing our acquisition of RMC.

         On February 4, 2005, CEMEX, Inc. and Votorantim Participacoes S.A.,
or Votorantim, entered into an Asset Purchase Agreement (which was amended by
Amendment No. 1 thereto entered into by the parties on March 31, 2005),
pursuant to which CEMEX, Inc. sold its Charlevoix, Michigan and Dixon,
Illinois cement plants and several distribution terminals located in the Great
Lakes region to Votorantim for an aggregate purchase price of approximately
U.S.$389 million. The distribution terminals sold to Votorantim are located in
Green Bay, Manitowoc and Milwaukee, Wisconsin; Chicago, Illinois; Ferrysburg,
Michigan; Cleveland and Toledo, Ohio; and Owen Sound, Ontario, Canada.

         On March 16, 2005, CEMEX Espana and RMC entered into an Amended and
Restated (pound)1,000,000,000 Term and Revolving Credit Agreement, which was
originally entered into by RMC on October 18, 2002, relating to a
multi-currency five-year (pound)600,000,000 revolving credit facility and a
multi-currency five-year (pound)400,000,000 term loan facility. The amendments
to the original agreement include a waiver of the provision requiring
mandatory prepayment in the event of a change of control, the inclusion of
CEMEX Espana, Cemex Caracas Investments B.V., Cemex Caracas II Investments
B.V., Cemex Manila Investments B.V., Cemex Egyptian Investments B.V., Cemex
American Holdings B.V. and Cemex Shipping B.V, as guarantors, amendments to
the financial covenants applicable to CEMEX Espana on a consolidated basis and
the extension of the termination date of the revolving credit facility to six
years from the date of

                                      111


the amended and restated agreement. Simultaneous with the execution of the
amended and restated agreement, the total amount of the facilities was reduced
to (pound)604,354,196; the revolving credit facility was reduced to
(pound)425,558,038 and the term loan facility was reduced to
(pound)178,796,154.

         On April 5, 2005, we entered into a U.S.$1,000,000,000 180-day term
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 New Sunward Holding B.V.,
dated September 24, 2004.

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.

         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. The term U.S. Shareholder shall have the same
meaning ascribed below under the section "-- U.S. Federal Income Tax
Considerations."

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.

                                      112


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.

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
of 1986, as amended (the "Code"), 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, 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 or a
            partnership 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);

                                      113


         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.

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
dividend 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.
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.

         Dividends paid in Pesos, including the amount of Mexican withholding
tax thereon, 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 U.S. 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, 2009, 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 American 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."

                                      114


         A U.S. Shareholder may elect to deduct in computing its taxable
income or, subject to specific complex limitations on foreign tax credits
generally, credit against its U.S. Federal income tax liability, Mexican
withholding tax at the rate applicable to such shareholder. For purposes of
calculating the U.S. foreign tax credit, dividends paid by us generally will
constitute foreign source "passive income," or in the case of some U.S.
Shareholders, "financial services income." U.S. Shareholders should consult
their tax advisors regarding the availability of, and limitations on, any such
foreign tax credit.

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, 2009, generally will be subject to a maximum United States Federal income
tax rate of 15 percent. Gains on the sale or exchange of CPOs or ADSs held for
one year or less will be treated as short-term capital gain and taxed as
ordinary income at the U.S. Shareholder's marginal income tax rate. 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.

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 Section of the Securities and
Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
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.


                                      115


                                    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

CEMEX, S.A. de C.V.

         Disclosure Controls and Procedures. The Chief Executive Officer and
Executive Vice President of Planning and Finance of CEMEX, S.A. de C.V.
("CEMEX") have evaluated the effectiveness of CEMEX's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of
December 31, 2004. Based on such evaluation, such officers have concluded that
CEMEX's disclosure controls and procedures are effective in alerting them on a
timely basis to material information relating to CEMEX (including its
consolidated subsidiaries) required to be included in CEMEX's reports filed or
submitted under the Exchange Act.

         Internal Control Over Financial Reporting. There were no changes in
CEMEX's internal control over financial reporting (as such term is defined in
Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during fiscal 2004 that
have materially affected, or are reasonably likely to materially affect,
CEMEX's internal control over financial reporting.

CEMEX Mexico, S.A. de C.V.

         Disclosure Controls and Procedures. The Chief Executive Officer and
Executive Vice President of Planning and Finance of CEMEX Mexico, S.A. de C.V.
("CEMEX Mexico") have evaluated the effectiveness of CEMEX Mexico's disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of December 31, 2004. Based on such
evaluation, such officers have concluded that CEMEX Mexico's disclosure
controls and procedures are effective in alerting them on a timely basis to
material information relating to CEMEX Mexico (including its consolidated
subsidiaries) required to be included in CEMEX Mexico's reports filed or
submitted under the Exchange Act.

         Internal Control Over Financial Reporting. There were no changes in
CEMEX Mexico's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during fiscal
2004 that have materially affected, or are reasonably likely to materially
affect, CEMEX Mexico's internal control over financial reporting.

Empresas Tolteca de Mexico, S.A. de C.V.

         Disclosure Controls and Procedures. The Chief Executive Officer and
Executive Vice President of Planning and Finance of Empresas Tolteca de
Mexico, S.A. de C.V. ("Empresas Tolteca") have evaluated the effectiveness of
Empresas Tolteca's disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31,
2004. Based on such evaluation, such officers have concluded that Empresas
Tolteca's disclosure controls and procedures are effective in alerting them on
a timely basis to material information relating to Empresas Tolteca (including
its consolidated subsidiaries) required to be included in Empresas Tolteca's
reports filed or submitted under the Exchange Act.

         Internal Control Over Financial Reporting. There were no changes in
Empresas Tolteca's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during fiscal
2004 that have materially affected, or are reasonably likely to materially
affect, Empresas Tolteca's internal control over financial reporting.

                                      116


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 of our
employees, including our principal executive officer, principal financial
officer and principal accounting officer.

         You may request a copy of our code of ethics, at no cost, by writing
to or telephoning us as follows:

                  CEMEX, S.A. de C.V.
                  Av. Ricardo Margain Zozaya #325
                  Colonia del Valle Campestre
                  Garza Garcia, Nuevo Leon, Mexico 66265.
                  Attn:  Luis Hernandez or Daniel Azcona
                  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 Ps46.3 million in fiscal year 2004 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 2003, KPMG
Cardenas Dosal, S.C. in Mexico and KPMG firms worldwide billed us
approximately Ps48.4 million for these services.

         Audit-Related Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG
firms worldwide billed us approximately Ps4.6 million in fiscal year 2004 for
assurance and related services reasonably related to the performance of our
audit. In fiscal year 2003, KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide charged us approximately Ps6.2 million for audit-related services.
These fees relate mainly to technical accounting support and guidance provided
by KPMG in connection with the implementation of newly issued accounting
standards.

         Tax Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide charged us approximately Ps33.5 million in fiscal year 2004 for tax
compliance, tax advice and tax planning. KPMG Cardenas Dosal, S.C. in Mexico
and KPMG firms worldwide billed us approximately Ps31.7 million for
tax-related services in fiscal year 2003.

         All Other Fees: KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide billed us Ps13.6 million in fiscal year 2004 for products and
services other than those comprising audit fees, audit-related fees and tax
fees. In fiscal year 2003, KPMG Cardenas Dosal, S.C. in Mexico and KPMG firms
worldwide charged us Ps7.1 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.

         During 2004, 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.

                                      117


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

         The following table sets forth, for the periods indicated,
information regarding purchases of any of our equity securities registered
pursuant to Section 12 of the Exchange Act made by us or on our behalf or by
or on behalf of any affiliated purchaser (as that term is defined in Rule
10b-18(a)(3) under the Exchange Act):




                                                                                                        Maximum Number
                                                                                Total Number of        (or Approximate
                                                                                   Securities          Dollar Value) of
                                                                               Purchased as Part     Securities that May
                                         Total Number            Average          of Publicly          Yet be Purchased
                                         of Securities         Price Paid       Announced Plans       Under the Plans or
Period                                     Purchased          per Security        or Programs              Programs
--------------------------------      ------------------   -----------------  -------------------   -----------------------
                                                                 Appreciation Warrants
                                                                                               
January 2004(1).................           90,018,042            Ps8.10            90,018,042                 0
February 2004...................               0                                       0                      0
March 2004......................               0                                       0                      0
April 2004......................               0                                       0                      0
May 2004........................               0                                       0                      0
June 2004.......................               0                                       0                      0
July 2004.......................               0                                       0                      0
August 2004.....................               0                                       0                      0
September 2004..................               0                                       0                      0
October 2004....................               0                                       0                      0
November 2004(2)................            438,800              Ps10.85               0                      0
December 2004(3)................            260,000              Ps17.61               0                      0
                                      ------------------   -----------------  -------------------   -----------------------
    Total.......................           90,716,842            Ps8.14            90,018,042                 0



_______________

(1)  In January 2004, we purchased 90,018,042 appreciation warrants (including
     appreciation warrants represented by ADWs) through a modified "Dutch
     Auction" cash tender offer we launched in November 2003, which allowed
     holders to tender their appreciation warrants and ADWs at a price in
     Pesos not greater than Ps8.10 per appreciation warrant (Ps40.50 per ADW)
     nor less than Ps5.10 per appreciation warrant (Ps25.50 per ADW), as
     specified by them. Pursuant to the terms of the offer, which expired on
     January 26, 2004, we purchased such appreciation warrants and ADWs on a
     pro rata basis (except for odd lot tenders, which were purchased on a
     priority basis) at a final purchase price of Ps8.10 per appreciation
     warrant (Ps40.50 per ADW). All appreciation warrants and ADWs not
     accepted because of proration were promptly returned. Following the
     completion of the offer, approximately 11,668,132 new appreciation
     warrants (including appreciation warrants represented by ADWs) were held
     by persons other than CEMEX and its subsidiaries.

(2)  In November 2004, we purchased 438,800 appreciation warrants, including
     43,500 appreciation warrants represented by ADWs. The average price paid
     listed above includes the price of the appreciation warrants represented
     by ADWs, which were purchased for approximately U.S.$1.00 (Ps 11.09) per
     appreciation warrant.

(3)  In December 2004, we purchased, at maturity pursuant to their terms,
     260,000 appreciation warrants, including 64,000 appreciation warrants
     represented by ADWs. The average price paid listed above includes the
     price of the appreciation warrants represented by ADWs, which were
     purchased for approximately U.S.$1.60 (Ps 17.89) per appreciation
     warrant.


                                      118


                                   PART III

Item 17 -  Financial Statements

           Not applicable.

Item 18 -  Financial Statements

           See pages F-1 through F-80, incorporated herein by reference.

Item 19 -  Exhibits

1.1      Amended and Restated By-laws of CEMEX, S.A. de C.V. (a)
2.1      Form of Trust Agreement between CEMEX, S.A. 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. de C.V., as founder
         of the trust, and Banco Nacional de Mexico, S.A. regarding the CPOs.
         (b)
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. 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.
         de C.V. (b)
2.7      Form of Certificate for shares of Series B Common Stock of CEMEX, S.A.
         de C.V. (b)
2.8      Form of appreciation warrant deed. (b)
2.9      Form of CPO Purchasing and Disbursing Agreement. (c)
2.10     Form of appreciation warrant certificate. (c)
2.11     Form of Warrant Deposit Agreement among CEMEX, S.A. de C.V., Depositary
         and holders and beneficial owners of American
         Depositary Warrants. (c)
2.12     Form of American Depositary Warrant Receipt (included in Exhibit 2.10).
         (c)
4.1      Note and Guarantee Agreement dated as of March 15, 2001, by and among
         CEMEX, Inc., as issuer, Compania Valenciana de Cementos Portland,
         S.A., as parent guarantor and Sandworth Plaza Holding B.V., Cemex
         Caracas Investments B.V., Cemex Caribe Investments B.V., Cemex Manila
         Investments B.V., Valcem International B.V., as subsidiary guarantors,
         and the several purchasers named therein, in connection with the
         offering and issuance by CEMEX, Inc. of U.S.$315,000,000 aggregate
         principal amount of Series A Guaranteed Senior Notes due 2006,
         (euro)50,000,000 aggregate principal amount of Series B Guaranteed
         Senior Notes due 2006 and U.S.$396,000,000 aggregate principal amount
         of Series C Guaranteed Senior Notes due 2008. (d)
4.2      Note Purchase Agreement dated June 23, 2003, by and among 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 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. (g)
4.3      First Amended and Restated Reimbursement and Credit Agreement dated as
         of August 8, 2003, by and among, CEMEX, S.A. de C.V., as Issuer, CEMEX
         Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de C.V., as
         Guarantors, Barclays Bank PLC, New York Branch, as Issuing Bank,
         Documentation Agent and Administrative Agent, the several lenders
         party thereto and Barclays Capital, The Investment Banking Division of
         Barclays Bank PLC, as Joint Arranger and Banc of America Securities
         LLC, as Joint Arranger and Syndication Agent., for an aggregate
         principal amount of U.S.$400,000,000. (g)
4.4      $1,150,000,000 Term Loan Agreement, dated October 15, 2003, by and
         among New Sunward Holding B.V. as borrower, CEMEX, S.A. de C.V., CEMEX
         Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de C.V. as
         guarantors, and the several lenders named therein. (g)
4.5      Early Termination Amendment to ABN AMRO Special Corporate Services
         B.V. Forward Contract, dated as of October 15, 2003. (g)

                                      119


4.6      Early Termination Amendment to Citibank, N.A. Forward Contract, dated
         as of October 15, 2003. (g)
4.7      Early Termination Amendment to Credit Suisse First Boston
         International Forward Contract, dated as of October 15, 2003. (g)
4.8      Early Termination Amendment to Deutsche Bank AG, London Branch,
         Forward Contract, dated as of October 15, 2003. (g)
4.9      Early Termination Amendment to ING Bank, N.V. Forward Contract, dated
         as of October 15, 2003. (g)
4.10     Early Termination Amendment to JPMorgan Chase Bank Forward Contract,
         dated as of October 15, 2003. (g)
4.11     Early Termination Amendment to Societe Generale Forward Contract,
         dated as of October 15, 2003. (g)
4.12     Term and Revolving Facilities Agreement, dated as of March 30, 2004,
         by and among CEMEX Espana, as borrower, 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, 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, for an aggregate
         amount of (euro)250,000,000 and (Y)19,308,000,000. (g)
4.13     (euro)250,000,000, (Y)19,308,000,000 Term and Revolving Facilities
         Agreement, dated March 30, 2004, for CEMEX ESPANA, S.A., as Borrower,
         CEMEX Caracas Investments B.V., CEMEX Caracas II Investments B.V.,
         CEMEX Egyptian Investments B.V., CEMEX Manila Investments B.V. and
         Sandworth Plaza Holding B.V., as Guarantors, arranged by Banco Bilbao
         Vizcaya Argentaria, S.A. and Societe Generale, S.A., with Banco Bilbao
         Vizcaya Argentaria, S.A. acting as Agent. (g)
4.14     CEMEX Espana Finance LLC Note Purchase Agreement, dated as of April
         15, 2004 for (Y)4,980,600,000 1.79% Senior Notes, Series 2004, Tranche
         1, due 2010 and (Y)6,087,400,000 1.99% Senior Notes, Series 2004,
         Tranche 2, due 2011. (h)
4.15     U.S.$800,000,000 Credit Agreement, dated as of June 23, 2004, among
         CEMEX, S.A. 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. (h)
4.16     U.S.$1,250,000,000 Term and Revolving Facilities Agreement, dated
         September 24, 2004 for New Sunward Holding B.V., as Borrower, CEMEX,
         S.A. de C.V., CEMEX Mexico, S.A. de C.V. and Empresas Tolteca De
         Mexico, S.A. de C.V., as Guarantors, arranged by Citigroup Global
         Markets Limited and Goldman Sachs International, with Citibank
         International PLC acting as Agent. (h)
4.17     U.S.$3,800,000,000 Term and Revolving Facilities Agreement, dated
         September 24, 2004 for CEMEX Espana, S.A., as Borrower, CEMEX Espana,
         S.A., CEMEX Caracas Investments B.V., Cemex Caracas II Investments
         B.V., Cemex Egyptian Investments B.V., CEMEX Manila Investments B.V.,
         CEMEX American Holdings B.V., as Guarantors, arranged by Citigroup
         Global Markets Limited and Goldman Sachs International with Citibank
         International PLC acting as Agent. (h)
4.18     Implementation Agreement, dated September 27, 2004, by and between
         CEMEX UK Limited and RMC Group p.l.c. (h)
4.19     Scheme of Arrangement, dated October 25, 2004, pursuant to which
         CEMEX UK Limited acquired the outstanding shares of RMC Group
         p.l.c. (h)
4.20     Asset Purchase Agreement by and between CEMEX, Inc. and Votorantim
         Participacoes S.A., dated as of February 4, 2005. (h)
4.20.1   Amendment No. 1 to Asset Purchase Agreement, dated as of March 31,
         2005, by and between CEMEX, Inc. and Votorantim Participacoes S.A. (h)
4.21     (pound)1,000,000,000 Amended and Restated Term and Revolving Credit
         Agreement, dated March 16, 2005, by and among RMC Group Limited, CEMEX
         Espana, S.A., Cemex Caracas Investments B.V., Cemex Caracas II
         Investments B.V., Cemez Egyptian Investments B.V., Cemex Manila
         Investments B.V., Cemex American Holdings B.V. and Cemex Shipping
         B.V., as Original Guarantors, RMC Group Limited, as Original Borrower,
         Banc of America Securities Limited, BNPParibas, HSBC Investment Bank
         plc, the Royal Bank of Scotland plc, West LB AG, London Branch, as
         Mandated Lead Arrangers and the Royal Bank of Scotland plc, as Agent.
         (h)
4.22     U.S.$1,000,000,000 Term Credit Agreement, dated as of April 5, 2005,
         among CEMEX, S.A. 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, Citigroup Global Markets Inc., as

                                      120


         Documentation Agent, Joint Lead Arranger and Joint Bookrunner,
         Barclays Bank PLC, Citibank, N.A., and Citibank, N.A., Nassau, Bahamas
         Branch as Lenders. (h)
8.1      List of subsidiaries of CEMEX, S.A. de C.V. (h)
12.1     Certification of the Principal Executive Officer of CEMEX, S.A. de
         C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.2     Certification of the Principal Financial Officer of CEMEX, S.A. de
         C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.3     Certification of the Principal Executive Officer of CEMEX Mexico, S.A.
         de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.4     Certification of the Principal Financial Officer of CEMEX Mexico, S.A.
         de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.5     Certification of the Principal Executive Officer of Empresas Tolteca
         de Mexico, S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002. (h)
12.6     Certification of the Principal Financial Officer of Empresas Tolteca
         de Mexico, S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002. (h)
13.1     Certification of the Principal Executive and Financial Officers of
         CEMEX, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
13.2     Certification of Principal Executive and Financial Officers of CEMEX
         Mexico, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
13.3     Certification of Principal Executive and Financial Officers of
         Empresas Tolteca de Mexico, S.A. de C.V. pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002. (h)
14.1     Consent of KPMG Cardenas Dosal, S.C. to the incorporation by reference
         into the effective registration statements of CEMEX, S.A. de C.V.
         under the Securities Act of 1933 of their report with respect to the
         consolidated financial statements of CEMEX, S.A. de C.V., which
         appears in this Annual Report on Form 20-F. (h)

_______________
(a)  Incorporated by reference to Post-Effective Amendment No. 4 to the
     Registration Statement on Form F-3 of CEMEX, S.A. 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. de C.V. (Registration No. 333-10682), filed with the
     Securities and Exchange Commission on August 10, 1999.
(c)  Incorporated by reference to Amendment No. 2 to the Registration
     Statement on Form F-4 of CEMEX, S.A. de C.V. (Registration No.
     333-13956), filed with the Securities and Exchange Commission on November
     19, 2001.
(d)  Incorporated by reference to Amendment No. 1 to the annual report on Form
     20-F/A of CEMEX, S.A. de C.V. filed with the Securities and Exchange
     Commission on November 19, 2001.
(e)  Incorporated by reference to the annual report on Form 20-F of CEMEX,
     S.A. de C.V. filed with the Securities and Exchange Commission on April
     8, 2002.
(f)  Incorporated by reference to the annual report on Form 20-F of CEMEX,
     S.A. de C.V. filed with the Securities and Exchange Commission on April
     8, 2003.
(g)  Incorporated by reference to the annual report on Form 20-F of CEMEX,
     S.A. de C.V. filed with the Securities and Exchange Commission on May 11,
     2004.
(h)  Filed herewith.


                                      121


                                  SIGNATURES


         CEMEX, S.A. 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. de C.V.


                                      By:  /s/  Lorenzo H. Zambrano
                                          ----------------------------------
                                          Name:   Lorenzo H. Zambrano
                                          Title:  Chief Executive Officer



Date:  May 27, 2005




                                  SIGNATURES


         CEMEX Mexico, S.A. 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 Mexico, S.A. de C.V.



                                      By:  /s/  Lorenzo H. Zambrano
                                          ----------------------------------
                                          Name:   Lorenzo H. Zambrano
                                          Title:  Chief Executive Officer



Date:  May 27, 2005





                                  SIGNATURES


         Empresas Tolteca de Mexico, S.A. 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.



                                      Empresas Tolteca de Mexico, S.A. de C.V.


                                      By:  /s/  Lorenzo H. Zambrano
                                          ----------------------------------
                                          Name:   Lorenzo H. Zambrano
                                          Title:  Chief Executive Officer


Date:  May 27, 2005




                                 EXHIBIT INDEX

Exhibit
  No.                          Description
-------                        -----------

1.1      Amended and Restated By-laws of CEMEX, S.A. de C.V. (a)
2.1      Form of Trust Agreement between CEMEX, S.A. 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. de C.V., as founder
         of the trust, and Banco Nacional de Mexico, S.A. regarding the CPOs.(b)
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. 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.
         de C.V. (b)
2.7      Form of Certificate for shares of Series B Common Stock of CEMEX, S.A.
         de C.V. (b)
2.8      Form of appreciation warrant deed. (b)
2.9      Form of CPO Purchasing and Disbursing Agreement. (c)
2.10     Form of appreciation warrant certificate. (c)
2.11     Form of Warrant Deposit Agreement among CEMEX, S.A. de C.V., Depositary
         and holders and beneficial owners of American
         Depositary Warrants. (c)
2.12     Form of American Depositary Warrant Receipt (included in Exhibit 2.10).
         (c)
4.1      Note and Guarantee Agreement dated as of March 15, 2001, by and among
         CEMEX, Inc., as issuer, Compania Valenciana de Cementos Portland,
         S.A., as parent guarantor and Sandworth Plaza Holding B.V., Cemex
         Caracas Investments B.V., Cemex Caribe Investments B.V., Cemex Manila
         Investments B.V., Valcem International B.V., as subsidiary guarantors,
         and the several purchasers named therein, in connection with the
         offering and issuance by CEMEX, Inc. of U.S.$315,000,000 aggregate
         principal amount of Series A Guaranteed Senior Notes due 2006,
         (euro)50,000,000 aggregate principal amount of Series B Guaranteed
         Senior Notes due 2006 and U.S.$396,000,000 aggregate principal amount
         of Series C Guaranteed Senior Notes due 2008. (d)
4.2      Note Purchase Agreement dated June 23, 2003, by and among 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 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. (g)
4.3      First Amended and Restated Reimbursement and Credit Agreement dated as
         of August 8, 2003, by and among, CEMEX, S.A. de C.V., as Issuer, CEMEX
         Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de C.V., as
         Guarantors, Barclays Bank PLC, New York Branch, as Issuing Bank,
         Documentation Agent and Administrative Agent, the several lenders
         party thereto and Barclays Capital, The Investment Banking Division of
         Barclays Bank PLC, as Joint Arranger and Banc of America Securities
         LLC, as Joint Arranger and Syndication Agent., for an aggregate
         principal amount of U.S.$400,000,000. (g)
4.4      $1,150,000,000 Term Loan Agreement, dated October 15, 2003, by and
         among New Sunward Holding B.V. as borrower, CEMEX, S.A. de C.V., CEMEX
         Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de C.V. as
         guarantors, and the several lenders named therein. (g)
4.5      Early Termination Amendment to ABN AMRO Special Corporate Services
         B.V. Forward Contract, dated as of October 15, 2003. (g)
4.6      Early Termination Amendment to Citibank, N.A. Forward Contract, dated
         as of October 15, 2003. (g)



Exhibit
  No.                          Description
-------                        -----------
4.7      Early Termination Amendment to Credit Suisse First Boston
         International Forward Contract, dated as of October 15, 2003. (g)
4.8      Early Termination Amendment to Deutsche Bank AG, London Branch,
         Forward Contract, dated as of October 15, 2003. (g)
4.9      Early Termination Amendment to ING Bank, N.V. Forward Contract, dated
         as of October 15, 2003. (g)
4.10     Early Termination Amendment to JPMorgan Chase Bank Forward Contract,
         dated as of October 15, 2003. (g)
4.11     Early Termination Amendment to Societe Generale Forward Contract,
         dated as of October 15, 2003. (g)
4.12     Term and Revolving Facilities Agreement, dated as of March 30, 2004,
         by and among CEMEX Espana, as borrower, 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, 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, for an aggregate
         amount of (euro)250,000,000 and (Y)19,308,000,000. (g)
4.13     (euro)250,000,000, (Y)19,308,000,000 Term and Revolving Facilities
         Agreement, dated March 30, 2004, for CEMEX ESPANA, S.A., as Borrower,
         CEMEX Caracas Investments B.V., CEMEX Caracas II Investments B.V.,
         CEMEX Egyptian Investments B.V., CEMEX Manila Investments B.V. and
         Sandworth Plaza Holding B.V., as Guarantors, arranged by Banco Bilbao
         Vizcaya Argentaria, S.A. and Societe Generale, S.A., with Banco Bilbao
         Vizcaya Argentaria, S.A. acting as Agent. (g)
4.14     CEMEX Espana Finance LLC Note Purchase Agreement, dated as of April
         15, 2004 for (Y)4,980,600,000 1.79% Senior Notes, Series 2004, Tranche
         1, due 2010 and (Y)6,087,400,000 1.99% Senior Notes, Series 2004,
         Tranche 2, due 2011. (h)
4.15     U.S.$800,000,000 Credit Agreement, dated as of June 23, 2004, among
         CEMEX, S.A. 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. (h)
4.16     U.S.$1,250,000,000 Term and Revolving Facilities Agreement, dated
         September 24, 2004 for New Sunward Holding B.V., as Borrower, CEMEX,
         S.A. de C.V., CEMEX Mexico, S.A. de C.V. and Empresas Tolteca De
         Mexico, S.A. de C.V., as Guarantors, arranged by Citigroup Global
         Markets Limited and Goldman Sachs International, with Citibank
         International PLC acting as Agent. (h)
4.17     U.S.$3,800,000,000 Term and Revolving Facilities Agreement, dated
         September 24, 2004 for CEMEX Espana, S.A., as Borrower, CEMEX Espana,
         S.A., CEMEX Caracas Investments B.V., Cemex Caracas II Investments
         B.V., Cemex Egyptian Investments B.V., CEMEX Manila Investments B.V.,
         CEMEX American Holdings B.V., as Guarantors, arranged by Citigroup
         Global Markets Limited and Goldman Sachs International with Citibank
         International PLC acting as Agent. (h)
4.18     Implementation Agreement, dated September 27, 2004, by and between
         CEMEX UK Limited and RMC Group p.l.c. (h)
4.19     Scheme of Arrangement, dated October 25, 2004, pursuant to which
         CEMEX UK Limited acquired the outstanding shares of RMC Group p.l.c.
         (h)
4.20     Asset Purchase Agreement by and between CEMEX, Inc. and Votorantim
         Participacoes S.A., dated as of February 4, 2005. (h)
4.20.1   Amendment No. 1 to Asset Purchase Agreement, dated as of March 31,
         2005, by and between CEMEX, Inc. and Votorantim Participacoes S.A. (h)
4.21     (pound)1,000,000,000 Amended and Restated Term and Revolving Credit
         Agreement, dated March 16, 2005, by and among RMC Group Limited, CEMEX
         Espana, S.A., Cemex Caracas Investments B.V., Cemex Caracas II
         Investments B.V., Cemez Egyptian Investments B.V., Cemex Manila
         Investments B.V., Cemex American Holdings B.V. and Cemex Shipping



Exhibit
  No.                          Description
-------                        -----------
         B.V., as Original Guarantors, RMC Group Limited, as Original Borrower,
         Banc of America Securities Limited, BNPParibas, HSBC Investment Bank
         plc, the Royal Bank of Scotland plc, West LB AG, London Branch, as
         Mandated Lead Arrangers and the Royal Bank of Scotland plc, as Agent.
         (h)
4.22     U.S.$1,000,000,000 Term Credit Agreement, dated as of April 5, 2005,
         among CEMEX, S.A. 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, Citigroup Global Markets Inc., as
         Documentation Agent, Joint Lead Arranger and Joint Bookrunner, Barclays
         Bank PLC, Citibank, N.A., and Citibank, N.A., Nassau, Bahamas Branch
         as Lenders. (h)
8.1      List of subsidiaries of CEMEX, S.A. de C.V. (h)
12.1     Certification of the Principal Executive Officer of CEMEX, S.A. de
         C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.2     Certification of the Principal Financial Officer of CEMEX, S.A. de
         C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.3     Certification of the Principal Executive Officer of CEMEX Mexico, S.A.
         de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.4     Certification of the Principal Financial Officer of CEMEX Mexico, S.A.
         de C.V. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (h)
12.5     Certification of the Principal Executive Officer of Empresas Tolteca
         de Mexico, S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002. (h)
12.6     Certification of the Principal Financial Officer of Empresas Tolteca
         de Mexico, S.A. de C.V. pursuant to Section 302 of the Sarbanes-Oxley
         Act of 2002. (h)
13.1     Certification of the Principal Executive and Financial Officers of
         CEMEX, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
13.2     Certification of Principal Executive and Financial Officers of CEMEX
         Mexico, S.A. de C.V. pursuant to 18 U.S.C. Section 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h)
13.3     Certification of Principal Executive and Financial Officers of
         Empresas Tolteca de Mexico, S.A. de C.V. pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002. (h)
14.1     Consent of KPMG Cardenas Dosal, S.C. to the incorporation by reference
         into the effective registration statements of CEMEX, S.A. de C.V.
         under the Securities Act of 1933 of their report with respect to the
         consolidated financial statements of CEMEX, S.A. de C.V., which
         appears in this Annual Report on Form 20-F. (h)

________________________
(a)  Incorporated by reference to Post-Effective Amendment No. 4 to the
     Registration Statement on Form F-3 of CEMEX, S.A. 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 Font F-4 of
     CEMEX, S .A. de C.V. (Registration No. 333-10682), tiled with the
     Securities and Exchange Commission on August 10, 1999.
(c)  Incorporated by reference to Amendment No. 2 to the Registration
     Statement on Form F-4 of CEMEX, S.A. de C.V. (Registration No.
     333-13956), filed with the Securities and Exchange Commission on November
     19, 2001.
(d)  Incorporated by reference to Amendment No. 1 to the annual report on Form
     20-F/A of CEMEX, S .A. de C.V. filed with the Securities and Exchange
     Commission on November 19, 2001.
(e)  Incorporated by reference to the annual report on Form 20-F of CEMEX,
     S.A. de C.V. filed with the Securities and Exchange Commission on April 8,
     2002.
(f)  Incorporated by reference to the annual report on Form 20-F of CEMEX,
     S.A. de C.V. filed with the Securities and Exchange Commission on April
     8, 2003.
(g)  Incorporated by refernce to the annual report on Form 20-F of CEMEX, S.A.
     de C.V. filed with the Securities and Exchange Commission on May 11,
     2004.
(h)  Filed herewith.





        INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
        ----------------------------------------------------------------

                                                                           Page
                                                                          ------
CEMEX, S.A. de C.V. and subsidiaries:

Independent Auditors' Report--KPMG Cardenas Dosal, S.C..................    F-2

Audited consolidated balance sheets as of December 31, 2003 and 2004....    F-3

Audited consolidated statements of income for the years ended
December 31, 2002, 2003 and 2004........................................    F-4

Audited statements of changes in stockholders' equity for the years
ended December 31, 2002, 2003 and 2004..................................    F-5

Audited consolidated statements of changes in financial position
for the years ended December 31, 2002, 2003 and 2004....................    F-6

Notes to the audited consolidated financial statements..................    F-7

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-11

                                       F-1


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders
CEMEX, S.A. de C.V.:



We have audited the consolidated balance sheets of CEMEX, S.A. de C.V. and
subsidiaries as of December 31, 2003 and 2004, and the related consolidated
statements of income, changes in stockholders' equity and changes in financial
position for each of the years ended December 31, 2002, 2003 and 2004. These
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 audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and are prepared in accordance
with accounting principles generally accepted in Mexico. 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, based upon our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of CEMEX, S.A. de C.V. and subsidiaries at December 31, 2003 and 2004,
and the consolidated 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, 2002, 2003 and 2004, in accordance with accounting
principles generally accepted in Mexico.

Accounting principles generally accepted in Mexico 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, 2002, 2003, and 2004, and stockholders' equity as of
December 31, 2003 and 2004, to the extent summarized in note 24 to the
consolidated financial statements.

KPMG Cardenas Dosal, S.C.



/s/Leandro Castillo Parada


Monterrey, N.L., Mexico
January 15, 2005, except for note 24,
which is as of March 31, 2005

                                      F-2


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
                           Consolidated Balance Sheets
           (Millions of constant Mexican pesos as of December 31, 2004
                         and millions of U.S. dollars)



                                                                                   December 31,                   (unaudited)
                                                                                                                     2004
Assets                                                                           2003           2004               (note 3A)
                                                                           ------------------------------       ---------------
                                                                                                        
Current Assets
   Cash and investments (note 4).......................................  Ps     3,479.5        3,813.5     U.S.$       342.3
   Trade accounts receivable, less allowance for doubtful accounts                             4,767.8                 428.0
    (note 5)...........................................................         5,606.9
   Other receivables (note 6)..........................................         4,826.9        5,064.4                 454.6
   Inventories (note 7)................................................         7,100.1        7,046.8                 632.6
   Other current assets (note 8).......................................           796.3        1,048.8                  94.1
                                                                           ------------------------------       ---------------
       Total current assets............................................        21,809.7       21,741.3               1,951.6
                                                                           ------------------------------
Investments and Noncurrent Receivables (note 9)
   Investments in affiliated companies.................................         7,349.3       16,903.3               1,517.4
   Other noncurrent accounts receivable................................         2,199.1        3,644.9                 327.2
                                                                           ------------------------------       ---------------
       Total investments and noncurrent receivables....................         9,548.4       20,548.2               1,844.6
                                                                           ------------------------------
Properties, Machinery and Equipment (note 10)
   Land and buildings .................................................        55,321.1       55,194.9               4,954.7
   Machinery and equipment ............................................       158,701.3      155,381.2              13,948.0
   Accumulated depreciation ...........................................      (105,842.2)    (107,057.6)             (9,610.2)
   Construction in progress............................................         2,461.7        3,575.3                 320.9
                                                                           ------------------------------       ---------------
       Net properties, machinery and equipment.........................       110,641.9      107,093.8               9,613.4
                                                                           ------------------------------       ---------------
Intangible Assets and Deferred Charges (note 11).......................        49,250.6       44,239.6               3,971.2
                                                                           ------------------------------       ---------------
       Total Assets....................................................  Ps   191,250.6      193,622.9     U.S.$    17,380.8
                                                                           ------------------------------       ---------------
Liabilities and Stockholders' Equity
Current Liabilities
   Bank loans (note 12)................................................  Ps     2,634.1        5,031.9     U.S.$       451.7
   Notes payable (note 12).............................................         3,173.0          319.9                  28.7
   Current maturities of long-term debt (note 12) .....................        10,062.8        6,275.2                 563.3
   Trade accounts payable..............................................         5,831.9        5,964.6                 535.4
   Other accounts payable and accrued expenses (note 6)................        12,084.4        9,282.1                 833.2
                                                                           ------------------------------       ---------------
       Total current liabilities ......................................        33,786.2       26,873.7               2,412.3
                                                                           ------------------------------       ---------------
Long-Term Debt (note 12)
   Bank loans .........................................................        29,678.5       30,302.4               2,720.2
   Notes payable ......................................................        34,560.4       30,412.3               2,730.0
   Current maturities of long-term debt ...............................       (10,062.8)      (6,275.2)               (563.3)
                                                                           ------------------------------       ---------------
       Total long-term debt ...........................................        54,176.1       54,439.5               4,886.9
                                                                           ------------------------------       ---------------
Other Noncurrent Liabilities
   Pension and other postretirement benefits (note 14).................           664.1          656.4                  58.9
   Deferred income taxes (note 18B)....................................        12,580.5       12,828.3               1,151.6
   Other noncurrent liabilities (note 13)..............................         9,246.5        7,258.2                 651.5
                                                                           ------------------------------       ---------------
       Total other noncurrent liabilities .............................        22,491.1       20,742.9               1,862.0
                                                                           ------------------------------       ---------------
       Total Liabilities...............................................       110,453.4      102,056.1               9,161.2
                                                                           ------------------------------       ---------------
Stockholders' Equity (note 15)
   Majority interest:
     Common stock-historical cost basis................................            59.1           61.7                   5.5
     Common stock-accumulated inflation adjustments ...................         3,624.5        3,624.6                 325.4
     Additional paid-in capital........................................        38,171.5       41,339.8               3,710.9
     Deficit in equity restatement ....................................       (73,101.3)     (73,725.9)             (6,618.1)
     Cumulative initial deferred income tax effects (note 3K)..........        (6,100.2)      (6,100.2)               (547.6)
     Retained earnings ................................................       104,282.8      107,471.8               9,647.4
     Net income........................................................         7,508.4       14,562.3               1,307.2
                                                                           ------------------------------       ---------------
       Total majority interest ........................................        74,444.8       87,234.1               7,830.7
   Minority interest (note 15E)........................................         6,352.4        4,332.7                 388.9
                                                                           ------------------------------       ---------------
       Total stockholders' equity .....................................        80,797.2       91,566.8               8,219.6
                                                                           ------------------------------       ---------------
       Total Liabilities and Stockholders' Equity......................  Ps   191,250.6      193,622.9     U.S.$    17,380.8
                                                                           ------------------------------       ---------------


          See accompanying notes to consolidated financial statements.

                                      F-3


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
                        Consolidated Statements of Income
           (Millions of constant Mexican pesos as of December 31, 2004
          and millions of U.S. dollars, except for earnings per share)



                                                                           Years ended December 31,              (unaudited)
                                                                                                                    2004
                                                                         2002        2003        2004             (note 3A)
--------------------------------------------------------------------------------------------------------         -----------
                                                                                                   
Net sales........................................................  Ps  79,724.6    85,552.6    90,783.9   U.S.$     8,149.3
Cost of sales....................................................     (44,540.6)  (49,318.4)  (51,091.9)           (4,586.3)
                                                                     -----------------------------------         -----------
   Gross profit..................................................      35,184.0    36,234.2    39,692.0             3,563.0
                                                                     -----------------------------------         -----------

Operating expenses:
     Administrative..............................................     (10,022.3)   (9,483.0)   (9,225.5)             (828.1)
     Selling.....................................................      (9,195.0)   (9,374.1)   (9,838.8)             (883.2)
                                                                     -----------------------------------         -----------
       Total operating expenses..................................     (19,217.3)  (18,857.1)  (19,064.3)           (1,711.3)
                                                                     -----------------------------------         -----------

   Operating Income..............................................      15,966.7    17,377.1    20,627.7            1,851.70
                                                                     -----------------------------------         -----------

Comprehensive financing result:
     Financial expense...........................................      (4,051.7)   (4,545.5)   (4,146.6)             (372.2)
     Financial income............................................         543.5       199.3       260.9                23.4
     Results from valuation and liquidation of financial
       instruments...............................................      (3,856.2)     (711.4)    1,335.1               119.8
     Foreign exchange result, net................................        (939.4)   (2,049.1)     (262.5)              (23.6)
     Monetary position result....................................       4,290.6     3,912.8     4,298.6               385.9
                                                                     -----------------------------------         -----------
       Net comprehensive financing result........................      (4,013.2)   (3,193.9)    1,485.5               133.3
                                                                     -----------------------------------         -----------

                                                                     -----------------------------------         -----------
Other expense, net (notes 7, 10 and 11)..........................      (4,743.2)   (5,454.0)   (5,390.2)             (483.9)
                                                                     -----------------------------------         -----------

   Income before income taxes, employees' statutory profit
     sharing and equity in income of affiliates..................       7,210.3     8,729.2    16,723.0             1,501.1
                                                                     -----------------------------------         -----------

Income tax and business assets tax, net (note 18A)...............        (668.1)   (1,070.0)   (2,043.6)             (183.4)
Employees' statutory profit sharing (note 18A)...................        (125.5)     (202.9)     (330.2)              (29.7)
                                                                     -----------------------------------         -----------
   Total income tax, business assets tax and employees'
     statutory profit sharing....................................        (793.6)   (1,272.9)   (2,373.8)             (213.1)
                                                                     -----------------------------------         -----------

   Income before equity in income of affiliates..................       6,416.7     7,456.3    14,349.2             1,288.0

Equity in income of affiliates...................................         374.1       415.2       446.3                40.1
                                                                     -----------------------------------         -----------

   Consolidated net income.......................................       6,790.8     7,871.5    14,795.5             1,328.1
   Minority interest net income..................................         451.6       363.1      233.2                20.9
                                                                     -----------------------------------         -----------
   Majority interest net income..................................  Ps   6,339.2     7,508.4    14,562.3   U.S.$     1,307.2
--------------------------------------------------------------------------------------------------------         -----------

  Basic earnings per share (notes 3A and 21).....................  Ps      1.41        1.58        2.92   U.S.$        0.26

  Diluted earnings per share (notes 3A and 21)...................  Ps      1.41        1.55        2.90   U.S.$        0.26
--------------------------------------------------------------------------------------------------------         -----------


          See accompanying notes to consolidated financial statements.

                                      F-4



                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
                 Statements of Changes in Stockholders' Equity
          (Millions of constant Mexican pesos as of December 31, 2004
                         and millions of U.S. dollars)



                                                                             Cumulative
                                                                              initial                                     Total
                                                    Additional   Deficit in   deferred                Total               stock
                                            Common   paid-in      equity     income tax  Retained   majority   Minority  holders'
                                            Stock    capital    restatement   effects    earnings   interest   interest   equity
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
Balances at December 31, 2001.......... Ps  3,677.4   30,369.1  (61,933.4)   (6,100.2)  106,563.3   72,576.2   23,211.6  95,787.8
Dividends (Ps0.82 pesos per share) ....         2.4    3,374.0          -           -    (3,984.1)    (607.7)         -    (607.7)
Issuance of common stock (note 16A) ...         0.1       79.8          -           -           -       79.9                 79.9
Share repurchase program (note 15A)....        (0.3)         -          -           -      (425.3)    (425.6)              (425.6)
Restatement of investments and other
  transactions relating to minority
  interest.............................           -          -          -           -           -          -   (8,959.0) (8,959.0)
Investment by subsidiaries (note 9)....           -          -      269.6           -           -      269.6          -     269.6
Comprehensive net income (loss)
  (note 15G)...........................           -          -   (8,239.9)          -     6,339.2   (1,900.7)     451.6  (1,449.1)
                                           ---------------------------------------------------------------------------------------
Balances at December 31, 2002..........     3,679.6   33,822.9  (69,903.7)   (6,100.2)  108,493.1   69,991.7   14,704.2  84,695.9
Dividends (Ps0.85 pesos per share) ....         3.6    3,895.8          -           -    (4,210.3)    (310.9)         -    (310.9)
Issuance of common stock (note 16A) ...         0.1       45.2          -           -           -       45.3          -      45.3
Share repurchase program (note 15A)....         0.3      407.6          -           -           -      407.9          -     407.9
Restatement of investments and other
  transactions relating to minority
  interest.............................           -          -          -           -           -          -   (8,714.9) (8,714.9)
Investment by subsidiaries (note 9)....           -          -   (2,865.9)          -           -   (2,865.9)         -  (2,865.9)
Comprehensive net income (loss)
  (note 15G)...........................           -          -     (331.7)          -     7,508.4    7,176.7      363.1   7,539.8
                                           ---------------------------------------------------------------------------------------
Balances at December 31, 2003..........     3,683.6   38,171.5  (73,101.3)   (6,100.2)  111,791.2   74,444.8    6,352.4  80,797.2
Dividends (Ps0.82 pesos per share).....         2.6    4,154.2          -           -    (4,319.4)    (162.6)         -    (162.6)
Issuance of common stock (note 16A) ...         0.1       67.1          -           -           -       67.2          -      67.2
Liquidation of optional instruments
  (note 15F)...........................           -   (1,053.0)         -           -           -   (1,053.0)         -  (1,053.0)
Restatement of investments and other
  transactions relating to minority
  interest.............................           -          -          -           -           -          -   (2,252.9) (2,252.9)
Investment by subsidiaries (note 9)....           -          -   (3,274.0)          -           -   (3,274.0)         -  (3,274.0)
Comprehensive net income (loss)
  (note 15G)...........................           -          -    2,649.4           -    14,562.3   17,211.7      233.2  17,444.9
                                           ---------------------------------------------------------------------------------------
Balances at December 31, 2004.......... Ps  3,686.3   41,339.8  (73,725.9)   (6,100.2)  122,034.1   87,234.1    4,332.7  91,566.8
                                           ---------------------------------------------------------------------------------------
Balances at December 31, 2004
  (note 3A)(unaudited)...............U.S.$    330.9    3,710.9   (6,618.1)     (547.6)   10,954.6    7,830.7      388.9   8,219.6
----------------------------------------------------------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

                                      F-5


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
            Consolidated Statements of Changes in Financial Position
          (Millions of constant Mexican pesos as of December 31, 2004
                         and millions of U.S. dollars)


                                                                                Years ended December 31,              (unaudited)
                                                                                                                         2004
                                                                            2002         2003          2004            (note 3A)
 -------------------------------------------------------------------------------------------------------------       ------------
                                                                                                        
 Operating activities
    Majority interest net income.................................   Ps     6,339.2     7,508.4     14,562.3    U.S.$   1,307.2
    Charges to operations which did not require resources:
      Depreciation of properties, machinery and equipment........          6,363.0     6,866.0      6,681.4              599.8
      Amortization of deferred charges and credits, net..........          2,961.0     2,983.6      2,869.9              257.6
      Impairment of properties and intangible assets.............            109.4     1,257.0      1,567.8              140.7
      Pensions, and other postretirement benefits................            242.3       491.3        470.5               42.2
      Deferred income tax charged to results.....................           (483.6)     (465.6)     1,261.1              113.2
      Equity in income of affiliates.............................           (374.1)     (415.2)      (446.3)             (40.1)
      Minority interest..........................................            451.6       363.1        233.2               20.9
         Resources provided by operating activities..............         15,608.8    18,588.6     27,199.9            2,441.5
                                                                       ------------- ------------ ------------       ------------
    Changes in working capital, excluding acquisition effects:
      Trade accounts receivable, net.............................          2,612.1      (671.8)       736.1               66.1
      Other accounts receivables and other assets................          1,265.9       270.2       (332.9)             (29.9)
      Inventories................................................           (386.1)    1,628.4       (151.2)             (13.6)
      Trade accounts payable.....................................            619.3       849.9        156.7               14.1
      Other accounts payable and accrued expenses................            550.8    (1,961.3)    (2,780.2)            (249.6)
         Net change in working capital...........................          4,662.0       115.4     (2,371.5)            (212.9)
                                                                       ------------- ------------ ------------       ------------
         Net resources provided by operating activities..........         20,270.8    18,704.0     24,828.4            2,228.6
                                                                       ------------- ------------ ------------       ------------
 Financing activities

    Proceeds from bank loans (repayments), net...................          3,057.3    (3,248.8)    (5,734.3)            (514.7)
    Notes payable, net, excluding foreign exchange effect........           (363.2)    1,290.0     (7,090.4)            (636.5)
    Bank loans financing the acquisition of RMC Group p.l.c......                -           -      8,756.0              786.0
    Investment by subsidiaries...................................             (5.3)      (23.9)           -                  -
    Liquidation of optional instruments..........................                -           -     (1,053.0)             (94.5)
    Dividends paid...............................................         (3,984.1)  (4,210.3)     (4,319.4)            (387.7)
    Issuance of common stock from reinvestment of dividends......          3,376.4     3,899.4      4,156.8              373.1
    Issuance of common stock under stock option programs.........             79.9        45.3         67.2                6.0
    Repurchase of preferred stock by subsidiaries................         (4,920.2)   (7,801.5)      (791.0)             (71.0)
    Disposal (acquisition) of shares under repurchase program....           (425.6)      407.9            -                  -
    Other financing activities, net..............................          3,594.7     3,743.2     (1,824.9)            (163.8)
                                                                       ------------- ------------ ------------       ------------
         Resources provided by (used in) financing activities....            409.9    (5,898.7)    (7,833.0)            (703.1)
                                                                       ------------- ------------ ------------       ------------
 Investing activities
    Properties, machinery and equipment, net.....................         (5,166.2)   (4,703.2)    (4,834.9)            (434.0)
    Acquisition of subsidiaries and affiliates...................         (3,210.9)     (973.5)      (186.4)             (16.7)
    Investment in RMC Group p.l.c................................                -           -     (8,756.0)            (786.0)
    Disposal of assets...........................................            653.8       167.1        709.3               63.7
    Minority interest............................................         (3,474.5)     (913.3)    (1,461.9)            (131.2)
    Deferred charges.............................................         (2,263.7)     (604.1)     1,551.6              139.3
    Other investments and monetary foreign currency effect.......         (7,852.2)   (6,699.3)    (3,683.1)            (330.6)
                                                                       ------------- ------------ ------------       ------------
         Resources used in investing activities..................        (21,313.7)  (13,726.3)   (16,661.4)          (1,495.5)
                                                                       ------------- ------------ ------------       ------------
         Increase (Decrease) in cash and investments ............           (633.0)     (921.0)       334.0               30.0
         Cash and investments at beginning of year...............          5,033.5     4,400.5      3,479.5              312.3
                                                                       ------------- ------------ ------------       ------------
         Cash and investments at end of year.....................   Ps     4,400.5     3,479.5      3,813.5    U.S.$     342.3
 -------------------------------------------------------------------------------------------------------------       ------------


          See accompanying notes to consolidated financial statements.

                                      F-6


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


1. DESCRIPTION OF BUSINESS

CEMEX, S.A. de C.V. (CEMEX or the Company) is a Mexican holding company
(parent) of entities whose main activities are oriented to the construction
industry, through the production and marketing of cement, ready-mix concrete
and aggregates, as well as providing services to the construction industry.

2. OUTSTANDING EVENT IN 2004

On September 27, 2004, CEMEX announced a public offer to purchase the
outstanding shares of RMC Group p.l.c. ("RMC") for approximately U.S.$4,100
million in cash. Including the assumption of debt, the enterprise value of the
transaction is approximately U.S.$5,800 million. RMC, headquartered in the
United Kingdom, is a leading international producer and supplier of materials,
products and services used primarily in the construction industry. RMC is one
of Europe's largest producers of cement and one of the world's largest
suppliers of ready-mix concrete and aggregates. As part of the acquisition
process in 2004, CEMEX acquired approximately 18.8% of RMC shares for
(pound)432 million (U.S.$786 million). In 2003, according to public
information, RMC sold approximately 15.7 million tons of cement, 55.5 million
cubic meters of ready-mix concrete and 158 million tons of aggregates.

The boards of directors of both companies approved the transaction on September
27, 2004, subject to shareholder approval in the case of RMC and clearance from
antitrust authorities in Europe and the United States of America. On November
17, 2004, more than 99% of RMC shareholders approved the transaction in an
extraordinary shareholders meeting; consequently, shareholders were committed
to sell their shares to CEMEX. On December 8, 2004, the European Commission
authorized the transaction under the European Community's Merger Regulation. As
of December 31, 2004, the acquisition of RMC is pending pre-merger clearance
from the anti-trust authorities in the United States of America, which could be
received at the end of January or at the beginning of February 2005.

On March 1, 2005, after receiving pending clearances, CEMEX completed the
acquisition of RMC (note 24(w)).

3. SIGNIFICANT ACCOUNTING POLICIES

A) BASIS OF PRESENTATION AND DISCLOSURE

The accompanying financial statements have been prepared in accordance with
Generally Accepted Accounting Principles in Mexico ("Mexican GAAP"), which
recognize the effects of inflation on the financial information. All amounts
herein are presented in constant Mexican pesos ("pesos" or "Ps") and, for the
year 2004 amounts in the financial statements, also in dollars of the United
States of America ("dollars" or "U.S.$"), the latter being unaudited and
presented solely for the convenience of the reader at the rate of U.S.$1 =
Ps11.14, the CEMEX accounting rate on December 31, 2004.

When reference is made to "(pound)" or pounds, it means U.K. pounds sterling.
Except when specific references are made to "U.S. dollar millions", "earnings
per share", and "option prices", 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 "CPO" or "CPOs" it means the Ordinary Participation
Certificates of CEMEX. Each CPO represents the participation in two series "A"
shares and one series "B" share of the common stock. References to "ADS" or
"ADSs" refer to "American Depositary Shares", listed on the New York Stock
Exchange ("NYSE"). Each ADS represents 5 CPOs. See note 24(w(unaudited)) for a
description of the Company's proposed stock split, approved at the April 28,
2005 extraordinary stockholders' meeting.

Certain amounts reported in the consolidated financial statements and their
notes as of December 31, 2003 and 2002 have been reclassified to conform to the
2004 presentation.

B) RESTATEMENT OF COMPARATIVE FINANCIAL STATEMENTS

The restatement factors applied to the 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
peso.



                                                                   2001 to 2002      2002 to 2003      2003 to 2004
                                                                  --------------    -------------    ---------------
                                                                                                
   Restatement factor using weighted average inflation.........       1.0916            1.1049           1.0624
   Restatement factor using Mexican inflation..................       1.0559            1.0387           1.0539
                                                                  --------------    -------------    ---------------


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.

                                      F-7


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


C) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include those of CEMEX and the subsidiary
companies in which the Company holds more than 50% of their common stock and/or
has control. All significant balances and transactions between related parties
have been eliminated in consolidation. As of December 31, 2004, the main
operating subsidiaries, ordered by holding company, and the percentage of
interest directly held by their immediate holding company, are as follows:




                      Subsidiary                                Country           % Interest
-------------------------------------------------      ----------------------   --------------------
                                                                               
CEMEX Mexico, S. A. de C.V........................1    Mexico                          100.0
  CEMEX Espana, S.A...............................2    Spain                            99.7
    CEMEX Venezuela, S.A.C.A......................     Venezuela                        75.7
    CEMEX, Inc....................................     United States                   100.0
    CEMEX (Costa Rica), S.A.......................3    Costa Rica                       98.7
    Assiut Cement Company.........................     Egypt                            95.8
    CEMEX Colombia, S.A. .........................4    Colombia                         99.6
    Cementos Bayano, S.A. ........................     Panama                           99.3
    Cementos Nacionales, S.A......................     Dominican Republic               99.9
    Puerto Rican Cement Company, Inc..............     Puerto Rico                     100.0
    CEMEX Asia Holdings Ltd.......................5    Singapore                        99.1
      Solid Cement Corporation....................6    Philippines                      99.1
      APO Cement Corporation......................6    Philippines                      99.1
      CEMEX (Thailand) Co. Ltd....................7    Thailand                        100.0
----------------------------------------------------------------------------------------------------

1.   CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico") 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. ("Cedice"). Through Cedice, CEMEX Mexico indirectly holds CEMEX
     Espana, S.A. and subsidiaries.

2.   In June 2002, Compania Valenciana de Cementos Portland, S.A. changed its legal name to CEMEX Espana, S.A. ("CEMEX
     Espana").

3.   In July 2003, Cementos del Pacifico, S.A. changed its legal name to CEMEX (Costa Rica), S.A.

4.   In August 2002, Cementos Diamante, S.A. changed its legal name to CEMEX Colombia, S.A.

5.   In August 2004, 6.83% of CEMEX Asia Holdings Ltd. ("CAH") shares were acquired, which in addition to the shares
     exchange occurred in July 2002, increased the interest in CAH to approximately 99.1% (see note 9A).

6.   Represents the Company's interest held through CAH. The direct economic benefits of CAH in Solid and APO Cement
     Corporation is 100%. On December 23, 2002, Rizal was merged with Solid.

7.   In July 2002, Saraburi Cement Company Ltd. changed its legal name to CEMEX (Thailand) Co. Ltd.


D) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FOREIGN CURRENCY
   FINANCIAL STATEMENTS

Transactions denominated in foreign currencies are recorded at the exchange
rates prevalent 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, which are recorded against stockholders' equity, as part of
the foreign currency translation adjustment of foreign subsidiaries.

The financial statements of foreign subsidiaries 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 peso to
U.S. dollar exchange rate used by CEMEX is an average of free market rates
available to settle its foreign currency transactions.

                                      F-8


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


E) CASH AND INVESTMENTS (note 4)

Investments include fixed-income securities with original maturities of three
months or less, as well as marketable securities readily convertible into cash.

Investments in fixed-income securities are recorded at cost plus accrued
interest. Investments in marketable securities are recorded at market value.
Gains or losses resulting from changes in market values, accrued interest and
the effects of inflation are included in the income statements as part of the
Comprehensive Financing Result.

F) 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 or 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, 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.

G) INVESTMENTS AND NONCURRENT RECEIVABLES (note 9)

Investments in affiliated companies 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
inflation effects.

Other long-term investments, included under this caption, are recognized at
their estimated fair value and their changes in valuation are included in the
results of the period as part of the Comprehensive Financing Result.

H) PROPERTIES, MACHINERY AND EQUIPMENT (note 10)

Properties, machinery and equipment are presented at their restated value,
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 are depreciated by the straight-line method over the
estimated useful lives, which fluctuate from 50 years for administrative
buildings to 10 to 35 years for industrial buildings, machinery and equipment.
Properties, machinery and equipment are subject to periodic impairment
evaluations (see note 3U).

The Comprehensive Financing Results, arising from indebtedness incurred during
the construction or installation period of fixed assets, are capitalized as
part of the carrying value of such assets.

I) INTANGIBLE ASSETS, DEFERRED CHARGES AND AMORTIZATION (note 11)

In accordance with Bulletin C-8, Intangible Assets, intangible assets acquired
as well as costs incurred in the development stages of intangible assets are
capitalized when associated future benefits are identified and the control over
such benefits is demonstrated. Expenditures not meeting these requirements are
charged to earnings as incurred. Intangible assets are presented at their
restated value and are classified as having a definite life, which are
amortized over the benefited periods, and as having an indefinite life, which
are not amortized since the period cannot be accurately established in which
the benefits associated with such intangibles will terminate. Amortization of
intangible assets, except for goodwill, is calculated under the straight-line
method.

Intangible assets acquired in a business combination are separately accounted
for at fair value at the acquisition date, unless the value cannot be
reasonably estimated, in which case, such amounts are included as part of
goodwill, which was amortized until December 31, 2004, in accordance with
current accounting standards. Until that date, CEMEX amortized goodwill 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 before 1992 was amortized over a maximum
period of 40 years, while goodwill generated from 1992 to December 31, 2004 was
amortized over a maximum period of 20 years. Starting January 1, 2005, in
compliance with the rules established by the new Bulletin B-7 (see note 23),
goodwill balances will cease to be amortized but will remain subject to
periodic impairment tests.

                                      F-9


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Direct costs incurred in debt issuances are capitalized and amortized as part
of the effective interest rate of each transaction over its maturity. These
costs include discounts on debt issuance, bank fees, fees paid to attorneys,
agents, printers and consultants. Likewise, direct costs incurred in the
development stage of computer software for internal use are capitalized and
amortized through the operating results over the estimated useful life of the
software, which is approximately 4 years.

Preoperative expenses and other deferred charges recognized in prior years
under former Bulletin C-8 will continue to be amortized over their original
periods. Intangible assets are subject to impairment evaluations (see note 3U).
The adoption of Bulletin C-8 only affected the grouping of intangible assets in
the categories indicated above (see note 11).

J) PENSIONS AND OTHER POSTRETIREMENT BENEFITS (note 14)

The costs related to benefits to which employees are entitled by pension plans
and other postretirement benefits, including medical expenses, life insurance
and seniority premiums, legally or by Company grant, are recognized in the
operating results as services are rendered, based on actuarial estimations of
the benefits' present value. The amortization of prior service cost (transition
asset) and of changes in assumptions and adjustments based on experience is
recognized over the employee's estimated active service life. For certain
pension plans, irrevocable trust funds have been created to cover future
benefit payments under these plans. The actuarial assumptions upon which the
Company's employee benefit liabilities are determined consider the use of real
rates (nominal rates discounted by inflation).

Until December 31, 2004, other postretirement benefits, including severance
benefits, were recognized as an expense in the year in which they were paid. In
some circumstances, however, provisions were made for these benefits. Starting
January 1, 2005, as a result of modifications to Bulletin D-3, "Labor
Obligations", the costs related to postretirement benefits will be recognized
over the estimated active service life of the employees.

K)    INCOME TAX ("IT"), BUSINESS ASSETS TAX ("BAT"), EMPLOYEES' STATUTORY
      PROFIT SHARING ("ESPS") AND DEFERRED INCOME TAXES (note 18)

The IT, BAT and ESPS reflected in the income statements, include amounts
incurred during the period and the effects of deferred IT and ESPS.
Consolidated deferred IT represents the summary of the effect determined in
each subsidiary by 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 effects 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 the effective statutory tax rate is recognized in the
income statement for the period in which the change occurs and is officially
declared. 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 of the period and the taxable income of the
period for ESPS.

The cumulative initial effect, arising from the adoption of the asset and
liability method, was recognized on January 1, 2000 in stockholders' equity
under the caption "Cumulative initial deferred income tax effects".
Consolidated balances of assets and liabilities and their corresponding taxable
amounts substantially differ from those of the Parent Company. The cumulative
initial deferred income tax effects presented in the statement of changes in
stockholders equity correspond to the consolidated entity. The difference
between the Parent Company's and the consolidated accumulated initial deferred
IT effects is included under the caption "Deficit in Equity Restatement".

L) MONETARY POSITION RESULT

The monetary position result, which represents the gain or loss from holding
monetary assets and liabilities in inflationary environments, is calculated by
applying the inflation rate of the country of each subsidiary to its net
monetary position (difference between monetary assets and liabilities).

M) DEFICIT IN EQUITY RESTATEMENT (note 15)

The deficit in equity restatement includes: (i) the accumulated effect from
holding non-monetary assets; (ii) the currency translation effects from foreign
subsidiaries' financial statements, net of 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 (see notes 3D and 15D); and (iii) valuation and
liquidation effects of certain derivative financial instruments that qualify as
hedge instruments, which are recorded temporarily or permanently in
stockholders' equity (see note 3N).

                                     F-10


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


N) DERIVATIVE FINANCIAL INSTRUMENTS (notes 12 and 17)

In compliance with the guidelines established by the Risk Committee, CEMEX uses
derivative financial instruments, 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 (see note 12) and as an
alternative source of financing (see note 17), as well as hedges of: (i)
forecasted transactions, (ii) net assets in foreign subsidiaries and (iii)
executive stock option programs. These instruments have been 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. As of December 31, 2004 and 2003, some of these
instruments have been designated as hedges of debt or equity instruments. In
other cases, although some derivatives complement the Company's financial
strategy, such derivatives have not been designated as hedge instruments as
accounting hedge requirements were not met.

Effective January 1, 2001, in accordance with Bulletin C-2, "Financial
Instruments", the Company recognizes all derivative financial instruments as
assets or liabilities in the balance sheet at their estimated fair value and
the changes in such values in the income statement for the period in which they
occur.

The exceptions to the rule, as they refer to the transactions designated by the
Company and that meet hedging requirements, are the following:

a)   Beginning in 2002, changes in the estimated fair value of interest rate
     swaps to exchange floating rates for fixed rates, designated as accounting
     hedges of the cash flows related to interest rates of a portion of
     contracted debt, as well as those instruments negotiated to hedge the
     interest rates at which certain forecasted debt is expected to be
     contracted or renegotiated, are recognized temporarily in stockholders'
     equity (note 15G) and reclassified to earnings, in the case of the
     forecasted debt, once the related debt is recognized in the balance sheet
     and its related financial expense is accrued.

b)   The 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 recorded in stockholders' equity, as part of the
     foreign currency translation result (notes 3D and 15D). The accumulated
     effect in stockholders' equity will be reversed through the income
     statement upon disposition of the foreign investment.

c)   Beginning in 2001, changes in the estimated fair value of those equity
     forward contracts that cover the executive stock option programs are
     recorded through the income statement in the comprehensive financing
     result, as part of the costs related to such programs. The results derived
     from equity forward contracts on the Company's own shares not designated
     as hedges of the stock option programs, as well as from equity instruments
     (such as the appreciation warrants refered to in note 15F), are recognized
     in stockholders' equity upon settlement (notes 16 and 17).

d)   Changes in fair value of foreign currency derivative instruments
     negotiated to hedge a firm commitment, are recognized through
     stockholders' equity, and are reclassified to the income statement once
     the operation underlying the firm commitment takes place, as the effects
     from the hedged item are reflected in earnings. In 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 17B), the
     accumulated effect in equity is reclassified to earnings when the purchase
     occurs.

For balance sheet presentation purposes, a portion of the assets or liabilities
resulting from the estimated fair value recognition of Cross Currency Swaps
("CCS"), is reclassified as part of the carrying amount of the underlying debt
instruments, thereby reflecting the cash flows expected to be received or paid
upon liquidation of such instruments. CCS are negotiated to change the profile
of the interest rate and currency of existing debt, required to present the
indebtedness as if it had been originally negotiated in the exchanged interest
rates and currencies. The non-reclassified portion, resulting from the
difference between the forward exchange rates and those in effect as of the
balance sheet date, is recognized as other assets or other liabilities, both
short and long term, depending on the maturity of the contracts. As a result of
new accounting pronouncements, starting January 1, 2005, the above
reclassification will be discontinued; therefore, for balance sheet
presentation, debt will remain in the original currencies and rates (note 23).

                                     F-11


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The periodic cash flows generated by interest rate swaps and CCS are recognized
as financial expense, adjusting the effective interest rate of the related
debt. For all other derivative instruments, cash flows are recognized within
the same item where the effects of the primary instrument subject to the
accounting or economic hedge relationship are classified. In the case of
derivatives not associated with an identified exposure, related cash flows are
recognized in earnings as part of the results from valuation and liquidation of
financial instruments. Premiums paid on hedge derivative instruments are
deferred and amortized over the life of the instrument or immediately upon
settlement. In other cases, premiums are recognized in earnings when paid or
received.

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 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 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.

O) REVENUE RECOGNITION

Revenue is recognized upon shipment of cement and ready-mix concrete 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.

P) CONTINGENCIES AND COMMITMENTS

Obligations or losses, related to contingencies, are recognized as liabilities
in the balance sheet when present obligations exist, as a result of past
events, it is probable that the effects will materialize and can be reasonably
quantified. 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 formalized with suppliers or clients,
are recognized in the financial statements on the incurred or accrued basis,
considering 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.

Q) COMPREHENSIVE NET INCOME (LOSS) (note 15G)

The Company presents comprehensive net income (loss) and its components as a
single item in the statement of changes in stockholders' equity. Comprehensive
net income (loss) represents the change in stockholders' equity during a period
for transactions and other events not representing contributions, reductions or
distributions of capital.

R) USE OF ESTIMATES

The preparation of financial statements requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities at the
date of the financial statements, as well as the reported amounts of revenues
and expenses during the period. The main captions subject to estimations and
assumptions include the book value of fixed assets, allowances for doubtful
accounts, inventories and assets for deferred IT, the fair market values of
financial instruments and, the assets and liabilities related to labor
obligations. Actual results could differ from these estimates.

S) CONCENTRATION OF CREDIT RISK

The Company 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 accounted for a significant
amount of the Company's sales in 2002, 2003 and 2004, 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

T) OTHER INCOME AND EXPENSE

Other income and expense, in the statements of income, consists primarily of
goodwill amortization, anti-dumping duties, results from the sales of fixed
assets, impairment losses of long-lived assets, results from the early
extinguishment of debt and other unusual or non-recurrent transactions.

                                     F-12


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


U) IMPAIRMENT OF LONG LIVED ASSETS (notes 10 and 11)

The Company evaluates the balances of its machinery and equipment, 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
of the period when such determination is made, resulting from the excess of
carrying amount over the net present value of estimated cash flows related to
such assets.

Likewise, CEMEX periodically evaluates the balances of goodwill and other
intangible assets of indefinite life by determining the cash flows to be
generated by the reporting units to which those assets relate. A reporting unit
refers to a group of one or more cash generating units. Cash flows are
discounted at present value and an impairment loss is recognized if such
discounted cash flows are lower than the net book value of the reporting unit.

V) ASSET RETIREMENT OBLIGATIONS (note 13)

Effective January 1, 2003, in accordance with Bulletin C-9, "Liabilities,
Accruals, Contingent Assets and Liabilities, and Commitments", CEMEX recognizes
unavoidable obligations, legal or assumed, to restore the site or the
environment when removing assets at the end of their useful lives. These
obligations represent the net present value of expected cash flows to be
incurred in the restoration process and are initially recognized against the
related assets' book value. The additional asset is depreciated to operating
results during its remaining useful life, while the increase of the liability,
by the passage of time, is charged to results 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.

As of the implementation date, the Company had already created liabilities for
the known situations; however, an analysis was performed throughout all
subsidiaries in the different countries in order to identify additional
possible existing situations and proceed to calculate them and if applicable
reflect them in the accounting record. Asset retirement obligations in the case
of CEMEX are related mainly to future costs of demolition, cleaning and
reforestation, derived from commitments, both legal and assumed, so that at the
end of the operation, the sites where raw material is extracted, the maritime
terminals and other production sites, are left in acceptable conditions. For
those situations identified and quantified, effective January 1, 2003, a
remediation liability was recorded for approximately Ps537.2, against fixed
assets for Ps388.1, deferred IT assets for Ps58.0 and an initial cumulative
effect for Ps91.1, which was recorded in stockholders' equity as an element of
comprehensive net income.

W) EXECUTIVE STOCK OPTION PROGRAMS (note 16)

The Company recognizes the cost associated with executive stock options
programs by means of the intrinsic value method, for those programs in which,
as of the granted date, is not known the exercise price at which the underlying
shares will be exercised, because this exercise price is growing (variable)
over the life of the options. Through the intrinsic value method, the changes
in the appreciation of options represented by the difference between the market
price of the CPO and the exercise price of the option is recognized as cost in
the Company's income statement, within the Comprehensive Financing Result. The
Company does not recognize cost for those programs in which the exercise price
is equal to the CPO price at the date of grant of the option and it remains
fixed for the life of the option.

4. CASH AND INVESTMENTS

Consolidated cash and investments as of December 31, 2003 and 2004 consists of:

                                                    2003             2004
                                              ---------------  ---------------
Cash and bank accounts................... Ps       1,767.1          1,615.7
Fixed-income securities..................          1,367.4          1,720.4
Investments in marketable securities.....            345.0            477.4
                                              ---------------  ---------------
                                          Ps       3,479.5          3,813.5
                                              ---------------  ---------------

                                     F-13


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


5. TRADE ACCOUNTS RECEIVABLE

The Company evaluates each of its customers' credit and risk profiles in order
to establish the required allowance for doubtful accounts. Trade accounts
receivable as of December 31, 2003 and 2004 include allowances for doubtful
accounts of Ps671.5 and Ps756.4, respectively.

The Company has established sales of trade accounts receivable programs with
financial institutions ("securitization programs"). These programs were
originally established in Mexico during 2002, in the United States during 2001
and in Spain in 2000. Through the securitization programs, CEMEX effectively
surrenders control, risks and the benefits associated with 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 (note 6). The
balances of receivables sold pursuant the securitization programs as of
December 31, 2003 and 2004 were Ps6,507.1 (U.S.$584.1million) and Ps7,114.0
(U.S.$638.6 million), respectively. The accounts receivable qualifying for sale
do not include amounts over certain days past due or concentrations over
certain limit 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 Ps127.4 (U.S.$11.4 million) in 2002, Ps113.6
(U.S.$10.2 million) in 2003 and Ps125.7 (U.S.$11.3 million) in 2004.

6. OTHER ACCOUNTS RECEIVABLE AND OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other accounts receivable as of December 31, 2003 and 2004 consist of:



                                                                                           2003               2004
                                                                                     ---------------    ---------------
                                                                                                     
Non-trade receivables...........................................................  Ps      1,688.6            1,210.1
Prepayments and receivables from valuation of derivative instruments
  (notes 12 and 17).............................................................            520.4            1,837.2
Interest and notes receivable...................................................          1,064.2            1,196.9
Advances for travel expenses and loans to employees.............................            326.1              432.8
Other refundable taxes..........................................................          1,227.6              387.4
                                                                                     ---------------    ---------------
                                                                                  Ps      4,826.9            5,064.4
                                                                                     ---------------    ---------------


Non-trade receivables are mainly originated by the sale of assets. Interest and
notes receivable include Ps1,022.9 (U.S.$91.8 million) in 2003 and Ps1,161.6
(U.S.$ 104.3 million) in 2004, arising from securitization programs (note 5).
Other refundable taxes include Ps926.8 in 2003 for tax advances.

Other accounts payable and accrued expenses as of December 31, 2003 and 2004
consist of:



                                                                                           2003               2004
                                                                                     ---------------    ---------------
                                                                                                     
Other accounts payable and accrued expenses.....................................  Ps      2,648.0            1,856.8
Interest payable................................................................            715.1              575.2
Tax payable.....................................................................          3,187.4            1,453.4
Dividends payable...............................................................             95.5               17.8
Provisions......................................................................          3,135.5            3,584.4
Advances from customers.........................................................            915.2              812.9
Accounts payable from valuation of derivative instruments (notes 12 and 17).....          1,387.7              981.6
                                                                                     ---------------    ---------------
                                                                                  Ps     12,084.4            9,282.1
                                                                                     ---------------    ---------------


Short-term provisions primarily consist of: (i) remuneration and other
personnel benefits accrued at the balance sheet date; (ii) accruals for
insurance payments; and (iii) accruals related to the portion of legal
assessments to be settled in short-term, such as the case of anti-dumping fees
(note 22C) and environmental remediations (note 22G). Commonly, these amounts
are revolving in nature and are to be settled and replaced by similar amounts
within the next 12 months.

                                     F-14


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


7. INVENTORIES

Inventories in the consolidated balance sheet as of December 31, 2003 and 2004
are summarized as follows:

                                                 2003                2004
                                             -------------      -------------
 Finished goods.....................     Ps       1,467.9            1,676.1
 Work-in-process....................              1,921.6            1,603.7
 Raw materials......................                587.0              666.2
 Supplies and spare parts...........              2,533.6            2,506.7
 Advances to suppliers..............                255.1              265.4
 Inventory in transit...............                334.9              328.7
                                             -------------      -------------
                                         Ps       7,100.1           7,046.8
                                             =============      ==============

In December 2004, based on periodic impairment analysis on the inventory
balances (note 3F), impairment losses of approximately U.S.$16.9 million
(Ps188.3) were recognized within other expenses.

8. OTHER CURRENT ASSETS

Other current assets in the consolidated balance sheet as of December 31, 2003
and 2004 consist of:

                                                 2003                2004
                                             -------------      -------------
 Advance payments......................   Ps        376.0            471.1
 Non-cement related assets.............             420.3            577.7
                                             -------------      -------------
                                          Ps        796.3          1,048.8
                                             =============      ==============

Non-cement related assets are stated at their estimated realizable value and
mainly consist of (i) non-cement related assets acquired in business
combinations, (ii) various assets held for sale received from customers as
payment of trade receivables, and (iii) real estate held for sale.

9. INVESTMENTS AND NONCURRENT RECEIVABLES

A) INVESTMENTS IN SUBSIDIARIES AND AFFILIATED COMPANIES

As of December 31, 2003 and 2004, investments in affiliated companies,
accounted for by the equity method, are summarized as follows:

                                                 2003                2004
                                             -------------      -------------
 Book value at acquisition date.........  Ps     4,149.2           13,175.3
 Equity in income and other
    changes in stockholders' equity.....         3,200.1            3,728.0
                                             -------------      -------------
                                          Ps     7,349.3           16,903.3
                                             =============      ==============

Investments held by subsidiaries in CEMEX shares, amounting to Ps9,814.6
(153,594,177 CPOs and 30,709,083 appreciation warrants) at December 31, 2003
and Ps12,512.1 (154,014,032 CPOs) at December 31, 2004, are offset against
majority interest stockholders' equity in the accompanying financial
statements.

                                     F-15



                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The Company's principal acquisitions and divestitures during 2002, 2003 and
2004 are as follows:

I.   On September 27, 2004, as a result of a public offer to purchase the
     outstanding shares of RMC, CEMEX acquired 50 million shares for
     approximately (pound)432 million (U.S.$786 million), which represents
     approximately 18.8% of RMC's outstanding stock. RMC, headquartered in the
     United Kingdom, is a leading international producer and supplier of
     materials, products and services used primarily in the construction
     industry. The acquisition of the remaining 81.2% is subject to several
     authorizations and may conclude during the first quarter of 2005 (see note
     2).

II.  On November 15, 2004, CEMEX announced that it had reached a preliminary
     understanding with a Brazilian company to sell the cement plants in
     Charlevoix, Michigan, and Dixon, Illinois, both located in the United
     States. The transaction, valued at approximately U.S.$400 million, is
     expected to close in the first quarter of 2005, subject to definitive
     documentation and the satisfaction of customary conditions precedent. The
     combined capacity of these plants is close to 2 million tons and in 2004
     revenues from those operations represented around 10% of CEMEX operations
     in that country.

III. In August 2004, a subsidiary acquired 6.83% (695,065 shares) of CAH equity
     for approximately U.S.$70 million. In addition, in 2004, 1,398,602 CAH
     shares were exchanged for 27,850,713 CPOs with an approximate value of
     U.S.$172 million (Ps1,916.0). In 2003, 84,763 CAH shares were exchanged
     for 1,683,822 CPOs, with an approximate value of U.S.$7.8 million
     (Ps93.2). Exchanges during 2004 and 2003 resulted from the agreements
     established on July 12, 2002, through which in 2003, 1,483,365 CAH shares
     would be acquired by a forward exchange requiring delivery of 28,195,213
     CPOs. In April 2003, the original settlement date was modified with
     respect to 1,398,602 CAH shares, which were acquired during 2004. In 2002,
     25,429 CAH shares were acquired for U.S.$2.3 million. For accounting
     purposes, the 1,483,365 CAH shares were consolidated since July 2002,
     recognizing an account payable of U.S.$140 million, equivalent to the
     price of 28,195,213 CPOs as of the date of the exchange agreements. In
     2004, CEMEX recorded a loss in stockholders' equity for approximately
     Ps1,000.4 representing the excess in the price paid over the book value of
     the CAH shares held by minority interests. Through the transactions
     mentioned above, the Company's share in CAH increased to 99.1%.

IV.  In August and September 2003, for a combined price of approximately
     U.S.$99.7 million (Ps1,190.5), CEMEX, Inc. acquired Mineral Resource
     Technologies, Inc. ("MRT"), a distributor of minerals used in
     manufacturing of ready-mix concrete, and a cement plant and quarry with an
     annual production capacity of 560 thousand tons located in Dixon,
     Illinois, United States. The operating results of MRT and the Dixon plant
     are included in the consolidated financial statements since the respective
     acquisition dates. During 2002, CEMEX, Inc. sold aggregate quarries and
     other equipment for an approximate amount of U.S.$49 million.

V.   On July 30, 2002, through a public tender offer, a subsidiary of the
     Company acquired 100% of the outstanding shares of Puerto Rican Cement
     Company, Inc. ("PRCC"), for approximately U.S.$180.2 million. As of
     December 31, 2002, the consolidated financial statements include the
     balance sheet of PRCC and the results of operations as of and for the
     five-month period ended December 31, 2002.

VI.  In July 2002, a Company subsidiary acquired the 30% remaining economic
     interest of Solid from third parties for approximately U.S.$95 million.
     Prior to this purchase, CEMEX indirectly had a 70% economic interest in
     Solid through CAH. As a result of this acquisition and the subsequent
     increases in CAH's equity interest held by CEMEX, the approximate indirect
     economic interest of CEMEX in Solid increased from 54.2% to 99.1%.

Certain condensed financial information of Dixon and MRT, companies acquired in
2003, that were consolidated in the Company's financial statements in the year
of acquisition is presented below:

Total assets.........................................      Ps       1,301.6
Total liabilities....................................                 119.4
Stockholders' equity.................................               1,182.2
                                                              ---------------
Sales................................................      Ps         197.6
Operating income.....................................                  12.2
Net income...........................................                  12.1
                                                              ---------------

                                     F-16


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


As of December 31, 2003 and 2004, the consolidated investments in affiliated
companies are as follows:




                                                                                  % Equity
                                                    Activity        Country       interest          2003           2004
                                                   ----------    ------------    ----------      -----------    -----------
                                                                                                     
RMC Group p.l.c. .................................. Concrete        United         18.8      Ps      -              9,186.8
                                                                    Kingdom
PT Semen Gresik, Tbk...............................  Cement        Indonesia       25.5             2,919.4         2,774.3
Control Administrativo Mexicano, S.A. de C.V.......  Cement         Mexico         49.0             2,087.9         2,238.5
Trinidad Cement Limited............................  Cement        Trinidad        20.0               341.0           297.8
Cementos Bio Bio, S.A..............................  Cement          Chile         11.9               438.2           472.6
Cancem, S.A. de C.V................................  Cement         Mexico         10.0               212.3           228.7
Lehigh White Cement Company........................  Cement          U.S.          24.5               127.4           142.3
Societe des Ciments Antillais......................  Cement      Antilles Fr.      26.1               170.8           198.6
Caribbean Cement Company Limited...................  Cement         Jamaica         5.0               109.0           116.7
Others.............................................     -              -             -                943.3         1,247.0
                                                                                                 -----------    -----------
                                                                                             Ps     7,349.3        16,903.3
                                                                                                 ===========    ===========


During 2003, the management of PT Semen Padang ("Padang"), subsidiary of
Gresik, by different means obstructed the ownership rights of Gresik, by not
acknowledging the Padang's administration designated by Gresik in May's 2003
stockholders' meeting. In September 2003, pursuant to a court order, the
management appointed by Gresik finally assumed its duties. In addition, the
former management failed to provide financial information to Gresik, required
for consolidation purposes. Therefore, the consolidated financial statements of
Gresik, at December 31, 2002, included unaudited information of Padang. The
external auditors of Gresik, who were also auditors of Padang, abstained from
giving an opinion since Padang represented around 16% of the combined net
assets. In December 2003, Gresik designated new auditors to review the 2002 and
2003 consolidated financial statements. The in-depth troubles persist and are
related to the agreements of 1998 between the Indonesian government and CEMEX.
According to these agreements, the government would sell to CEMEX the majority
interest of Gresik and subsidiaries, which has not occurred mainly due to the
opposition of the provincial administration of West Sumatra, which has argued
that the original sale of Padang by the government to Gresik in 1995 is
invalid, since certain necessary approvals were not obtained. As a result of
this situation, in December 2003, CEMEX filed before the International Center
for the Settlement of Investments Disputes, a request for arbitration against
the Indonesian government.

The arbitration tribunal was constituted in May 2004 and held its first session
in July 2004, at which the Indonesian government objected the tribunal's
jurisdiction. As of December 31, 2004, the tribunal was still determining if it
has jurisdiction to hear the dispute. The resolution of in-depth issues can
take several years. Based on the information arising from the procedures
indicated before, CEMEX will evaluate its investment in conformity with its
accounting policies. As of December 31, 2003 and 2004, CEMEX used the best
information available in order to valuate and update its investment in Gresik.

                                     F-17


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


B)   NONCURRENT ACCOUNTS RECEIVABLE

Consolidated amounts include assets for the valuation of derivative instruments
(notes 12 and 17) of Ps1,206.0 in 2003 and Ps1,660.0 in 2004. Furthermore, they
include investments in private funds, recorded at fair value of U.S.$16.1
million (Ps192.3) in 2003 and U.S.$8.4 million (Ps93.3) in 2004. Of the private
funds in 2003, U.S.$9.3 million (Ps103.8) were reclassified to cash and
investments in 2004, since their liquidation is expected within a
three-month-period or less. In 2003 and 2004, approximately U.S.$7.3 million
(Ps87.2) and U.S.$2.3 million (Ps25.6) were contributed to these funds,
respectively.

10. PROPERTIES, PLANT AND EQUIPMENT

In December 2003 and 2004, based on periodic impairment analysis (note 3U),
losses of approximately Ps318.1 and Ps1,130.6, respectively, were recognized
within other expenses, derived from maritime terminals in the Asian region that
are out of service and the closing of cement assets in Mexico in 2003, and the
closing of cement assets in the Philippines and Mexico in 2004. The impaired
assets in Mexico in 2003 were first adjusted in 1999 when they ceased
operations to their estimated realizable value and their depreciation was
suspended. The approximate effect of having suspended the depreciation in 2002
was Ps43.3.

11. INTANGIBLE ASSETS AND DEFERRED CHARGES

As of December 31, 2003 and 2004, consolidated intangible assets of definite
and indefinite life and deferred charges, are summarized as follows:




                                                                      2003             2004
                                                               ---------------    --------------
Intangible assets of indefinite useful life:
                                                                                  
Goodwill...............................................     Ps        50,311.8          47,833.3
Accumulated amortization................................              (8,815.1)       (10,213.1)
                                                               ---------------    --------------
                                                                      41,496.7          37,620.2
                                                               ---------------    --------------
Intangible assets of definite useful life:
Cost of internally developed software...................               3,225.1           3,014.7
Additional minimum liability (note 14)..................               1,177.2             911.6
Accumulated amortization................................              (1,509.5)        (1,937.4)
                                                               ---------------    --------------
                                                                       2,892.8           1,988.9
                                                               ---------------    --------------
Deferred Charges:
Prepaid pension costs (note 14).........................                 412.0             440.3
Deferred financing costs................................                 619.7             551.5
Deferred income taxes (note 18B)........................               2,276.8           1,913.9
Others..................................................               3,316.0           3,567.0
Accumulated amortization ...............................              (1,763.4)        (1,842.2)
                                                               ---------------    --------------
                                                                       4,861.1           4,630.5
                                                               ---------------    --------------
                                                            Ps        49,250.6          44,239.6
                                                               ===============    ==============


As a result of the impairment evaluations (note 3U), CEMEX recognized within
other expenses, impairment losses of goodwill for Ps109.4 in 2002, Ps936.9 in
2003 and Ps248.9 in 2004. Such losses consist of those related to the Company's
information technology business unit, which were Ps109.4 in 2002, Ps167.2 in
2003 and Ps248.9 in 2004 and those related to the business units in the Asian
region in 2003 were Ps769.7.

The amortization expenses of intangible assets and deferred charges were
Ps2,961.0 in 2002, Ps2,983.6 in 2003 and Ps2,869.9 in 2004, of which, 65%, 69%
and 66% were recognized in other expenses, respectively, while the difference
in each year was recognized within operating expenses.

                                     F-18


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


12. SHORT-TERM AND LONG-TERM BANK LOANS AND NOTES PAYABLE

As of December 31, 2003 and 2004, short-term and long-term consolidated debt,
by type of financing and currency, as well as the interest rates information,
which include the effects of the related derivative financial instruments, are
summarized as follows:




                                                              Weighted                                 Amount         %
As December 31, 2003                              Original    effective   Carrying    Relation to    subject to   subject to
                                                   rate         rate     amount (2)  derivatives(1) derivatives  derivatives
                                                -----------------------------------------------------------------------------
                                                                                                 
Short-term bank loans
 Lines of credit in Mexico......................  Variable      2.1%          783.4        -             -         -
 Lines of credit in foreign countries...........  Variable      1.0%        1,850.7        -             -         -
                                                                        ------------               -----------------------
                                                                            2,634.1                      -         -
                                                                        ------------
Short-term notes payable


 Mexican commercial paper programs.............   Variable      6.3%        2,007.8       CCS          2,007.8    100.0%
 Foreign commercial paper programs..............  Variable      2.6%        1,134.3        -             -         -
 Other notes payable............................  Variable      7.4%           30.9        -             -         -
                                                                        ------------               -----------------------
                                                                            3,173.0                    2,007.8     63.3%
                                                                        ------------
                                                                            5,807.1
 Current maturities.............................                           10,062.8
                                                                        ------------
                                                                           15,869.9
                                                                        ============
Long-term bank loans
 Syndicated, 2004 to 2007.......................  Variable      2.2%       12,594.1       CCS          1,358.3     10.8%
 Syndicated, 2004 to 2006.......................    Fixed       7.4%        6,567.8       IRS          6,567.8    100.0%
 Bank loans, 2004 to 2007.......................  Variable      1.8%        7,821.9         -            -         -
 Bank loans, 2004 to 2006.......................    Fixed       7.4%        2,694.7       IRS          2,536.9     94.1%
                                                                        ------------               -----------------------
                                                                           29,678.5                   10,463.0     35.3%
                                                                        ------------
Long-term notes payable
 Euro medium-term notes, 2004 to 2009...........    Fixed       8.0%        3,871.7       CCS            797.9     20.6%
 Medium-term notes, 2004 to 2007................  Variable      3.0%        7,796.6       CCS          6,883.0     88.3%
 Medium-term notes, 2004 to 2015................    Fixed       5.8%       19,636.0       CCS          6,227.9     31.7%
 Other notes, 2004 to 2010......................  Variable      2.1%        2,804.2        -             -         -
 Other notes, 2004 to 2009......................    Fixed       6.6%          451.9       IRS            448.4     99.2%
                                                                        ------------               -----------------------
                                                                           34,560.4                   14,357.2     41.5%
                                                                        ------------
                                                                      ==   64,238.9
 Current maturities.............................                          (10,062.8)
                                                                        ------------
                                                                           54,176.1
                                                                        ============




                                                                                                       Effective
Debt by currency(2)                          Total debt       Short-term  Effective rate  Long-term      rate
                                            ------------     ---------------------------------------------------
                                                                                          
 Dollar.....................................   47,613.8          5,287.8         4.4%      42,326.0      5.5%
 Japanese yen...............................    9,573.9          4,799.9         0.6%       4,774.0      1.2%
 Euros......................................   12,443.7          5,591.6         2.8%       6,852.1      3.4%
 Mexican pesos..............................      251.5            102.4         7.3%         149.1      7.3%
 Egyptian pounds............................      114.7             76.8        11.3%          37.9     10.9%
 Other currencies...........................       48.4             11.4        11.5%          37.0     12.6%
                                            ------------     ------------               -------------
                                               70,046.0         15,869.9                   54,176.1
                                            ============     ============               =============

s
                                     F-19




                                             CEMEX, S.A. DE C.V. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                               December 31, 2002, 2003 and 2004
                                 (Millions of constant Mexican Pesos as of December 31, 2004)



                                                              Weighted                                 Amount         %
As December 31, 2004                              Original    effective   Carrying    Relation to    subject to   subject to
                                                   rate         rate     amount (2)  derivatives(1) derivatives  derivatives
                                                -----------------------------------------------------------------------------
                                                                                                
Short-term bank loans
 Lines of credit in Mexico......................  Variable      2.9%         530.5        CCS           744.3     100.0%
 Lines of credit in foreign countries...........  Variable      1.4%       4,501.4         -             -           -
                                                                        ------------               -----------------------
                                                                           5,031.9                      744.3      14.8%
                                                                        ------------
Short-term notes payable
 Foreign commercial paper program...............  Variable      2.5%         252.0         -             -           -
 Other notes payable............................  Variable      7.4%          67.9         -             -           -
                                                                        ------------               -----------------------
                                                                             319.9                       -           -
                                                                        ------------
                                                                           5,351.8
 Current maturities.............................                           6,275.2
                                                                        ------------
                                                                          11,627.0
                                                                        ============
Long-term bank loans
 Syndicated loans, 2005 to 2009.................  Variable      3.7%      22,391.4         -             -           -
 Syndicated loans, 2005 to 2009.................    Fixed       1.4%       2,098.7         -             -           -
 Bank loans, 2005 to 2007.......................  Variable      2.8%       5,734.3         -             -           -
 Bank loans, 2005 to 2007.......................    Fixed       7.4%          78.0         -             -           -
                                                                        ------------               -----------------------
                                                                           30,302.4                       -           -
                                                                        ------------
Long-term notes payable
 Euro medium-term notes, 2005 to 2009...........                           1,263.3         -             -           -
                                                    Fixed     11.1%
 Medium-term notes, 2005 to 2008................  Variable      3.7%       8,420.7        CCS         6,611.3      78.5%
 Medium-term notes, 2005 to 2015................    Fixed       5.7%      19,576.8        CCS         5,098.4      26.0%
 Other notes, 2005 to 2015......................  Variable      3.8%         955.4         -             -           -
 Other notes, 2005 to 2009......................    Fixed       3.3%         196.1         -             -           -
                                                                        ------------               -----------------------
                                                                          30,412.3                   11,709.7      38.5%
                                                                        ------------
                                                                          60,714.7
 Current maturities.............................                          (6,275.2)
                                                                       ------------
                                                                          54,439.5
                                                                       ============





                                                                                   Effective               Effective
Debt by currency(2)                               Total debt        Short-term       Rate       Long-term     Rate
                                                ------------      --------------------------------------------------
                                                                                               
 Dollar.........................................    36,874.5           3,322.0        4.5%       33,552.5     4.9%
 Japanese yen...................................     9,363.0           3,202.7        0.5%        6,160.3     1.5%
 Euros..........................................    10,089.8           4,898.8        2.7%        5,191.0     3.5%
 Sterling pounds................................     9,286.9                 -          -         9,286.9     5.5%
 Mexican pesos..................................       415.5             192.5        7.3%          223.0     5.3%
 Egyptian pounds................................        11.0              11.0       13.5%              -       -
 Other currencies...............................        25.8                 -          -            25.8    15.6%
                                                ------------      ------------               ------------
                                                    66,066.5          11,627.0                   54,439.5
                                                ============      ============               ============


(1) IRS or Interest Rate Swaps are instruments used to exchange interest rates
    (note 12A). CCS or Cross Currency Swaps are instruments to exchange both
    interest rates and currencies (note 12B).

(2) Include the effects for currencies exchange originated by the CCS.

                                     F-20


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The most representative exchange rates to the financial debt are as follows:

                                                      2003           2004
                                                 -------------   -------------
Mexican pesos per dollar.....................         11.24          11.14
Japanese yen per dollar......................        107.39         102.49
Euros per dollar.............................        0.7948         0.7383
Sterling pounds per dollar...................        0.5599         0.5218
                                                 =============   =============

The maturities of long-term debt as of December 31, 2004 are as follows:

                                                                 Consolidated
                                                                 -------------
2006......................................................    Ps    19,929.1
2007......................................................          13,697.8
2008......................................................           8,044.5
2009......................................................           6,666.6
2010 and thereafter.......................................           6,101.5
                                                                 -------------
                                                              Ps    54,439.5
                                                                 =============

In the consolidated balance sheet at December 31, 2003 and 2004, there were
short-term debt transactions amounting to U.S.$395 million (Ps4,716.8) and
U.S.$847.2 million (Ps9,438.1), 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 long-term lines of credit.

As of December 31, 2004, the Company and its subsidiaries have the following
lines of credit, both committed and subject to the banks' availability, at
annual interest rates ranging from 0.5% and 15.6%, depending on the negotiated
currency:



                                                             Line of credit      Available
                                                             ---------------   -------------
                                                                            
European commercial paper (U.S.$600 million)..........    Ps    6,684.0           6,684.0
Revolving credit facility (U.S.$ 800 million).........          8,912.0           5,102.1
Mexican commercial paper..............................          3,000.0           3,000.0
Long-term credit in current account..................           1,671.0              -
Other lines of credit in foreign subsidiaries.........         11,378.7           4,599.8
Other lines of credit from banks......................          6,561.5           1,559.6
                                                             ---------------   -------------
                                                          Ps   38,207.2          20,945.5
                                                             ===============   =============


Credit lines information included in the table above does not include lines of
credit agreed with financial institutions for approximately U.S.$5,050 million
for the acquisition of RMC (note 2).

In June 2004, CEMEX negotiated a revolving syndicated line of credit maturing
in three years for U.S.$800 million. Resources from this transaction and other
lines of credit were used to prepay the remaining outstanding U.S.$700 million
of the multi-currency credit of U.S.$1,150 million negotiated in 2003 and to
liquidate the U.S. commercial paper program for U.S.$300 million. On October
15, 2003, a Dutch subsidiary negotiated a multi-currency credit for an
equivalent at that date of U.S.$1,150 million. Funds were obtained as follows:
Euro 256.4 million maturing in two years and U.S.$550 million and yen 32,688
million maturing in three years. Such amounts were used mainly to repay a
revolving credit facility of U.S.$400 million and for the early redemption in
2003 of the remaining outstanding prefered stock financing of U.S.$650 million
related to the purchase of CEMEX Inc. (note 15E).

In March 2004, CEMEX Spain negotiated a multi-currency syndicated loan of 400
million euros, divided as follows: 1) a 364-day revolving line of credit; 2) a
five-year multicurrency loan, and 3) a fixed rate 5-year credit denominated in
yen. In addition, in April 2004, CEMEX Spain through one of its subsidiaries,
made a private debt issuance of 11,068 million yen (U.S.$100.2 million) to a
group of insurance companies and pension funds in the United States. Proceeds
obtained from this transaction were used to refinance short-term debt and for
other general corporate purposes.

                                     F-21


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


In October 2004, CEMEX completed a tender offer for its 9.625% Notes due in
2009 of U.S.$200 million and for the remaining outstanding balance of its 12.7%
Notes due in 2006 of U.S.$91.6 million, which had been previously reduced as a
result of a tender offer that culminated in 2002. In the 2004 offer,
U.S.$138.5million (Ps1,542.9) and U.S.$39.7 million (Ps442.3) of these notes
were retired, respectively. As of December 31, 2003, and as a result of the
tender offer in 2002, the Company had an outstanding balance of U.S.$91.6
million (Ps1,093.8) of its 12.7% Notes, which original amount was U.S.$300
million. As of December 31, 2004, the outstanding balance of the 9.625% Notes
was U.S.$61.6 million (Ps686.2) and of the 12.7% Notes was U.S.$51.9 million
(Ps578.2). Expenses related to the offer and the premiums paid to the notes
holders as a result of the early retirement, which amounted to approximately
U.S.$54 million (Ps657.9) in 2002 and U.S.$38 million (Ps423.3) in 2004, were
recognized within other expenses.

As of December 31, 2003 and 2004, in order to: (i) hedge contractual cash flows
of certain financial debt with floating rates or exchange floating for fixed
interest rates on a debt portion (note 12A), and (ii) reduce the financial cost
of debt originally contracted in dollars or pesos (note 12B), the Company has
negotiated derivative financial instruments related to short-term and long-term
debt, which are described below:

A)   Interest Rate Swaps Contracts

As of December 31, 2003 and 2004, information with respect to interest rate
swaps ("IRS") related to short-term and long-term financial debt is summarized
as follows:




   (U.S.dollar millions)      Notional        Debt                       CEMEX       CEMEX    Effective   Estimated fair
        Related debt           amount       currency    Maturity date    receives*    pays       rate         value
 -----------------------------------------------------------------------------------------------------------------------
                                                                                         
                                              Interest Rate Swaps in 2003
                                              ---------------------------
  Long-term
  Syndicated loans......      U.S.$  550      Dollar       Mar 2008       LIBOR       6.5%       7.4%     U.S.$  (70.3)
    Bank loans............           250      Dollar       Mar 2008       LIBOR       5.4%       7.3%            (33.4)
                            --------------                                                              ----------------
                                     800                                                                        (103.7)
  Not assigned(1)
    Long-term debt........         1,050      Dollar       Feb 2009       LIBOR       3.5%       2.3%           (124.4)
                            --------------                                                              ----------------
                              U.S.$1,850                                                                   U.S.$(228.1)
                            --------------                                                              ----------------
                                              Interest Rate Swaps in 2004
                                              ---------------------------
  Not assigned(1)
  Long-term debt........     U.S.$1,950       Dollar       Oct 2009    L + 26 bps     5.6%       5.8%      U.S.$(174.2)
                            --------------                                                              ================



*   LIBOR ("L") represents the London Interbank Offering Rate, used in the
    market for debt denominated in U.S. dollars.
(1) These instruments have optionality.

As of December 31, 2003 and 2004, the non-assigned interest rate swaps
presented above, which are part of and complement the financial strategy of
CEMEX, however, do not meet the accounting hedge criteria, consequently,
changes in the estimated fair value of these instruments were recognized in
earnings. As of December 31, 2003 interest rate swaps with a notional amount of
U.S.$800 million were designated as accounting hedges of contractual cash flows
(interest payments) of the related floating rate debt. Therefore, changes in
the estimated fair value of these instruments were recognized in stockholders'
equity (note 3N).

During 2004, the notional amount of interest rate swaps increased by U.S.$100
million as compared to 2003. This increase was mainly due to a new interest
rate swap for a notional amount of U.S.$200 million, negotiated upon the
exercise of interest rate options ("swaptions"). The increase was partially
offset by the early settlement of interest rate swaps and cap options for a
notional of U.S$100 million. As of December 31, 2003, of the approximate loss
in the estimated fair value of interest rate swaps of U.S.$228.1 million
(Ps2,723.8), losses of approximately U.S.$126 million (Ps1,504.6) correspond to
the estimated fair value that swaptions, Forward Rate Agreements ("FRAs") and
the floor and cap options had upon expiration or settlement. These losses were
recognized in earnings of prior periods between origination of the contracts
and their termination.

                                     F-22


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


During 2003 and 2004, due to changes in the interest rate mix of the financial
debt portfolio, interest rate swaps were settled in agreement with the
financial counterparties for notional amounts of U.S.$1,106 million and
U.S.$100 million, respectively. These settlements resulted in losses of
U.S$41.9 million (Ps500.4) in 2003 and losses of U.S.$8.3 million (Ps92.5) in
2004, corresponding to the estimated fair value of the contracts on the
settlement date, which were recognized in earnings in the respective periods.

As of December 31, 2003, there were swaptions for a notional amount of U.S.$200
million, with an estimated market loss of U.S.$24.9 million (Ps297.3),
negotiated to exchange floating for fixed interest rates. These options were
exercised in July 2004, and the counterparty elected to negotiate with CEMEX
new interest rate swaps receiving a fixed rate and paying a floating rate for a
five-year period. Likewise, during 2003, the Company sold and later settled
options for a notional amount of U.S.$400 million, resulting in a net gain of
approximately U.S.$1.1 million (Ps13.2). In 2002 and 2003, from the sale of
swaptions, CEMEX received premiums for approximately U.S.$57.6 million
(Ps701.8) and U.S.$25.0 million (Ps298.5), respectively. Premiums received as
well as changes in the estimated fair value of the options, which represented
losses of approximately U.S.$110.9 million (Ps1,351.3) in 2002 and gains of
approximately U.S.$1.6 million (Ps19.1) in 2003, were recognized in earnings of
each period. In addition, in 2002 and 2003, losses of approximately U.S.$92.3
million (Ps1,124.7) and U.S.$23.9 million (Ps285.4), respectively, were
recognized in earnings as a result of the settlement or termination of the
swaption contracts.

As of December 31, 2002, the Company held forward rate agreements ("FRAs") for
a notional amount of U.S.$650 million, negotiated in 2001 to fix the interest
rate of future debt issuances, which were not completed due to market
conditions. These instruments were designated at the end of 2002 as accounting
hedges of the interest rate of debt issuances, which were negotiated in 2003.
These contracts expired in June 2003 and new interest rate swaps were
negotiated. At maturity, an approximate loss of U.S.$37.6 million (Ps449.0) was
recognized in stockholders' equity and is being amortized to the financial
expense as part of the effective interest rate of the related debt. The amount
amortized was U.S$7.8 million (Ps93.1) in 2003 and U.S$4.3 million (Ps47.9) in
2004. The changes in the estimated fair value of these contracts during 2002
represented losses of approximately U.S.$33.7 million (Ps410.6), which were
recognized in earnings, except for a loss of U.S.$42.4 million (Ps506.3), which
was recognized in stockholders' equity, corresponding to the change in
valuation after these contracts were designated as accounting hedges.

As of December 31, 2002, there were floor and cap options for a notional amount
of U.S.$711 million, with maturity in March 2008. These options were settled in
May 2003, through the negotiation of interest rate swaps. These options were
structured as part of an interest rate swap for the same notional amount that
was settled in 2002. The changes in the estimated fair value of the floor and
cap options until settlement represented losses of approximately U.S.$55.2
million (Ps672.4) in 2002 and U.S.$0.1 million (Ps1.6) in 2003. These losses
were recognized in earnings in the respective periods.

B) Cross Currency Swap Contracts and Other Currency Instruments

As of December 31, 2004 and 2003, there were Cross Currency Swaps ("CCS"),
through which the Company exchanges the originally contracted interest rates
and currencies on notional amounts of related short-term and long-term debt.
During the life of the contracts, the cash flows related to the exchange of
interest rates under the CCS, match, in interest payment dates and conditions,
those of the underlying debt.

If there is no early settlement, at maturity of the contracts and the
underlying debt, the Company and the counterparty will exchange notional
amounts, so the Company will receive the cash flow in the currency of the
underlying debt necessary to cover its primary obligation, and will pay the
notional amount in the exchanged currency of the CCS. As a result, the original
financial risk profile related to interest rates and foreign exchange
variations of the underlying debt has been effectively exchanged.

                                     F-23


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


As of December 31, 2003 and 2004, information with respect to the CCS is
summarized as follows:




                                                                Currencies               Interest Rates
                                                         ------------------------------------------------------
                                                                     Amount in
(Amounts in millions)                        Notional      Original     new       CEMEX       CEMEX   Effective  Estimated
Related Debt                Maturity date     amount        amount    currency   receives *    pays *     rate    fair value
-------------------------- -------------------------------------------------------------------------------------------------
                                                                                            

CCS in 2003
Mexican peso to dollar
Short term notes...........    Jan 2004    U.S.$   168.1     Ps2,019 U.S.$ 168        N/A       N/A        6.3%  U.S.$   0.8
                                           -------------                                                         -----------

Mexican peso to dollar
Medium term notes.......... Nov 04-Dec 07          468.9    Ps 6,485 U.S.$ 469 TIIE+62 bps   L+121bps      2.7%         74.4
Mexican peso to dollar
Medium term notes.......... Apr 05-Apr 07          233.3    Ps 3,579 U.S.$ 233        12.4%  L+99 bps      1.9%        103.0
Mexican peso to dollar
Medium term notes.......... Mar 06-Dec 08          377.8    Ps 4,131 U.S.$ 378         8.6%    4.6%        3.8%          0.2
Mexican peso to dollar
Medium term notes..........    Oct 2007             79.9      Ps 850  U.S.$ 80 CETES+145bps    4.3%        4.3%        (8.9)
Mexican peso to yen
Medium term notes.......... Jun 05-Jun 06           66.8    U.S.$ 67  Yen 1,904   L+127 bps    1.9%        9.3%         93.2
Mexican peso to yen
Euro-medium term notes..... Jun 05-Jan 06           51.8    Ps 1,672  Yen 6,008        8.8%    2.6%        1.3%        (0.7)
                                           -------------                                                        ------------
                                                 1,278.5                                                               261.2
                                           -------------                                                        ------------
                                            U.S.$1,446.6                                                          U.S.$262.0
                                           =============                                                        =============

CCS in 2004
Dollar to yen
Short term notes...........    Jun 2005       U.S.$ 66.8     U.S.$67 Yen 1,904  L+127 bps      1.9%        2.9%   U.S.$ 92.9
                                           -------------                                                        ------------

Mexican peso to dollar
Medium term notes.......... Jun 05-Jun 06          308.4    Ps 3,804 U.S.$ 308 TIIE+55 bps   L+125bps      4.0%         33.3
Mexican peso to dollar
Medium term notes.......... Apr 05-Apr 07          233.3    Ps 3,369 U.S.$ 233        12.4%  L+97 bps      3.3%         87.8
Mexican peso to dollar
Medium term notes.......... Mar 06-Dec 08          377.8    Ps 4,022 U.S.$ 378         8.6%    4.6%        3.9%          2.8
Mexican peso to dollar
Medium term notes..........    Oct 2007             79.9      Ps 800  U.S.$ 80 CETES+145bps    4.3%        4.3%        (5.9)
Mexican peso to yen
Euro-medium term notes.....    Jan 2006             51.8      Ps 602  Yen 6,008        8.8%    2.6%        1.3%        (2.4)
                                           -------------                                                        ------------
                                                 1,051.2                                                               115.6
                                           -------------                                                        ------------
                                            U.S.$1,118.0                                                          U.S.$208.5
                                           =============                                                        =============


*   LIBOR ("L") represents the London Interbank Offering Rate, used in the
    market for debt denominated in U.S. dollars. TIIE represents the Interbank
    Offering Rate in Mexico, and CETES are public debt instruments issued by
    the Mexican government. As of December 31, 2004, the LIBOR rate was 2.56%,
    the TIIE rate was 8.95% and the CETES yield was 8.61% per annum.

                                     F-24


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The periodic cash flows underlying the CCS arising from the exchange of
interest rates are determined over the notional amounts in the exchanged
currency. The CCS have not been designated as accounting hedges; therefore,
changes in their estimated fair values are recognized through the income
statement. As mentioned in note 3N, portions of the assets and liabilities
resulting from the estimated fair value recognition of the CCS have been offset
for presentation purposes, in order to reflect the cash flows that the Company
expects to receive or pay upon settlement of these financial instruments.
Through this presentation, the book value of the financial indebtedness
directly related to the CCS is presented as if it had been effectively
negotiated in the exchanged currencies instead of in the originally negotiated
currencies. Assuming an early liquidation of the CCS, the related financial
liabilities and their corresponding interest expense would be established in
the rates and currencies originally contracted beginning as of the settlement
date.

As of December 31, 2003 and 2004, related to the estimated fair value of the
CCS, the Company recognized net assets of U.S.$262.0 million (Ps3,128.7) and
U.S.$208.5 million (Ps2,322.7), respectively, of which U.S.$364.5 million
(Ps4,352.7) in 2003 and U.S.$300.7 million (Ps3,349.8) in 2004 relates to a
prepayment made to yen and dollar denominated obligations under the CCS. This
is presented by decreasing the carrying amount of the related debt, while a
loss of U.S.$102.5 million (Ps1,224.0) in 2003 and a loss of U.S$92.2 million
(Ps1,027.1) in 2004 represents the net liabilities arising from the CCS'
estimated fair value without prepayment effects.

In accordance with presentation guidelines applied by the Company to the assets
or liabilities related to the CCS (note 3N); in connection to the net
liabilities without prepayment effects in 2003 and 2004 described in the
paragraph above, losses directly related to variations in exchange rates
between the origination of the CCS and the balance sheet date of approximately
U.S.$171.9 million (Ps2,052.8) in 2003 and U.S.$131.8 million (Ps1,468.3) in
2004, were presented as part of the related debt carrying amount. Likewise,
gains of approximately U.S.$12.2 million (Ps145.7) in 2003 and U.S.$10.9
million (Ps121.4) in 2004, corresponding to the periodic cash flows exchange
for interest rates, were presented as an adjustment of the related financing
interest payable. The remaining net assets of U.S.$57.2 million (Ps683.0) in
2003 and U.S.$28.7 million (Ps319.7) in 2004 were presented in the consolidated
balance sheet within short-term and long-term other assets, as applicable.

For the years ended December 31, 2002, 2003 and 2004, the changes in the
estimated fair value of the CCS, excluding the effects of prepayments, resulted
in losses of approximately U.S.$192.2 million (Ps2,341.8) and U.S.$149.7
million (Ps1,787.6) in 2002 and 2003, respectively, and a gain of approximately
U.S.$10.3 million (Ps114.7) in 2004. These results were recognized in earnings
of the respective periods.

Additionally, as of December 31, 2002, there were other currency instruments
for a notional amount of U.S.$104.5 million, related to financial debt expected
to be negotiated in the near future. These contracts matured in 2003, and a
loss of approximately U.S.$3.6 million (Ps43.0) was recognized in earnings. In
2002, these contracts had an estimated fair value loss of approximately
U.S.$6.8 million (Ps82.9), which was recognized in the income statement.

The estimated fair value of derivative instruments used for the exchange of
interest rates and/or currencies fluctuate over time and will be determined by
future interest rates and currency prices. These values should be viewed in
relation to the fair values of the underlying transactions and as part of the
Company's overall exposure 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 the Company's exposure to the use of these derivatives.
The amounts exchanged in cash are determined based on the basis of the notional
amounts and other terms included in the derivative financial instruments.

                                     F-25


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


C) Guaranteed Debt

As of December 31, 2003 and 2004, CEMEX Mexico, S.A. de C.V. and Empresas
Tolteca de Mexico, S.A. de C.V. jointly, fully and unconditionally guaranteed
indebtedness of the Company for an aggregate amount of U.S.$3,145 million
(Ps37,555.6) and U.S.$3,087.8 million (Ps34,398.1), respectively. The combined
summarized financial information of these guarantors as of December 31, 2002,
2003 and 2004 is as follows:

                                                          2003         2004
                                                       -----------  -----------
 Assets.............................               Ps   149,153.5   152,696.3
 Liabilities........................                     68,528.2   105,235.5
 Stockholders' equity...............                     80,625.3    47,460.8
                                                       -----------  -----------
                                         2002
                                       ---------
 Net sales.......................... Ps  25,535.0        25,931.6    26,037.3
 Operating income...................      3,997.4         2,951.6     3,323.9
 Net income.........................        509.6         6,412.5    17,167.8
                                       ----------      -----------  -----------

Certain debt contracts guaranteed by the Company and/or some of its
subsidiaries contain restrictive covenants limiting sale of assets, maintenance
of controlling interest on certain subsidiaries, limiting liens and requiring
compliance with financial ratios. The Company obtains waivers prior to the
occurrence of events of default.

13. OTHER NON-CURRENT LIABILITIES

As of December 31, 2003 and 2004, other non-current liabilities are integrated
as follows:
                                                          2003         2004
                                                       -----------  -----------
Valuation of derivative financial
  instruments (notes 12 and 17)....................  Ps   5,225.9       3,690.8
Accruals for legal assessments
  and other responsibilities.......................       1,691.7       1,371.4
Asset retirement obligations and
  other environmental liabilities..................         944.5         865.9
Other liabilities and deferred credits.............       1,384.4       1,330.1
                                                       -----------  -----------
                                                     Ps   9,246.5       7,258.2
                                                       ===========  ===========

Accounts payable from derivative financial instruments represent the
accumulated valuation losses resulting from the estimated fair value
recognition of these instruments (notes 12 and 17). Accruals for legal
assessments and other responsibilities (note 22), refer to the best estimation
of cash flows with respect to legal claims where the Company is determined to
be responsible and which are expected to be settled over a period greater than
twelve months.

During 2004, the balance of this caption decreased primarily as a result of the
reduction of Ps317.3 in the anti-dumping duties provision, and as a result of
the reduction of Ps1,228.2 in the accounts payable from valuation of derivative
financial instruments. Asset retirement obligations and other environmental
liabilities include the future estimated costs, mainly from demolition,
cleaning and reforestation of production sites at the end of their operation
(note 3V). The expected average period to settle these obligations is greater
than 15 years.

                                     F-26


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


14. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

For the years ended December 31, 2002, 2003 and 2004, the net periodic cost of
pension plans and other postretirement benefits (note 3J), was Ps242.3, Ps491.3
and Ps470.5, respectively, and is described as follows:



                                                                 Pensions                       Other benefits*
                                                     --------------------------------    --------------------------------
Components of net periodic cost:                       2002       2003         2004        2002        2003        2004
                                                     -------    --------     --------    --------    --------    --------
                                                                                                   
Service cost...................................   Ps   291.8       305.4        308.0        30.3        33.3        40.4
Interest cost..................................        286.0       302.6        362.4        45.9        48.2        34.4
Actuarial return on plan assets................       (424.2)     (355.9)      (397.8)       (0.7)       (0.7)       (1.0)
Amortization of prior service cost, changes in                                                                           )
 assumptions and experience adjustments........         50.6       139.4        131.7        14.6        16.0        (7.6
Results from extinguishment of obligations.....        (50.3)        3.0         -           (1.7)       -            -
                                                     -------    --------     --------    --------    --------    --------
                                                  Ps   153.9       394.5        404.3        88.4        96.8        66.2
                                                     =======    ========     ========    ========    ========    ========


As of December 31, 2003 and 2004, the reconciliation of the actuarial value of
pensions plans and other postretirement benefit obligations, as well as the
funded status (note 3J), are presented as follows:



                                                                              Pensions                Other benefits*
                                                                      -----------------------     -----------------------
                                                                          2003          2004          2003         2004
                                                                      ---------     ---------     ---------    ----------
                                                                                                        
Change in benefit obligation:
Projected benefit obligation ("PBO") at beginning of year........  Ps   6,035.3     6,776.1           958.5         852.9
Service cost.....................................................         305.4       308.0            33.3          40.4
Interest cost....................................................         302.6       362.4            48.2          34.4
Actuarial result and amendments..................................         700.7      (311.9)          (95.8)       (223.5)
Acquisitions.....................................................         -            (1.0)           -             (0.2)
Initial valuation of other postretirement benefits...............         -             -              29.4          13.6
Foreign exchange fluctuations and inflation adjustments..........        (112.9)     (198.1)          (50.1)        (34.5)
Extinguishment of obligations....................................           2.0        (8.9)            2.3          -
Benefits paid....................................................        (457.0)     (450.4)          (72.9)        (72.5)
                                                                      ----------   ----------     ---------    ----------
Projected benefit obligation ("PBO") at end of year..............       6,776.1     6,476.2           852.9         610.6
                                                                      ----------   ----------     ---------    ----------
Change in plan assets:
Fair value of plan assets at beginning of year...................       5,360.3     5,852.3            18.9          36.2
Return on plan assets............................................         863.6       476.0             2.2           1.0
Foreign exchange fluctuations and inflation adjustments..........        (223.5)     (189.8)           (1.8)         (0.1)
Employer contributions...........................................         133.8       175.1            16.9           -
Extinguishment of obligations....................................        -             (9.0)           -              -
Benefits paid from the funds.....................................        (281.9)     (345.8)           -            (16.9)
                                                                      ----------   ----------     ---------    ----------
Fair value of plan assets at end of year.........................       5,852.3     5,958.8            36.2          20.2
                                                                      ----------   ----------     ---------    ----------
Amounts recognized in the balance sheets consist of:
Funded status....................................................         923.8       517.4           816.7         590.4
Prior service cost ..............................................      (1,489.9)   (1,403.5)         (115.6)        (15.0)
Net actuarial results............................................      (1,015.0)     (456.4)          (45.1)         71.6
                                                                      ----------   ----------     ---------    ----------
  Accrued benefit liability (prepayment).........................      (1,581.1)   (1,342.5)          656.0         647.0
  Additional minimum liability...................................       1,169.1       902.2             8.1           9.4
                                                                      ----------   ----------     ---------    ----------
    Net liability (prepayment) recognized........................  Ps    (412.0)     (440.3)          664.1         656.4
                                                                      ==========   ==========     =========    ==========


* The cost and the actuarial value of postretirement benefits, include the cost
  and obligations of postretirement benefits other than pensions, such as
  seniority premiums granted by law, as well as health care and life insurance
  benefits that the Company grants to retirees.

                                     F-27


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


As of December 31, 2003 and 2004, the combined actual benefit obligation
("ABO") of pensions and other postretirement benefits, equivalent to the PBO
not considering salary increases, amounted to Ps6,315.1 and Ps6,110.1,
respectively, of which the vested portion was Ps2,134.3 in 2003 and Ps2,065.3
in 2004.

An additional minimum liability (excess of the net actual liability over the
net projected liability) is recognized in those cases when the ABO less the
plan assets (net actual liability) is lower than the net projected liability.
At December 31, 2003 and 2004, the Company recognized a minimum liability
against an intangible asset for approximately Ps1,177.2 and Ps911.6,
respectively.

Prior service cost and net actuarial results are amortized over the estimated
service life of the employees under plan benefits. As of December 31, 2004, the
average estimated service life for pension plans and other postretirement
benefits is 13 years.

As of December 31, 2003 and 2004, the consolidated assets of the pension plans
and other postretirement benefits are valued at their estimated fair value and
are aggregated as follows:

                                                       2003             2004
                                                   ------------    -------------
Fixed-income securities......................   Ps     2,626.3         1,940.3
Marketable securities........................          2,532.0         3,497.1
Private Funds and other investments..........            730.2           541.6
                                                   ------------    -------------
                                                Ps     5,888.5         5,979.0
                                                   ============    =============

The Company applies real rates (nominal rates discounted for inflation) in the
actuarial assumptions used to determine postretirement benefit liabilities. The
most significant assumptions used in the determination of the net periodic cost
are summarized as follows:



                                                                       2002              2003               2004
                                                                  --------------    --------------     --------------
                                                                                             
Range of discount rates used to reflect the obligations'           3.0% - 7.0%       4.5% - 8.0%        4.5% - 8.0%
    present value..............................................
Weighted average rate of return on plan assets.................         7.8%             7.8%               7.6%
                                                                  --------------    --------------     --------------


During 2003, the Company's units in Mexico implemented a voluntary early
retirement program, through which the retirement age was reduced by five years
and all employees meeting the new requirements were given the option to retire.
This program ended in May 2003, resulting in the early retirement of 230
employees and the increase of Ps604.4 in the projected benefit obligation and
the non-amortized prior service cost of pensions and other postretirement
benefits.

During 2002, the subsidiary of CEMEX in Spain, in agreement with its employees,
changed the structure of most of its defined benefit plans, replacing them with
defined contribution structures. In connection with this change, the subsidiary
contributed on behalf of its employees covered by the new plans, assets in an
amount equivalent to the obligation value as of the date of the exchange. These
assets were already restricted within the previous plans. As of December 31,
2002, the effect of writing off the PBO and the non-amortized items, net of the
assets contributed, are displayed on the table of the net periodic cost of
pension plans and other postretirement benefits.

                                     F-28


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


15. STOCKHOLDERS' EQUITY

A) COMMON STOCK

The Company's common stock as of December 31, 2003 and 2004 is as follows:



                                                           2003                                      2004
                                          -------------------------------------     -------------------------------------
                                             Series A (1)        Series B (2)         Series A (1)         Series B (2)
                                          -----------------    ----------------     ----------------    -----------------
                                                                                               
Subscribed and paid shares..............      3,547,614,432       1,773,807,216       3,703,634,244        1,851,817,122
Treasury shares (3).....................        287,097,712         143,548,856         249,133,670          124,566,835
Unissued shares authorized for Stock                      6                                       4                    2
 Option Plans...........................         113,114,10          56,557,053          107,960,62            53,980,31
                                          -----------------     ---------------     ----------------    -----------------
                                              3,947,826,250       1,973,913,125       4,060,728,538        2,030,364,269
                                          =================    ================     ================    =================


(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 pursuant to the ordinary stockholders' meeting
     of April 24, 2003 that were not subscribed.

Of the total number of shares, 3,267,000,000 in 2003 and 2004 correspond to the
fixed portion, while 2,654,739,375 in 2003 and 2,824,092,807 in 2004 correspond
to the variable portion.

On April 24, 2003, the annual stockholders' meeting approved: (i) a reserve for
share repurchases of up to Ps6,000.0 (nominal amount); (ii) an increase in the
variable common stock through the capitalization of retained earnings of up to
Ps3,664.4 (nominal amount), issuing shares as a stock dividend for up to
750,000,000 shares equivalent to up to 250,000,000 CPOs, at a subscription
price of Ps36.449 (nominal) per CPO, or instead, stockholders could have chosen
to receive Ps2.20 (nominal amount) in cash for each CPO. As a result, shares
equivalent to 98,841,944 CPOs were subscribed and paid, representing an
increase in common stock of Ps3.6 and in additional paid-in capital of
Ps3,895.8, considering a theoretical value of Ps0.0333 per CPO, while an
approximate cash payment through December 31, 2003 was made for Ps71.0; and
(iii) the cancellation of the corresponding shares held in the Company's
treasury.

On April 29, 2004, the annual 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
Ps4,169 (nominal amount), issuing shares as a stock dividend for up to
600,000,000 shares equivalent to up 200,000,000 CPOs, at a subscription price
of Ps53.129 (nominal) per CPO, or instead, stockholders could have chosen to
receive Ps2.35 (nominal amount) in cash for each CPO. As a result, shares
equivalent to 75,433,165 CPOs were subscribed and paid, representing an
increase in common stock of Ps2.6 and in additional paid-in capital of
Ps4,154.2 considering a theoretical value of Ps0.0333 per CPO, while an
approximate cash payment through December 31, 2004 was made for Ps167.4; and
(iii) the cancellation of the corresponding shares held in the Company's
treasury.

See note 24(w) for a description of the Company's proposed stock split,
approved at the April 28, 2005 extraordinary stockholders' meeting (unaudited).

B) RETAINED EARNINGS

Retained earnings as of December 31, 2004 include Ps90,496.4 of earnings
generated by subsidiaries and affiliated companies that are not available to be
paid as dividends by CEMEX until these entities distribute such amounts to
CEMEX. Additionally, retained earnings as of December 31, 2004 include a share
repurchase reserve in the amount of Ps6,283.2. 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, 2004 the legal reserve amounted
to Ps1,591.1.

Earnings distributed as dividends, in excess of tax earnings, will be subject
to a tax payment at a 30% rate; consequently, shareholders would receive only
70% after tax.

                                     F-29


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


C) EFFECTS OF INFLATION

The effects of inflation on majority interest stockholders' equity as of
December 31, 2004 are as follows:



                                                                  Historical          Inflation
                                                                     cost            adjustment          Total
                                                                 --------------     --------------    -------------
                                                                                                  

Common stock...............................................   Ps         61.7            3,624.6           3,686.3
Additional paid-in capital.................................          24,056.6           17,283.2          41,339.8
Deficit in equity restatement..............................            -               (73,725.9)        (73,725.9)
Cumulative initial deferred income tax effects.............          (4,697.9)          (1,402.3)         (6,100.2)
Retained earnings..........................................          54,200.6           53,271.2         107,471.8
Net income.................................................   Ps     14,059.8              502.5          14,562.3
                                                                 ==============     ==============    =============


D) FOREIGN CURRENCY TRANSLATION

The foreign currency translation results recorded in stockholders' equity are
summarized as follows:



                  Years ended December 31,                           2002                 2003               2004
                                                                 --------------     --------------    -------------
                                                                                                     

  Foreign currency translation adjustment.................    Ps      7,477.6              5,491.8            3,250.7
  Foreign exchange gain (loss) (1)........................           (3,024.7)            (1,661.8)             163.1
                                                                 --------------     --------------    -------------
                                                              P       4,452.9              3,830.0            3,413.8
                                                                 ==============     ==============    =============


 (1) Foreign exchange results from the financing identified with the
     acquisitions of foreign subsidiaries.

The foreign currency translation adjustment includes foreign exchange results
from financing related to the acquisition of foreign subsidiaries made by the
Company's subsidiary in Spain of Ps177.7 in 2002, Ps63.1 in 2003 and Ps2.9 in
2004.

E) PREFERRED STOCK

In October 2003, CEMEX repurchased the remaining balance of preferred stock of
U.S.$650 million (Ps7,761.9), which was to mature in February and August 2004.
The preferred stock was issued in November 2000 by a Dutch subsidiary for
U.S.$1,500 million with an original maturity in May 2002 and was related to the
financing of the CEMEX Inc. (formerly Southdown, Inc.) acquisition. The
preferred stock was mandatorily redeemable upon maturity and granted its
holders 10% of the subsidiary's voting rights, as well as the right to receive
a guaranteed variable preferred dividend, and the option, in certain
circumstances, to subscribe for additional preferred stock or common shares for
up to 51% of the subsidiary's voting rights. Until its liquidation, this
transaction was included as minority interest. Preferred dividends declared for
approximately U.S.$23.2 million (Ps275.9) in 2002 and U.S.$12.5 million
(Ps153.6) in 2003, were recognized as a part of minority interest in the
consolidated income statements.

In October 2004, the Company liquidated the remaining capital securities for
approximately U.S$66 million (Ps735.2). The preferred shares were issued in
1998 by a Spanish subsidiary for U.S.$250 million with an annual dividend rate
of 9.66%. In April 2002, through a tender offer, U.S.$184 million of capital
securities were redeemed. The amount paid to holders in excess of the nominal
amount of the capital securities pursuant the early redemption of approximately
U.S$20 million (Ps238.8) was recognized against stockholders' equity. The
balance outstanding as of December 31, 2003 was U.S$66 million (Ps788.1). As of
December 31, 2003, this transaction was recorded as minority interest. During
2004 and until its termination, as a result of new accounting pronouncements,
this transaction was recorded as financial debt. Preferred dividends declared
in 2002 and 2003 of approximately U.S.$11.9 million (Ps140.9) and U.S.$6.4
million (Ps78.0), respectively, were recognized as minority interest in the
consolidated income statements Meanwhile, preferred dividends declared on the
capital securities during 2004 of approximately U.S.$5.6 million (Ps66.1), were
recorded in earnings as part of financial expenses.

                                     F-30


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


F) OTHER EQUITY TRANSACTIONS

In December 2004, 13,772,903 appreciation warrants ("warrants") remaining from
the public purchase offer that was announced in November 2003, and which was
concluded in January 2004, were settled upon maturity. Through the prior offer
90,018,042 warrants were repurchased. Considering the results of the purchase
of warrants in January 2004, the expiration in December 2004 and the direct
expenses related to these transactions, approximately Ps1,053 was paid. This
amount was recognized against stockholders' equity within additional paid-in
capital. In November and December 2003, CEMEX announced a public offer to
purchase in cash up to 90,018,042 warrants in the Mexican Stock Exchange
("MSE"), and warrants represented by American Depositary Warrants ("ADWs) each
ADW representing five warrants, traded on the New York Stock Exchange ("NYSE").
The warrants purchased pursuant to the offer represented approximately 86.73%
of the then total outstanding warrants and included approximately 34.9 million
warrants owned by or controlled by CEMEX and its subsidiaries. The expiration
date of the offer was January 26, 2004.

The single price at which CEMEX purchased the warrants and ADWs was determined
at the end of the tender offer period, and depended on the prices at which
warrants and ADWs were tendered by their holders, which were between a range
from Ps5.10 per warrant (Ps25.50 per ADW) to Ps8.10 per warrant (Ps40.50 per
ADW). The tender proposals were ordered starting from the lowest price per
warrant offered and so forth, until arriving at a price that covered the
maximum number of warrants, and which was used to acquire the 90,018,042
warrants. According to this procedure, a single price of Ps8.10 per warrant was
determined (representing Ps40.50 per ADW).

The warrants and ADWs subject to the offer were originally issued in December
1999 by means of a public offer on the MSE and the NYSE, in which 105 million
warrants and ADWs with a December 2002 maturity were sold. In December 2001, in
a simultaneous and voluntary public purchase and sale offer for the warrants
and exchange offer for the ADWs, outstanding as of the offer date, under a one
for one exchange ratio, 103,790,945 new warrants and ADWs with maturity in
December 2004 were issued. The warrants and ADWs that were not exchanged in
2001 expired in December 2002. The warrants permitted the holders to benefit
from the future increases in the market price of the Company's CPOs above the
strike price, which as of December 31, 2003 was approximately U.S.$5.45 per CPO
(U.S.$27.23 per ADS). The benefit was payable in CPOs. Until September 2003,
the CPOs and ADSs required to cover future exercises of the new warrants, as
well as the old warrants, were held in equity forward contracts with financial
institutions. These forward contracts were settled in October 2003 as a result
of a simultaneous secondary equity offering through trades on the MSE and the
NYSE, made by the Company and the banks holding the shares (see note 17A).

In addition, in December 2003, through the payment of U.S.$75.9 million
(Ps906.3), CEMEX exercised the option that it retained and repurchased the
assets related to a financial transaction through which, in December 1995, the
Company transferred financial assets to a trust, while simultaneously,
investors contributed U.S.$123.5 million in exchange for notes representing a
beneficial interest in the trust. During the life of the transaction and until
maturity in 2007, periodic repurchases of the financial assets underlying in
the trust were stipulated. Therefore, as of December 31, 2002, the outstanding
balance of this transaction was approximately U.S.$90.6 million (Ps1,103.7).
Moreover, during the life of the transaction, the Company maintained an option
to reacquire the related financial assets at different dates. The cost of
retaining this option was recognized in earnings as part of the financial
expense for approximately U.S.$13.2 million (Ps160.6) in 2002 and U.S.$14.5
million (Ps173.2) in 2003. Until its settlement in December 2003, this
transaction was included as part of the minority interest in stockholders'
equity.

                                     F-31


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


G) COMPREHENSIVE NET INCOME (LOSS)

The main items included in the comprehensive net income (loss) for the years
ended December 31, 2002, 2003 and 2004, are as follows:




                                                                                2002             2003            2004
                                                                           ------------------------------------------------
                                                                                                       
Majority interest net income.........................................    Ps      6,339.2          7,508.4        14,562.3
Deficit in equity restatement:
 Effects from holding non-monetary assets............................          (11,082.7)        (3,647.1)       (2,876.6)
 Foreign currency translation adjustment.............................            7,477.6          5,491.8        3,250.7
 Capitalized foreign exchange result (note 15D) .....................           (3,024.7)        (1,661.8)          163.1
 Hedge derivative instruments (notes 12 and 17)......................           (2,548.4)           487.3         2,398.1
 Deferred IT of the year recorded  in stockholders' equity (note 18).              912.5           (228.7)          714.5
 Excess of price paid over book value of minority interests..........              -                -            (1,000.4)
 Equity instruments' early redemption results........................             (243.7)          (694.1)         -
 Cumulative initial effects of asset retirement obligations..........              -                (91.1)         -
 Inflation effect on equity(1).......................................              269.5             12.0          -
                                                                           ------------------------------------------------
   Total comprehensive income (loss) items...........................           (8,239.9)          (331.7)        2,649.4
                                                                           ------------------------------------------------
   Majority comprehensive net income (loss)..........................           (1,900.7)         7,176.7        17,211.7
   Minority interest.................................................              451.6            363.1           233.2
                                                                           ------------------------------------------------
   Consolidated comprehensive net income (loss)......................    Ps     (1,449.1)         7,539.8        17,444.9
                                                                           ================================================


(1) Relates to the adjustment resulting from the use of the weighted average
    inflation index for the restatement of stockholders' equity and the use of
    the index of inflation in Mexico to restate common stock and additional
    paid-in capital (note 3B).

16. EXECUTIVE STOCK OPTION PROGRAMS

The information relating to stock option programs, presented in terms of
equivalent CPOs and considering the effect of the options exchange program
described below, is summarized as follows:



                                              Restricted       Variable          Fixed      Special Program    Voluntary
                Options                      Programs (A)     Program (B)     Program (C)         (D)        Programs (E)
                                          --------------------------------------------------------------------------------
                                                                                                
As of December 31, 2002...................        -             98,592,824      6,575,525       4,963,775      16,049,305
Changes in 2003:
Granted...................................        -             22,346,738         -            2,682,985      38,583,989
Cancelled.................................        -                (22,799)       (533,608)        -           (9,700,280)
Exercised.................................        -               -             (1,352,582)        (17,500)   (38,884,926)
                                          --------------------------------------------------------------------------------
As of December 31, 2003...................        -            120,916,763      4,689,335       7,629,260       6,048,088
Changes in 2004:
Granted...................................    273,582,522       14,554,323         -            2,742,505         -
Cancelled.................................        -               -                -               -              -
Exercised.................................    (121,517,922)   (132,393,239)     (1,998,466)       (744,505)    (6,013,088)
                                          --------------------------------------------------------------------------------
As of December 31, 2004...................    152,064,600        3,077,847      2,690,869       9,627,260          35,000
                                          ================================================================================
Exercise Prices:
Options exercised during the year*........   U.S.$5.13         U.S.$5.07        Ps25.64       U.S.$4.65       U.S.$4.17
Options outstanding at year-end*..........   U.S.$7.32         U.S.$5.22        Ps30.11       U.S.$4.89       U.S.$5.92
Remaining average life....................    7.7 years        7.4 years       3.0 years      8.1 years       3.5 years
Options fully vested......................     93.3%             82.7%           96.9%          46.7%          100.0%
                                          ================================================================================


* Weighted average exercise price per CPO.

                                     F-32


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


A) Restricted Programs

In February 2004, through a voluntary option exchange program with the purpose
of restructuring the employees' stock option programs, CEMEX invited employees
to exchange their existing options for new options of equal fair value but
different characteristics. The new options had an initial exercise price of
U.S$5.05 per CPO, which increases annually at a 7% rate, and includes a
mandatory exercise condition when the CPO price reaches U.S$7.50. Any gain that
would be obtained by an employee, resulting from the difference between the CPO
market value and the exercise price would be paid in form of CPOs, which would
be acquired at a 20% discount to market. These CPOs would be restricted for
sale for a minimum period of two years and a maximum of four years, depending
on the exercise date. This program intends that the employee would hold the
CPOs for a long period and, by limiting the potential for gains, the hedge
through equity forward contracts can be improved (note 17). As a result of the
exchange, 112,495,811 options from the variable program and 1,625,547 options
from the voluntary programs were redeemed, and 122,708,146 new options were
granted with a remaining tenure of 8.4 years. As consideration to the employees
resulting from the mandatory exercise condition and the sale restriction, CEMEX
has granted an annual payment of U.S$0.10 per option, net of taxes, growing
annually at a 10% rate, to all outstanding new options during their tenure.

In December 2004, through a voluntary early exercise program to continue the
restructuring of its employees' stock option programs, CEMEX provided employees
early exercise of their existing options in exchange for cash, equivalent to
the options' intrinsic value, and new options equivalent in value to the
exercised options' remaining time value. The new options had an initial
exercise price of U.S$7.46 per CPO, which was U.S.$0.50 higher than the CPO
market price at the exercise date. Any gain that would be obtained by the
employee, resulting from the difference between the CPO market value and the
exercise price would be paid in the form of CPOs, which would be restricted for
sale for a minimum period of two years and a maximum of four years, depending
on the exercise date. This program intended to make a more efficient hedge
through equity forward contracts (note 17). As a result of the early exercise,
16,580,004 options from the variable program, 120,827,370 options from the
February's 2004 restricted program and 399,848 options from the voluntary
programs were redeemed, and 139,151,236 new options, with an exercise price
increasing annually at a 5.5% rate, were granted with a remaining tenure of 7.5
years. Of the total number of new options, 120,827,370 options include a
mandatory exercise condition at a CPO price of U.S.$8.50. The remaining
18,323,866 do not have exercise conditions. The cost for the early exercise
program of approximately U.S.$61.1 million (Ps680.7), resulting from the 20%
discount to market in the purchase of CPOs, was recognized in earnings. As
consideration to the employees resulting from the initial exercise price being
above market, the mandatory exercise condition and the sale restriction, CEMEX
has granted an annual payment of U.S$0.11 per option, net of taxes, growing
annually at a 10% rate, to all outstanding new options during their tenure.

B) Variable Program

In November 2001, through a voluntary exchange program for options granted
under the fixed program, the Company initiated an annual stock option program
with exercise prices denominated in U.S. dollars increasing annually at a 7%
rate. The employees who exchanged their options resigned their rights to
subscribe CPOs in exchange for cash, equivalent to the options' intrinsic
value, and the issuance of 88,937,805 new options. The options under this
program have a 10-year tenure and the employees' option rights may be exercised
up to 25% annually during the first four years after having been granted,
except for those issued through the exchange, in which 50% of the options
exercise rights were vested immediately, with an additional 25% vesting over
each of the next two years. In 2004, as a result of the restricted option
programs, 129,075,815 options granted under the variable program were
exercised.

C) Fixed Program

From June 1995 through June 2001, CEMEX granted stock options with a fixed
exercise price in pesos, equivalent to the market price of the CPO at the grant
date and tenure of 10 years. Exercise prices are adjusted for stock dividends.
The employees option rights vest up to 25% annually during the first four years
after having been granted. As of December 31, 2003 and 2004, the new CPOs
issued pursuant to the exercise of said options generated an additional paid-in
capital of Ps45.2 and Ps67.1, respectively, and increased the number of
outstanding shares.

                                     F-33


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


D) Special Program

Starting in 2001, a stock option program to purchase CEMEX ADSs was established
for eligible employees in the United States. The options granted have a fixed
exercise price in dollars, equivalent to the market price of ADSs as of the
grant date, and have a 10-year tenure. The employees' option rights vest up to
25% annually during the first four years after having been granted. The options
exercises are hedged using ADSs currently owned by subsidiaries, potentially
increasing stockholders' equity and the number of shares outstanding. The
amounts of these ADS programs are presented in terms of equivalent CPOs.

E) Voluntary Programs

During 2004, 3,927,693 options from voluntary programs were exercised, out of
36,468,375 options sold and issued to employees during 1998 and 1999 with a 5
year-tenure. The exercise price was denominated in dollars and increased
annually reflecting the funding cost in the market. In 2003, 300,937 options
were exercised, while 9,700,280 options expired and were canceled.

As of December 31, 2004, there are 35,000 remaining options from voluntary
programs, out of 2,120,395 options sold and issued to employees in April and
May 2002. During 2004, mainly as a result of the exchange for restricted
options, 2,085,395 options were exercised. From the issuance of the options in
2002, a premium of approximately U.S.$1.5 million (Ps17.8) was received. The
exercise price of the options is denominated in dollars and increases annually
to reflect the funding cost in the market.

In September 2003, 38,583,989 options were exercised, which had been sold and
issued to employees in January 2003 in exchange for a premium of approximately
U.S.$9.7 million (Ps107). The options, which had an increasing U.S. dollar
exercise price of approximately U.S.$3.58 per CPO, initially equal to the CPO
market price at the date of the issuance of the option, and a five-year tenure,
contained a mandatory exercise condition in case the market CPO price reached a
specified level, a situation that occurred in 2003. According to agreed
conditions, the executives' gain was paid in form of CPOs, which have a sale
restriction for two years after exercise.

F) Options hedging activities

The potential exercise of options under the restricted, variable and voluntary
programs require the Company to have availability of the CPOs or ADSs
underlying the options; therefore, the Company has negotiated equity forward
contracts in its own stock (note 17A), in order 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 do
not increase the number of shares outstanding and consequently do not result in
dilution of the basic earnings per share.

Beginning in 2001, CEMEX recognizes the appreciation of the options under the
variable, special and voluntary programs, and in 2004 of the restricted
program, resulting from the difference between the CPO market price and the
exercise prices established in the options, as an expense in the income
statement, which for the years ended December 31, 2002, 2003 and 2004 was
U.S.$5.0 million (Ps60.9), U.S.$45.3 million (Ps541.0) and U.S.$50.6 million
(Ps563.7), respectively. Likewise, the Company recognizes through earnings the
changes in the estimated fair value of equity forward contracts designated as
hedges of these plans (note 17A), which resulted in a loss of approximately
U.S.$47.1 million (Ps573.9) in 2002, a gain of approximately U.S.$28 million
(Ps334.3) in 2003 and a gain of approximately U.S.$44.8 million (Ps499.1) in
2004.

As of December 31, 2004, a provision of approximately U.S.$50 million has been
generated against earnings, representing the net present value of expected
payments in connection with the sales restriction contained in the new
restricted programs. All costs related to the stock options programs, as well
as the valuation of the equity forward contracts, are recognized in the
Comprehensive Financing Result.

                                     F-34


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


17. DERIVATIVE FINANCIAL INSTRUMENTS

As of December 31, 2003 and 2004, the Company's derivative financial
instruments, other than those related to financial debt (note 12), are
summarized as follows:



                                                              2003                                  2004
                                               ----------------------------------    --------------------------------
                 U.S. dollars millions           Notional         Estimated fair       Notional        Estimated fair
                                                  amount              value             amount             value
                                               -------------     ----------------    --------------    --------------
                                                                                                  
A)    Equity forward contracts.................    1,085.0               16.4             1,157.2             66.2
B)    Foreign exchange instruments.............    1,445.9             (191.6)            4,897.9             63.4
C)    Derivatives related to energy projects...      174.5               (7.4)              168.1             (6.3)
                                               =============     ================    ==============    ==============


Upon liquidation and at CEMEX's option, the equity forward contracts allow for
physical or net cash settlement of the estimated fair value. The effects at
settlement are recognized in the income statement or as part of stockholders'
equity, according to their characteristics and use. At maturity, if these
forward contracts are not settled or replaced, or if the Company defaults on
the agreements established with the financial counterparties, such
counterparties may sell the shares underlying the contracts. If any such sale
were to occur, it might have an adverse effect on CEMEX and/or its
subsidiaries' stock market price, may reduce the amount of dividends and other
distributions that the Company may receive from its subsidiaries, and/or may
create minority interests affecting the ability to operate the Company.

A)  On October 26, 2003, through a secondary equity offering agreed by CEMEX,
    launched simultaneously on the MSE and the NYSE, financial institutions
    offered 29.325 million ADSs (25.5 million in the offer plus an optional
    amount of 3.825 million ADSs in case of overallotments) held through
    forward contracts. The acquirers purchased all ADSs including the optional
    amount, resulting in the sale of 23.325 million ADSs (116.6 million CPOs)
    and 30 million CPOs (6 million ADSs), at a price of U.S.$23.15 per ADS and
    Ps52.07 per CPO. Of the total sale proceeds of approximately U.S.$660
    million (Ps7,881.3), net of the offering expenses, the financial
    institutions retained approximately U.S.$538 million (Ps6,424.4) as payment
    for the liquidation of the related forward contracts, while approximately
    U.S.$122 million (Ps1,456.9) was reimbursed to CEMEX. This transaction did
    not increase the number of shares outstanding.

    As of December 31, 2002, CEMEX held forward contracts for a notional amount
    of U.S.$461.1 million. The maturity of these contracts was extended until
    December 2003, covering 24,008,392 ADSs (120,041,960 CPOs) and 33.8 million
    shares of CEMEX's subsidiary in Spain. In October 2003, these forwards were
    settled through a secondary equity offering (see preceding paragraph) that
    resulted in the write-off of accrued prepayments toward the forwards' final
    settlement price of U.S.$101.7 million (Ps1,214.9), recognized as part of
    other accounts receivable and a net gain in stockholders' equity of
    approximately U.S.$19.5 million (Ps232.9). These contracts were negotiated
    in 1999 to hedge future exercises under the 105 million warrants program
    that was liquidated in 2004. The shares underlying these contracts were
    sold by CEMEX during 1999 for approximately U.S.$905.7 million, and CEMEX
    simultaneously prepaid approximately U.S.$439.9 million toward the
    forwards' final settlement price. From execution of the contracts until
    their settlement, pursuant to the prepayment made in 1999 and the Company's
    retention of the economic and voting rights on the Spanish subsidiary's
    shares underlying the contracts, such shares were considered as owned by
    CEMEX.

    As of December 31, 2003 and 2004, there are forward contracts with
    different maturities until October 2006, for notional amounts of U.S.$789.3
    million and U.S.$1,112 million, respectively, covering 29,314,561 ADSs in
    2003 and 30,644,267 ADSs in 2004, which are designated to hedge the future
    exercise of the options granted under the employee equity programs (note
    16). Starting in 2001, changes in the estimated fair value of these
    contracts have been recognized in the balance sheet against the income
    statement, as a complement of the costs generated by the option programs.
    As of December 31, 2003 and 2004, the estimated fair value of these
    contracts were gains of approximately U.S.$28.0 million (Ps334.3) and
    U.S.$44.8 million (Ps499.1), respectively.

    As of December 31, 2003 there were forward contracts with maturities in
    August and September 2004, for a notional amount of U.S.$122.9 million that
    covered 23,622,500 CPOs and represented a fair value gain of approximately
    U.S.$1.8 million (Ps21.5). These contracts were negotiated to hedge the
    purchase of CAH shares through the exchange for the Company's CPOs (note
    9A). During 2004, these contracts were liquidated resulting in gains of
    U.S.$14.5 million (Ps161.5) that were recognized in stockholders' equity.

                                     F-35


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


    In addition, as of December 31, 2003 and 2004, there are forward contracts
    for notional amounts of U.S.$172.8 million and U.S.$45.2 million,
    respectively, with different maturities until January 2006, covering a
    total of 5,268,939 ADSs in 2003 and 1,364,061 ADSs in 2004. Until December
    31, 2004, these contracts were treated as equity instruments; therefore,
    changes in their fair value were recognized in stockholders' equity when
    settled. Starting in 2005, due to new accounting pronouncements, changes in
    the fair value of these contracts will be recognized in earnings. As of
    December 31, 2003 and 2004, the estimated fair value of these contracts was
    a loss of U.S.$27.1 million (Ps323.6) and a gain of U.S.$6.0 million
    (Ps66.8), respectively. During 2004, contracts representing 2,509,524 CPOs
    that were held to meet the Company's requirements of shares under the
    warrants program (note 15F) were settled, resulting in a gain of U.S.$2.6
    million (Ps29.0), recognized in stockholders' equity.

B)  In order to hedge financial risks associated with variations in foreign
    exchange rates, CEMEX has negotiated foreign exchange forward contracts for
    notional amounts of U.S.$559.3 million and U.S.$956.6 million, at December
    31, 2003 and 2004, respectively, with different maturities until 2007.
    These contracts have been designated as hedges of the Company's net
    investment in foreign subsidiaries. The estimated fair value of these
    instruments is recorded in stockholders' equity as part of the foreign
    currency translation effect (see note 15D). In addition, as of December 31,
    2003 and 2004, there are foreign exchange options for notional amounts of
    U.S.$886.6 million and U.S.$488.4 million, respectively, with maturity in
    June 2005. For the sale of these options, the Company received premiums of
    approximately U.S.$62.8 million in 2003. The estimated fair value losses of
    U.S.$57.2 million (Ps683.0) in 2003 and U.S.$19.2 million (Ps213.9) in 2004
    were recognized in earnings.

    Beginning in September 2004, in connection with the commitment to acquire
    RMC (notes 2 and 9A) that is denominated in pounds sterling, CEMEX entered
    into a foreign exchange hedge program. The program is oriented to hedge the
    variability in cash flows associated with exchange fluctuations between the
    U.S. dollar, the currency in which CEMEX will obtain the funds to purchase,
    and pounds sterling. For this purpose, the Company negotiated foreign
    exchange forwards, collars and digital options, for a combined notional
    amount of U.S.$3,452.9 million. 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
    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.$132.1 million (Ps1,471.6),
    was recognized in stockholders' equity in 2004, and will be reclassified to
    earnings on the date when the purchase occurs, which is expected during the
    first quarter of 2005. Changes in the estimated fair value of these
    contracts from their origination until their designation in 2004 as hedges,
    were a gain of approximately U.S.$102.4 million (Ps1,140.7), which was
    recognized in earnings.

C)  As of December 31, 2003 and 2004, the Company had a interest rate swap
    maturing in May 2017, with a notional amount of U.S.$162.1 million and
    U.S.$159.0 million, respectively, negotiated to exchange floating for fixed
    interest rates in connection with agreements entered into by the Company
    for the acquisition of electric energy for a 20-year period (note 22F).
    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 May 2017. In
    addition, during 2001, the Company sold a floor option with a notional
    amount of U.S.$174.5 million in 2003 and U.S.$168.1 million in 2004,
    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. For the sale of this option the Company received a premium of
    approximately U.S.$22 million (Ps262.7). As of December 31, 2003 and 2004,
    the combined fair value of the swap and the floor option represented losses
    of approximately U.S.$7.4 million (Ps88.4) and U.S.$6.3 million (Ps70.2),
    respectively, recognized in earnings during the respected periods. 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.

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 the Company's 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
the Company's exposure through its use of derivatives. The amounts exchanged
are determined on the basis of the notional amounts and other terms included in
the derivative instruments.

                                     F-36


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


18.  INCOME TAX (IT), BUSINESS ASSETS TAX (BAT), EMPLOYEES' STATUTORY PROFIT
     SHARING (ESPS) AND DEFERRED INCOME TAXES

The income tax law in Mexico provides that companies must pay either IT or BAT
depending on which amount is greater with respect to their Mexican operations.
Both taxes recognize the effects of inflation, although in a manner different
from Mexican GAAP. 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. In addition, the taxable
income of those subsidiaries that have tax loss carryforwards generated before
1999 will be considered by the parent company according to equity ownership.
Beginning in 2002, in the determination of consolidated IT, 60% of the taxable
result of the controlling entity should be considered, unless such entity
obtains taxable income, in which case 100% should be considered, until the
restated balance of the individual tax loss carryforwards before 2001 are
amortized. Beginning in 2002, a new IT law became effective in Mexico,
establishing that the IT rate was scheduled to be decreased by 1% each year,
beginning in 2003, until it reached 32% in 2005. Nevertheless, according to
reforms approved to such law in November 2004, the tax rate for 2005 will be
30%, 29% for 2006 and 28% starting in 2007. In addition, the maximum of 60% for
tax consolidation was eliminated, except in those situations when the
subsidiaries had generated tax loss carryforwards in the period from 1999 to
2004 or the parent company from 2002 to 2004. In those cases, the 60% factor
will prevail in the IT consolidation, until tax loss carryforwards are
extinguished in each company.

The IT (expense) benefit, presented in the income statements, is summarized as
follows:



                                                       2002             2003             2004
                                                  -------------    -------------    ------------
                                                                               
Current income tax...........................   Ps  (1,053.9)         (1,597.1)         (994.2)
Deferred IT..................................          461.9             539.9        (1,049.4)
Effects of inflation (note 3B)...............          (76.1)            (12.8)         -
                                                  -------------    -------------    ------------
                                                Ps    (668.1)         (1,070.0)       (2,043.6)
                                                  =============    =============    ============


For the years ended December 31, 2002, 2003 and 2004, the total consolidated IT
includes expenses of Ps914.0, Ps1,484.0 and Ps1,258.7, respectively, from
foreign subsidiaries, and income of Ps245.9 in 2002, income of Ps414.0 in 2003
and expense of Ps784.9 in 2004 from Mexican subsidiaries.

For its operations in Mexico, CEMEX has accumulated IT loss carryforwards
which, restated for inflation, can be amortized against taxable income in the
succeeding ten years according to income tax law. The Company and its
subsidiaries in Mexico must generate taxable income to preserve the benefit of
the tax loss carryforwards generated beginning in 1999. The tax loss
carryforwards at December 31, 2004 are as follows:

                                                    Amount of         Year of
      Year in which tax loss occurred             carryforwards     expiration
                                                 ---------------    ------------
2000........................................  Ps       360.0           2010
2001........................................         3,527.9           2011
2002........................................         4,053.6           2012
2003........................................           811.7           2013
                                                 ---------------
                                              Ps     8,753.2
                                                 ===============

                                     F-37


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The BAT law establishes a 1.8% tax levy on assets, restated for inflation in
the case of inventory and fixed assets, and after 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 exceeds BAT in such period. The recoverable BAT as of December 31,
2004 is as follows:

         Year in which BAT exceeded IT              Amount of          Year of
                                                  carryforwards       expiration
                                                  --------------    ------------
1997.......................................  Ps       150.4            2007
                                                  --------------    ------------

B) DEFERRED IT AND ESPS (see note 3K)

The deferred IT result in earnings represents the difference, in nominal pesos,
between the beginning of year balance and the year-end balance of the deferred
tax assets or liabilities. The tax effects of the main temporary differences
that generate the consolidated deferred tax assets and liabilities are
presented below:




                                                                                               2003             2004
                                                                                        ----------------------------------
Deferred tax assets:
                                                                                                          
Tax loss carryforwards and other tax credits......................................   Ps         6,551.9         7,382.8
Accounts payable and accrued expenses.............................................                118.7           261.6
Trade accounts receivable.........................................................                  9.0             6.7
Properties, plant and equipment...................................................             (3,301.5)       (3,342.0)
Others............................................................................                 23.5          (214.1)
                                                                                        ----------------------------------
  Total deferred tax assets.......................................................              3,401.6         4,095.0
  Less - Valuation allowance......................................................             (1,124.8)       (2,206.1)
                                                                                        ----------------------------------
    Net deferred tax assets.......................................................              2,276.8         1,888.9
                                                                                        ----------------------------------
Deferred tax liabilities:
Tax loss carryforwards and other tax credits......................................              7,337.3         5,889.5
Accounts payable and accrued expenses.............................................              2,044.8         3,579.7
Trade accounts receivable.........................................................                 90.6           102.3
Properties, plant and equipment...................................................            (17,864.9)      (17,463.8)
Inventories.......................................................................               (948.3)         (156.6)
Others............................................................................               (460.7)       (2,381.4)
                                                                                        ----------------------------------
  Total deferred tax liabilities..................................................             (9,801.2)      (10,430.3)
Less - Valuation allowance........................................................             (2,779.3)       (2,097.2)
                                                                                        ----------------------------------
    Net deferred tax liabilities..................................................            (12,580.5)      (12,527.5)
                                                                                        ----------------------------------
Net deferred tax position (liability).............................................            (10,303.7)      (10,638.6)
  Less - Deferred IT of acquired subsidiaries at the acquisition date.............             (4,810.5)       (4,810.5)
                                                                                        ----------------------------------
Total effect of deferred IT in stockholders' equity at end of year................             (5,493.2)       (5,828.1)
Total effect of deferred IT in stockholders' equity at beginning of year..........             (5,804.4)       (5,493.2)
                                                                                        ----------------------------------
     Change in deferred IT for the period.........................................   Ps           311.2          (334.9)
                                                                                        ----------------------------------


The breakdown of the change in consolidated deferred income tax for the period
is as follows:



                                                                      2002              2003             2004
                                                                  ------------     -------------     ------------
                                                                                              
Deferred IT charged (credited) to the income statement.........Ps       461.9            539.9         (1,049.4)
Deferred IT applied directly to stockholders' equity...........         912.5           (228.7)           714.5
                                                                  ------------     -------------     ------------
   Deferred IT income (expense) for the period...............  Ps     1,374.4            311.2           (334.9)
                                                                  ============     =============     =============


Bulletin D-4 states that all items whose effects are recorded directly in
stockholders' equity should be recognized net of their deferred income tax
effects. Bulletin D-4 does not allow the offsetting of deferred tax assets and
liabilities relating to different tax jurisdictions.

                                     F-38


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The Company's management considers that sufficient taxable income will be
generated as 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 income of Ps21.7 in 2002, expense of Ps74.3 in 2003 and expense
of Ps211.7 in 2004, reflected in the income statement.

C) EFFECTIVE TAX RATE

The effects of inflation are recognized differently for IT and for accounting
purposes. This situation, and other differences between the book and the IT
basis, arising from the several income tax rates and laws in each of the
countries in which CEMEX operates, give rise to permanent differences between
the approximate statutory tax rate and the effective tax rate presented in the
consolidated income statement, as follows:




                    For the years ended December 31,                     2002           2003           2004
                                                                      ----------     ----------     ---------
                                                                         %              %               %
                                                                                              
Approximate consolidated statutory tax rate.........................      35.0           34.0          33.0
    Additional deductions and other deductible items................      (6.6)         (15.8)        (21.6)
    Expenses and other non-deductible items.........................       1.0            1.2           1.9

    Non-taxable sale of marketable securities and fixed assets......     (10.2            -             0.4
    Difference between book and tax inflation.......................      (5.6)          (0.3)          1.6
    Others (1)......................................................      (4.3)          (6.8)         (3.1)
                                                                      ----------     ----------     ---------
Effective consolidated tax rate.....................................       9.3           12.3          12.2
                                                                      ==========     ==========     ==========


(1)  Includes the effects for the different IT rates enacted in the countries
     where CEMEX operates, and the difference between the 2004 rate in Mexico
     of 33% and those in effect in 2005 of 30% and in 2006 of 29%, until
     reaching a tax rate of 28% in 2007.

19. FOREIGN CURRENCY POSITION

As of December 31, 2004, the principal balances denominated in foreign
currencies, as well as non-monetary assets in Mexico of foreign origin, are
presented as follows:




                   U.S. dollars millions                  Mexico              Foreign               Total
                                                     ----------------    -----------------    ----------------
                                                                                            
  Current assets..................................             18.5             2,934.4              2,952.9
  Noncurrent assets...............................            994.3   (1)       8,756.1              9,750.4
                                                     ----------------    -----------------    ----------------
    Total assets..................................          1,012.8            11,690.5             12,703.3
                                                     ================    ================     ================
  Current liabilities.............................            255.0             1,561.5              1,816.5
  Long-term liabilities...........................          2,170.9             3,616.7              5,787.6
                                                     ----------------    -----------------    ----------------
    Total liabilities.............................          2,425.9             5,178.2              7,604.1
                                                     ================    ================     ================

  (1)Non-monetary assets in Mexico of foreign origin.



The peso to dollar exchange rate as of December 31, 2002, 2003 and 2004 was
Ps10.38, Ps11.24 and Ps11.14 pesos per dollar, respectively. As of January 14,
2005, the exchange rate was Ps11.23 pesos per dollar.

Additionally, transactions of the Company's Mexican operations denominated in
foreign currencies during 2002, 2003 and 2004 are summarized as follows:




                   U.S. dollars millions           2002            2003         2004
                                                 ----------      ----------   ----------
                                                                         
  Export sales................................       72.1            57.1         75.7
  Import purchases............................       92.5            90.5         88.3
  Financial income............................       11.1             7.5         12.5
  Financial expense...........................      275.6           389.0        337.6
                                                 ----------      ----------   ----------


                                     F-39


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


20. GEOGRAPHIC SEGMENT DATA

The Company operates principally in the construction industry segment through
the production and marketing of cement and ready-mix concrete. The following
tables present, in accordance with the information analyzed for decision-making
by management, selected condensed financial information of the Company's main
business units for the years ended December 31, 2002, 2003 and 2004:



                                                      Net Sales                             Operating Income
                                        --------------------------------------    ---------------------------------------
                                         2002         2003            2004           2002         2003          2004
                                        --------------------------------------    ---------------------------------------
                                                                                              
Mexico...........................   Ps     30,254.9     31,388.5     32,529.4        11,553.9      12,088.5     12,207.8
Spain............................          11,987.1     14,505.1     15,370.9         2,795.7       3,167.0      3,735.2
United States....................          21,326.0     20,684.0     21,999.2         3,286.7       2,443.9      2,894.3
Venezuela........................           3,699.3      3,808.1      3,902.4         1,197.5       1,269.9      1,218.6
Colombia.........................           2,363.0      2,637.9      2,731.7           985.6       1,096.6      1,245.3
Caribbean and Central America....           6,107.2      7,084.1      7,671.1         1,149.0       1,253.2      1,756.9
Philippines......................           1,589.7      1,601.5      1,685.9           (76.9)       (150.9)       301.8
Egypt............................           1,825.9      1,608.3      2,114.7           235.6         355.4        638.7
Others...........................           9,230.1     10,013.0     11,039.9        (5,160.4)     (4,146.5)   (3,370.9)
                                        --------------------------------------    ---------------------------------------
                                           88,383.2     93,330.5     99,045.2        15,966.7      17,377.1     20,627.7
Eliminations.....................          (8,658.6)    (7,777.9)    (8,261.3)         -            -             -
                                        --------------------------------------    ---------------------------------------
Consolidated.....................   Ps     79,724.6     85,552.6     90,783.9        15,966.7      17,377.1     20,627.7
                                        ======================================    =======================================


In order to present integrally the operations of each geographic area, net
sales between geographic areas are presented under the caption "eliminations".

                                             Depreciation and Amortization
                                        --------------------------------------
                                           2002        2003            2004
                                        --------------------------------------
Mexico...........................    Ps     1,890.8      1,747.6       1,817.7
Spain............................           1,195.3      1,454.2       1,446.1
United States....................           2,052.8      2,139.0       2,363.2
Venezuela........................             616.8        674.8         591.9
Colombia.........................             564.7        881.9         430.4
Caribbean and Central America....             471.1        639.9         610.4
Philippines......................             494.7        472.0         390.0
Egypt............................             516.7        376.5         198.6
Others...........................           1,521.1      1,463.7       1,703.0
                                        --------------------------------------
Consolidated.....................    Ps     9,324.0      9,849.6       9,551.3
                                        ======================================

For purposes of the preceding table, goodwill amortization reported by holding
companies has been allocated to the business geographic segment that originated
such goodwill amounts. Therefore, this information is not directly comparable
with the information of the individual entities, which are comprised in each
segment. Additionally, in the Company's consolidated income statement, goodwill
amortization is recognized as part of other expenses, net.

                                     F-40


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Total assets and investment in fixed assets by geographic segment are
summarized as follows:



                                                      Total Assets                      Investment in Fixed Assets (2)
                                         ----------------------------------------    ------------------------------------
                                                2003                 2004                  2003                2004
                                         ------------------    ------------------    ----------------   -----------------
                                                                                                    
Mexico............................... Ps        59,296.8              64,380.1              1,333.2             1,176.7
Spain................................           37,381.4              32,796.3                706.3               601.3
United States........................           49,695.0              44,771.8              1,176.9             1,223.8
Venezuela............................            9,229.9               8,452.8                131.1               148.7
Colombia.............................            8,025.9               9,160.1                 72.6               101.9
Caribbean and Central America........           12,913.9              13,597.4                726.0               315.4
Philippines..........................            8,360.6               8,020.8                 20.3                26.0
Other Asian..........................            4,556.6               4,207.9                 21.2                34.9
Egypt................................            4,408.9               6,043.5                171.7                92.8
Others (1)...........................           78,575.2              83,545.9                421.8             1,052.4
                                         ------------------    ------------------    ----------------   -----------------
                                               272,444.2             274,976.6              4,781.1             4,773.9
Eliminations.........................          (81,193.6)            (81,353.7)             -                   -
                                         ------------------    ------------------    ----------------   -----------------
Consolidated......................... Ps       191,250.6             193,622.9              4,781.1             4,773.9
                                         ==================    ==================    ================   =================


(1)  Includes, in addition to trade maritime operating assets and other assets,
     related party balances of the Parent Company of Ps37,236.3.3 and
     Ps33,737.4 in 2003 and 2004, respectively, which are eliminated in
     consolidation. In addition, other assets in 2004 include Ps9,186.8 related
     to the investment in RMC (notes 2 and 9A).

(2)  Corresponds to investments in fixed assets not considering the effects of
     inflation. As a result, this balance differs from the amount presented as
     investing activities in the Statement of Changes in the Financial Position
     within "Properties, machinery and equipment, net", which considers the
     inflation effects in accordance with Bulletin B-10.

As of December 31, 2003 and 2004, of the consolidated financial debt amounting
to Ps70,045.9 and Ps66,066.5, respectively, approximately 35% in 2003 and 2004
was in the Parent Company, 14% in 2003 and 2004 in the United States, 16% in
2003 and 15% in 2004 in Spain and 35% in 2003 and 36% in 2004 was in other
countries, respectively. Of the 35% and 36% of such consolidated debt in other
countries in 2003 and 2004, respectively, 57% in 2003 and 62% in 2004 was in a
Dutch subsidiary, guaranteed by the subsidiaries conducting Mexican operations
and the Parent. The other 31% in 2003 and 24% in 2004 are in finance companies
in the United States, guaranteed by the subsidiaries conducting Spanish
operations.

                                     F-41


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


21. EARNINGS PER SHARE

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 on the weighted average
number of common shares outstanding and the effects of any transaction carried
out by the Company, which have a potentially dilutive effect on such number of
shares.

The amounts considered for calculations are summarized as follows:



                                                                                    Majority
                                          Basic number of    Diluted number of    interest net      Basic      Diluted
                                              shares               shares            income          EPS         EPS
                                         ----------------    -----------------    -------------    --------    --------
                                                                                                   
December 31, 2002....................     4,487,527,392         4,496,213,613  Ps      6,339.2  Ps    1.41  Ps    1.41
December 31, 2003....................     4,728,201,229         4,837,194,188          7,508.4        1.58        1.55
December 31, 2004....................     4,993,682,521         5,019,632,767         14,562.3        2.92        2.90
                                         ----------------    -----------------    -------------    --------    --------


The difference between the basic and diluted average number of shares in 2002,
2003 and 2004 is attributable to the additional shares to be issued under the
Company's fixed employee stock option programs (see note 16). In addition,
beginning in 2003, the Company includes the dilutive effect on the basic number
of shares resulting from the equity forward contracts in the Company's own
stock, determined under the inverse treasury method.

22. CONTINGENCIES AND COMMITMENTS

A) GUARANTEES

As of December 31, 2003 and 2004, CEMEX, S.A. de C.V. had signed as guarantor
of loans made to certain subsidiaries for approximately U.S.$1,322.0 million
and U.S.$1,355.0 million, respectively. As of the same dates, the Company and
certain subsidiaries have guaranteed the risks associated with certain
financial transactions, assuming contingent obligations under standby letters
of credit, issued by financial institutions for a total of U.S.$55.0 million
and U.S.$25.8 million, respectively.

B) TAX ASSESSMENTS

The Company and some of its subsidiaries in Mexico have been notified of
several tax assessments related to different tax periods, determined by the
Mexican tax authorities according to its verification attributions. These tax
assessments are for an amount of approximately Ps3,638.6 as of December 31,
2004. The tax assessments result primarily from: (i) recalculation of the
inflationary tax deduction, since the tax authorities claim that "Advance
Payments to Suppliers" and "Guaranty Deposits" are not by their nature credits;
(ii) disallowed restatement of tax loss carryforwards in the same period in
which they occurred; (iii) disallowed determination of tax loss carryforwards;
and (iv) disallowed reduction of BAT by the controlling entity on the grounds
that the creditable amount should be in proportion to the equity interest it
has over the controlled entities. The companies involved are using the
available defense actions granted by law in order to cancel the tax claims.

The Philippine Bureau of Internal Revenue ("BIR") assessed APO and Solid, which
are CEMEX subsidiaries in Philippines. The assessments, which relate to
different tax periods, are for an amount of approximately 3,069.1 million of
Philippines pesos (approximately U.S.$54.8 million) as of December 31, 2004.
The tax assessments result primarily from: (i) disallowance of APO's income tax
holiday related income from 1998 to 2001; and (ii) deficiencies in national
taxes of APO for the 1999 period and Solid for the 2000 period. In the first
case, the tax credit is in process with the Court of Tax Appeal ("CTA"). In the
second case, both companies continue to submit relevant evidence to the BIR to
contest these assessments. The companies intend to contest these assessments
with the CTA in case the BIR issues a final collection letter. In addition,
Solid's 1998 tax year and APO's 1997 and 1998 tax years are under preliminary
review for deficiency in the payment of taxes. Finalization of the assessments
was held in abeyance by the BIR as APO and Solid continue to present evidence
to dispute the BIR findings.

                                     F-42


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


C) 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, certain subsidiaries of the Company, as importers of
record, have been subject to payment of anti-dumping duty deposits, estimated
on imports of gray Portland cement and clinker from Mexico since April 1990.
The order is likely to continue for an indefinite period, until the United
States of America ("United States") government determines, taking into
consideration the World Trade Organization new rules, that conditions for
imposing the order no longer exist; the cancellation or suspension of the order
would follow. In the last quarter of 2000, the United States government
continued the order, a resolution that will prevail until it makes a new
review. During December 2001, the United States government through the
International Trade Commission denied the Company's request to initiate a new
review.

As of December 31, 2004, the Company has accrued a liability of U.S.$103.6
million, including accrued interest, for the difference between the amount of
anti-dumping duties paid on imports and the latest findings by the DOC in its
administrative reviews for all periods under review.

As of December 31, 2004, the Company is in the fourteenth review period by the
DOC and expects a preliminary resolution in the second half of 2005. The DOC
published, during September 2003, the final resolution with respect to the
twelfth administrative review period, and on December 20, 2004, the DOC issued
the final resolution for the thirteenth review period, determining an
anti-dumping margin of 80.75% and 54.97% for these periods, respectively. With
respect to the first five review periods, the seventh, twelfth and thirteenth
review period, the DOC has issued a final resolution of the anti-dumping
duties. Referring to the remaining review periods, the final resolutions are
suspended until all the procedures before the North America Free Trade
Agreement Panel are concluded. As a result, the final amounts may differ from
those liabilities recorded in the consolidated financial statements. CEMEX and
its subsidiaries have defended their position in this matter and will continue
to do so through available means in order to determine the actual dumping
margins within each period of the administration reviews carried out by the
DOC.

During 2001, the Ministry of Finance ("MOF") of Taiwan, in response of 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. APO, Rizal and Solid (Rizal and Solid merged in
December 2002) are among the cement producers under investigation and have
received their anti-dumping questionnaires from the International Trade
Commission under the Ministry of Economic Affairs ("ITC-MOEA"). Rizal and Solid
replied to the ITC-MOEA by confirming that they have not been exporting cement
or clinker during the review period. Furthermore, APO contested the allegation
of "injury" in the anti-dumping proceedings before the ITC-MOEA. At the end of
the same year ITC-MOEA informed the petitioners and the respondent producers of
the results of the preliminary investigation and determined that there were
reasonable indicators that the Taiwanese industry has incurred material damage
due to imports of cement and clinker from South Korea and the Philippines that
allegedly is sold in Taiwan at a price below market price. In order to comply
with regulations of anti-dumping duties in Taiwan, the ITC-MOEA transferred
this investigation to the MOF. In November 2001, APO received supplemental
questionnaires by the MOF. The answer to these questionnaires was presented by
APO during November and December 2001.

In January 2002, the MOF notified the petitioners and respondent producers, on
a preliminary resolution, of findings that there might be dumping and that the
investigation would continue, but without imposing any anti-dumping duty. In
June 2002, the ITC-MOEA informed the petitioners and respondent producers of
its resolution that the imports from South Korea and the Philippines had caused
material damage to the Taiwanese industry. In July 2002, the MOF gave notice of
a cement and clinker import duty, from imports on South Korea and the
Philippines, beginning in July 19, 2002. The imposed tariff was 42% on imports
from APO, Rizal and Solid (Rizal and Solid merged in December 2002). 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 will not appeal this
resolution.

                                     F-43


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


D) LEASES

CEMEX has entered into various non-cancelable 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. Future minimum rental
payments due under such leases are as follows:

                                                                  U.S. dollars
                 Year ending December 31,                           millions
 ------------------------------------------------------------------------------
 2005.............................................................    110.2
 2006.............................................................     93.7
 2007.............................................................     79.3
 2008.............................................................     68.7
 2009.............................................................     42.9
 2010.............................................................     54.3
 2011 and thereafter..............................................     35.6
                                                                  -------------
                                                                      484.7
                                                                  =============

Rental expense for the years ended December 31, 2002, 2003, and 2004 was
approximately U.S.$57 million (Ps680.6), U.S.$56 million (Ps668.7) and U.S.$114
million (Ps1,270.0), respectively.

E) PLEDGE ASSETS

As of December 31, 2003 and 2004, there are liabilities amounting to U.S.$27.1
million and U.S.$2.2 million, respectively, secured by properties, machinery
and equipment.

F) COMMITMENTS

As of December 31, 2003 and 2004, the Company has future commitments for the
purchase of raw materials for an approximate amount of U.S.$113.0 million and
U.S.$172.3 million, respectively.

During 1999, the Company entered into agreements with an international
partnership, which built and currently operates an electrical energy generating
plant. According to the agreements, CEMEX will purchase, starting from the
beginning of operations of the plant, all the energy generated for a term of no
less than 20 years. The electrical energy generating plant started commercial
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. By means of this
transaction, CEMEX expects to have significant decreases in its electrical
energy costs, and the supply is expected to be sufficient to cover
approximately 80% of the electrical energy needs of CEMEX in Mexico. The
Company is not required to make any capital investment in the project. At
December 31, 2004, after eight months of operations, the energy generated by
the plant has supplied electricity to 10 cement plants of CEMEX in Mexico,
covering 83% of its needs and decreasing the electricity cost by 21%.

In March 2002, the distribution contract in Taiwan that CEMEX had with Universe
Company since March 31, 2000, was terminated. As a result, for the year ended
December 31, 2002, CEMEX recognized a loss of approximately U.S.$17.3 million
(Ps209.1) within other expenses, net.

                                     F-44


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


G) OTHER CONTINGENCIES

During 2004, in Colombia four claims were notified in protection of the public
interest, which involve CEMEX Concretos de Colombia as co-accused. The first
proceeding was received on April 14 and the last on December 16. The plaintiffs
demand that the use of a raw material offered by the ready-mix concrete
industry resulted in extreme danger to the public underground transportation
system in Bogota, known as Transmilenio, disputing that the basis of the
material supplied by CEMEX Concretos Colombia, S.A., together with other
suppliers, did not meet technical standards offered by the producers (quality
deficiencies) and/or that suppliers provided insufficient or incorrect
information about the product. The four claims intend for suppliers to repair
the damage in order to guarantee the service during the period for which it was
originally designed (20 years). Nevertheless, the claims do not estimate
damages (repair costs). CEMEX Concretos de Colombia, S.A. has been defending
its interests and will continue to do so during the following year. One of the
proceedings was disregarded by the court based on arguments presented by CEMEX
Concretos de Colombia, S.A. All other claims are in their initial phase. CEMEX
Concretos de Colombia, S.A. has promptly responded to each of the proceedings
notified. At this early stage, it is neither possible to determine the amount
of damages nor other situations that the company may confront. Typically, this
process will continue for several years before its final resolution.

As of December 31 2004, 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.$28.3 million. 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
the Company, including discontinued operations, in regard to 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 any 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 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.

In May 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 the amount of approximately
U.S.$60 million. As of December 31, 2004, as a result of the depreciation of
the Colombian peso, this amount has decreased to approximately U.S.$55 million.
This proceeding has reached the evidentiary stage. Typically, proceedings of
this nature take several years before a final resolution is reached.

In May 1999, several companies filed a lawsuit against two subsidiaries of the
Company in Colombia, alleging that the Ibague plants were causing capacity
production damage to their lands due to the pollution they generate. On January
13, 2004, CEMEX Colombia, S.A. was notified that the court's decision was that
plaintiffs should be paid in the amount of approximately U.S$8.8 million. On
January 15, 2004, CEMEX Colombia, S.A. appealed the decision, which was
accepted and sent to the Superior Court of Ibague. On March 23, 2004, CEMEX
presented arguments that sustained the appeal. The claim is under review in the
Court of Appeals. Typically, this process will continue for several years
before its final resolution.

                                     F-45


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


23. NEW ACCOUNTING PRONUNCEMENTS

In April 2004, the Mexican Institute of Public Accountants issued Bulletin B-7,
"Business Acquisitions", which is effective for acquisitions beginning on
January 1, 2005. The most important aspects are: a) adoption of the purchase
method as the sole valuation method for the accounting of acquired business and
investment in associates, pursuant to which the pooling of interests method for
the recognition and initial valuation of the net assets acquired was
eliminated; b) requiring the allocation of the purchase price to all assets
acquired and liabilities assumed based on their fair value as of the
acquisition date; c) modification of the accounting treatment of goodwill
pursuant to which of which amortization of goodwill is eliminated, while this
item remains subject to periodic impairment evaluations; d) establishment of
specific rules for the accounting for the acquisition of minority interests and
for transfers of assets or exchange of shares between entities under common
control; and e) including additional regulations to Bulletin C-8 "Intangible
Assets", to identify, value and recognize intangible assets in a business
combination. The Company estimates that the adoption of this bulletin will have
no significant impact on its financial position or operating results.

In March 2004, the Mexican Institute of Public Accountants issued Bulletin
C-10, "Derivative Financial Instruments and Hedging Activities", which is
effective beginning January 1, 2005. Bulletin C-10 details and supplements
issues related to the accounting of derivative financial instruments and
supersedes other dispositions related to hedging activities established
previously by Bulletin C-2, "Financial Instruments". Among other aspects,
Bulletin C-10 confirms the rule of Bulletin C-2, in the respect that all
derivative financial instruments should be recognized as assets or liabilities
at fair value. The Bulletin also establishes criteria for segregation of
embedded derivatives and rules to classify and value from origination,
financial assets and liabilities resulting from derivative financial
instruments, as well as to value and classify hedging instruments. In addition,
the Bulletin widens disclosure requirements regarding a company's exposure to
financial risks. Beginning in 2001, CEMEX applies accounting policies for the
valuation and recognition of derivative financial instruments that are
consistent with those of new Bulletin C-10. Therefore, except for the
requirement to evaluate effectiveness when there is a hedge of debt over the
net investment in a foreign subsidiary, and the presentation effect described
in the paragraph below, and subject to the conclusion of the analysis, the
Company estimates that the adoption of this bulletin will have no significant
impact on its financial position or operating results.

Starting in 2001, the Company has effectively changed the original profile of
interest rates and currencies of financial debt associated to Cross Currency
Swaps ("CCS") (note 12). Accordingly, debt subject to these instruments has
been presented in the currencies negotiated in the CCS, through the recognition
within debt, of the assets or liabilities resulting from the valuation of the
derivative instruments. New Bulletin C-10 considers that such criteria
represent the synthetic presentation of two financial instruments as if it
would be a single instrument, and specifically prohibits such presentation. For
this reason, beginning in 2005, the Company will recognize the assets and
liabilities resulting from the valuation of CCS separately from the financial
debt, through which such debt will be presented in the currencies originally
negotiated. This presentation effect will have no significant impact on its
financial position or operating results.

In January 2004, the Mexican Institute of Public Accountants revised Bulletin
D-3, "Labor Obligations". The new requirements are effective from the issuance
date of the Bulletin, except for the new rules for postemployment obligations
(severance payments), which are effective beginning on January 1, 2005. The
most relevant change of new Bulletin D-3 is the requirement to value and
recognize postemployment obligations in a manner similar to pensions and other
postretirement benefits. This means recognizing the costs associated to these
obligations during the service life of the employees, while the accounting rule
until December 31, 2004 was to recognize these costs as they were incurred. The
other new rules of the revised Bulletin, such as postretirement benefits,
health care or life insurance, were already accounted for in accordance with
the Bulletin, based on the supplementary application of International
Accounting Standards. The Company does not anticipate any material impact on
stockholders' equity or net income, except for the cost to be determined in
2005 for postemployment obligations (severance payments), which is expected to
be similar to the expense currently recognized on the basis of the "as
incurred" accounting method.

                                     F-46


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


24. DIFFERENCES BETWEEN MEXICAN AND UNITED STATES ACCOUNTING PRINCIPLES

The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Mexico (Mexican GAAP), which differ
in certain significant respects from those applicable in the United States
(U.S. GAAP).

The Mexican GAAP consolidated financial statements include the effects of
inflation as provided for under Bulletin B-10 and Bulletin 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 Bulletin B-15 for the restatement to
constant pesos for the years ended December 31, 2002 and 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 the
methodology set forth by Bulletin B-10 (integrated document) 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 GAAP
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 GAAP 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
GAAP and U.S. GAAP for the years ended December 31, 2002, 2003 and 2004, and
their effect on consolidated net income and earnings per share, are presented
below:





                                                                                           Years ended December 31,
                                                                                   ---------------------------------------
                                                                                       2002          2003          2004
                                                                                   -------------  ------------ -----------
                                                                                                         
    Net income reported under Mexican GAAP...................................... Ps      6,339.2     7,508.4      14,562.3

    Inflation adjustment (*)....................................................          (427.5)      (60.1)            -
                                                                                   -------------  ------------ -----------
    Net income reported under Mexican GAAP after inflation adjustment...........         5,911.7     7,448.3      14,562.3


    Approximate additional U.S. GAAP adjustments:

1.  Amortization of goodwill (note 24(a)).......................................         1,822.6     2,051.3         883.4

2.  Deferred income taxes (note 24(b))..........................................         2,441.7       (65.1)        382.7

3.  Deferred employees' statutory profit sharing (note 24(b))...................          (204.9)       94.1         (55.9)

4.  Other employee benefits (note 24(c))........................................           (33.5)       91.1          27.6

5.  Capitalized interest (note 24(d))...........................................           (42.2)      (48.2)          9.9

6. Minority interest (note 24(e)):

    a) Financing transactions...................................................          (176.0)     (184.4)            -

    b) Effect of U.S. GAAP adjustments..........................................            35.4       (25.7)        (31.5)

7.  Hedge accounting (note 24(l))...............................................        (2,693.0)     (871.3)        184.3

8.  Depreciation (note 24(f))...................................................            13.8        51.4          19.1

9.  Accruals for contingencies (note 24(g)).....................................             8.0      (114.8)        (32.1)

10. Equity in net income of affiliated companies (note 24(h))...................            12.5       (10.2)         (7.9)


11. Inflation adjustment of fixed assets (note 24(i))...........................          (397.5)     (276.1)       (239.7)

12. Temporary equity from forward contracts (note 24(j))........................          (567.0)      780.4             -

13. Derivative instruments and equity forward contracts in CEMEX's stock (notes
       24(l) and 24(m)).........................................................               -       437.4       1,938.4

14. Other U.S. GAAP adjustments (note 24(k))....................................          (520.9)     (271.0)         61.9

15. Monetary effect of U.S. GAAP adjustments....................................           571.6       307.6         262.9
                                                                                   -------------  ------------ -----------
    Approximate U.S. GAAP adjustments before cumulative effect of accounting
       change...................................................................           270.6     1,946.5       3,403.1
                                                                                   -------------  ------------ -----------
    Approximate net income under U.S. GAAP before cumulative effect of
       accounting change........................................................         6,182.3     9,394.8      17,965.4

    Cumulative effect of accounting change (notes 24(k) and 24(m))..............               -      (675.2)            -
                                                                                   -------------  ------------ -----------
    Approximate net income under U.S. GAAP after cumulative effect of
       accounting change........................................................ Ps      6,182.3     8,719.6      17,965.4
                                                                                   =============  ============ ===========
Basic EPS under U.S. GAAP before cumulative effect of accounting change......... Ps   1.38           1.99          3.60

Diluted EPS under U.S. GAAP before cumulative effect of accounting change.......      1.38           1.94          3.58
                                                                                   =============  ============ ===========

Basic EPS under U.S. GAAP after cumulative effect of accounting change.......... Ps   1.38           1.84          3.60

Diluted EPS under U.S. GAAP after cumulative effect of accounting change........      1.38           1.80          3.58
                                                                                   =============  ============ ===========


                                     F-47


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


At December 31, 2003 and 2004, the other principal differences between Mexican
GAAP and U.S. GAAP, and their effect on consolidated stockholders' equity, with
an explanation of the adjustments, are presented below:



                                                                                                         At December 31,
                                                                                                     -------------------------
                                                                                                        2003         2004
                                                                                                     ----------- -------------
                                                                                                              
    Total stockholders' equity reported under Mexican GAAP....................................... Ps    80,797.2    91,566.8
    Inflation adjustment (*).....................................................................       (646.5)       -
                                                                                                     ----------- -------------
    Total stockholders' equity reported under Mexican GAAP after inflation adjustment............       80,150.7    91,566.8
    Approximate additional U.S. GAAP adjustments:
1.  Goodwill, net (note 24(a))...................................................................        1,329.8     5,621.5
2.  Deferred income taxes (note 24(b))...........................................................          809.6       990.3
3.  Deferred employees' statutory profit sharing (note 24(b))....................................       (3,170.2)   (3,059.4)
4.  Other employee benefits (note 24(c)).........................................................         (185.3)     (148.8)
5.  Capitalized interest (note 24(d))............................................................         (551.7)     (505.8)
6.  Minority interest--effect of financing transactions (note 24(e)).............................         (788.1)     -
7.  Minority interest--U.S. GAAP presentation (note 24(e)).......................................       (5,711.2)   (4,536.4)
8.  Depreciation (note 24(f))....................................................................          (58.1)      (78.7)
9.  Accruals for contingencies (note 24(g))......................................................           33.1      -
10. Investment in net assets of affiliated companies (note 24(h))................................         (257.1)     (267.4)
11. Inflation adjustment for machinery and equipment (note 24(i))................................        3,973.8     3,208.9
12. Derivative instruments and equity forward contracts in CEMEX's stock (notes 24(l) and 24(m)).          418.4       238.7
13. Other U.S. GAAP adjustments (note 24(k)).....................................................         (483.2)     (396.7)
                                                                                                     ----------- -------------
    Approximate U.S. GAAP adjustments before cumulative effect of accounting change..............       (4,640.2)    1,066.2
                                                                                                     ----------- -------------
    Approximate stockholders' equity under U.S. GAAP before cumulative effect of accounting
      change.....................................................................................       75,510.5    92,633.0
    Cumulative effect of accounting change (notes 24 (k) and (m))                                         (555.9)     -
                                                                                                     ----------- -------------
    Approximate stockholders' equity under U.S. GAAP after cumulative effect of accounting change Ps    74,954.6    92,633.0
                                                                                                     =========== =============


(*) Adjustment that reverses the restatement of prior periods into constant
  pesos as of December 31, 2004, using the CEMEX weighted average inflation
  factor (note 3B), and restates such prior periods into constant pesos as of
  December 31, 2004 using the Mexican-only inflation factor, in order to comply
  with current requirements of Regulation S-X. The Mexican and U.S. GAAP prior
  periods 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 GAAP notes.

Net income and stockholders' equity reconciliations to U.S. GAAP for the year
ended December 31, 2003 have been prepared on a basis that is substantially
consistent with the accounting principles applied in our Annual Report on Form
20-F for the year ended December 31, 2002, except for the adoption of SFAS 143
Accounting for Asset Retirement Obligations ("SFAS 143") and SFAS 150
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity ("SFAS 150"), as of and for the year ended December 31,
2003 (notes 24(k) and 24(m)). The term "SFAS" as used herein refers to
Statements of Financial Accounting Standards.

(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 GAAP 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, SFAS 142, Goodwill and Other Intangible Assets,
eliminated the amortization of goodwill under U.S. GAAP (note 24(s)); and (iii)
the difference between goodwill amounts carried in the reporting unit's
functional currency, restated by the inflation factor of the reporting unit's
country and then translated into Mexican pesos at the exchange rates prevailing
at the reporting date, under U.S. GAAP, against goodwill amounts carried in the
currencies of the reporting units' holding companies, translated into pesos and
then restated using the Mexican inflation index under Mexican GAAP.

For the years ended December 31, 2002, 2003 and 2004, amortization of goodwill
is reflected as other expenses under Mexican GAAP.

For purposes of reconciliation to U.S. GAAP, CEMEX adopted in 2002, SFAS 142
and SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(note 24(s)). As a result of this adoption, effective January 1, 2002,
amortization ceased for goodwill under U.S. GAAP; therefore, beginning in 2002,
goodwill amortization recorded under Mexican GAAP is adjusted for purposes of
the reconciliation of net income and stockholders' equity to U.S. GAAP.

                                     F-48


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


CEMEX assesses goodwill for impairment annually unless events occur that
require more frequent reviews. Discounted cash flow analyses are used to assess
goodwill impairment (note 24(s)). 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. Considerable management judgment is
necessary to estimate discounted future cash flows. Assumptions used for these
cash flows are consistent with internal forecasts.

During 2004, CEMEX exchanged its CPOs for CAH shares (note 9A), resulting an
excess in the fair value of the assets delivered over the fair value of the
assets received of approximately Ps1,000.4, which were recognized as an
adjustment to stockholders' equity under Mexican GAAP. This amount has been
charged to earnings in the reconciliation of net income to U.S. GAAP. The
reclassification under U.S. GAAP had no effect on stockholders' equity.

(b) Deferred Income Taxes ("IT") and Employees' Statutory Profit Sharing
("ESPS")

For U.S. GAAP purposes, CEMEX accounts for income taxes utilizing SFAS 109,
Accounting for Income Taxes ("SFAS 109"), which requires the asset and
liability method of accounting for deferred income taxes. Under the asset and
liability method, 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, 2003 and 2004 are presented below:




                                                                                                  2003         2004
                                                                                               ------------ -----------
                                                                                                      
Deferred tax assets:
   Net operating loss and assets tax carryforwards........................................  Ps   13,778.1    13,272.3
   Trade accounts receivable..............................................................           98.9       109.0
   Accounts payable and accrued expenses..................................................        1,797.7     3,841.3
   Other..................................................................................           23.3       655.6
                                                                                               ------------ -----------
   Total gross deferred tax assets........................................................       15,698.0    17,878.2
   Less valuation allowance...............................................................        3,873.0     4,303.3
                                                                                               ------------ -----------
     Total deferred tax assets under U.S. GAAP............................................       11,825.0    13,574.9
                                                                                               ------------ -----------
Deferred tax liabilities:
   Property, plant and equipment..........................................................       22,452.0    21,982.1
   Inventories............................................................................          940.7       156.6
   Other..................................................................................          (20.2)    3,265.3
                                                                                               ------------ -----------
     Total deferred tax liability under U.S. GAAP.........................................       23,372.5    25,404.0
                                                                                               ------------ -----------
   Net deferred tax liability under U.S. GAAP.............................................       11,547.5    11,829.1
   Less--U.S. GAAP deferred IT liability of acquired subsidiaries at date of acquisition...        6,907.8     6,991.3
                                                                                               ------------ -----------
   Net deferred IT effect in stockholders' equity under U.S. GAAP.........................        4,639.7     4,837.8
   Less-- Deferred IT effect in stockholders' equity under Mexican GAAP (note 18B)........        5,493.2     5,828.1
                                                                                               ------------ -----------
   Income in reconciliation of stockholders' equity to U.S. GAAP..........................          835.5       990.3
   Inflation adjustment (note 3B).........................................................          (43.9)      -
                                                                                               ------------ -----------
    Net income in reconciliation of stockholders' equity to U.S. GAAP......................  Ps      809.6       990.3
                                                                                               ============ ===========


Management considers that there is existing evidence that, in the future, the
Company will generate sufficient taxable income to realize the tax benefits
associated with the deferred 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 deferred tax assets' valuation
allowance would be increased by a charge to income.

                                     F-49


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


CEMEX records a valuation allowance for the estimated amount of the recoverable
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 2003 and 2004 CEMEX increased
the valuation allowance by approximately Ps2,743.4 and Ps430.3, respectively.

Under Mexican GAAP, CEMEX determines deferred income tax through the asset and
liability method (notes 3K and 18B), in a manner similar to U.S. GAAP.
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 as of January 1, 2000, which was
recorded directly to stockholders' equity and therefore, does 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 and U.S. GAAP. For Mexican GAAP
presentation purposes, deferred tax assets and liabilities are long-term items.

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, 2003 and
2004 are presented below:



                                                                                         -----------------------------
                                                                                             2003            2004
                                                                                         -------------   -------------
Deferred assets:

                                                                                                         
   Employee benefits...............................................................  Ps        27.3            18.6
   Trade accounts receivable.......................................................            23.5            24.3
   Other...........................................................................           110.3            70.3
                                                                                         -------------   -------------
Gross deferred assets under U.S. GAAP..............................................           161.1           113.2
                                                                                         -------------   -------------
Deferred liabilities:
   Property, plant and equipment...................................................         3,077.7         2,970.5
   Inventories.....................................................................           117.5             1.3
   Other...........................................................................           136.1           200.8
                                                                                         -------------   -------------
Gross deferred liabilities under U.S. GAAP.........................................         3,331.3         3,172.6
                                                                                         -------------   -------------
Net deferred liabilities under U.S. GAAP...........................................  Ps     3,170.2         3,059.4
                                                                                         =============   =============


In the condensed financial information presented under U.S. GAAP in note 24(o),
ESPS effect, both current and deferred, is included in the determination of
operating income. For Mexican GAAP presentation, ESPS effect, both current and
deferred, is considered as a separate line item equivalent to income tax.

Under Mexican GAAP, 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 income of Ps21.7 in 2002, expense of Ps74.3 in 2003 and expense
of Ps211.7 in 2004, determined under Mexican GAAP, were reversed.

(c)  Other Employee Benefits

Vacations

Beginning in 2003, CEMEX recognizes vacation expense under Mexican GAAP during
the period the employees earn it, consistently with SFAS 43, Accounting for
Compensated Absences. For the year ended December 31, 2002, in some business
units of CEMEX, vacation expense was recorded for purposes of Mexican GAAP when
taken rather than during the period the employees earn it; therefore, a
reconciling item was determined for U.S. GAAP purposes representing expense of
approximately Ps6.0 in 2002 and Ps1.3 in 2003. The amount of expense recognized
during 2003 under U.S. GAAP represents the difference between the estimated
accrual made under U.S. GAAP through December 31, 2002 and the accumulated
initial effect from the accounting change under Mexican GAAP, which was
recognized as of January 1, 2003 directly to stockholders' equity.

Severance

                                     F-50


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Under Mexican GAAP, severance payments, which are not part of a business
restructuring or a substitution for pension benefits, are recognized in
earnings in the period in which they are paid. Under U.S. GAAP, post-employment
benefits, including severance payments, for former or inactive employees,
excluding retirement benefits, are accrued over an employee's service life. For
the years ended December 31, 2002, 2003 and 2004, severance provisions recorded
for U.S. GAAP purposes resulted in expense of Ps27.5, income of Ps92.4 and
income of Ps27.6, respectively, with an accrual of Ps185.3 and Ps148.8 at
December 31, 2003 and 2004, respectively. Severance payments relating to any
specific event or restructuring are excluded from the calculation under SFAS
112, Employers' Accounting for Postemployment Benefits. Beginning in January 1,
2005, according to newly issued Mexican GAAP provisions, companies must accrue
severance payments, which are not part of a business restructuring, over an
employee's estimated service life (note 23).

Pension and other benefits

CEMEX accounts for employee pension benefits based on the net present value of
the obligations determined by independent actuaries (notes 3J and 14), in a
manner similar to SFAS 87, Employers' Accounting for Pensions, under U.S. GAAP
and, 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.

Most of CEMEX's health care benefits are self-insured and administered on cost
plus fee arrangements with major insurance companies or provided through health
maintenance organizations. CEMEX also provides life insurance benefits to its
active and retired employees. Generally, life insurance benefits for retired
employees are reduced over a number of years from the date of retirement to a
minimum level.

(d)  Capitalized Interest

Under Mexican GAAP, CEMEX capitalizes interest related to debt incurred to
finance construction projects, which is comprehensively measured in order to
include the following effects: (i) the interest cost, plus (ii) any foreign
currency fluctuations, and less (iii) the related monetary position result.
Under U.S. GAAP, only interest is considered an additional cost of constructed
assets to be capitalized and depreciated over the lives of the related assets.
The U.S. GAAP reconciliation removes the foreign currency gain or loss and the
monetary position result capitalized for Mexican GAAP derived from borrowings
denominated in foreign currency.

(e)  Minority Interest

Financing Transactions

For U.S. GAAP presentation purposes (note 24(o)), related to the preferred
stock described in note 15E, preferred dividends declared in 2002 were
recognized as part of the minority interest in the consolidated income
statements under both Mexican and U.S. GAAP. As a result of the adoption of
SFAS 150 during 2003, preferred dividends declared in 2003 were classified as
interest expense under U.S. GAAP.

For U.S. GAAP presentation purposes (note 24(o)), in respect to the capital
securities described in note 15E, capital securities dividends declared in 2002
were recorded as part of the minority interest in the consolidated income
statements under both Mexican and U.S. GAAP. As a result of the adoption of
SFAS 150 during 2003, capital securities dividends declared in 2003 were
classified as interest expense. During 2004, as a result of newly issued
Mexican GAAP effective January 1, 2004, this transaction was treated as
financial debt until its liquidation; consequently, dividends declared in 2004
were recorded as interest expense under both Mexican and U.S. GAAP.

U.S. GAAP adjustments on minority interest

Under Mexican GAAP, 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(o)). At December 31, 2003 and 2004, the amount presented in the
reconciliation of stockholders' equity to U.S. GAAP includes the
reclassification previously mentioned, as well as the share on minority
interest of the adjustments to U.S. GAAP determined in the consolidated
subsidiaries.

(f)  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 Mexican GAAP purposes, CEMEX has
maintained this accounting practice due to tax consequences in Colombia arising
from a change

                                     F-51


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


in methodology and the immateriality of the effects in CEMEX's consolidated
results. 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, 2002, 2003 and 2004, income of Ps13.8, Ps51.4 and Ps19.1,
respectively, were reflected in the reconciliation of net income to U.S. GAAP.

 (g) 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 is considered to be possible but not probable,
the accruals under Mexican GAAP were reversed for U.S. GAAP purposes. During
2003 and 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, CEMEX has evaluated
certain previously created accruals and determined to reverse them under
Mexican GAAP. The amount presented in the reconciliation of net income to U.S.
GAAP in 2004 corresponds to the reversal of the adjustment made in prior years
under U.S. GAAP.

 (h) Affiliated Companies

CEMEX has adjusted its investment and equity method in affiliated companies
(note 9A) for CEMEX's share of the approximate U.S. GAAP adjustments applicable
to these affiliates.

(i)  Inflation Adjustment of Machinery and Equipment

For purposes of the reconciliation to U.S. GAAP, fixed assets of foreign origin
are restated by applying the inflation rate of the country that holds the
assets, regardless of the assets' origin countries, instead of using the
Mexican GAAP methodology, under which a fixed asset of foreign origin is
restated by applying a factor that considers the inflation of the asset's
origin country, not the inflation of the country that holds the asset, and the
fluctuation of the functional currency (currency of the country that holds the
asset) against the currency of the asset's origin country. Depreciation expense
is based upon the revised amounts.

(j)  Temporary Equity from Forward Contracts

During 1999, CEMEX entered into equity forward in its own ADSs with an original
maturity in December 2002, in connection with its appreciation warrants (notes
15F and 17A). In December 2002, prior to their expiration, CEMEX renegotiated
the extension of the contracts until December 2003 and recognized a loss of
approximately U.S$98.3 million (Ps1,173.7) within stockholders' equity under
Mexican GAAP, representing the difference between the cash redemption amount of
the contracts and the market value of the underlying shares at origination of
the agreements. The counterparties deducted the Company's loss amount from the
prepayments made by CEMEX toward the forward contracts' final price. The
renewed contracts were settled during October 2003 in connection with a
secondary equity offering (note 17A), resulting in a gain of approximately
U.S.$19.5 million (Ps232.9), recognized in stockholders' equity under Mexican
GAAP. For Mexican GAAP purposes, since origination, the forward contracts were
treated as equity transactions and gains or losses were recognized upon
settlement or extension as an adjustment to stockholders' equity. During the
life of the contracts, the difference between the proceeds from the ADSs sale
and the forward price, which was periodically paid to the counterparties, was
treated as a prepayment toward the forward contracts' final price and was
presented as other accounts receivable. Such prepayments were also treated as
preferred dividends in the reconciliation of net income to U.S. GAAP, in a
manner similar to a mandatorily redeemable preferred stock, representing an
expense of approximately Ps567.0 in 2002 and income of Ps780.4 in 2003. The
amount of income in 2003 includes: (i) a net gain of U.S.$19.5 million from the
secondary equity offering; (ii) income of U.S.$101.7 million from the reversal
of prepayments accrued until settlement that were recognized as preferred
dividends during the life of the contracts and that were not realized as a
result of the offering and settlement; and (iii) expense of U.S.$6.4 million
from prepayments made in 2003 treated as preferred dividends. The loss of
U.S.$98.3 million and the gain of U.S.$19.5 million recognized in stockholders'
equity under Mexican GAAP in 2002 and 2003, respectively, were not reclassified
through net income in the reconciliation to U.S. GAAP, since such amounts were
periodically charged to earnings under U.S. GAAP as part of the preferred
dividends.

(k)  Other U.S. GAAP Adjustments

Capitalization of costs of computer software development--Under U.S. GAAP,
certain direct costs related to the development stage or purchase of
internal-use software are capitalized and amortized over the estimated useful
life of

                                     F-52


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


the software. Costs related to the preliminary project stage and the
post-implementation/operations stage are expensed as incurred.

Beginning in 2001, CEMEX implemented the policy of capitalizing the direct
costs associated with developing and implementing of internal-use software
(note 11) resulting in a capitalization under Mexican GAAP for the years ended
December 31, 2002, 2003 and 2004 of U.S.$90.1 million (Ps1,097.8), U.S.$11.3
million (Ps134.9) and U.S.$9.9 million (Ps110.3), respectively. The estimated
average useful lives period to amortize these capitalized costs is between 3
and 5 years. As a result, in the reconciliation of net income to U.S. GAAP for
the years ended December 31, 2002, 2003 and 2004, the reconciling item refers
exclusively to the amortization of the capitalized amount under U.S. GAAP until
December 2000, which led to expenses of Ps214.5 in 2002, Ps366.3 in 2003 and
Ps27.7 in 2004, respectively, with a net effect of income in the stockholders'
equity reconciliation to U.S. GAAP at December 31, 2003 of Ps26.8.

Deferred charges--Capitalized costs, net of accumulated amortization, that did
not qualify for deferral under U.S. GAAP were reversed through earnings under
U.S. GAAP in the period incurred, resulting in expense of Ps306.4 in 2002,
income of Ps95.3 in 2003 and income of Ps89.6 in 2004. During 2003 and 2004,
all amounts capitalized under Mexican GAAP also met the requirements for
capitalization under U.S. GAAP. Accordingly, the reconciliation of net income
to U.S. GAAP for the years ended December 31, 2003 and 2004 only includes
amounts amortized under Mexican GAAP during the respective year and which were
expensed in prior years under U.S. GAAP. The net effect in the reconciliation
of stockholders' equity to U.S. GAAP was a decrease of Ps510.0 and Ps396.7 at
December 31, 2003 and 2004, respectively.

Asset Retirement Obligations and Other Environmental Costs--Effective January
1, 2003, SFAS 143, Accounting for Asset Retirement Obligations ("SFAS 143"),
requires entities to record the fair value of an asset retirement obligation as
a liability in the period in which incur a legal or constructive obligation
associated with the retirement of tangible long-lived assets that result from
the acquisition, construction, development, and/or normal use of the assets.
Such liability would be recorded against an asset that is depreciated over the
life of the long-lived asset. Subsequent to the initial measurement, the
obligation will be adjusted at the end of each period to reflect the passage of
time and changes in the estimated future cash flows underlying the obligation.
Also effective January 1, 2003, Mexican GAAP's Bulletin C-9 established
basically the same requirement as SFAS 143. The difference between Mexican GAAP
and U.S. GAAP on this item relates to the recognition of the cumulative initial
effect from adoption, which under SFAS 143 was recognized in earnings after net
income, while under Mexican GAAP it was recognized in stockholders' equity.
Accordingly, the reconciling item presented in the reconciliation of net income
to U.S. GAAP includes the reclassification of the cumulative effect from
adoption from stockholders' equity under Mexican GAAP to net income under U.S.
GAAP (notes 3V and 13).

As mentioned in note 3V, during 2003, an asset retirement liability was
recorded in the amount of approximately Ps537.2, against fixed assets of
Ps388.1, deferred IT assets of Ps58.0 and an initial cumulative effect of
Ps91.1, recorded in stockholders' equity under Mexican GAAP and in earnings
under U.S. GAAP.

In addition, environmental expenditures related to current operations are
expensed or capitalized, as appropriate. Other than those contingencies
disclosed in notes 13 and 22G, CEMEX is not currently facing other material
contingencies, which might result in the recognition of an environmental
remediation liability.

Monetary position result--Monetary position result of the U.S. GAAP adjustments
is determined by (i) applying the annual inflation factor to the net monetary
position of the U.S. GAAP adjustments at the beginning of the period, plus (ii)
the monetary position effect of the adjustments during the period, determined
in accordance with the weighted average inflation factor for the period.

Reclassifications--Non-cement related assets (note 8) of Ps420.3 and Ps577.7,
as of December 31, 2003 and 2004, respectively, were reclassified to long-term
assets for purposes of the condensed financial information under U.S. GAAP in
note 24(o). These assets are stated at their estimated fair value. Estimated
costs to sell these assets are not significant.

(l)  Financial Instruments

Derivative Financial Instruments (notes 3N, 12 and 17)

Under U.S. GAAP, all derivative instruments, including derivative instruments
embedded in other contracts, should be recognized in the balance sheet as
assets or liabilities at their fair values and changes in fair value are
recognized

                                     F-53


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


immediately in earnings, unless the derivatives qualify as hedges of future
cash flows, in which case the effective portion of such changes in fair value
is recorded temporarily in equity, and then recognized in earnings along with
the related effects of the hedged items. Any ineffective portion of a hedge is
reported in earnings as it occurs. Mexican GAAP, through Bulletin C-2 (note
3N), establishes a methodology similar to that of U.S. GAAP (SFAS 133,
Derivative Instruments and Hedging Activities). The differences between SFAS
133 and Bulletin C-2 relate to the rules for hedge accounting. SFAS 133
provides specific rules for hedge accounting, while under Bulletin C-2, hedge
accounting is based solely on an entity's intention and designation, providing
that the underlying hedged asset or liability is already recognized in the
balance sheet. Bulletin C-2 does not provide guidance for hedging forecasted
transactions, for cash flow hedges, for derivative instruments by an entity in
its own equity and, for hedges of an entity's net investment in its foreign
subsidiaries. Accordingly, such instruments have been accounted for by CEMEX in
accordance with SFAS 133 or with other U.S. GAAP accounting pronouncements, as
appropriate. Fair value hedges, as defined by SFAS 133, were precluded by
Mexican GAAP until December 31, 2004, since it was not permitted to record
primary hedged instruments at fair value (note 23).

At December 31, 2003 and 2004, the differences in derivative instruments' hedge
accounting between Mexican and U.S. GAAP, as they relate to CEMEX, led to an
adjustment in the reconciliation of net income to U.S. GAAP, and a
reclassification in the condensed financial information under U.S. GAAP in note
24(o), which are explained as follows:

o In connection with the fair value recognition of the derivatives related to
  the Company's acquisition of RMC (note 17B); under Mexican GAAP, CEMEX
  designated such derivatives as hedge of the variability in cash flows
  associated with exchange fluctuations between the U.S. dollar, the currency
  in which CEMEX obtained the funds to purchase, and the British pound, the
  currency in which the firm commitment was established. As a result of this
  designation, the Company recognized in stockholders' equity, the changes in
  fair value of the derivatives from the designation date that took place on
  November 17, 2004 until December 31, 2004, and which represented a gain of
  approximately U.S.$132.1 million (Ps1,471.6). This gain was reclassified to
  earnings under Mexican GAAP in March 2005, the date when the purchase
  occurred. For purposes of the reconciliation of net income to U.S. GAAP, this
  gain was reclassified from stockholders' equity to earnings in 2004, as SFAS
  133, does not permit to establish a cash flow hedging relationship in a
  transaction that involves a business combination.

o As discussed in note 12B, as of December 31, 2003 and 2004, related to the
  estimated fair value of Cross Currency Swaps ("CCS"), CEMEX recognized net
  assets of U.S.$262.0 million (Ps3,128.7) and U.S.$208.5 million (Ps2,322.7),
  respectively. Under U.S. GAAP, these amounts do not qualify for net
  presentation and thus have been presented as gross amounts for purposes of
  the condensed financial information under U.S. GAAP presented in note 24(o).
  As a result, under U.S. GAAP at December 31, 2003, in respect to the portion
  of the estimated fair value attributable to changes in the exchange rates,
  short-term and long-term debt increased U.S.$171.9 million (Ps2,052.8),
  including prepayments, against current and non-current assets; while in
  respect of the portion of the estimated fair value attributable to accrued
  interest, current liabilities increased U.S.$12.2 million (Ps145.7) against
  current assets. At December 31, 2004, in respect to the portion of the
  estimated fair value attributable to changes in the exchange rates,
  short-term and long-term debt increased U.S.$131.8 million (Ps1,468.3),
  including prepayments, against current and non-current assets; while in
  respect of the portion of the estimated fair value attributable to accrued
  interest, current liabilities increased U.S.$10.9 million (Ps121.4) against
  current assets.

See note 24(m) for changes in accounting principles regarding CEMEX's equity
forward contracts in its own shares due to the adoption of SFAS 150. All
derivative instruments, with the exceptions described above and the equity
forwards described in notes 24(j) and 24(m), entered into by CEMEX and
disclosed in notes 12 and 17, were accounted under Mexican GAAP consistently
with the provisions of U.S. GAAP.

For all hedging relationships for accounting purposes, CEMEX formally documents
the hedging relationship and its risk-management objective and strategy for
undertaking the hedge, the hedging instrument, the hedged item, the nature of
the risk being hedged, how the hedging instrument's effectiveness in offsetting
the hedged risk will be assessed, and a description of the method of measuring
ineffectiveness. This process includes linking all derivatives that are
designated as cash-flow or foreign-currency hedges to specific assets and
liabilities on the balance sheet or to specific firm commitments or forecasted
transactions.

As of December 31, 2003 and 2004, CEMEX has not designated any derivative
instrument as a fair value hedge for accounting purposes under both Mexican
GAAP and U.S. GAAP. CEMEX also formally assesses, both at the hedge's
origination and on an ongoing basis, whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in cash flows
of hedged items. When it is determined that a derivative is not highly
effective as a

                                     F-54


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


hedge or that it has ceased to be a highly effective hedge, CEMEX discontinues
hedge accounting prospectively.

Fair Value of Financial Instruments

The carrying amount of cash, trade accounts receivable, other accounts
receivable, trade accounts payable, other accounts payable and accrued expenses
and short-term debt, approximates fair value because of the short-term maturity
of these financial assets and liabilities.

Marketable securities and long-term investments are accounted for at fair
value, which is based on quoted market prices for these or similar instruments.

The carrying value of CEMEX's long-term debt and the related fair value based
on quoted market prices for the same or similar instruments or on current rates
offered to CEMEX for debt of the same remaining maturities (or determined by
discounting future cash flows using borrowing rates currently available to
CEMEX) at December 31, 2004 is summarized as follows:




                  At December 31, 2004                                     Estimated fair
                                                          Carrying amount       value
                                                          ---------------  --------------
                                                                       
Bank loans.......................................    Ps       30,302.4       30,304.0
Notes payable....................................             30,412.3       32,994.8
                                                          ---------------  --------------


As discussed in notes 3D and 15D, CEMEX has designated certain debt as hedges
of its investment in foreign subsidiaries and, for Mexican GAAP purposes,
records foreign exchange fluctuations on such debt in stockholders' equity. For
purposes of the U.S. GAAP net income reconciliation, expense of Ps2,693.0 in
2002, and expense of Ps871.3 in 2003 and income of Ps184.3 in 2004, were
recognized as foreign exchange results since the related debt did not meet the
conditions for hedge accounting purposes, given that the currencies involved do
not move in tandem.

(m)  Financial Instruments with Characteristics of both Liabilities and Equity

In May 2003, the FASB issued SFAS 150, which requires an issuer to classify
financial instruments as liabilities (or assets under certain circumstances)
when they meet the following criteria: (i) a financial instrument issued in the
form of shares that is mandatorily redeemable, through the unconditional
obligation of transferring its assets at a specified or determinable date (or
dates) or upon an event that is certain to occur; (ii) a financial instrument,
other than an outstanding share, that, at origination, embodies an obligation
to repurchase the issuer's equity shares, or is indexed to such an obligation,
and that requires or may require the issuer to settle the obligation by
transferring assets (for example, a forward purchase contract or written put
option on the issuer's equity shares that is to be physically settled or net
cash settled); and (iii) a financial instrument that embodies an unconditional
obligation, which the issuer must or may settle by issuing a variable number of
its equity shares if, at origination, the monetary value of the obligation is
based solely or predominantly in a fixed monetary amount known at origination,
if variations are based on something other than the fair value of the issuer's
equity shares, or if variations are inversely related to changes in the fair
value of the issuer's equity shares. SFAS 150 is effective for all transactions
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003.

Under SFAS 150, mandatorily redeemable instruments must be classified as a
liability and initially measured at fair value against equity. Equity forward
contracts that require physical settlement by repurchase of a fixed number of
the issuer's equity shares in exchange for cash are measured initially at the
fair value of the shares at origination, adjusted for any consideration or
unstated rights or privileges, against equity. Subsequently, those instruments
should be measured at the net present value of the amount to be paid at
settlement, accruing interest cost using the rate implicit at origination.
Other instruments within the scope of SFAS 150 shall be initially measured at
fair value with subsequent changes in fair value recognized in earnings as
interest expense. SFAS 150 was adopted presenting the cumulative effect of a
change in an accounting principle for financial instruments created before the
issuance date of the Statement. Restatement is not permitted.

Mandatorily Redeemable Instruments

As described in notes 15E and 24(e), CEMEX held capital securities for the
outstanding amount of U.S.$66 million (Ps735.2) at December 31, 2003 that were
liquidated in October 2004. The capital securities were a mandatorily

                                     F-55


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


redeemable financial instrument, presented under minority interest under
Mexican GAAP. For the year ended December 31, 2002, capital securities
dividends were recognized in the income statement within minority interest for
both Mexican GAAP and U.S. GAAP. As a result of the adoption of SFAS 150, for
purposes of the reconciliation of stockholders' equity to U.S. GAAP as of
December 31, 2003, capital securities were recognized at their outstanding
amount (equivalent to fair value) as a separate component within liabilities
(note 24(o)), for approximately Ps735.2 (U.S.$66 million) against minority
interest, which is considered a component of consolidated stockholders' equity
under Mexican GAAP. In the condensed financial information under U.S. GAAP in
note 24(o) for the year ended December 31, 2003, capital securities dividends
in the income statement were reclassified from minority interest under Mexican
GAAP to a separate item of interest expense under U.S. GAAP (note 15E).

Equity Forward Contracts in CEMEX's own Shares

As described in notes 16 and 17A, as of December 31, 2003 and 2004, CEMEX held
equity forward contracts negotiated to hedge future exercises under its stock
option programs, for notional amounts of U.S.$789.3 million and U.S.$1,112
million, respectively. Since January 1, 2001, under Mexican GAAP, these forward
contracts, which can be physically or net cash settled at CEMEX's option, have
been recognized at their estimated fair value as assets or liabilities in the
balance sheet and changes in fair value have been recorded in earnings for the
years ended December 31, 2002, 2003 and 2004. The accounting treatment given to
these contracts since 2001 is consistent with SFAS 150 and, therefore, with
respect to these forwards, no reconciling adjustments are required pursuant to
the implementation of the Statement.

In addition, as of December 31, 2003 and 2004, CEMEX held other equity forward
contracts (note 17A), for notional amounts of U.S.$295.7 million and U.S.$45.2
million, respectively, which can be physically or net cash settled at CEMEX's
option and which are considered as equity transactions under Mexican GAAP.
For U.S. GAAP. Until December 31, 2002, the effects of these contracts were
recognized upon settlement as an adjustment to stockholders' equity and no
periodic recognition was made. Under SFAS 150, these instruments should be
initially recognized at their estimated fair market value as assets or
liabilities in the balance sheet and subsequent changes in fair value should be
recorded in earnings, with the cumulative effect of adoption recognized as an
adjustment to net income. CEMEX adopted SFAS 150 as of June 30, 2003 and, as a
result, for purposes of the reconciliations of stockholders' equity and net
income to U.S. GAAP as of and for the year ended December 31, 2003, a net
liability of approximately U.S.$11.6 million (Ps138.5) was recognized against
the cumulative effect from the change in accounting principle, which
represented an expense of approximately U.S.$49.1 million (Ps585.7) and a gain
related to changes in fair value during 2003 amounting to approximately
U.S.$36.9 million (Ps440.9).

Related to the equity forwards in the Company's own, during 2004, upon
settlement of several contracts, CEMEX recognized a gain of approximately
U.S.$38.6million (Ps430.3) under Mexican GAAP within stockholders' equity.
Under U.S. GAAP, instruments with a variety of settlement options should be
marked to market through earnings; accordingly, the gain recognized under
Mexican GAAP was reclassified to earnings under U.S. GAAP. The reclassification
under U.S. GAAP had no effect on stockholders' equity.

There are no other instruments subject to SFAS 150 other than those previously
described.

(n)  Supplemental Debt Information

At December 31, 2003 and 2004, due to CEMEX's ability and its intention to
refinance short-term debt with the available amounts of the committed long-term
lines of credit, U.S.$395 million (Ps4,716.8) and U.S.$847.2 million
(Ps9,438.1), respectively, were reclassified from short-term debt to long-term
debt under Mexican GAAP (note 12). For purposes of the condensed balance sheets
under U.S. GAAP in note 24(o), this reclassification was reversed given that
under U.S. GAAP the reclassification is precluded when the long-term agreements
contain "Material Adverse Events" clauses, which in the case of CEMEX are
customary covenants.

(o)  Condensed Financial Information under U.S. GAAP

The following table presents consolidated condensed income statements for the
years ended December 31, 2002, 2003 and 2004, prepared under U.S. GAAP, and
includes all differences described in this note as well as certain other
reclassifications required for purposes of U.S. GAAP:

                                     F-56


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)




                                                                                      Years ended December 31,
                                                                              ------------------------------------------
Statements of income                                                              2002          2003          2004
                                                                              ------------- ------------- --------------
                                                                                                    
Net sales..................................................................Ps    73,648.6      84,046.9      89,857.0
Gross profit...............................................................      31,806.8      35,058.2      37,900.7
Operating income...........................................................      11,903.8      14,339.9      16,511.5
Comprehensive financial result.............................................      (6,461.9)     (2,988.6)      3,858.3
Other expenses, net........................................................      (1,049.8)     (1,183.2)     (1,077.3)
Income tax (including deferred)............................................       1,729.4      (1,171.3)     (1,635.2)
Equity in income of affiliates.............................................         497.5         564.6         572.7
                                                                              ------------- ------------- --------------
Consolidated net income....................................................       6,619.0       9,561.4      18,230.0
Minority interest net income...............................................         436.7         166.6         264.6
                                                                              ------------- ------------- --------------
Majority interest net income before cumulative effect of accounting change.       6,182.3       9,394.8      17,965.4
Cumulative effect of accounting change.....................................           -          (675.2)          -
                                                                              ------------- ------------- --------------
Majority interest net income...............................................Ps     6,182.3       8,719.6      17,965.4
                                                                              ============= ============= ==============


The following table presents consolidated condensed balance sheets at December
31, 2003 and 2004, prepared under U.S. GAAP, including all differences and
reclassifications as compared to Mexican GAAP described in this note 24:




                                                                                              At December 31,
                                                                                     ----------------------------------
   Balance sheets                                                                          2003             2004
                                                                                     ------------------  --------------
                                                                                                       
   Current assets.................................................................Ps        21,975.2         24,545.6
   Investments and non-current assets.............................................          10,013.6         21,113.1
   Property, machinery and equipment..............................................         112,670.2        109,542.3
   Deferred charges...............................................................          51,680.5         51,158.4
                                                                                     ------------------  --------------
       Total assets...............................................................         196,339.5        206,359.4
                                                                                     ==================  ==============
   Current liabilities............................................................          37,971.9         36,239.7
   Long-term debt.................................................................          47,204.0         43,639.4
    Shares subject to mandatory redemption:
       Putable capital securities (see note 15E)..................................             781.8         -
   Other non-current liabilities..................................................          29,716.0         29,310.9
                                                                                     ------------------  --------------
       Total liabilities..........................................................         115,673.7        109,190.0
                                                                                     ------------------  --------------
       Minority interest..........................................................           5,711.2          4,536.4
                                                                                     ------------------  --------------
       Stockholders' equity including cumulative effect of accounting change......          74,954.6         92,633.0
                                                                                     ==================  ==============
       Total liabilities and stockholders' equity.................................Ps       196,339.5        206,359.4
                                                                                     ==================  ==============


The prior period amounts presented in the tables above were restated to
constant pesos as of December 31, 2004 using the Mexican inflation rate in
order to comply with current requirements of Regulation S-X, instead of the
weighted average inflation factor used by CEMEX under Mexican GAAP (see note
3B).

(p)  Supplemental Cash Flow Information Under U.S. GAAP

Under Mexican GAAP, statements of changes in financial position identify the
sources and uses of resources based on the differences between beginning and
ending financial statements in constant pesos. Monetary position results and
unrealized foreign exchange results are treated as cash items in the
determination of resources provided by operations. Under U.S. GAAP (SFAS 95),
statements of cash flows present only cash items and exclude non-cash items.
SFAS 95 does not provide any guidance with respect to inflation-adjusted
financial statements. The differences between Mexican GAAP and U.S. GAAP in the
amounts reported is primarily due to (i) the elimination of inflationary
effects of monetary assets and liabilities from financing and investing
activities against the corresponding monetary position result in operating
activities, (ii) the elimination of foreign exchange results from financing and
investing activities against the corresponding unrealized foreign exchange
result included in operating activities and (iii) the recognition in operating,
financing and investing activities of the U.S. GAAP adjustments.

The following table summarizes the cash flow items as required under SFAS 95
provided by (used in) operating, financing and investing activities for the
years ended December 31, 2002, 2003 and 2004, giving effect to the U.S. GAAP
adjustments, excluding the effects of inflation required by Bulletin B-10 and
Bulletin B-15. The following information is presented in millions of pesos on a
historical peso basis and is not presented in pesos of constant purchasing
power:

                                     F-57


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)




                                                                                   Years ended December 31,
                                                                         ----------------------------------------------
                                                                              2002           2003            2004
                                                                         --------------- -------------- ---------------
                                                                                                    
Net cash provided by operating activities........................... Ps        9,526.4         9,771.8       21,884.3
Net cash used in financing activities...............................          (1,323.7)       (4,874.0)      (3,722.7)
Net cash used in investing activities...............................          (8,380.4)       (5,419.4)     (17,733.5)
                                                                         =============== ============== ===============


Net cash flow from operating activities reflects cash payments for interest and
income taxes as follows:



                                                                                   Years ended December 31,
                                                                         ----------------------------------------------
                                                                              2002           2003            2004
                                                                         --------------- -------------- ---------------
                                                                                                     
Interest paid....................................................... Ps        3,467.1         4,897.4        3,654.4
Income taxes paid...................................................           1,350.3           576.2        1,314.2
                                                                         =============== ============== ===============


Non-cash activities are comprised of the following:

Liabilities assumed through the acquisition of businesses were Ps1,873.7 in
2002 and Ps137.8 in 2003. In 2004, in connection with the acquisition of the
18.8% equity interest in RMC (see note 9A) and other minor acquisition during
the year, new financings and other liabilities for approximately U.S.$835.7
million (Ps9,309.7) were assumed.

(q)  Restatement to Constant Pesos of Prior Years

The following table presents summarized financial information under Mexican
GAAP of the consolidated income statements for the years ended December 31,
2002 and 2003 and balance sheet information as of December 31, 2003, in
constant Mexican pesos as of December 31, 2004, using the Mexican inflation
index:



                       Years ended December 31,                                     2002                  2003
                                                                             --------------------  --------------------
                                                                                                      
   Sales...............................................................  Ps           74,348.3              84,868.1
   Gross profit........................................................               32,811.4              35,944.3
   Operating income....................................................               14,889.9              17,238.2
   Majority interest net income........................................                5,911.7               7,448.3
                                                                             ====================  ====================
                            At December 31,                                                               2003
                                                                                                   --------------------
   Current assets......................................................                         Ps          21,635.2
   Non-current assets..................................................                                    168,085.1
   Current liabilities.................................................                                     33,515.9
   Non-current liabilities.............................................                                     76,053.7
   Majority interest stockholders' equity..............................                                     73,849.1
   Minority interest stockholders' equity..............................                                      6,301.6
                                                                                                   ====================


(r)  Stock Option Programs

For financial reporting under Mexican GAAP, CEMEX accounts for its stock option
programs (note 16) using a methodology that is consistent with the rules set
forth in APB Opinion No. 25, Accounting for Stock Issued to Employees ("APB
25") under U.S GAAP. According to APB 25, compensation cost should be
determined under the intrinsic cost method, which represents the difference
between the strike price and the market price of the stock at the reporting
date, for all plans that do not meet the following characteristics: (i) the
exercise price established in the option is equal to the quoted market price of
the stock at the measurement date, (ii) the exercise price is fixed for the
option's life, and (iii) the option's exercise is hedged through the issuance
of new shares of common stock. After considering these characteristics, no
compensation cost is recognized for the fixed program (note 16C), while
compensation cost is periodically determined, beginning in 2001, for the
variable program (note 16B) and the voluntary programs (note 16E), beginning in
2002, for the special program (note 16D), and beginning in 2004, for the
restricted program.

Stock options activity during 2003 and 2004, the balance of options outstanding
at December 31, 2003 and 2004 and other general information regarding CEMEX's
stock option programs is presented in note 16. The availability of CPOs for the
potential future exercise of the programs is hedged through equity forward
contracts in CEMEX's own stock (note 17A).

                                     F-58


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Under U.S. GAAP, SFAS 123, Accounting for Stock-Based Compensation, requires
compensation cost for stock option plans to be determined based on the options'
fair value at the grant date, using a qualified option-pricing model, and
recorded in results of operations during the options' vesting period, after
which no further recognition is required.

Had compensation cost be determined under SFAS 123, based on the fair value of
stock options at the grant date using an option pricing model, CEMEX's net
income and earnings per share would have been as follows:




             For the year ended December 31, 2002                   Special     Variable      Voluntary
                                                                    program      program      programs        Total
                                                                  ------------  -----------  ------------ --------------
                                                                                               
Net income, as reported (Mexican GAAP)........................Ps                                               6,339.2
   Cost of options granted according to SFAS 123..............          (9.9)       (186.3)       (21.0)        (217.2)
   Reversal of cost recognized under APB 25 3.................           -             -           60.9           60.9
                                                                  ------------  -----------  ------------ --------------
Approximate net income, pro forma.............................                                                 6,182.9
                                                                                                          ==============
Basic earnings per share, as reported.........................Ps                                                 1.41
                                                                                                          --------------
Basic earnings per share, pro forma...........................Ps                                                 1.37
                                                                                                          ==============

             For the year ended December 31, 2003                   Special     Variable      Voluntary
                                                                    program      program      programs        Total
                                                                  ------------  -----------  ------------ --------------
Net income, as reported (Mexican GAAP)........................Ps                                               7,508.4
   Cost of options granted according to SFAS 123 1............         (14.6)       (184.2)         -           (198.8)
   Reversal of cost recognized under APB 25 3.................          62.9         389.1         31.2          483.2
                                                                  ------------  -----------  ------------ --------------
Approximate net income, pro forma.............................                                                 7,792.8
                                                                                                          ==============
Basic earnings per share, as reported.........................Ps                                                 1.58
                                                                                                          --------------
Basic earnings per share, pro forma...........................Ps                                                 1.65
                                                                                                          ==============

       For the year ended December 31, 2004            Restricted      Special     Variable     Voluntary
                                                         program       program      program     programs       Total
                                                                     ------------ ------------ ------------ ------------
Net income, as reported (Mexican GAAP).............Ps                                                         14,562.3
   Cost of options granted according to SFAS 123 2.      (1,366.7)        (23.0)        (1.2)         -      (1,390.9)
   Reversal of cost (income) under APB 25 3........         224.6         159.7       (240.6)       (84.5)        59.2
                                                       ------------  ------------ ------------ ------------ ------------
Approximate net income, pro forma..................                                                           13,230.6
                                                                                                          ==============
Basic earnings per share, as reported..............Ps                                                            2.92
                                                                                                            ------------
Basic earnings per share, pro forma................Ps                                                            2.65
                                                                                                          ==============


1    The cost of the voluntary program granted in 2003 under the fair value
     approach (SFAS 123) amounting to approximately Ps227.4 is not presented,
     since net income under Mexican GAAP includes the liquidation cost of
     approximately Ps740.3 related to such program, which was fully exercised
     during the year (note 16 E).

2    As a result of the early exercise in December 2004, CEMEX recognized a
     liquidation cost of approximately U.S.$61.1 million (Ps680.7) related to
     options redeemed from old programs (note 16), including those of the
     variable program granted in February 2004 and those of the restricted
     program initiated also in February 2004, of which approximately 99.6% and
     98.5% were exercised, respectively. Consequently, the pro forma expense
     under SFAS 123 includes approximately U.S.$0.1 million (Ps1.2) related to
     the variable program and U.S.$2.1 million (Ps23.2) related to the
     restricted program, corresponding to the 0.4% and 1.5% of options under
     these programs, respectively, that were not exercised.

3   The amount of expense (income) recognized under Mexican GAAP and reversed
    for purposes of the pro forma disclosure under U.S. GAAP, reflects only the
    change between the initial balance and the year-end balance of the
    provision created for under the intrinsic value method, and do not include
    amounts expensed in actual exercises or liquidations. Amounts expensed are
    included in earnings under Mexican GAAP and are not reversed for U.S. GAAP
    disclosure purposes.

                                     F-59


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The assumptions for the valuation model for the options granted during each
year were as follows:



                                                                2002           2003            2004
                                                            ============== ==============  ==============
                                                                                       
Expected dividend yield.....................................     2%             2%              2%
Volatility..................................................     25%            25%             25%
Range of risk free interest rates........................... 3.6% - 4.8%    3.7% - 4.5%     4.0% - 4.6%
Weighted average tenure.....................................  9.8 years       7 years         8 years
                                                            -------------- --------------  --------------


(s)  Impairment of Long Lived Assets

As mentioned in note 24(a), effective January 1, 2002, CEMEX adopted SFAS 142,
which eliminates the amortization of goodwill and of indefinite-lived
intangible assets, addresses the amortization of intangible assets with finite
lives, the impairment testing and the recognition of goodwill and other
intangible assets acquired in business combinations. Likewise, effective
January 1, 2002, CEMEX adopted SFAS 144, which establishes a single model for
the impairment of long-lived assets and broadens the presentation of
discontinued operations to include disposal of an individual business.

As a result of such adoption under U.S. GAAP, CEMEX ceased the amortization of
the goodwill balances determined at December 31, 2001; however, such amounts
remain subject to impairment evaluations. During the first half of 2002, in
connection with SFAS 142's transitional goodwill impairment evaluation, which
required an assessment of whether there was an indication that goodwill was
impaired as of the date of adoption, CEMEX identified its reporting units and
determined the carrying value of each reporting unit as of January 1, 2002, by
assigning the assets and liabilities, including the existing goodwill and
intangible assets, to those reporting units. CEMEX also determined the fair
value of each reporting unit and compared it to their related carrying amounts.
Fair value of the reporting units exceeded in each case the corresponding
carrying amount and, therefore, no impairment charges resulted from the
transitional evaluation performed on the recorded goodwill as of January 1,
2002. For the years ended December 31, 2002, 2003 and 2004, goodwill under
Mexican GAAP continued to be an amortizable intangible asset. 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 are also the reporting units under SFAS 142 for
purposes of assessing fair value in determining potential impairment at
transition and in future periods.

Under U.S. GAAP, CEMEX assesses goodwill and indefinite-lived intangibles for
impairment annually unless events occur that require more frequent reviews.
Long-lived assets, including amortizable intangibles, are tested for impairment
if impairment triggers occur. Discounted cash flow analyses are used to assess
the possible impairment of both amortizable and non-amortizable intangible
assets, while undiscounted cash flow analyses are used to assess long-lived
asset impairment. If an assessment indicates impairment, the impaired asset is
written down to its fair value based on the best information available. The
useful lives of amortizable intangibles are evaluated periodically, and
subsequent to impairment reviews, to determine whether revision is warranted.
If cash flows related to a non-amortizable intangible are not expected to
continue for the foreseeable future, a useful life is assigned. Considerable
management judgment is necessary to estimate undiscounted and discounted future
cash flows. Assumptions used for these cash flows are consistent with internal
forecasts and industry practices. For the years ended December 31, 2002, 2003
and 2004, there were no impairment charges under U.S. GAAP in addition to those
described in notes 10 and 11, which were recorded under Mexican GAAP, as
CEMEX's policy for impairment is consistent with U.S. GAAP.

                                     F-60


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Approximate goodwill by reporting unit under U.S. GAAP is summarized as
follows:



                                                                                       Inflation and
                                   December 31,        Goodwill         Impairment        currency        December 31,
                                       2002          acquired (1)        charges       fluctuation (2)       2003
                                  ----------------  ---------------   ---------------  ---------------   --------------
                                                                                             
United States................ Ps       15,760.5            212.7               -            1,075.1        17,048.3
Mexico.......................           6,621.0              -                 -                -           6,621.0
Spain........................           9,219.1              -                 -            2,592.1        11,811.2
Colombia.....................           3,421.1              -                 -              481.7         3,902.8
The Philippines..............           1,918.3                             (568.6)                         1,394.9
                                                             -                                 45.2
Dominican Republic...........             422.8                                                               348.0
                                                             -                 -             (74.8)
Thailand.....................             437.3                                                               504.8
                                                             -                 -               67.5
The Caribbean................             416.5                                                               444.1
                                                             -                 -               27.6
Venezuela....................             287.4                                                               333.8
                                                             -                 -               46.4
Egypt........................             299.6                                                               245.7
                                                             -                 -             (53.9)
Costa Rica...................             302.8                                                               325.5
                                                             -                 -               22.7
Other reporting units (3)....           1,346.5                             (360.8)                         1,466.6
                                                             -                                480.9
Affiliates (note 9A).........             582.6                                                               590.6
                                                             -                 -                8.0
                                  ----------------  ---------------   ---------------  ---------------   --------------
                              Ps       41,035.5            212.7            (929.4)         4,718.5        45,037.3
                                  ================  ===============   ===============  ===============   ==============

                                                                                       Inflation and
                                                                                          currency
                                   December 31,        Goodwill         Impairment       fluctuation      December 31,
                                       2003          acquired (1)        charges            (2)              2004
                                  ----------------  ---------------   ---------------  ---------------   --------------
United States................ Ps       17,048.3            100.3               -            (500.9)         16,647.7
Mexico.......................           6,621.0              -                 -                -            6,621.0
Spain........................          11,811.2              -                 -              555.2         12,366.4
Colombia.....................           3,902.8              -                 -              616.7          4,519.5
The Philippines..............           1,394.9              -                 -              (4.7)          1,390.2
Dominican Republic...........             348.0              -                 -              118.0            466.0
Thailand.....................             504.8              -                 -              (4.9)            499.9
The Caribbean................             444.1              -                 -             (12.6)            431.5
Venezuela....................             333.8              -                 -             (22.1)            311.7
Egypt........................             245.7              -                 -              (0.4)            245.3
Costa Rica...................             325.5              -                 -             (13.7)            311.8
Other reporting units (3)....           1,466.6              -              (248.9)          (57.0)          1,160.7
Affiliates (note 9A).........             590.6              -                 -              (4.0)            586.6
                                  ----------------  ---------------   ---------------  ---------------   --------------
                              Ps       45,037.3            100.3            (248.9)           669.6         45,558.3
                                  ================  ===============   ===============  ===============   ==============


1.  During 2003 (note 9A), CEMEX acquired a raw materials supplier and a cement
    plant and quarry in the United States for a combined purchase price of
    approximately U.S.$99.7 million (Ps1,110.7). In addition, during 2004 CEMEX
    acquired a ready-mix company in the state of Georgia for approximately
    U.S.$16.7 million (Ps186.0).

2.  The amounts presented in this column include: (i) the effects on goodwill
    from foreign exchange fluctuations during the period between the reporting
    unit's currencies and the Mexican peso, and (ii) the effect of removing the
    restatement into constant pesos as of December 31, 2004 using Mexican
    inflation, applied to the goodwill balances at the beginning of the year.

3.  Other reporting units are primarily integrated by CEMEX's cement operations
    in Puerto Rico and Panama, the ready-mix concrete operations in France and
    the reporting unit engaged in software development projects.

(t) Sale of Accounts Receivable

CEMEX accounts for transfers of receivables under Mexican GAAP consistently
with the rules set forth by SFAS 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. Under SFAS 140,
transactions that meet the criteria for surrender of control are recorded as
sales of receivables and their amounts are removed from the consolidated
balance sheet at the time they are sold (note 5).

                                     F-61


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


(u)  Other Disclosures Under U.S. GAAP

Accounting for Costs Associated with Exit or Disposal Activities

Effective January 1, 2003, CEMEX adopted SFAS 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS 146, which addresses
financial accounting and reporting for costs associated with exit or disposal
activities, basically requires, as a condition to accrue for the costs related
to an exit or disposal activity, including severance payments, that the entity
communicate the plan to all affected employees and that the plan be terminated
in the short-term; otherwise, associated costs should be expensed as incurred.
As of and for the years ended December 31, 2003 and 2004, CEMEX did not
recognize any such costs related to exit or disposal activities.

Guarantor's Accounting and Disclosure Requirements for Guarantees

Effective January 1, 2003, CEMEX adopted Interpretation 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements 5,
57 and 107 and a rescission of FASB Interpretation 34, which elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees issued. The interpretation
also clarifies that a guarantor is required to recognize, at origination of a
guarantee, a liability for the fair value of the obligation undertaken. As of
December 31, 2003 and 2004, CEMEX has not guaranteed any third parties'
obligations; however, with respect to the electricity supply long-term contract
discussed in note 22F, CEMEX may also be required to purchase the power plant
upon the occurrence of specified material defaults or events, such as failure
to purchase the energy and pay when due, bankruptcy or insolvency, and
revocation of permits necessary to operate the facility. For the years ended
December 31, 2003 and 2004, for accounting purposes under Mexican GAAP and U.S.
GAAP, CEMEX has considered this agreement as a long-term supply agreement and
no liability has been created, based on the contingent characteristics of
CEMEX's obligation and given that, absent a default under the agreement,
CEMEX's obligations are limited to the purchase of energy from, and the supply
of fuel to, the plant.

Variable Interest Entities

Effective March 15, 2004, CEMEX adopted Interpretation 46R (revised December
2003), Consolidation of Variable Interest Entities, an interpretation of ARB 51
("FIN 46R"). The interpretation addresses the consolidation by business
enterprises of variable interest entities ("VIEs"), which are defined in FIN
46R as those that have one or more of the following characteristics: (i)
entities which equity investment at risk is not sufficient to finance their
operations without requiring additional subordinated financing support provided
by any parties, including the equity holders; and (ii) the equity investors
lack one or more of the following attributes: a) the ability to make decisions
about the entity's activities through voting or similar rights, b) the
obligation to absorb the expected losses of the entity, and c) the right to
reveive the expected residual returns of the entity. Among others, entities that
are deemed to be a business according to FIN 46R, including operating joint
ventures, need not be evalued to determine if they are VIE's under FIN 46R.
Variable interests, among other factors, may be represented by operating
losses, debt, contingent obligations or residual risks and may be assumed by
means of loans, guarantees, management contracts, leasing, put options,
derivatives, etc. A primary beneficiary is the entity that assumes the variable
interests of a VIE, or the majority of them in the case of partnerships,
directly or jointly with related parties, and is the entity that should
consolidate the VIE. FIN 46R applies to financial statements for periods ending
after March 15, 2004. As discussed in the preceding paragraph, CEMEX has an
electricity supply long-term contract (note 22F), through which, an
international partnership, which built and currently operates an electrical
energy generating plant, will sell to CEMEX, starting in 2004, all the energy
generated for a term of no less than 20 years. Under FIN 46R, after analysis of
the provisions of the agreements, CEMEX believes that such partnership is not a
VIE under the scope of the Interpretation, and, therefore, as of and for the
years ended December 31, 2003 and 2004, CEMEX has not consolidated any asset,
liability or operating result of such partnership.

(v)  Newly Issued Accounting Pronouncements under U.S. GAAP

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
123R, Share-Based Payment, a revision of Statement 123, "Accounting for Stock
Issued to Employees", which establishes standards for the accounting of all
share-based payment transactions, with a primary focus on schemes in which
an entity obtains employee services in share-based payment transactions, also
clarifies and expands guidance in several areas, including measuring fair

                                     F-62


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


value, classifying an award as equity or as a liability, and attributing
compensation cost to reporting periods. SFAS123R requires companies to measure
the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award and eliminates the
alternative to use APB Opinion 25's intrinsic value method of accounting,
permitted by Statement 123 as originally issued (note 24(r)), under which, upon
compliance of certain rules, issuing stock options to employees resulted in
recognition of no compensation cost.

The cost under SFAS123R should be recognized over the period during which an
employee is required to provide service in exchange for the award (usually the
vesting period). The grant-date fair value of employee share awards will be
estimated using option-pricing models, unless observable market prices for the
same or similar instruments are available.

SFAS 123R will be effective for the Company as of January 1, 2006 and will
apply to all awards granted after the required effective date and to awards
modified, repurchased, or cancelled after that date. The cumulative effect of
initially applying this statement, if any, will be recognized as of the
required effective date. As of the required effective date, entities that used
the fair-value-based method for either recognition or disclosure under
Statement 123 (note 24(r)) will apply SFAS123R using a modified version of
prospective application. Under this transition method of adoption, compensation
cost is recognized for the portion of outstanding awards for which the
requisite service has not yet been rendered, based on the grant-date fair value
of those awards calculated under Statement 123 for either recognition or pro
forma disclosures. For periods before the required effective date, entities may
elect to apply a modified version of retrospective application under which
financial statements for prior periods are adjusted on a basis consistent with
the pro forma disclosures required for those periods by Statement 123.

In connection with the adoption of SFAS 123R in 2006, if the Company elects to
grant new equity awards to employees, SFAS 123R may have a material impact in
the Company's net income under U.S. GAAP (see pro forma historical information
in footnote 24(r)). In respect to expected non-vested awards as of the adoption
date, the Company considers that their cost will not have a material effect
given that they are very few after the restructuring of employee' stock option
programs undertaken during 2004.

In December 2004, the FASB issued SFAS 151, Inventory Costs, which clarifies
the accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Under this statement, such items will be
recognized as current-period charges. In addition, the statement requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. This statement will be
effective for the Company for inventory costs incurred on or after January 1,
2006. The Company does not expect any material impact from the adoption of this
statement.

In December 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets,
which eliminates an exception in APB 29 for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. The exception
provides that those exchanges should be measured based on the recorded amount
of the nonmonetary assets relinquished, rather than on the fair values of the
exchanged assets. A nonmonetary exchange has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of
the exchange. This statement will be effective for the Company for nonmonetary
asset exchanges occurring on or after January 1, 2006. The Company does not
expect any material impact from the adoption of this Statement.

(w)  Recent Developments (unaudited)

On March 1, 2005, CEMEX completed the acquisition of RMC. The boards of
directors of CEMEX and RMC, as well as RMC shareholders, European Union and
U.S. regulators, and the High Court of Justice in England and Wales have
approved the acquisition. Considering the assumption of debt for approximately
U.S.$1.7 billion, the total purchase price of the transaction was approximately
U.S.$5.8 billion. This amount includes the acquisition of the approximately
18.8% equity interest in RMC made during 2004.

With the integration of RMC, CEMEX will enhance its position as one of the
world's largest building materials companies, with global presence in cement
and aggregates and a leading position in ready mix concrete. With the
integration of RMC, CEMEX will have an estimated production capacity of 97
million tons of cement, enhancing its position as the third largest company in
the cement industry. CEMEX, with RMC, will be the largest ready mix

                                     F-63


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


concrete company in the world, with an estimated production capacity of 77
million cubic meters of ready mix concrete. Additionally, the combined company
will become the fourth largest aggregates company in the world.

For the year ended December 31, 2004, RMC's consolidated revenues from
continuing operations, before revenues from unconsolidated joint ventures and
associated entities of approximately (pound)351.7 million, were approximately
(pound)4,121.1 million (U.S.$7,897.9 million or Ps87,982.1). From this amount,
approximately 26% was generated in the United Kingdom, 14% in Germany, 33% in
other European countries, 23% in the United States and 4% in the rest of the
world. The revenues amount was determined under U.K. GAAP, which may differ
from Mexican GAAP and U.S. GAAP. The Company is currently evaluating possible
differences between these accounting standards that may modify the disclosed
amounts but has not yet concluded its assessment.

At the 2004 annual shareholders' meeting held on April 28, 2005, in connection
with their approval of a dividend for the 2004 fiscal year, the Company's
shareholders approved an increase in the variable part of CEMEX's capital stock
through the capitalization of retained earnings in an amount up to
approximately Ps4,815.3 through the issuance of up to 240 million series A
shares and 120 million series B shares, to be represented by CPOs. The final
amount of the capital increase will be determined by the board of directors
once the final number of CPOs required to be issued in connection with the
dividend is established and will be based on the then current market price of
the CPOs on the Mexican Stock Exchange, minus the 20% discount at which those
CPOs will be issued. In addition, at the 2004 annual shareholders' meeting, our
shareholders approved the cancellation of 249,133,670 series A treasury shares
and 124,566,835 series B treasury shares.

In addition, at a general extraordinary meeting of shareholders held on April
28, 2005, CEMEX's shareholders approved a new stock split. For every one of our
series A shares, two new series A shares will be issued, and for every one of
our series B shares, two new series B shares will be issued. Concurrently with
this stock split, shareholders authorized the amendment of the CPO trust
agreement to provide for the substitution of two new CPOs for each of our
existing CPOs, each new CPO will represent two new series A shares and one new
series B share. After giving effect to the new stock split and the amendment to
the CPO trust agreement, each of our ADSs will represent ten new CPOs. The
proportional equity interest participation of the stockholders in our common
stock will not change as a result of the stock split mentioned above. Earnings
per share, the average number of shares outstanding, as well as the CPO numbers
included throughout this financial statements and related notes for the years
ended December 31, 2002, 2003 and 2004, were not adjusted to make the effect of
the stock split retroactive.

Had the per share amounts and the average number of shares been restated in
order to give retroactive effect to the stock split mentioned above, the pro
forma information would had been as follows:




                                                                           For the years ended December 31, (unaudited)
                                                                    ---------------------------------------------------------
                                                                        2002         2003         2004               2004
                                                                    ------------- ------------ ------------       -----------
                                                                                                      
Pro forma per share information under Mexican GAAP:
Basic earnings per share........................................ Ps         0.71          0.79         1.46 U.S.$        0.13
Diluted earnings per share......................................            0.71          0.78         1.45              0.13

Pro forma per share information under U.S. GAAP:
Basic earnings per share........................................ Ps         0.69          0.92         1.80 U.S.$        0.16
Diluted earnings per share......................................            0.69          0.90         1.79              0.16

Pro forma number of shares (millions):
Basic average number of shares outstanding......................        8,975         9,456           9,987           -
Diluted average number of shares outstanding....................        8,992         9,674          10,039           -


                                     F-64


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


(x)  Guaranteed debt

In June 2000, CEMEX concluded the issuance of U.S.$200 million aggregate
principal amount of 9.625% Exchange Notes due 2009 in a registered public
offering in the United States of America in exchange for U.S.$200 million
aggregate principal amount of its then outstanding 9.625% Notes due 2009. The
Exchange Notes are fully and unconditionally guaranteed, on a joint and several
basis, as to payment of principal and interest by two of CEMEX's Mexican
subsidiaries: CEMEX Mexico and ETM (see note 3C). These two companies, together
with their subsidiaries, account for substantially all of the revenues and
operating income of CEMEX's Mexican operations.

As mentioned in note 12C, as of December 31, 2003 and 2004, indebtedness of
CEMEX in an aggregate amount of U.S.$3,145 million (Ps37,555.6) and
U.S.$3,087.8 million (Ps34,398.1), respectively, is fully and unconditionally
guaranteed, on a joint and several basis, by CEMEX Mexico and ETM.

As of December 31, 2002, 2003 and 2004, CEMEX owned a 100% equity interest in
CEMEX Mexico, including, in 2002, a 0.6% equity interest held by a Mexican
trust in connection with an equity financing transaction due in 2007, which was
terminated during 2003 (see note 15F), and CEMEX Mexico owned a 100% equity
interest in ETM at the end of the three years.

For purposes of the accompanying condensed consolidated balance sheets, income
statements and statements of changes in financial position under Mexican GAAP,
the first column, "CEMEX," corresponds to the parent company issuer, which has
no material operations other than its investments in subsidiaries and
affiliated companies. The second column, "Combined guarantors", represents the
combined amounts of CEMEX Mexico and ETM on a Parent Company-only basis, after
adjustments and eliminations relating to their combination. The third column,
"Combined non-guarantors", represents the amounts of CEMEX's international
subsidiaries, CEMEX Mexico and ETM non-Guarantor subsidiaries, and other
immaterial Mexican non-guarantor subsidiaries of CEMEX. The fourth column,
"Adjustments and eliminations", includes all the amounts resulting from
consolidation of CEMEX, the Guarantors and the non-guarantor subsidiaries, as
well as the corresponding constant pesos adjustment as of December 31, 2004,
for the years ended December 31, 2002 and 2003 described below. The fifth
column, "CEMEX consolidated", represents CEMEX's consolidated amounts as
reported in the consolidated financial statements. The amounts presented under
the line item "investments in affiliates" for both the balance sheet and the
income statement are accounted for by the equity method.

As mentioned in note 3B, under Mexican GAAP, the financial statements of those
entities with foreign consolidated subsidiaries should be presented in constant
pesos as of the latest balance sheet presented, considering the inflation of
each country in which the entity operates, as well as the changes in the
exchange rate between the functional currency of each country vis-a-vis the
reporting currency (in this case, the Mexican peso). As a result of the
aforementioned, for comparability purposes the condensed financial information
of CEMEX, the "Combined Guarantors" and the "Combined non-guarantors" amounts
have been adjusted to reflect constant pesos as of December 31, 2004, using the
Mexican inflation index. Therefore, the corresponding inflation adjustment
derived from the application of the weighted average inflation factor in the
consolidated amounts is presented within the "Adjustments and eliminations"
column.

The condensed consolidated financial information is as follows:


                                     F-65


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)

Condensed consolidated balance sheets:




                                                                                                Adjustments
                                                                   Combined       Combined          and           CEMEX
          As of December 31, 2003                    CEMEX        guarantors    non-guarantors  eliminations   consolidated
---------------------------------------------     --------------------------------------------------------------------------
                                                                                                    
Current assets.............................. Ps        1,808.7        6,436.0        78,173.0     (64,608.0)       21,809.7
Investment in affiliates....................          90,012.2      107,642.5        67,624.9    (257,930.3)        7,349.3
Other non-current assets....................          37,372.0          488.8         1,043.8     (36,705.5)        2,199.1
Property, machinery and equipment...........           1,820.0       31,425.1        76,543.7         853.1       110,641.9
Deferred charges............................           5,585.9        5,970.3        94,427.4     (56,733.0)       49,250.6
                                                  -------------  -------------  --------------  -------------  -------------
   Total assets.............................         136,598.8      151,962.7       317,812.8    (415,123.7)      191,250.6
                                                  -------------  -------------  --------------  -------------  -------------
Current liabilities.........................          11,403.4       15,043.0        28,193.8     (20,854.0)       33,786.2
Long-term debt..............................          48,844.3            8.9        35,449.4     (30,126.5)       54,176.1
Other non-current liabilities...............           1,906.3       50,374.4        14,792.6     (44,582.2)       22,491.1
                                                  -------------  -------------  --------------  -------------  -------------
   Total liabilities........................          62,154.0       65,426.3        78,435.8     (95,562.7)      110,453.4
                                                  -------------  -------------  --------------  -------------  -------------
Majority interest stockholders' equity......          74,444.8       86,536.4       172,318.2    (258,854.6)       74,444.8
                                                  -------------  -------------  --------------  -------------  -------------
   Minority interest........................                 -              -        67,058.8     (60,706.4)        6,352.4
                                                  -------------  -------------  --------------  -------------  -------------
Stockholders' equity under Mexican GAAP.....          74,444.8       86,536.4       239,377.0    (319,561.0)       80,797.2
                                                  -------------  -------------  --------------  -------------  -------------
Total liabilities and stockholders' equity.. Ps      136,598.8      151,962.7       317,812.8    (415,123.7)      191,250.6
                                                  =============  =============  ==============  =============  =============

                                                                                                 Adjustments
                                                                    Combined       Combined         and             CEMEX
          As of December 31, 2004                    CEMEX         guarantors    non-guarantors  eliminations   consolidated
---------------------------------------------     ---------------------------------------------------------------------------
Current assets.............................. Ps       1,780.8        8,222.4       77,599.1       (65,861.0)      21,741.3
Investment in affiliates....................        103,554.6      119,214.5       70,828.8      (276,694.6)      16,903.3
Other non-current assets....................         33,916.0          459.5       17,467.6       (48,198.2)       3,644.9
Property, machinery and equipment...........          1,813.5       30,833.4       74,670.9          (224.0)     107,093.8
Deferred charges............................          4,135.3        6,129.0       87,619.3       (53,644.0)      44,239.6
                                                  -------------  -------------  --------------  -------------  --------------
  Total assets..............................        145,200.2      164,858.8      328,185.7      (444,621.8)     193,622.9
                                                  -------------  -------------  --------------  -------------  --------------
Current liabilities.........................         10,319.2       28,004.2       42,870.0       (54,319.7)      26,873.7
Long-term debt..............................         46,280.6           37.2       27,808.5       (19,686.8)      54,439.5
Other non-current liabilities...............          1,366.3       35,374.8       17,350.9       (33,349.1)      20,742.9
                                                  -------------  -------------  --------------  -------------  --------------
  Total liabilities.........................         57,966.1       63,416.2       88,029.4      (107,355.6)     102,056.1
                                                  -------------  -------------  --------------  -------------  --------------
Majority interest stockholders' equity......         87,234.1      101,442.6      181,010.5      (282,453.1)      87,234.1
                                                  -------------  -------------  --------------  -------------  --------------
  Minority interest.........................                -              -       59,145.8       (54,813.1)       4,332.7
                                                  -------------  -------------  --------------  -------------  --------------
Stockholders' equity under Mexican GAAP.....         87,234.1      101,442.6      240,156.3      (337,266.2)      91,566.8
                                                  -------------  -------------  --------------  -------------  --------------
Total liabilities and stockholders' equity.. Ps     145,200.2      164,858.8      328,185.7      (444,621.8)     193,622.9
                                                  =============  =============  ==============  =============  =============


                                     F-66


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)




Condensed consolidated income statements:

     For the year ended December 31, 2002                                                       Adjustments
                                                                    Combined       Combined         and            CEMEX
                                                      CEMEX        guarantors   non-guarantors  eliminations    consolidated
-----------------------------------------------    --------------------------------------------------------------------------
                                                                                                 
Sales........................................  Ps           -       23,813.1        53,450.9       2,460.6        79,724.6
Operating income.............................          (116.4)       3,513.7         5,942.0       6,627.4        15,966.7
Comprehensive financing result...............        (1,503.9)      (6,987.4)       (4,006.6)      8,484.7        (4,013.2)
Other income (expense), net..................          (369.3)        (359.6)        6,667.6     (10,681.9)       (4,743.2)
Income tax...................................         2,418.1       (1,367.4)       (1,373.1)       (471.2)         (793.6)
Equity in income of affiliates...............         5,910.7        1,747.2            (2.5)     (7,281.3)          374.1
                                                   -------------  -------------   ------------  --------------  -------------
Consolidated net income......................         6,339.2       (3,453.5)        7,227.4      (3,322.3)        6,790.8
                                                   -------------  -------------   ------------  --------------  -------------
   Minority interest.........................               -              -            92.8         358.8           451.6
                                                   -------------  -------------   ------------  --------------  -------------
Majority interest net income.................  Ps     6,339.2       (3,453.5)        7,134.6      (3,681.1)        6,339.2
                                                   =============  =============   ============  ==============  =============

                                                                                                Adjustments
                                                                    Combined       Combined        and            CEMEX
     For the year ended December 31, 2003             CEMEX        guarantors   non-guarantors  eliminations    consolidated
-----------------------------------------------    --------------------------------------------------------------------------
Sales........................................  Ps         -          25,724.1        60,753.2        (924.7)       85,552.6
Operating income.............................            (57.8)       3,566.3         4,315.6       9,553.0        17,377.1
Comprehensive financing result...............         (1,864.5)      (3,161.1)        1,055.5         776.2       (3,193.9)
Other income (expense), net..................          4,603.1         (515.5)        3,446.8     (12,988.4)       (5,454.0)
Income tax...................................            832.8          397.1        (1,236.9)     (1,265.9)       (1,272.9)
Equity in income of affiliates...............          3,994.8        5,522.1           203.5      (9,305.2)          415.2
                                                   -------------  -------------   ------------  --------------  -------------
Consolidated net income......................          7,508.4        5,808.9         7,784.5     (13,230.3)        7,871.5
                                                   -------------  -------------   ------------  --------------  -------------
  Minority interest..........................                -              -            21.8         341.3          363.1
                                                   -------------  -------------   ------------  --------------  -------------
Majority interest net income.................  Ps      7,508.4        5,808.9         7,762.7     (13,571.6)        7,508.4
                                                   =============  =============   ============  ==============  =============


                                                                                                 Adjustments
                                                      CEMEX         Combined       Combined         and            CEMEX
     For the year ended December 31, 2004                          guarantors   non-guarantors   eliminations    consolidated
-----------------------------------------------    --------------------------------------------------------------------------
Sales........................................  Ps            -       26,776.2        70,205.4      (6,197.7)       90,783.9
Operating income.............................            (37.5)       3,669.1         4,403.3      12,592.8        20,627.7
Comprehensive financing result...............          1,225.5          493.8         6,623.7      (6,857.5)        1,485.5
Other income (expense), net..................         (1,172.6)        (463.8)        5,870.9      (9,624.7)       (5,390.2)
Income tax...................................            304.0          354.2        (1,178.9)     (1,853.1)       (2,373.8)
Equity in income of affiliates...............         14,242.9       14,756.9         3,027.4     (31,580.9)          446.3
                                                   -------------  -------------   ------------  --------------  -------------
Consolidated net income......................         14,562.3       18,810.2        18,746.4     (37,323.4)       14,795.5
                                                   -------------  -------------   ------------  --------------  -------------
   Minority interest.........................                -              -         3,235.3      (3,002.1)          233.2
                                                   -------------  -------------   ------------  --------------  -------------
Majority interest net income.................  Ps     14,562.3       18,810.2        15,511.1     (34,321.3)       14,562.3
                                                   =============  =============   ============  ==============  =============


                                     F-67


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Condensed consolidated statements of changes in financial position:



                                                                                                Adjustments
                                                                    Combined       Combined         and           CEMEX
     For the year ended December 31, 2002               CEMEX      guarantors    non-guarantors eliminations    consolidated
------------------------------------------------   --------------------------------------------------------------------------
                                                                                                    
Operating activities:
Majority interest net income..................  Ps     6,339.2        (3,453.5)      7,134.6       (3,681.1)        6,339.2
Non-cash items................................        (6,591.9)        1,499.6      21,583.2       (7,221.3)        9,269.6
                                                   --------------------------------------------------------------------------
   Resources provided by operations...........          (252.7)       (1,953.9)     28,717.8      (10,902.4)       15,608.8
Net change in working capital.................         1,193.1         5,508.9     (29,697.0)      27,657.0         4,662.0
                                                   --------------------------------------------------------------------------
   Resources provided by operations, net......           940.4         3,555.0        (979.2)      16,754.6        20,270.8
Financing activities:
Bank loans and notes payable, net.............         7,990.7          69.9        (5,548.0)         181.5         2,694.1
Dividends paid................................        (3,984.1)       (2,377.1)          2.6        2,374.5        (3,984.1)
Issuance of common stock......................         3,456.3            -        15,875.2      (15,875.2)         3,456.3
Repurchase of preferred stock by subsidiaries.            -               -         (4,880.8)         (39.4)       (4,920.2)
Others........................................           377.1          (188.0)     59,358.3      (56,383.6)        3,163.8
                                                   --------------------------------------------------------------------------
   Resources used in financing activities.....         7,840.0        (2,495.2)     64,807.3      (69,742.2)          409.9
Investing activities:
Property, machinery and equipment, net........            -           (1,164.3)     (3,043.8)        (304.3)       (4,512.4)
Acquisitions, net of cash acquired............       (69,166.9)       12,636.3         615.7       52,704.0        (3,210.9)
Dividends received............................         2,546.1            -             -         (2,546.1)            -
Minority interest.............................            -               -         (3,446.7)         (27.8)       (3,474.5)
Deferred charges and others...................        58,064.3       (11,673.0)    (57,008.9)         501.7       (10,115.9)
                                                   --------------------------------------------------------------------------
   Resources used in investing activities.....        (8,556.5)         (201.0)    (62,883.7)      50,327.5       (21,313.7)
   Change in cash and investments.............           223.9           858.8         944.4       (2,660.1)         (633.0)
   Cash and investments initial balance.......           179.0         1,152.3       2,497.4        1,204.8         5,033.5
                                                   --------------  ------------  -------------- --------------  -------------
   Cash and investments ending balance........  Ps       402.9         2,011.1       3,441.8       (1,455.3)        4,400.5
                                                   ==============  ============  ============== ==============  =============


                                     F-68


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)




                                                                                  Adjustments
                                                                   Combined       Combined        and             CEMEX
     For the year ended December 31, 2003              CEMEX      guarantors    non-guarantors eliminations    consolidated
------------------------------------------------   --------------------------------------------------------------------------
                                                                                                 
Operating activities:
Majority interest net income..................  Ps     7,508.4         5,808.9       7,762.7      (13,571.6)        7,508.4
Non-cash items................................        (2,240.1)       (3,307.7)     22,763.1       (6,135.1)       11,080.2
                                                   --------------------------------------------------------------------------
   Resources provided by operations...........         5,268.3         2,501.2      30,525.8      (19,706.7)       18,588.6
Net change in working capital.................        19,089.0        14,619.3     (43,705.9)      10,113.0           115.4
                                                   --------------------------------------------------------------------------
   Resources provided by operations, net......        24,357.3        17,120.5     (13,180.1)      (9,593.7)       18,704.0
Financing activities:
Bank loans and notes payable, net.............       (12,227.3)         (232.9)     10,517.1          (15.7)       (1,958.8)
Dividends paid................................        (4,210.3)       (5,945.0)        147.2        5,797.8        (4,210.3)
Issuance of common stock......................         3,944.7            -              -              -           3,944.7
Repurchase of preferred stock by subsidiaries.            -               -         (7,801.5)           -          (7,801.5)
Others........................................           787.2        (8,843.2)      2,866.1        9,317.1         4,127.2
                                                   --------------------------------------------------------------------------
   Resources used in financing activities.....       (11,705.7)      (15,021.1)      5,728.9       15,099.2        (5,898.7)
Investing activities:
Property, machinery and equipment, net........            -           (1,003.5)     (3,496.3)         (36.3)       (4,536.1)
Acquisitions, net of cash acquired............        (7,397.9)       (2,097.2)     13,475.7       (4,954.1)         (973.5)
Dividends received............................         5,844.6            -             -          (5,844.6)           -
Minority interest.............................            -               -           (906.0)         (7.3)          (913.3)
Deferred charges and others...................       (11,386.7)          665.3       7,006.0       (3,588.0)       (7,303.4)
                                                   --------------------------------------------------------------------------
   Resources used in investing activities.....       (12,940.0)       (2,435.4)     16,079.4      (14,430.3)      (13,726.3)
   Change in cash and investments.............          (288.4)         (336.0)      8,628.2       (8,924.8)         (921.0)
   Cash and investments initial balance.......           402.9         2,011.1       3,441.8       (1,455.3)        4,400.5
                                                   --------------  ------------  -------------- --------------  -------------
   Cash and investments ending balance........  Ps       114.5         1,675.1      12,070.0      (10,380.1)        3,479.5
                                                   ==============  ============  ============== ==============  =============


                                     F-69


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)




                                                                                 Adjustments
                                                                    Combined       Combined        and             CEMEX
     For the year ended December 31, 2004             CEMEX        guarantors    non-guarantors eliminations    consolidated
------------------------------------------------   --------------------------------------------------------------------------
                                                                                                  
Operating activities:
Majority interest net income..................  Ps    14,562.3        18,810.2      15,511.1      (34,321.3)       14,562.3
Non-cash items................................       (11,891.3)      (13,530.8)     13,700.2       24,359.5        12,637.6
                                                   --------------------------------------------------------------------------
   Resources provided by operations...........         2,671.0         5,279.4      29,211.3       (9,961.8)       27,199.9
Net change in working capital.................          (862.7)       11,379.0      (9,374.3)      (3,513.5)       (2,371.5)
                                                   --------------------------------------------------------------------------
   Resources provided by operations, net......         1,808.3        16,658.4      19,837.0      (13,475.3)       24,828.4
Financing activities:
Bank loans and notes payable, net.............        (1,526.2)           59.0     (11,357.5)           -         (12,824.7)
Bank loans acquisition of RMC Group...........             -               -         8,756.0            -           8,756.0
Appreciation warrants.........................        (1,053.0)            -             -              -          (1,053.0)
Dividends paid................................        (4,319.4)            -          (283.4)         283.4        (4,319.4)
Issuance of common stock......................         4,224.0             -             -              -           4,224.0
Issuance (repurchase) of preferred stock by
subsidiaries..................................            -                -        (2,810.0)       2,019.0          (791.0)
Others........................................          (540.0)      (14,311.8)      4,771.1        8,255.8        (1,824.9)
                                                   --------------------------------------------------------------------------
   Resources used in financing activities.....        (3,214.6)      (14,252.8)       (923.8)      10,558.2        (7,833.0)
Investing activities:
Property, machinery and equipment, net........            -             (651.8)     (4,183.1)       709.3          (4,125.6)
Acquisitions, net of cash acquired............        (1,358.9)       (1,364.5)       (186.4)       2,723.4          (186.4)
Investment in RMC Group.......................             -              -        (8,756.0)            -          (8,756.0)
Dividends received............................           283.4            -             -            (283.4)           -
Minority interest.............................            -               -         (1,461.9)          -           (1,461.9)
Deferred charges and others...................         2,471.8           (73.3)     (1,814.7)      (2,715.3)       (2,131.5)
                                                   --------------------------------------------------------------------------
   Resources used in investing activities.....         1,396.3        (2,089.6)    (16,402.1)         434.0       (16,661.4)
   Change in cash and investments.............           (10.0)          316.0       2,511.1       (2,483.1)          334.0
   Cash and investments initial balance.......           114.5         1,675.1      12,070.0      (10,380.1)        3,479.5
                                                   --------------  ------------  -------------- --------------  -------------
   Cash and investments ending balance........  Ps       104.5         1,991.1      14,581.1      (12,863.2)        3,813.5
                                                   ==============  ============  ============== ==============  =============


                                     F-70


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The tables below present consolidated balance sheets as of December 31, 2003
and 2004, and income statements and statements of changes in financial position
for each of the three-year periods ended December 31, 2004 for the Guarantors.
Such information presents in separate columns each individual Guarantor on a
Parent Company-only basis, consolidation adjustments and eliminations, and the
combined Guarantors. All significant related parties balances and transactions
between the Guarantors have been eliminated in the "Combined guarantors"
column.

The amounts presented in the column "Combined guarantors" are readily
comparable with the information of the Guarantors included in the condensed
consolidated financial information. As previously described, amounts presented
under the line item "Investments in affiliates" for both the balance sheets and
income statements, include the net investment in affiliates accounted for by
the equity method. In addition, the Guarantors' reconciliation of net income
and stockholders' equity to U.S. GAAP are presented below:

Guarantors' Combined Balance Sheets:



                       December 31, 2003                                    Guarantors (Parent Company-only)
                                                            -----------------------------------------------------------------
                            Assets                                                              Adjustments
                                                                 CEMEX                             and            Combined
                                                                 Mexico            ETM          eliminations     guarantors
                                                            ----------------  --------------  --------------- ---------------
                                                                                                        
     Current Assets
     Cash and investments............................ Ps           809.4             865.7               -         1,675.1
     Trade accounts receivable, net..................              278.2                 -               -           278.2
     Other receivables and other current assets......              887.1             106.6          (117.9)          875.8
     Related parties receivables.....................            2,137.6           4,740.7        (4,599.0)        2,279.3
     Inventories.....................................            1,327.6                 -               -         1,327.6
                                                            ----------------  --------------  --------------- ---------------
        Total current assets.........................            5,439.9           5,713.0        (4,716.9)        6,436.0
                                                            ----------------  --------------  --------------- ---------------
     Other Investments
     Investments in subsidiaries and affiliates......          127,448.1          30,075.9       (49,881.5)      107,642.5
     Long-term related parties receivables...........              254.6           9,833.9        (9,833.9)          254.6
     Other investments...............................              234.2                 -               -           234.2
                                                            ----------------  --------------  --------------- ---------------
        Total other investments......................          127,936.9          59,715.4       (39,909.8)      127,936.4
                                                            ----------------  --------------  --------------- ---------------
     Property, machinery and equipment...............           31,425.1                 -               -        31,425.1
                                                            ----------------  --------------  --------------- ---------------
     Deferred charges................................            1,633.9           4,353.7           (17.3)        5,970.3
                                                            ----------------  --------------  --------------- ---------------
        Total Assets................................. Ps       166,435.8          49,976.5       (64,449.6)      151,962.7
                                                            ================  ==============  =============== ===============
             Liabilities and Stockholders' Equity
     Current Liabilities
     Current maturities of long-term debt............ Ps             7.2                 -               -             7.2
     Trade accounts payable..........................              640.3                 -               -           640.3
     Other accounts payable and accrued expenses.....            1,319.6               5.5          (118.1)        1,207.0
     Related parties payables........................           17,787.5                 -        (4,599.0)       13,188.5
                                                            ----------------  --------------  --------------- ---------------
        Total current liabilities....................           19,754.6               5.5        (4,717.1)       15,043.0
                                                            ----------------  --------------  --------------- ---------------
     Total long-term debt............................                8.9                 -               -             8.9
                                                            ----------------  --------------  --------------- ---------------
     Other Noncurrent Liabilities
     Deferred income taxes...........................            8,327.2                 -           (17.3)        8,309.9
     Others..........................................              102.0              89.9               -           191.9
     Long-term related parties payables..............           51,706.7                 -        (9,834.1)       41,872.6
                                                            ----------------  --------------  --------------- ---------------
        Total other noncurrent liabilities...........           60,135.9              89.9        (9,851.4)       50,374.4
                                                            ----------------  --------------  --------------- ---------------
        Total Liabilities............................           79,899.4              95.4       (14,568.5)       65,426.3
                                                            ----------------  --------------  --------------- ---------------
     Stockholders' equity............................           80,727.5          48,050.0       (48,050.0)       80,727.5
     Net income......................................            5,808.9           1,831.1        (1,831.1)        5,808.9
                                                            ----------------  --------------  --------------- ---------------
        Total stockholders' equity...................           86,536.4          49,881.1       (49,881.1)       86,536.4
                                                            ----------------  --------------  --------------- ---------------
        Total Liabilities and Stockholders' Equity... Ps       166,435.8          49,976.5       (64,449.6)      151,962.7
                                                            ================  ==============  =============== ===============


                                     F-71


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Guarantors' Combined Balance Sheets:



                 December 31, 2004                                    Guarantors (Parent Company-only)
                                                       --------------------------------------------------------------
                                                                                         Adjustments
                                                              CEMEX                         and          Combined
                      Assets                                  Mexico         ETM        eliminations    guarantors
                                                       ----------------  -----------  ---------------  --------------
Current Assets
                                                                                                
Cash and investments..............................  Ps         831.9         1,159.2              -        1,991.1
Trade accounts receivable, net....................              93.0               -              -           93.0
Other receivables and other current assets........             770.4           400.9         (301.4)         869.9
Related parties receivables.......................           3,730.6         1,725.6       (1,792.1)       3,664.1
Inventories.......................................           1,604.3               -              -        1,604.3
                                                       --------------------------------------------------------------
    Total current assets..........................           7,030.2         3,285.7       (2,093.5)       8,222.4
                                                       --------------------------------------------------------------
Other Investments
Investments in subsidiaries and affiliates........         138,243.5        29,515.0      (48,544.0)     119,214.5
Long-term related parties receivables.............             145.0        34,100.0      (34,100.0)         145.0
Other investments.................................             314.5               -              -          314.5
                                                       --------------------------------------------------------------
    Total other investments.......................         138,703.0        63,615.0      (82,644.0)     119,674.0
                                                       --------------------------------------------------------------
Property, machinery and equipment.................          30,833.4               -              -       30,833.4
                                                       --------------------------------------------------------------
Deferred charges..................................           1,828.5         4,300.5              -        6,129.0
                                                       --------------------------------------------------------------
    Total Assets..................................  Ps     178,395.1        71,201.2      (84,737.5)     164,858.8
                                                       ==============================================================
       Liabilities and Stockholders' Equity
       ------------------------------------
Current Liabilities
Current maturities of long-term debt..............              37.9               -              -           37.9
Trade accounts payable............................             745.0               -              -          745.0
Other accounts payable and accrued expenses.......           1,361.1           300.4         (301.4)       1,360.1
Related parties payables..........................          27,582.4            70.9       (1,792.1)      25,861.2
                                                       --------------------------------------------------------------
    Total current liabilities.....................          29,726.4           371.3       (2,093.5)      28,004.2
                                                       --------------------------------------------------------------
Total long-term debt..............................              37.2               -              -           37.2
                                                       --------------------------------------------------------------
Other Noncurrent Liabilities
Deferred income taxes.............................           7,580.6            72.8              -        7,653.4
Others............................................             205.5               -              -          205.5
Long-term related parties payables................          39,402.8        22,213.1      (34,100.0)      27,515.9
                                                       --------------------------------------------------------------
    Total other noncurrent liabilities............          47,188.9        22,285.9      (34,100.0)      35,374.8
                                                       --------------------------------------------------------------
    Total Liabilities.............................          76,952.5        22,657.2      (36,193.5)      63,416.2
                                                       --------------------------------------------------------------
Stockholders' equity..............................          82,632.4        48,152.9      (48,152.9)      82,632.4
Net income........................................          18,810.2          (391.1)        (391.1)      18,810.2
                                                       --------------------------------------------------------------
    Total stockholders' equity....................         101,442.6        48,544.0      (48,544.0)     101,442.6
                                                       --------------------------------------------------------------
    Total Liabilities and Stockholders' Equity....  Ps     178,395.1        71,201.2      (84,737.5)     164,858.8
                                                       ==============================================================



                                     F-72


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Guarantors' Combined Income Statements:



                                                                              Guarantors (Parent Company-only)
                                                                  ----------------------------------------------------------
                                                                                             Adjustments
                                                                     CEMEX                       and             Combined
             For the year ended December 31, 2002                    Mexico         ETM      eliminations       guarantors
                                                                  ----------     --------  ----------------  ---------------
                                                                                                    
  Net sales................................................  Ps     23,813.1           -            -            23,813.1
  Cost of sales............................................         (8,175.4)          -            -            (8,175.4)
                                                                  ----------------------------------------------------------
       Gross profit........................................         15,637.7           -            -            15,637.7
       Total operating expenses............................        (12,123.7)       (0.2)        (0.1)          (12,124.0)
                                                                  ----------------------------------------------------------
          Operating income.................................          3,514.0        (0.2)        (0.1)            3,513.7
                                                                  ----------------------------------------------------------
          Net comprehensive financing result...............         (6,422.7)     (564.8)         0.1            (6,987.4)
                                                                  ----------------------------------------------------------
  Other income (expense), net..............................           (352.2)       (7.3)        (0.1)             (359.6)
                                                                  ----------------------------------------------------------
  Income before IT, BAT, ESPS and equity in affiliates.....         (3,260.9)     (572.3)        (0.1)           (3,833.3)
                                                                  ----------------------------------------------------------
       Total IT, BAT and ESPS..............................           (580.6)     (786.8)           -            (1,367.4)
                                                                  ----------------------------------------------------------
       Income before equity in income of affiliates........         (3,841.5)   (1,359.1)        (0.1)           (5,200.7)
          Equity in income of affiliates...................            388.0       (28.7)     1,387.9             1,747.2
                                                                  ----------------------------------------------------------
       Net income..........................................  Ps     (3,453.5)   (1,387.8)     1,387.8            (3,453.5)
                                                                  ==========================================================





                                                                              Guarantors (Parent Company-only)
                                                                  ---------------------------------------------------------
                                                                                           Adjustments
                                                                     CEMEX                     and              Combined
             For the year ended December 31, 2003                    Mexico        ETM     eliminations        guarantors
                                                                  ----------    --------  ----------------  ---------------
                                                                                                     
  Net sales................................................  Ps     25,724.1            -           -           25,724.1
  Cost of sales............................................         (9,240.8)           -           -           (9,240.8)
                                                                  ---------------------------------------------------------
       Gross profit........................................         16,483.3            -           -           16,483.3
       Total operating expenses............................        (12,916.6)           -        (0.4)         (12,917.0)
                                                                  ---------------------------------------------------------
          Operating income.................................          3,566.7            -        (0.4)           3,566.3
                                                                  ---------------------------------------------------------
          Net comprehensive financing result...............         (4,299.0)     1,137.9           -           (3,161.1)
                                                                  ---------------------------------------------------------
  Other income (expense), net..............................           (492.8)       (22.7)          -             (515.5)
                                                                  ---------------------------------------------------------
  Income before IT, BAT, ESPS and equity in affiliates.....         (1,225.1)     1,115.2        (0.4)            (110.3)
                                                                  ---------------------------------------------------------
       Total IT, BAT and ESPS..............................            472.7        (75.6)          -              397.1
                                                                  ---------------------------------------------------------
       Income before equity in income of affiliates........           (752.4)     1,039.6        (0.4)             286.8
          Equity in income of affiliates...................          6,561.3        791.5    (1,830.7)           5,522.1
                                                                  ---------------------------------------------------------
       Net income..........................................  Ps      5,808.9      1,831.1    (1,831.1)           5,808.9
                                                                  =========================================================





                                                                              Guarantors (Parent Company-only)
                                                                  ---------------------------------------------------------
                                                                                           Adjustments
                                                                     CEMEX                     and              Combined
             For the year ended December 31, 2004                    Mexico        ETM     eliminations        guarantors
                                                                  ----------    --------  ----------------  ---------------
                                                                                                   
 Net sales................................................  Ps     26,776.2          -              -        26,776.2
 Cost of sales............................................         (9,953.8)         -              -        (9,953.8)
                                                                 ----------------------------------------------------------
      Gross profit........................................         16,822.4          -              -        16,822.4
      Total operating expenses............................        (13,153.0)        (0.3)           -       (13,153.3)
                                                                 ----------------------------------------------------------
         Operating income.................................          3,669.4         (0.3)           -         3,669.1
                                                                 ----------------------------------------------------------
         Net comprehensive financing result...............             17.7        476.1            -           493.8
                                                                 ----------------------------------------------------------
 Other income (expense), net..............................           (406.4)       (57.4)           -          (463.8)
                                                                 ----------------------------------------------------------
 Income before IT, BAT, ESPS and equity in affiliates.....          3,280.7        418.4            -         3,699.1
                                                                 ----------------------------------------------------------
      Total IT, BAT and ESPS..............................            733.9       (379.7)           -           354.2
                                                                 ----------------------------------------------------------
      Income before equity in income of affiliates........          4,014.6         38.7            -         4,053.3
         Equity in income of affiliates...................         14,795.6        (52.4)         391.1      14,756.9
                                                                 ----------------------------------------------------------
      Net income..........................................   Ps    18,810.2        (91.1)         391.1      18,810.2
                                                                  =========================================================


                                     F-73


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Guarantors' Combined Statements of Changes in Financial Position:



                                                                          Guarantors (Parent Company-only)
                                                                                            Adjustments
                                                                  CEMEX                         and          Combined
           For the year ended December 31, 2002                  Mexico           ETM       eliminations     guarantors
                                                               --------------   ---------  -------------  ------------
                                                                                              
Operating activities
Net income                                                  Ps    (3,453.5)    (1,387.8)       1,387.8        (3,453.5)
Charges to operations which did not require resources.....         1,698.7      1,188.7       (1,387.8)        1,499.6
                                                               --------------   ---------  -------------  ------------
Resources provided by operating activities................        (1,754.8)      (199.1)             -        (1,953.9)
    Net change in working capital.........................         5,060.4        (27.6)         476.1         5,508.9
                                                               --------------   ---------  -------------  ------------
    Net resources provided by operating activities........         3,305.6       (226.7)         476.1         3,555.0
                                                               --------------   ---------  -------------  ------------
Financing activities
Bank loans and notes payable, net.........................            13.5         56.4              -            69.9
Dividends.................................................        (2,377.1)           -              -        (2,377.1)
Long-term related parties receivables and payables, net...       (56,521.2)           -              -       (56,521.2)
Other noncurrent assets and liabilities, net..............        56,333.2            -              -        56,333.2
                                                               --------------   ---------  -------------  ------------
Resources used in financing activities....................        (2,551.6)        56.4              -        (2,495.2)
                                                               --------------   ---------  -------------  ------------
Investing activities
Property, plant and equipment, net........................        (1,164.3)           -              -        (1,164.3)
Investments in subsidiaries and affiliates................       (11,355.0)       (24.5)          68.1       (11,311.4)
Deferred charges..........................................          (232.6)       (18.5)        (110.5)         (361.6)
Other investments.........................................         12,921.2        148.8        (433.7)       12,636.3
                                                               --------------   ---------  -------------  ------------
    Resources used in investing activities................            169.3        105.8        (476.1)        (201.0)
                                                               --------------   ---------  -------------  ------------
    Change in cash and investments........................            923.3       (64.5)             -           858.8
    Cash and investments initial balance..................            439.8        712.5             -         1,152.3
                                                               --------------   ---------  -------------  ------------
    Cash and investments ending balance...................  Ps      1,363.1        648.0             -         2,011.1
                                                               ==============   =========  =============  ============






                                                                          Guarantors (Parent Company-only)
                                                               -------------------------------------------------------
                                                                                           Adjustments
                                                                     CEMEX                     and         Combined
           For the year ended December 31, 2003                      Mexico        ETM     eliminations    guarantors
                                                               --------------   ---------  -------------  ------------
                                                                                                 
Operating activities
Net income................................................  Ps      5,808.9      1,831.1     (1,831.1)       5,808.9
Charges to operations which did not require resources.....         (5,238.6)       100.1      1,830.8        3,307.7
                                                               --------------   ---------  -------------  ------------
Resources provided by operating activities................            570.3      1,931.2         (0.3)       2,501.2
    Net change in working capital.........................         40,445.3      1,112.7    (26,938.7)      14,619.3
    Net resources provided by operating activities........         41,015.6      3,043.9    (26,939.0)      17,120.5
                                                               --------------   ---------  -------------  ------------
Financing activities
Bank loans and notes payable, net.........................          (266.4)         33.5            -         (232.9)
Dividends.................................................        (5,945.0)            -            -       (5,945.0)
Long-term related parties receivables and payables, net...       (40,831.6)            -     31,951.1       (8,880.5)
Other noncurrent assets and liabilities, net..............             37.3     (6,808.2)     6,808.2           37.3
                                                               --------------   ---------  -------------  ------------
Resources used in financing activities....................       (47,005.7)     (6,774.7)    38,759.3      (15,021.1)
                                                               --------------   ---------  -------------  ------------
Investing activities
Property, plant and equipment, net........................        (1,003.5)            -            -       (1,003.5)
Investments in subsidiaries and affiliates................          5,774.6     (1,063.8)    (6,808.0)      (2,097.2)
Deferred charges..........................................            634.7            -            -          634.7
Other investments.........................................             30.6      5,012.3     (5,012.3)          30.6
                                                               --------------   ---------  -------------  ------------
    Resources used in investing activities................          5,436.4      3,948.5    (11,820.3)      (2,435.4)
                                                               --------------   ---------  -------------  ------------
    Change in cash and investments........................          (553.7)        217.7            -         (336.0)
    Cash and investments initial balance..................          1,363.1        648.0            -        2,011.1
                                                               --------------   ---------  -------------  ------------
    Cash and investments ending balance...................  Ps        809.4        865.7            -        1,675.1
                                                               ==============   =========  =============  ============


                                     F-74


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)




Guarantors' Combined Statements of Changes in Financial Position:
-------------------------------------------------------------------------------------------------------------------

                                                                          Guarantors (Parent Company-only)
                                                               ------------------------------------------------------
                                                                                           Adjustments
                                                                   CEMEX                        and         Combined
           For the year ended December 31, 2004                    Mexico         ETM      eliminations    guarantors
                                                               ------------  -----------  --------------  -----------
                                                                                               
Operating activities
Net income................................................  Ps    18,810.2       (391.1)        391.1       18,810.2
Charges to operations which did not require resources.....       (13,642.4)       279.5        (391.1)     (13,530.8)
                                                               ------------  -----------  --------------  -----------
Resources provided by operating activities................         5,167.8        111.6             -        5,279.4
    Net change in working capital.........................         8,182.6      3,087.0         109.4       11,379.0
                                                               ------------  -----------  --------------  -----------
    Net resources provided by operating activities........        13,350.4      3,198.6         109.4       16,658.4
                                                               ------------  -----------  --------------  -----------
Financing activities
Bank loans and notes payable, net.........................           59.0             -             -           59.0
Long-term related parties receivables and payables, net...       (12,303.9)    22,213.1     (24,265.9)     (14,356.7)
Other noncurrent assets and liabilities, net..............            44.9            -             -           44.9
                                                               ------------  -----------  --------------  -----------
Resources used in financing activities....................       (12,200.0)    22,213.1     (24,265.9)     (14,252.8)
                                                               ------------  -----------  --------------  -----------
Investing activities
Property, plant and equipment, net........................          (651.8)           -             -         (651.8)
Investments in subsidiaries and affiliates................          (439.6)   (25,081.4)     24,156.5       (1,364.5)
Deferred charges..........................................          (177.4)       (36.8)            -         (214.2)
Other investments.........................................           140.9            -             -          140.9
                                                               ------------  -----------  --------------  -----------
    Resources used in investing activities................        (1,127.9)   (25,118.2)     24,156.5       (2,089.6)
                                                               ------------  -----------  --------------  -----------
    Change in cash and investments........................            22.5        293.5             -          316.0
    Cash and investments initial balance..................           809.4        865.7             -        1,675.1
    Cash and investments ending balance...................  Ps       831.9      1,159.2             -        1,991.1
                                                               ============  ===========  ==============  ===========



Guarantors--Restatement of certain amounts of year 2003

Until June 2003, CEMEX, the owner of 100% of the common stock of CEMEX Mexico,
held an approximate 49% equity interest in CEMEX Trademarks Holdings, Ltd.
("CTH"), which in turn was the holding company of CEMEX Trademarks Worldwide
Ltd. ("CTW"), the subsidiary that conducts the research and development efforts
within the group, and that is the owner of the rights for most of CEMEX's
intangible assets, including trademarks and commercial names. The remaining 51%
equity interest in CTH was indirectly held by CEMEX Mexico. In June 2003, by
means of an exchange of assets between related parties, CEMEX Mexico became the
indirect majority owner of CTW, in exchange for the transfer to CEMEX, through
CTH, of an equity interest of approximately 24% in the subsidiary of CEMEX
Mexico that holds the international operations of the group. As a result of the
exchange of assets, which was accounted for at historical cost, CEMEX Mexico
reduced its investment in subsidiaries with a corresponding reduction in equity
which was intended to represent the carrying value of the 24% interest
transferred to CEMEX.

In connection with the preparation of the 2004 financial information for the
separate CEMEX Mexico and Combined guarantors presentation, CEMEX recognized
that the effect of the exchange of assets was not reflective of the
transaction. As a result, during 2004, CEMEX Mexico and CTH entered into
agreements pursuant to which CEMEX Mexico, through a subsidiary, has an option
to acquire the equity interest of CTH in the holding company of the
international operations, while CTH has an option to acquire, from a subsidiary
of CEMEX Mexico, such subsidiary's equity interest in CTW.

                                     F-75


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The balance sheets of CEMEX Mexico-only and the Combined guarantors as of
December 31, 2004, as well as the income statements of CEMEX Mexico-only and
the Combined guarantors for the year ended December 31, 2004, reflect 100% of
the interest of the subsidiaries of CEMEX Mexico. The line items "Investment in
subsidiaries and affiliates" and "Stockholders' equity" in the balance sheet
andn the line item "Equity in income of affiliates" in the income statement of
both, CEMEX Mexico-only and the Combined guarantors, include the equity
interest of CEMEX in CTH. CEMEX considers that is a more meaningful
representation of the stockholders' equity of CEMEX Mexico-only and the pro
forma stockholders' equity of the Combined guarantors, given that: i) CEMEX
Mexico and CTH are directly and indirectly, respectively, wholly-owned
subsidiaries of CEMEX, as a result of which, the majority equity interest of
CTH, and majority and minority equity interests of, CEMEX Mexico and the
Combined guarantors were under the common control of CEMEX for all periods
presented; and ii) upon execution of the call option for the 24% minority
interest entered into by CEMEX Mexico and CTH during 2004, a reduction in the
carrying value of CEMEX Mexico's investment in subsidiaries would not be
reflected. This presentation does not affect the consolidated financial
information of CEMEX and subsidiaries.

For purposes of presenting the comparative Combined guarantors financial
statements for the year 2003, on a basis consistent with that presented in 2004
as discussed above, CEMEX restated the previously filed balance sheet
information of CEMEX Mexico-only and the Combined guarantors as of December 31,
2003, as well as the income statement information of CEMEX Mexico-only and the
Combined guarantors for the year ended December 31, 2003, as if the option had
been in effect at the date of the original exchange, thus reflecting 100%
ownership of the Subsidiaries of CEMEX Mexico, and also corrected
misclassifications in the 2003 presentation of amounts between guarantors and
non-guarantors. The restated items in the Combined guarantors' financial
information are as follows:




           As of and for the year ended December 31, 2003                  As reported         Restated
                                                                          -------------    ----------------
Combined Guarantors
                                                                                         
   Investment in subsidiaries and affiliated companies............... Ps     97,698.3          107,642.5
   Total assets......................................................       142,018.1          151,962.7
   Stockholders' equity..............................................        76,591.8           86,536.4
   Total liabilities and stockholders' equity........................       142,018.1          151,962.7
                                                                          ------------     --------------
   Equity in income of subsidiaries and affiliates...................         3,575.9            5,522.1
   Net income........................................................         3,862.8            5,808.9
                                                                          ------------     --------------


Guarantors--Cash and investments

At December 31, 2003 and 2004, ETM's temporary investments are primarily
comprised of CEMEX CPOs. In June 2003 and 2004, CEMEX issued 817,515 CPOs and
325,212 CPOs, respectively, through dividends to ETM amounting to Ps30.6 and Ps
17.3, respectively.

Guarantors--Trade receivables

During December 2002, CEMEX Mexico and one of its subsidiaries established
sales of trade accounts receivable program ("securitization program"). With
this program, these companies effectively transferred control, risks and
benefits related to some of the trade accounts receivable balances. As of
December 31, 2003 and 2004, these balances amounted to Ps1,705.2 and Ps1,726.1
from CEMEX Mexico, respectively, and Ps909.4 and Ps1,417.1 from its subsidiary,
respectively.

Guarantors--Investment in affiliates

At December 31, 2003 and 2004, of the Guarantors' total investment in
affiliates, which are accounted for under the equity method, Ps108,098.2 and
Ps118,969.9, respectively, correspond to investments in non-guarantors, and
Ps241.8 in 2003 and Ps244.6 in 2004, are related to minority investments in
third parties.

At December 31, 2004, the main Guarantors' investments in non-guarantors are in
CEMEX Concretos, S.A. de C.V and CEMEX Internacional, S.A. de C.V., which
together integrate the ready-mix concrete operations and export trading
activities in Mexico; and CEDICE, which is the parent company of the
international operations of CEMEX.

                                     F-76


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Guarantors--Indebtedness

At December 31, 2003 and 2004, the Guarantors had total indebtedness of
U.S.$1.3 million (Ps16.1) and U.S.$6.7 million (Ps75.1), respectively. At
December 31, 2003 and 2004, the average annual interest rate of this
indebtedness was approximately 7.8% and 9.9%, respectively. Of the total
indebtedness of the Guarantors at December 31, 2004, approximately U.S.$3.4
million (Ps37.9) matures in 2005 and U.S.$3.3 million (Ps.37.2) matures in 2006
and thereafter.

Guarantors--Balances and transactions with related parties

Balances with related parties result primarily from (i) the sale and purchase
of cement and clinker to and from affiliates, (ii) the sale and/or acquisition
of subsidiaries' shares within the CEMEX group, (iii) the invoicing of
administrative and other services received or provided from and to affiliated
companies, and (iv) the transfer of funds between the Guarantors, their
respective parents and certain affiliates. The related parties balance detail
is as follows:




                          Guarantors                                         Assets                 Liabilities
                                                                    ------------------------- -------------------------
                     At December 31, 2003                            Short-Term   Long-Term   Short-Term   Long-Term
                                                                    ------------  ----------- ----------   ------------
                                                                                                        
CEMEX, S.A. de C.V...........................................    Ps        141.3      -           -           32,270.5
CEMEX Central, S.A. de C.V...................................              703.5      -           -            -
CEMEX Concretos, S.A. de C.V.................................              257.9      -           -            -
Impra Cafe, S.A. de C.V. ....................................              502.1      -           -            -
CEMEX Trademarks Worldwide...................................            -            -          5,122.3       -
Servicios CEMEX Mexico, S.A. de C.V. ........................              272.7      -           -            -
Proveedora de Fibras Textiles, S.A. de C.V. .................            -            -             61.1       -
Inmobiliaria Rio la Silla, S.A. de C.V.......................            -             254.6      -            -
Centro Distribuidor de Cemento, S.A. de C.V. ................            -            -           -            6,704.0
CEMEX International Finance Company..........................            -            -          4,116.6       -
Petrocemex, S.A. de C.V......................................            -            -          1,185.5       2,898.1
CEMEX Internacional, S.A. de C.V.............................            -            -            641.2       -
Turismo CEMEX, S.A. de C.V.. ................................            -            -            269.0       -
Others.......................................................              401.8      -          1,792.8       -
                                                                    ------------  ----------- ----------   ------------
                                                                 Ps      2,279.3       254.6    13,188.5      41,872.6
                                                                    ============  =========== ==========   ============
----------------------------------------------------------------------------------------------------------------------
                          Guarantors                                         Assets                 Liabilities
                     At December 31, 2004                            Short-Term   Long-Term   Short-Term   Long-Term
                                                                    ------------  ----------- ----------   ------------
CEMEX, S.A. de C.V...........................................    Ps        912.0        -           -         27,515.9
CEMEX Central, S.A. de C.V...................................            1,344.8        -           -             -
CEMEX Concretos, S.A. de C.V.................................              240.0        -           -             -
Corporacion Gouda, S.A. de C.V...............................              127.1        -           -             -
Incalpa, S.A. de C.V. ..................................... .              625.3        -           -             -
Construmexcla, S.A. de C.V. .................................                -          -        6,183.5          -
CEMEX Irish Investments Company Limited. ....................                -          -        4,710.3          -
CEMEX Trademarks Worldwide...................................                -          -        5,425.8          -
Servicios CEMEX Mexico, S.A. de C.V. ........................                -          -          334.3          -
Inmobiliaria Rio la Silla, S.A. de C.V......................
                                                                             -         145.0    71.2              -
Centro Distribuidor de Cemento, S.A. de C.V. ................                -          -        2,618.3          -
Petrocemex, S.A. de C.V.....................................                 -          -        4,085.6          -
CEMEX Internacional, S.A. de C.V.............................                -          -          302.7          -
Turismo CEMEX, S.A. de C.V.. ................................                -          -        1,072.9          -
Others.......................................................              414.9        -        1,056.6          -
                                                                    ------------  ----------- ----------   ------------
                                                                 Ps      3,664.1       145.0    25,861.2      27,515.9
                                                                    ============  =========== ==========   ============


                                     F-77


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


The principal transactions carried out with affiliated companies are as
follows:



                                                                                  Years ended December 31,
                                                                      -------------------------------------------------
                   Guarantors                                             2002               2003             2004
                                                                      --------------     -------------    -------------
                                                                                                     
Net sales......................................................... Ps      3,681.7           3,848.1          4,556.6
Purchases.........................................................        (1,079.2)         (1,380.5)        (1,381.7)
Selling and administrative expenses ..............................        (7,878.6)         (8,613.2)        (7,683.7)
Financial expense.................................................        (4,680.2)         (4,963.1)        (2,831.1)
Financial income .................................................           631.5             360.1            863.6
Other expense, net ............................................... Ps        (62.0)            295.3            580.8
                                                                      --------------     -------------    -------------



Net sales--The Guarantors sell cement and clinker to affiliated companies in
arms-length transactions.

Purchases--The Guarantors purchase raw materials from affiliates in arms-length
transactions.

Selling and administrative expenses--CEMEX allocates part of its corporate
expense to the Guarantors, which also incur rental and trademark rights
expenses payable to CEMEX.

Financial income and expense is recorded in receivables from and payables to
affiliated companies as described above. Additionally, the Guarantors receive
financial income on their temporary investment position, invested in the
non-guarantor treasury company.

Guarantors--U.S. GAAP reconciliation of net income and stockholders' equity:

As discussed at the beginning of this note 24, the following reconciliation to
U.S. GAAP does not include the reversal of Mexican GAAP inflation accounting
adjustments, as these adjustments represent a comprehensive measure of the
effects of price level changes in the inflationary Mexican economy, which 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 GAAP and U.S. GAAP and the effect on net income and
stockholders' equity are presented below, with an explanation of the
adjustments, as follows:




                                                                                   Years ended December 31,
                                                                         ---------------------------------------------
                                                                            2002             2003              2004
                                                                         -----------      -----------       ----------
                                                                                                     
 Net income reported under Mexican GAAP...........................   Ps    (3,453.5)          5,808.9         18,810.2
 Approximate U.S. GAAP adjustments:
 1. Deferred income taxes and ESPS (see note B)...................          2,117.1              (8.4)          (541.2)
 2. Other employees' benefits (see note C)........................            (14.8)             36.5             10.9
 3. Inflation adjustment of machinery and equipment (see note D)..           (200.4)           (123.1)          (108.7)
 4. Other U.S. GAAP adjustments (see note E)......................            331.7            (176.1)         1,159.9
 5. Monetary position result (see note F).........................            541.1             118.4            181.0
                                                                         -----------      -----------       ----------
     Total approximate U.S. GAAP adjustments......................          2,774.7            (152.7)           701.9
                                                                         -----------      -----------       ----------
     Total approximate net income under U.S. GAAP.................   Ps      (678.8)          5,656.2         19,512.1
                                                                         ===========      ===========       ==========





                                                                                             At December 31,
                                                                                  -------------------------------------
                                                                                       2003                 2004
                                                                                  ----------------     ----------------
                                                                                                    
Total stockholders' equity under Mexican GAAP.............................    Ps      86,536.4            101,442.6
Approximate U.S. GAAP adjustments:
 1. Effect of pushdown of goodwill, net (see note A)......................             2,139.2              1,693.8
 2. Deferred income taxes and ESPS (see note B)...........................            (3,447.2)            (3,248.2)
 3. Other employees' benefits (see note C)................................              (105.5)               (89.2)
4. Inflation adjustment for machinery and equipment (see note D)..........             2,279.5              1,805.3
 5. Other U.S. GAAP adjustments (see note E)..............................               581.0              6,656.4
                                                                                  ================     ================
     Total approximate U.S. GAAP adjustments..............................             1,447.0              6,818.1
                                                                                  ----------------     ----------------
     Total approximate stockholders' equity under U.S. GAAP...............   Ps       87,983.4            108,260.7
                                                                                  ================     ================


                                     F-78


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Guarantors--Notes to the U.S. GAAP reconciliation:

A.   Business Combinations

In 1989 and 1990, through an exchange of its shares with CEMEX, CEMEX Mexico
acquired substantially all its Mexican subsidiaries from CEMEX. The original
excess of the purchase price paid by CEMEX over the fair value of the net
assets of these subsidiaries was Ps7,647.0, of which Ps3,955.4 were recorded in
ETM under Mexican GAAP at the time of the acquisition. The net adjustment in
the Guarantors stockholders' equity reconciliation to U.S. GAAP arising from
this pushed-down goodwill, after eliminating the amounts recorded under Mexican
GAAP, was Ps1,274.8 in 2003 and Ps829.4 in 2004.

In addition, during 1995, CEMEX acquired an additional 24.2% equity interest in
TOLMEX, S.A. de C.V. ("TOLMEX"), through a public exchange offer pursuant to
which CEMEX exchanged its own shares for TOLMEX's shares. TOLMEX merged during
1999 with other Mexican subsidiaries creating CEMEX Mexico. The excess of the
purchase price paid by CEMEX over the fair value of the net assets of TOLMEX
was Ps972.6. The net adjustment in the Guarantors' stockholders' equity
reconciliation to U.S. GAAP arising from this pushed-down goodwill was Ps864.4
in 2003 and Ps864.4 in 2004.

As mentioned in note 24(a), for purposes of the reconciliation to U.S. GAAP,
CEMEX adopted SFAS 142 and SFAS 144 in 2002. As a result of this adoption,
effective January 1, 2002, amortization ceased for goodwill under U.S. GAAP
and, therefore, beginning in 2002, goodwill amortization recorded under Mexican
GAAP is adjusted for purposes of the reconciliation of net income and
stockholders' equity.

B. Deferred income taxes and Employees' Statutory Profit Sharing

Deferred income taxes adjustment in the stockholders' equity reconciliation to
U.S. GAAP, at December 31, 2003 and 2004, represented expense of Ps717.4 and
expense of Ps405.9, respectively. In addition, deferred ESPS adjustment to U.S.
GAAP was an expense of Ps2,729.8 in 2003 and an expense of Ps2,842.3 in 2004.

C. Other employees' benefits

The Guarantors do not accrue for severance payments and until December 31,
2002, did not accrue for vacation expense. These items are recognized when
retirements occur or when vacation was taken. Beginning January 1, 2003, in
accordance with new Mexican GAAP pronouncements, the Guarantors began to accrue
for vacation expense on the basis of services rendered. The Guarantors
recognized, for purposes of the U.S. GAAP reconciliation, a liability for
severance benefits for Ps105.5 in 2003 and Ps89.2 in 2004.

D.   Inflation Adjustment of Machinery and Equipment

As previously mentioned in note 24(i), for purposes of the U.S. GAAP
reconciliation, fixed assets of foreign origin were restated using the
inflation factor arising from the Consumer Price Index ("CPI") of each country,
and depreciation is based upon the revised amounts.

E. Other U.S. GAAP adjustments

Deferred charges--For U.S. GAAP purposes, other deferred charges net of
accumulated amortization that did not qualify for deferral under U.S. GAAP have
been charged to expense, with a net effect in the net income reconciliation to
U.S. GAAP of expense of Ps294.3 for the year ended December 31, 2002. Mexican
GAAP allowed the deferral of these expenses. This effect has been cancelled in
stockholders' equity because the intangible assets were sold to Cemex
Trademark Worldwide (CTW), an affiliated company, for a total amount of Ps521.2
in February 2003.

Subsidiary companies--The Guarantors have adjusted their investment and their
equity in the earnings of subsidiary companies for the share of the approximate
U.S. GAAP adjustments applicable to these affiliates. The net effect in the
stockholders' equity reconciliation to U.S. GAAP at December 31, 2003 and 2004
was income of Ps581.0 and income of Ps6,656.4, respectively. The effect on the
net income reconciliation to U.S. GAAP was income of Ps626.0 in 2002 and
expense of Ps176.1 in 2003 and Ps1,159.9 in 2004, respectively. From the U.S.
GAAP adjustments to subsidiary companies in the Guarantors' reconciliation of
stockholders' equity, expense of Ps3,447.2 in 2003 and expense of Ps3,248.2 in
2004, are related to deferred IT and deferred ESPS.

                                     F-79


                      CEMEX, S.A. DE C.V. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)


Affiliates companies--In 2003, the investment in affiliates includes an effect
of Ps682.4 corresponding to the cumulative effect of accounting change; see
notes 24(k), with respect to asset retirement obligations, and 24(m) with
respect to equity forward contracts.

F. Monetary position result

Monetary position result of the U.S. GAAP adjustments is determined by (i)
applying the annual inflation factor to the net monetary position of the U.S.
GAAP adjustments at the beginning of the period, plus (ii) the monetary
position effect of the adjustments during the period, determined in accordance
with the CPI inflation factor for the period.

Supplemental Guarantors' Cash Flow Information under U.S. GAAP

The classifications of cash flows under Mexican GAAP and U.S. GAAP are
basically the same in respect of the transactions presented under each caption.
The nature of the differences between Mexican GAAP and U.S. GAAP in the amounts
reported is primarily due to (i) the elimination of inflationary effects in the
variations of monetary assets and liabilities arising from financing and
investing activities, against the corresponding monetary position result in
operating activities, (ii) the elimination of exchange rate fluctuations
resulting from financing and investing activities, against the corresponding
unrealized foreign exchange gain or loss included in operating activities, and
(iii) the recognition in operating, financing and investing activities of the
U.S. GAAP adjustments.

For the Guarantors, the following table summarizes the cash flow items as
required under SFAS 95 provided by (used in) operating, financing and investing
activities for the years ended December 31, 2002, 2003 and 2004, giving effect
to the U.S. GAAP adjustments, excluding the effects of inflation required by
Bulletin B-10 and Bulletin B-15. The following information is presented, in
millions of pesos, on a historical peso basis and it is not presented in pesos
of constant purchasing power:




                                                                                    Years ended December 31,
                                                                        -------------------------------------------------
                                                                            2002              2003             2004
                                                                        --------------    -------------    --------------
                                                                                                      
 Net cash provided by operating activities.......................... Ps       2,001.4          6,969.9         17,387.8
 Net cash provided by (used in) financing activities................          2,418.5         (5,886.0)            31.1
 Net cash used in investing activities..............................         (3,555.4)        (1,561.2)       (17,355.0)
                                                                        ==============    =============    ==============


Net cash flow from operating activities reflects cash payments for interests
and income taxes as follows:




                                                                                    Years ended December 31,
                                                                        -------------------------------------------------
                                                                            2002              2003             2004
                                                                        --------------    -------------    --------------
                                                                                                           
 Interest paid...................................................... Ps        263.5             149.7              0.1
 Income taxes paid..................................................             -                 -                0.7
                                                                        --------------    -------------    --------------


Guarantors' non-cash activities are comprised of the following:

Dividends declared to CEMEX amounting to Ps2,171.5 in 2002 and Ps6,460.0 in
2003 were recognized by the Guarantors as accounts payable to CEMEX as of
December 31, 2003.

Contingent liabilities of the Guarantors

As of December 31, 2003 and 2004, CEMEX Mexico and ETM guaranteed debt of CEMEX
in the amount of U.S.$3,145 million (Ps37,555.6) and U.S.$3,087.8 million
(Ps34,398.1) (note 12C).

Subsequent event

On March 7, 2005, at the extraordinary shareholders meeting of CEMEX Mexico,
shareholders approved: 1) an increase in capital stock amounting to
approximately U.S.$799.6 millions (Ps8,863.3) and, 2) a capital contribution to
its subsidiary CEDICE amounting to U.S.$799.6 millions (Ps8,863.3).

                                     F-80


            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                  ON SCHEDULES


The Board of Directors and Stockholders
CEMEX, S.A. de C.V.:


Under the date of January 15, 2005, we reported on the consolidated balance
sheets of CEMEX, S.A. de C.V. and subsidiaries as of December 31, 2003 and
2004, and the related consolidated statements of income, changes in
stockholders' equity and changes in financial position for each of the years
ended December 31, 2002, 2003 and 2004, which are included in this annual
report on Form 20-F. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related consolidated
financial statement schedules in the annual report. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.

In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.



KPMG Cardenas Dosal, S.C.



/s/ Leandro Castillo Parada

Monterrey, N.L. Mexico
January 15, 2005

                                      S-1


                                                                     SCHEDULE I


                   CEMEX, S.A. DE C.V. (PARENT COMPANY ONLY)
                                 Balance Sheets
           (Millions of constant Mexican Pesos as of December 31, 2004)



                                                                                            December 31,
                                                                                  ------------------------------------
     Assets                                                                             2003                 2004
                                                                                  -----------------    ---------------
Current Assets
                                                                                                       
   Cash and investments....................................................    Ps          114.5             104.5
   Other receivables (note 3)..............................................                750.5             984.6
   Related parties receivables (note 7)....................................                943.7             691.7
                                                                                  -----------------    ---------------
       Total current assets................................................              1,808.7           1,780.8
                                                                                  -----------------    ---------------

Investments and Noncurrent Receivables
   Investments in subsidiaries and affiliated companies (note 4) ..........             90,012.2         103,554.6
   Other investments.......................................................                 75.6              77.2
   Other noncurrent accounts receivable....................................              1,003.8             793.1
   Long-term related parties receivables (note 7)..........................             36,292.6          33,045.7
                                                                                  -----------------    ---------------
       Total investments and noncurrent receivables........................            127,384.2         137,470.6
                                                                                  -----------------    ---------------

                                                                                  -----------------    ---------------
Land and Buildings.........................................................             1,820.0            1,813.5
                                                                                  -----------------    ---------------
Intangible Assets and Deferred Charges (note 5)............................             5,585.9            4,135.3
                                                                                  -----------------    ---------------

       Total Assets........................................................    Ps     136,598.8          145,200.2
                                                                                  =================    ===============


     Liabilities and Stockholders' Equity
 Current Liabilities
   Bank loans (note 6).........................................................Ps          770.0            1,541.5
   Notes payable (note 6)......................................................          1,991.8               -
   Current maturities of long-term debt (note 6)...............................            743.0            1,759.7
   Other accounts payable and accrued expenses  (note 3).......................          2,968.6              654.8
   Related parties payable (note 7)............................................          4,930.0            6,363.2
                                                                                  -----------------    ----------------
       Total current liabilities...............................................         11,403.4           10,319.2
                                                                                  -----------------    ----------------
Long-Term Debt
   Long-Term debt (note 6).....................................................         23,396.7           22,074.1
   Long-term related parties payables (note 7).................................         25,447.6           24,206.5
                                                                                  -----------------    ----------------
       Total long-term debt....................................................         48,844.3           46,280.6
       Other long-term liabilities.............................................          1,906.3            1,366.3
                                                                                  -----------------    ----------------
Total Liabilities..............................................................         62,154.0           57,966.1
                                                                                  -----------------    ----------------

                                                                                  -----------------    ----------------
Stockholders' Equity...........................................................         74,444.8           87,234.1
                                                                                  -----------------    ----------------

       Total Liabilities and Stockholders' Equity..............................Ps      136,598.8          145,200.2
                                                                                  =================    ================

                See accompanying notes to financial statements.

                                      S-2






                                                                                   SCHEDULE I (Continued)

                   CEMEX, S.A. DE C.V. (PARENT COMPANY ONLY)
                              Statements of Income

 (Millions of constant Mexican Pesos as of December 31, 2004, except for earnings per share)

                                                                                   Years ended December 31,
                                                                          ---------------    --------------    ---------------
                                                                               2002               2003               2004
                                                                          ---------------    --------------    ---------------
                                                                                                           
          Total revenues ..............................................Ps       5,910.7           3,994.8           14,242.9
       Administrative expenses.........................................          (116.4)            (57.8)             (37.5)
                                                                          ---------------    --------------    ---------------
          Operating income.............................................         5,794.3           3,937.0           14,205.4
                                                                          ---------------    --------------    ---------------

              Net comprehensive financing result.......................        (1,503.9)         (1,864.5)           1,225.5

       Other  income (expense), net....................................          (369.3)          4,603.1           (1,172.6)
                                                                          ---------------    --------------    ---------------

          Income before income taxes...................................         3,921.1           6,675.6           14,258.3

       Income tax benefit and business assets tax, net (note 8)........         2,418.1             832.8              304.0
                                                                          ---------------    --------------    ---------------

          Net income...................................................Ps       6,339.2           7,508.4           14,562.3
                                                                          ===============    ==============    ===============



          Basic earnings per share.....................................Ps          1.41              1.58               2.92
          Diluted earnings per share...................................Ps          1.41              1.55               2.90
                                                                          ===============    ==============    ===============

                See accompanying notes to financial statements.


                                      S-3




                                                                                                        SCHEDULE I (Continued)

                   CEMEX, S.A. DE C.V. (PARENT COMPANY ONLY)
                  Statements of Changes in Financial Position

          (Millions of constant Mexican Pesos as of December 31, 2004)


                                                                                        Years ended December 31,
                                                                           ---------------   ---------------   ---------------
                                                                                 2002              2003              2004
                                                                           ---------------   ---------------   ---------------
Operating activities
                                                                                                           
   Net income..........................................................  Ps      6,339.2           7,508.4          14,562.3
   Charges to operations which did not require resources (note 9)......         (6,591.9)         (2,240.1)        (11,891.3)
                                                                           ---------------   ---------------   ---------------
      Resources provided by (used in) operating activities............            (252.7)          5,268.3           2,671.0
   Net change in working capital.......................................          1,193.1          19,089.0            (862.7)
                                                                           ---------------   ---------------   ---------------
      Net resources provided by operating activities..................             940.4          24,357.3           1,808.3
                                                                           ---------------   ---------------   ---------------

Financing activities
   Proceeds from bank loans (repayments), net.........................           3,523.4          (9,901.0)          5,712.0
   Notes payable, net.................................................           4,467.3          (2,326.3)         (7,238.2)
   Liquidation of appreciation warrants...............................                -                 -           (1,053.0)
   Dividends paid.....................................................          (3,984.1)         (4,210.3)         (4,319.4)
   Issuance of common stock from reinvestment of dividends............           3,376.4           3,899.4           4,156.8
   Issuance of common stock under stock option plan...................              79.9              45.3              67.2
   Disposal (acquisition) of shares under repurchase program..........            (425.5)            407.9                 -
   Other financing activities, net....................................             802.6             379.3            (540.0)
                                                                           ---------------   ---------------   ---------------
       Resources (used in) provided by financing activities...........           7,840.0         (11,705.7)         (3,214.6)
                                                                           ---------------   ---------------   ---------------

Investing activities
   Long-term related parties receivables, net.........................          58,037.6         (10,883.9)          2,005.8
   Net change in investment in subsidiaries...........................         (69,166.9)         (7,397.9)         (1,358.9)
   Dividends received.................................................           2,546.1           5,844.6             283.4
   Deferred charges...................................................            (103.1)            (50.1)            267.5
   Other noncurrent accounts receivable...............................             129.8            (452.7)            198.5
                                                                           ---------------   ---------------   ---------------
       Resources (used in) provided by  investing activities..........          (8,556.5)        (12,940.0)          1,396.3
                                                                           ---------------   ---------------   ---------------
       Increase (decrease) in cash and investments....................             223.9            (288.4)            (10.0)
       Cash and investments at beginning of year......................             179.0             402.9             114.5
                                                                           ---------------   ---------------   ---------------
       Cash and investments at end of year............................ Ps          402.9             114.5             104.5
                                                                           ===============   ===============   ===============


                              See accompanying notes to financial statements.

                                      S-4





                                                         SCHEDULE I (Continued)

                              CEMEX, S.A. DE C.V.
             NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS
                        December 31, 2002, 2003 and 2004
          (Millions of constant Mexican Pesos as of December 31, 2004)

1.        DESCRIPTION OF BUSINESS

CEMEX, S.A. de C.V. (CEMEX or the Company) is a Mexican holding company
(parent) of entities whose main activities are oriented to the construction
industry, through the production and marketing of cement and ready-mix
concrete.

2. SIGNIFICANT ACCOUNTING POLICIES

A)  BASIS OF PRESENTATION AND DISCLOSURE

These financial statements have been prepared in accordance with Generally
Accepted Accounting Principles in Mexico ("Mexican GAAP"), which include the
recognition of the effects of inflation on the financial information.

B)  PRESENTATION OF COMPARATIVE FINANCIAL STATEMENTS

The restatement factors for the Parent Company's financial statements of prior
periods were calculated using Mexican inflation.




                                                                   2001 to 2002      2002 to 2003      2003 to 2004
                                                                  --------------    -------------    ---------------
                                                                                               
   Restatement factor using Mexican inflation..................      1.0559            1.0387           1.0539
                                                                  --------------    -------------    ---------------


C)  CASH AND INVESTMENTS

Investments include fixed-income securities with original maturities of three
months or less, as well as marketable securities easily convertible into cash.
Investments in fixed-income securities are recorded at cost plus accrued
interest. Investments in marketable securities are recorded at market value.
Results from changes in market values, accrued interest and the effects of
inflation are included in earnings as part of the Comprehensive Financing
Result.

D)  INVESTMENTS IN SUBSIDIARIES AND AFFILIATED COMPANIES

Investments in common stock representing between 10% and 100% of the issuer's
common stock are accounted for by the equity method. Under the equity method,
after acquisition, the investments original cost are adjusted for the
proportional interest of the holding company in the affiliates equity and
earnings, considering the inflation effects.

E)  LAND AND BUILDINGS

Land and buildings are presented at their restated values using the Mexican
inflation index. Depreciation of buildings is provided on the straight-line
method over the estimated useful lives of the assets. The useful lives of
administrative buildings are approximately 50 years.

F) INTANGIBLE ASSETS, DEFERRED CHARGES AND AMORTIZATION (note 5)

Intangible assets acquired as well as costs incurred in the development stages
of intangible assets are capitalized when associated future benefits are
identified and the control over such benefits is demonstrated. Expenditures not
meeting these requirements are charged to earnings as incurred. Intangible
assets are presented at their restated value and are classified as having a
definite life, which are amortized over the benefited periods, and as having an
indefinite life, which are not amortized since the period cannot be accurately
established in which the benefits associated with such intangibles will
terminate. Amortization of intangible assets, except for goodwill, is
calculated under the straight-line method.

Intangible assets acquired in a business combination are separately accounted
for at fair value at the ac