Exhibit A(5)(B)
[Slide 1]
[CEMEX Logo 1]
Southdown Acquisition
September 2000
www.cemex.com
[CEMEX Logo 2]
[Slide 2]
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This presentation contains certain forward-looking statements and
information relating to CEMEX, S.A. de C.V. and its subsidiaries
(collectively, "CEMEX") that are based on the beliefs of its management as
well as assumptions made by and information currently available to CEMEX.
Such statements reflect the current views of CEMEX with respect to future
events and are subject to certain risks, uncertainties and assumptions.
Many factors could cause the actual results, performance or achievements of
CEMEX to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking
statements, including, among others, changes in general economic,
political, governmental and business conditions globally and in the
countries in which CEMEX does business, changes in interest rates, changes
in inflation rates, changes in exchange rates, the level of construction
generally, changes in cement demand and prices, changes in raw material and
energy prices, changes in business strategy and various other factors.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated, expected
or targeted. CEMEX does not intend, and does not assume any obligation, to
update these forward-looking statements.
UNLESS OTHERWISE NOTED, ALL FIGURES ARE PRESENTED UNDER
MEXICAN GAAP
This presentation is the property of CEMEX, S.A. de C.V., and is provided
exclusively for your use on a confidential basis. This information may not
be copied, quoted or transmitted without the prior written consent of
CEMEX, S.A. de C.V.
Copyright CEMEX, S.A. de C.V. and its subsidiaries.
[CEMEX Logo 2]
[Slide 3]
[CEMEX Logo 1]
Southdown Acquisition
September 2000
www.cemex.com
[CEMEX Logo 2]
[Slide 4]
Transaction Summary
o All cash tender offer for up to 100% and no less than two-thirds of
Southdown's shares, and a merger to follow
o Subject to regulatory approvals and other conditions, we expect to
close in the fourth quarter of 2000 or the first quarter of 2001.
o Price $73.00 per Southdown share
o Total Enterprise Value of $2.85 billion
o 50% funded with preferred stock
o Committed(1) Financial Package
(1) Subject to customary closing requirements
[CEMEX Logo 2]
[Slide 5]
The Deal
CEMEX and Southdown together will achieve a better diversified portfolio
with one of the highest growth rates and strongest free cash flow in the
industry with combined Sales(1) of $6.3 billion and EBITDA(1) of $2.3
billion
(1) LTM as of June 30, 2000
[CEMEX Logo 2]
[Slide 6]
Acquisition Rationale
o Immediately accretive
- Single digit accretion in CEPS and FCFPS in the first year
[CEMEX Logo 2]
[Slide 7]
Acquisition Rationale
o Immediately accretive
o Improves access to funding sources
- Lower WACC
[CEMEX Logo 2]
[Slide 8]
Acquisition Rationale
o Immediately accretive
o Improves access to funding sources
o Potential to create synergies
[CEMEX Logo 2]
[Slide 9]
Acquisition Rationale
o Immediately accretive
o Improves access to funding sources
o Potential to create synergies
o Provides better platform for investments into high growth markets
- Enhances stability of free cash flow
[CEMEX Logo 2]
[Slide 10]
Acquisition Rationale
o Immediately accretive
o Improves access to funding sources
o Potential to create synergies
o Provides better platform for investments into high growth markets
o Fits with CEMEX's strategy and business model
- Supports historic high growth rate
- Meets our acquisition criteria
[CEMEX Logo 2]
[Slide 11]
The CEMEX Business Model
o Focused on cement and related products
o Focus on high growth and/or free cash flow
o Acquire assets that complement existing network
o Achieve required scale in an increasingly global marketplace
o Financial flexibility and investment grade are strategic imperatives
o Achieve returns in excess of WACC
[CEMEX Logo 2]
[Slide 12]
CEMEX Has Delivered High Growth...
76.9 million tons with Southdown
11.6% CAGR (90-00E without Southdown)
13.4% CAGR (90-00E with Southdown)
Continued EBITDA Growth
20.0% CAGR (90-2Q00LTM without Southdown)
23.0% CAGR (90-2Q00LTM with Southdown)
[Included a bar chart showing the growth of CEMEX's tons per year capacity
and the markets CEMEX entered during the relevant year.]
1990 - 23 million tons/year
1991 - 24 million tons/year
1992 - 36 million tons/year (Spain)
1993 - 39 million tons/year
1994 - 45 million tons/year (Venezuela)
1995 - 47 million tons/year
1996 - 50 million tons/year (Colombia)
1997 - 51 million tons/year (Philippines)
1998 - 57 million tons/year
1999 - 65 million tons/year (Costa Rica and Egypt)
2Q00(1) - 76.9 million tons/year (including Southdown)
[GRAPHICS OMITTED]
[Included bar chart showing the growth of (a) sales and EBITDA of CEMEX
from 1990 to 2Q00 and (b) proforma sales and EBITDA of both CEMEX and
Southdown as of the twelve months ended June 30, 2Q00.]
CEMEX
Year Sales (US$ Million) EBITDA (US$ Million)
1991 $1305 $324
1992 1706 567
1993 2194 700
1994 2897 914
1995 2101 719
1996 2564 815
1997 3365 1087
1998 3788 1193
1999 4315 1485
2Q00 5151 1902
2Q00(1) 6340 2327
(1) CEMEX + Southdown Proforma at and for the twelve months ended June 30,
2000.
[CEMEX Logo 2]
[Slide 13]
CEMEX + Southdown
attractive attributes vs. global peers
[GRAPHICS OMITTED]
[Included chart comparing a combined CEMEX and Southdown operation with
other cement companies.]
<TABLE>
<CAPTION>
2000 Estimated US$ CX + SDN (2) Holderbank Lafarge Italcementi Heidelberger
<S> <C> <C> <C> <C> <C>
Net sales 6,340 8,693 11,556 3,468 6,246
EBITDA 2,326 1,947 2,542 858 1,213
EBITDA Margin 37% 22% 22% 25% 19%
Installed Capacity (1) 77 103 85 54 54
1 Million tons per year
2 Proforma LTM as of June 30, 2000 CX + SDN
Source for estimates: ING Barings
</TABLE>
[CEMEX Logo 2]
[Slide 14]
...And One of the Highest Operating
Free Cash Flows(1) in the Industry
[GRAPHICS OMITTED]
[Included a bar chart showing the growth in free cash flow from US$323
million to US$872 million between the years of 1994 and 1999.]
(US$ Million)
1994 $323
1995 -25
1996 213
1997 420
1998 646
1999 872
Year over Year Growth: +97% +54% +35%
CAGR (94-YY): +9% +19% +22%
(1) Operating free cash flow does not include expansion CAPEX
[CEMEX Logo 2]
[Slide 15]
Improving Diversification of Cash Flows...
[GRAPHICS OMITTED]
[Included pie graph of CEMEX EBITDA for last 12 months ended June 30, 2000
by region.]
Mexico - 59%
United States - 6%
Spain - 15%
Venezuela/DR - 10%
Colombia - 4%
Egypt, Philippines,
Costa Rica and Carribean - 6%
[Included pie graph of Proforma CEMEX and Southdown EBITDA for last 12
months ended June 30, 2000 by region.]
Mexico - 49%
United States - 22%
Spain - 12%
Venezuela/DR - 8%
Colombia - 4%
Egypt, Philippines,
Costa Rica and Carribean - 5%
Percentages calculated before eliminations resulting from consolidation.
[CEMEX Logo 2]
[Slide 16]
Providing Returns in Excess of the Cost of Capital
[GRAPHICS OMITTED]
[Included chart graphing return on equity and return on capital employed
for 1992 through 2Q00.]
Year Return on Equity Return on Capital Employed
1992 15.5% 13.6%
1993 13.1% 12.4%
1994 10.2% 9.4%
1995 3.2% 9.9%
1996 9.1% 12.3%
1997 13.9% 12.5%
1998 19.5% 15.7%
1999 21.3% 17.6%
2Q00 21.8% 17.0%
ROE = (EBITDA - net financial expense - cash taxes - other cash expenses +
cash dividends from non consolidated affiliates) / average shareholders'
equity
ROCE = (EBITDA - cash taxes - other cash expenses + cash dividends
from non consolidated affiliates ) / (average shareholders' equity +
average net debt)
[CEMEX Logo 2]
[Slide 17]
Southdown Acquisition: What has changed?
o Industry consolidation dynamics have changed
o Slower pace benefits CEMEX
o Post electoral outlook is better than expected
o We have obtained an investment-grade rating
o After carefully analyzing Southdown...
we like what we have seen!
[CEMEX Logo 2]
[Slide 18]
Why the US?
o Largest market in the world(1)
o Domestic capacity fully utilized
o Over 20% of demand met by imports
o Stable future demand outlook
o Consistent free cash flow generator
(1) Excluding China
[CEMEX Logo 2]
[Slide 19]
Why Southdown?
o Fits with CEMEX's business model
o Second largest US cement producer
<TABLE>
<CAPTION>
- 11.0 million tpy of capacity [GRAPHIC OMITTED] [GRAPHIC OMITTED]
<S> <C> <C>
- 12 plants and 45 terminals serving 27 states [Included pie graph of [Included pie graph of
net sales by product EBITDA by product in
o Ready-mix operations in 1999.] 1999.]
- 3.5 million cubic meters per year Cement 70% Cement 85%
Concrete 21% Concrete 7%
o Aggregate products Aggregates 9% Aggregates 8%
</TABLE>
Sales and EBITDA do not include Highway Safety business division (Sales
US$34.1MM, EBITDA US$3.0MM).
[CEMEX Logo 2]
[Slide 20]
Strong Strategic Fit
o Upon closing and subject to regulatory approvals, CEMEX USA and
Southdown will be merged
o Clarence Comer, President and CEO of Southdown, has agreed to become
the CEO of the new entity
o Operations complement each other
- Few redundancies
(1) Excluding China
[CEMEX Logo 2]
[Slide 21]
Installed Capacity of 11 Million Tons Per Year As of 2000
[GRAPHICS OMITTED]
[Included map of the United States showing locations of Southdown's cement
plants and cement terminals and showing installed capacity (in million tons
per year) at each cement plant as of 2000.]
Cement Plant Production Capacity
Cement Plant Locations (Million tons per year)
Victorville, CA 2.0
Odessa, TX 0.5
Lyons, CO 0.5
Demopolis, AL 0.9
Brookeville, FL 1.3
Clinchfield, GA 0.8
Knoxville, TN 0.8
Pittsburgh, PA 0.4
Wampum, PA 0.8
Fairborn, OH 0.7
Louisville, KY 0.9
Charlevoix, MI 1.4
(1) All figures in may represent plant production capacity in million
tons per year.
[CEMEX Logo 2]
[Slide 22]
Southdown Summary Financials (1)
1998 1999 %
------- ------ ----
Net Sales $1,185 $1,205 2%
EBITDA $ 368 $ 413 12%
EBITDA Margin 31% 34% 3pp
Net Debt $ 168 $ 166 - 1%
Installed Capacity (2) 9.9 10.2 3%
EBITDA-Maint. Capex 307 351 14%
(1) Expressed in US GAAP
(2) Current expansion program will result in 12.8 MTPY capacity by 2002
[CEMEX Logo 2]
[Slide 23]
Leading to a Stronger Financial Performance
o Continued high revenue growth
o Stronger free cash flow growth
o Improved diversification of cash flows
o Better developing / developed market balance
o Lower WACC
[CEMEX Logo 2]
[Slide 24]
Better Balance Between Developing and Developed Markets
Distribution of Production Capacity(1)
[GRAPHICS OMITTED]
[Included two pie graphs of the distribution of installed
production capacity between developing and
developed markets, one graph for CEMEX in 1999 and
another graph combining the operations of CEMEX and
Southdown on a proforma basis.]
CEMEX (1999): 82% Developing Markets and 18% Developed Markets
CEMEX and with Southdown: 71% Developing Markets and 29% Developed Markets
[GRAPHICS OMITTED]
[Included a pie graph showing the distribution of
production capacity between developing and
developed markets as averaged among the other top
five(2) Cement Players.]
Developing Markets - 55%
Developed Markets - 45%
High growth markets and a strong free cash flow have allowed CEMEX to grow
at a faster pace than competition
Source: Cembureau, National Associations, Analyst Reports & Company Research
(1) Weighted capacity
(2) Holderbank, Lafarge, Heidelberger, Italcementi & Blue Circle
[CEMEX Logo 2]
[Slide 25]
Financing Strategy
o 50% funded with preferred equity
o Acquisition through our European subsidiary
- Lower borrowing costs
o Committed(1)financial package
o Intend to maintain investment grade ratings
(1) Subject to customary closing requirements
[CEMEX Logo 2]
[Slide 26]
Preferred Equity at Valenciana Supports Strong Capital Structure
Funding Highlights
o US$1.5 billion in preferred
equity without recourse to
CEMEX or CVCP
[GRAPHICS OMITTED]
[Include table showing the o Facilities for up to US$1.4
detail of the Funding Structure] billion in Southdown
o Intend to maintain
investment grade ratings
(US$ Million) Proforma
Funding Sources 2000 2001
--------------- ----------- -----------
CEMEX Holding
+ Mexico $2,500 $2,500
250(1) 250(1)
Preferred Equity + $1,500 1,500 1,500
Compania Valenciana
de Cementos Portland 1,814 1,550
(including Egypt)
Target + 1,184 1,814 1,100
Total Debt &
Preferred Equity + 2,684 7,248 6,900
(1) Putable to CEMEX in 2005
[CEMEX Logo 2]
[Slide 27]
Preferred Equity
(non-recourse to CEMEX or Valenciana)
Description: Banks acquire US$1.5 Billion of preferred equity issued by
Valenciana
Recourse: Non-recourse to CEMEX or Valenciana. The only source of
repayment is the sale of enough common stock of Valenciana
to redeem the preferred equity
CEMEX
call option: CEMEX avoids dilution by exercising a call
option as follows:
- US$300 million between 9 and 15 months
- US$1,200 million in 18 months
To exercise the option, CEMEX intends to IPO Valenciana
[CEMEX Logo 2]
[Slide 28]
Consolidated Financial Indicators
Before Share Buy-back and Other Acquisitions
[GRAPHICS OMITTED]
[Included graph showing the consolidated financial structure (incorporating
the results of the Southdown acquisition funding package) of CEMEX, S.A. de
C.V. as parent of both CEMEX Mexico (Mexican Operation) and Compania
Valenciana de Cementos Portland, Egypt and Target (International
Operation.]
US $MIL (MEX GAAP) 1999 2Q-00LTM FYF 2000 PROFORMA 2001 2001 W/
$1-1.5K IPO
of CVCP
-------------------------------------------------------------------------------
EBITDA 1,791 1,891 2,050 2,700
FREE CASH FLOW 862 818 1,000 1,150
NET DEBT (1) 4,795 4,445 6,900 6,900 5,400-5,900
EXCESS CASH (2)
>06/00 300 1,450 1,450
-------------------------------------------------------------------------------
NET DEBT MINUS
EXCESS CASH/
EBITADA 2.7x 2.3x 2.7x (3) 2.0x 1.4x-1.6x
INTEREST
COVERAGE (4) 3.6x 3.8x 4.0x 4.0x 4.3x-4.4x
(1) Includes Capital Securities, Equity swaps and/or Acquisition
Preferred Equity
(2) Excess cash (above 06/00 balance) before share buy-back and other
acquisitions
(3) Proforma
(4) Includes preferred equity dividend
[CEMEX Logo 2]
[Slide 29]
Why IPO Valenciana?
o Desirability for CEMEX
- Continue participating in the industry's consolidation
- Access significant Euro indexed investor base
- Reduce cost of capital
o Viability
- Depending on then prevailing market conditions
[CEMEX Logo 2]
[Slide 30]
[CEMEX Logo 1]
Share Repurchase
Program
September 2000
www.cemex.com
[CEMEX Logo 2]
[Slide 31]
Share Repurchase Program Highlights
Program Size Up to US$500 million
Acquiring entity CEMEX, S.A. de C.V.
Eligible securities CEMEX CPO's
Effective Period 15 months through December 2001
Treatment Repurchased shares will be cancelled
Restrictions Customary
[CEMEX Logo 2]
[Slide 32]
Current Valuation Provides Opportunity to Purchase at a Discount to Historical
Multiples
Enterprise value lags growth in cash flows
[GRAPHICS OMITTED]
[Included graph showing that the enterprise value (with average share
price), EBITDA (Trailing 12 months) has not grown at the same pace of
CEMEX's EBITDA and operating free cash flow (trailing 12 months) for years
1992 through August 2000.]
($US MILLION)
ENTERPRISE VALUE EBITDA OPERATING FREE CASH FLOW
---------------- ------- ------------------------
1992 7989 700 -160
1993 9588 914 214
1994 12,304 719 323
1995 8,639 815 -25
1996 10,221 1087 213
1997 11,098 1193 420
1998 9,847 1485 648
1999 11,026 1791 872
August 00 11,366 ---- ---
Source: SSB & CEMEX
Total Enterprise Value using average share price for each period.
Value for 2000 using average share price as of August 15, 2000, number of
shares, net debt and minority interest as June 30, 2000.
[CEMEX Logo 2]
[Slide 33]
Unique Buying Opportunity Given Growth and Strong Free Cash Flow
[GRAPHICS OMITTED]
[Included graph comparing CEMEX's TEV/EBITDA with the average TEV(2)/EBITDA
of the other five Cement Players.(1)]
TOTAL ENTERPRISE VALUE DIVIDED BY EBITDA
CEMEX AVG. TOP 5 OTHER CEMENT Cos.
----- ----------------------------
1990 9.09 6.33
1991 7.84 6.84
1992 11.41 6.9
1993 10.49 7.72
1994 17.11 7.62
1995 10.6 6.6
1996 9.4 6.72
1997 9.3 7.32
1998 6.63 7.72
1999 6.16 7.73
2000 6.97 5.55
Source: SSB and CEMEX
1994 peak in CEMEX's multiple explained by translation effect caused
by the peso devaluation of December 1994.
(1) Holderbank, Lafarge, Heidelberger, Italcementi and Blue Circle
(2) Total enterprise value calculated using average yearly share price.
Multiple as of August 2000 calculated using 2000E Ebitda.
[CEMEX Logo 2]
[Slide 34]
Stock Buyback and Southdown Acquisition Are Accomplished Within Our Targeted
Structure
[GRAPHICS OMITTED]
[Included graph showing interest coverage (1) and net debt minus excess
cash/EBITDA (2) for years 1992 through T'01 under different investment
amount scenarios.]
INTEREST COVERAGE(2) NET DEBT MINUS EXCESS
CASH DIVIDED BY EBITDA(1)
1992 2.6 4.3
1993 1.9 3.8
1994 2.0 5.1
1995 1.3 5.3
1996 1.7 4.6
1997 2.4 4.0
1998 3.0 3.1
1999 3.6 2.7
T'00 4.0 2.7(3)
T'01 4.0 2.2
(1) Includes dividends from Preferred Equity but excludes interest income
from excess cash.
(2) Net Debt includes Preferred Equity
(3) Assumes acquisition before 12/00 and gradual share buy-back
of 1/5 of US$500 million.
[CEMEX Logo 2]
[Slide 35]
CEMEX Can Continue Growing Profitably in the Future...
o CEMEX's capital structure
allows for growth while
lowering risk
o Strong free cash flow [GRAPHICS OMITTED]
beyond 2000 can be used [Included graph illustrating a
for acquisitions sensitivity on CEMEX's financial
ratios based on different investment
o Stronger European amount scenarios.]
subsidiary provides
financial flexibility (IPO
candidate)
Expected EOY2001 additional
investment capacity after Southdown
and US$500MM
stock repurchase program
(USD million)
[CEMEX Logo 2]
[Slide 36]
Demonstrating Commitment to Our Shareholders
o Immediately accretive
o Provides better platform for investments into high growth markets
o Maintains a strong capital structure
o Fits with CEMEX's strategy and business model
o Balanced approach to usage of free cash flow
[CEMEX Logo 2]
[Slide 37]
[CEMEX Logo 1]
Southdown Acquisition
September 2000
www.cemex.com
[CEMEX Logo 2]
