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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1)
OR SECTION 13(5)(1) OF THE SECURITIES EXCHANGE ACT OF 1934.

SOUTHDOWN, INC.
(Name of Subject Company (issuer))

CENA ACQUISITION CORP.
CEMEX, S.A. de C.V.
(Names of Filing Persons (offerors))

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COMMON STOCK, PAR VALUE $1.25 PER SHARE;
RIGHTS TO PURCHASE PREFERRED STOCK
(Title of Class of Securities)

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841297104
(CUSIP Number of Class of Securities)

Ramiro Villarreal
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte.
Monterrey, Nuevo Leon, Mexico 64000
Telephone: (011-528) 328-3000
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of filing persons)

Copies to:

Randall H. Doud, Esq.                    Frank Ed Bayouth II, Esq.
Skadden, Arps, Slate, Meagher              Skadden, Arps, Slate, Meagher 
& Flom LLP                                & Flom LLP
Four Times Square                    1600 Smith Street, Suite 4400
New York, N.Y. 10036                       Houston, Texas 77002
Telephone: 212-735-3000                    Telephone: 713-655-5100

CALCULATION OF FILING FEE
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Amount
of
Transaction                                                     Filing
Valuation*                                                      Fee
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$2,771,635,530                                                  $554,328

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*  For purposes of calculating amount of filing fee only. This amount assumes
the purchase of (i) all outstanding shares of common stock of Southdown,
Inc., including the related rights to purchase preferred stock, and (ii)
shares of common stock of Southdown, Inc., subject to options that will be
vested and exercisable as of the closing of this offer. The amount of the
filing fee calculated in accordance with Rule 0-11 of the Securities
Exchange Act of 1934, as amended, equals 1/50 of 1% of the transaction
value.
[_]  Check the box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number or the Form or Schedule and the date of its filing.

Amount Previously Paid: N/A     Form or Registration No.: N/A
Filing party: N/A               Date Filed: N/A

[_]  Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X]  third-party tender offer subject to Rule 14d-1.

[_]  issuer tender offer subject to Rule 13e-4.

[_]  going-private transaction subject to Rule 13e-3.

[_]  amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the
results of the tender offer:   [_]

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THIS TENDER OFFER STATEMENT ON SCHEDULE TO RELATES TO THE OFFER BY CENA
ACQUISITION CORP. ("PURCHASER"), A DELAWARE CORPORATION AND AN INDIRECT
SUBSIDIARY OF CEMEX, S.A. DE C.V., A COMPANY ORGANIZED UNDER THE LAWS OF THE
UNITED MEXICAN STATES ("CEMEX"), TO PURCHASE ALL OUTSTANDING SHARES OF THE
COMPANY'S COMMON STOCK, PAR VALUE $1.25 PER SHARE AND THE RELATED RIGHTS TO
PURCHASE PREFERRED STOCK PURCHASE RIGHTS (THE "SHARES"), AT $73.00 PER SHARE,
NET TO THE SELLER IN CASH, WITHOUT INTEREST THEREON, UPON THE TERMS AND SUBJECT
TO THE CONDITIONS SET FORTH IN THE OFFER TO PURCHASE AND IN THE RELATED LETTER
OF TRANSMITTAL, COPIES OF WHICH ARE ATTACHED HERETO AS EXHIBITS (a)(1)(A) AND
(a)(1)(B) (WHICH ARE HEREIN COLLECTIVELY REFERRED TO AS THE "OFFER").

ALL OF THE INFORMATION IN THE OFFER TO PURCHASE, THE RELATED LETTER OF
TRANSMITTAL, AND ANY SUPPLEMENTS THERETO RELATED TO THE OFFER HEREAFTER FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE PURCHASER AND CEMEX, IS
HEREBY INCORPORATED BY REFERENCE (WHERE APPROPRIATE) IN ANSWER TO ITEMS 2
THROUGH 11 OF THIS SCHEDULE TO (WHETHER OR NOT IDENTIFIED WITH SPECIFICITY).

Item 1. Summary Term Sheet.

The information set forth in the section of the Offer to Purchase entitled
"Summary Term Sheet" is incorporated herein by reference.

Item 2. Subject Company Information.

(a) The name of the subject company is Southdown, Inc., a Louisiana
corporation (the "Company"), and the address of its principal executive offices
is 1200 Smith Street, Suite 2400, Houston, Texas 77002. Its telephone number is
(713) 650-6200.

(b) The titles of the subject classes of securities being sought are (i)
Common Stock, par value $1.25 per share, and (ii) the related Rights to
Purchase Preferred Stock ((i) and (ii) together, the "Shares"). The information
concerning the securities outstanding set forth under "Introduction" in the
Offer to Purchase is incorporated herein by reference.

(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market is set forth in "Price Range of Shares; Dividends" and "Dividends and
Distributions" in the Offer to Purchase and is incorporated herein by
reference.

Item 3. Identity and Background of the Filing Person.

(a)-(c) The information set forth in "Certain Information Concerning CEMEX
and Purchaser" and Schedule I in the Offer to Purchase is incorporated herein
by reference.

Item 4. Terms of the Transaction.

(a)(1)(i)-(viii) The information set forth under "Introduction", "Terms of
the Offer", "Procedures for Accepting the Offer and Tendering Shares",
"Withdrawal Rights", "Acceptance for Payment and Payment for Shares", "Purpose
of the Offer; Plans for the Company" and "Source and Amount of Funds" in the
Offer to Purchase is incorporated herein by reference.

(a)(1)(ix)-(xi) Not applicable.

(xii) The information set forth under "Certain United States Federal Income
Tax Consequences" in the Offer to Purchase is incorporated herein by reference.

(a)(2) Not applicable.

2

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

The information set forth in "Background of the Offer; Past Contacts or
Negotiations with the Company", "The Merger Agreement and the Confidentiality
Agreement", "Certain Information Concerning CEMEX and the Purchaser" and
"Purpose of the Offer; Plans for the Company" in the Offer to Purchase is
incorporated herein by reference.

Item 6. Purpose of the Transaction and Plans or Proposals.

(a)-(c) The information set forth in "Introduction", "The Merger Agreement
and the Confidentiality Agreement", "Purpose of the Offer; Plans for the
Company", "Certain Effects of the Offer" and "Dividends and Distributions" in
the Offer to Purchase is incorporated herein by reference.

Item 7. Source and Amount of Funds or Other Consideration.

(a)-(b), (d) The information set forth in "Source and Amount of Funds" in
the Offer to Purchase is incorporated herein by reference.

Item 8. Interest in Securities of the Subject Company.

(a)-(b) None. The information set forth in "Introduction", "Certain
Information Concerning the Company", "Certain Information Concerning CEMEX and
Purchaser" and Schedule I in the Offer to Purchase is incorporated herein by
reference.

Item 9. Persons/Assets, Retained, Employed, Compensated or Used.

The information set forth in "Introduction" and "Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.

Item 10. Financial Statements.

The information set forth in "Certain Information Concerning CEMEX and
Purchaser" and "Annex A-- Financial Statements of CEMEX, S.A. de C.V." of the
Offer to Purchase is incorporated herein by reference.

Item 11. Additional Information.

The information set forth in "Introduction", "Certain Information Concerning
CEMEX and Purchaser", "The Merger Agreement and the Confidentiality Agreement",
"Certain Conditions of the Offer" and "Certain Legal Matters; Regulatory
Approvals" of the Offer to Purchase is incorporated herein by reference.

Item 12. Exhibits.

(a)(1)(A) Offer to Purchase dated October 5, 2000.

(a)(1)(B) Letter of Transmittal.

(a)(1)(C) Notice of Guaranteed Delivery.

(a)(1)(D) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.

(a)(1)(E) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.

(a)(1)(F) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.

(a)(5)(A) Joint Press Release issued by CEMEX and the Company on September 29,
2000.

3

(a)(5)(B) Summary Advertisement as published in The Wall Street Journal on
October 5, 2000.

(a)(5)(C) Consent of Independent Auditors, dated October 3, 2000.

(a)(5)(D) Consent of Independent Auditors, dated October 4, 2000.

(b)(1)    Commitment Letter, dated September 28, 2000, among The Chase
Manhattan Bank, Deutsche Bank AG London, Chase Manhattan PLC,
Deutsche Bank AG Securities Inc. and CEMEX.

(b)(2)    Commitment Letter, dated September 28, 2000, among Salomon Smith
Barney Inc., Citibank, N.A. and CEMEX.

(d)(1)    Agreement and Plan of Merger, dated as of September 28, 2000, among
CEMEX, Purchaser and the Company (incorporated herein by reference
to Exhibit 2.1 to the Company's Current Report on Form 8K filed on
September 29, 2000).

(d)(2)    Confidentiality Agreement, dated August 11, 2000, between CEMEX and
the Company (incorporated herein by reference to Exhibit (e)(3) to
the Company's Solicitation/Recommendation Statement on Schedule 14D-
9 filed on October 5, 2000).

(g)       Not applicable.

(h)       Not applicable.

4

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.

CENA Acquisition Corp.

By: /s/   Jeffrey H. Smith
__________________________________
Name: Jeffrey H. Smith
Title: Director and Treasurer

CEMEX, S.A. de C.V.

By: /s/    Francisco Garza
__________________________________
Name: Francisco Garza
Title:  President of CEMEX North
America and Trading

Dated: October 5, 2000

5

EXHIBIT INDEX

Exhibit                                                                  Page
No.                            Exhibit Name                           Number
-------                          ------------                           ------

(a)(1)(A) Offer to Purchase dated October 5, 2000.....................

(a)(1)(B) Letter of Transmittal.......................................

(a)(1)(C) Notice of Guaranteed Delivery...............................

(a)(1)(D) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees................................

(a)(1)(E) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees...................

(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9...............................

(a)(5)(A) Joint Press Release issued by CEMEX and the Company on
September 29, 2000. ........................................

(a)(5)(B) Summary Advertisement as published in The Wall Street
Journal on October 5, 2000..................................

(a)(5)(C) Consent of Independent Auditors, dated October 3, 2000......

(a)(5)(D) Consent of Independent Auditors, dated October 4, 2000......

(b)(1)    Commitment Letter, dated September 28, 2000, among The Chase
Manhattan Bank, Deutsche Bank AG London Chase Manhattan PLC,
Deutsche Bank AG Securities Inc. and CEMEX..................

(b)(2)    Commitment Letter, dated September 28, 2000, among Salomon
Smith Barney Inc., Citibank, N.A. and CEMEX.................

(d)(1)    Agreement and Plan of Merger, dated as of September 28,
2000, among CEMEX, Purchaser and the Company (incorporated
herein by reference to Exhibit 2.1 to the Company's Current
Report on Form 8K filed on September 29, 2000)..............

(d)(2)    Confidentiality Agreement, dated August 11, 2000, between
CEMEX and the Company (incorporated herein by reference to
Exhibit (e)(3) to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed on October 5, 2000) ......

(g)       Not applicable..............................................

(h)       Not applicable..............................................

6

EXHIBIT (A)(1)(A)
Offer To Purchase For Cash
All Outstanding Shares of Common Stock
(Including the Related Rights to Purchase Preferred Stock)
of
Southdown, Inc.
at
U.S.$73.00 Net Per Share
by
CENA Acquisition Corp.,
an indirect subsidiary of
CEMEX, S.A. de C.V.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.

THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER, DATED
AS OF SEPTEMBER 28, 2000 (THE "MERGER AGREEMENT"), AMONG CEMEX, S.A. DE C.V., A
CORPORATION ORGANIZED UNDER THE LAWS OF UNITED MEXICAN STATES ("CEMEX"), CENA
ACQUISITION CORP., A DELAWARE CORPORATION AND AN INDIRECT SUBSIDIARY OF CEMEX
("PURCHASER"), AND SOUTHDOWN, INC., A LOUISIANA CORPORATION ("SOUTHDOWN" OR THE
"COMPANY").

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED (OTHER THAN BY GUARANTEED DELIVERY WHERE ACTUAL DELIVERY HAS NOT TAKEN
PLACE) AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $1.25 PER SHARE, OF THE COMPANY, INCLUDING
THE RELATED RIGHTS TO PURCHASE PREFERRED STOCK (COLLECTIVELY, THE "SHARES"),
WHICH REPRESENTS AT LEAST TWO-THIRDS OF THE THEN OUTSTANDING SHARES ON A FULLY
DILUTED BASIS AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER HAVING
EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. PLEASE READ SECTIONS 1 AND 15
WHICH SET FORTH IN FULL THE CONDITIONS TO THE OFFER.

THE COMPANY'S BOARD OF DIRECTORS, AT A SPECIAL MEETING HELD ON SEPTEMBER 28,
2000, UNANIMOUSLY (1) DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO THE
SHAREHOLDERS AND IN THE BEST INTERESTS OF THE COMPANY AND THE COMPANY'S
SHAREHOLDERS; (2) APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER; AND (3)
RECOMMENDED THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND, IF
SHAREHOLDER APPROVAL IS NECESSARY, APPROVE THE MERGER AGREEMENT AND THE MERGER.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU ACCEPT THE OFFER AND
TENDER ALL OF YOUR SHARES OF THE COMPANY'S COMMON STOCK PURSUANT TO THE OFFER.

IMPORTANT

Any shareholder of the Company wishing to tender Shares in the Offer must
(1) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal or such facsimile and all other required
documents to the Depositary (as defined herein) together with certificates
representing the Shares tendered or follow the procedure for book-entry
transfer set forth in Section 3 or (2) request such shareholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for the shareholder. A shareholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such person if such shareholder wishes to tender such Shares.

Any shareholder of the Company who wishes to tender Shares and cannot
deliver certificates representing such Shares and all other required documents
to the Depositary on or prior to the Expiration Date (as defined herein) or who
cannot comply with the procedures for book-entry transfer on a timely basis may
tender such Shares pursuant to the guaranteed delivery procedure set forth in
Section 3.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of
this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be obtained from the Information Agent
or from brokers, dealers, commercial banks, trust companies or other nominees.

The Dealer Manager for the Offer is:
Salomon Smith Barney

October 5, 2000

TABLE OF CONTENTS

Page
----

SUMMARY TERM SHEET......................................................   1
INTRODUCTION............................................................   6
THE TENDER OFFER........................................................   9
1.  Terms of the Offer..............................................    9
2.  Acceptance for Payment and Payment for Shares...................   11
3.  Procedures for Accepting the Offer and Tendering Shares.........   12
4.  Withdrawal Rights...............................................   15
5.  Certain United States Federal Income Tax Consequences...........   15
6.  Price Range of Shares; Dividends................................   16
7.  Certain Information Concerning the Company......................   17
8.  Certain Information Concerning CEMEX and Purchaser..............   17
9.  Source and Amount of Funds......................................   18
10. Background of the Offer; Past Contacts or Negotiations with the
Company.........................................................   22
11. The Merger Agreement and the Confidentiality Agreement..........   22
12. Purpose of the Offer; Plans for the Company.....................   39
13. Certain Effects of the Offer....................................   40
14. Dividends and Distributions.....................................   41
15. Certain Conditions of the Offer.................................   42
16. Certain Legal Matters; Regulatory Approvals.....................   44
17. Fees and Expenses...............................................   46
18. Miscellaneous...................................................   46
Schedule I -- Information Concerning Directors and Executive Officers of
CEMEX and Purchaser................................................... I-1
Annex A -- Financial Statements of CEMEX, S.A. de C.V................... F-1

SUMMARY TERM SHEET

CENA Acquisition Corp. is offering to purchase all of the outstanding common
stock of Southdown, Inc. for $73.00 per share in cash. The following are some
of the questions you, as a shareholder of Southdown, may have and answers to
those questions. We urge you to read carefully the remainder of this Offer to
Purchase and the Letter of Transmittal because the information in this summary
term sheet is not complete. Additional important information is contained in
the remainder of this Offer to Purchase and the Letter of Transmittal.

WHO IS OFFERING TO BUY MY SECURITIES?

We are CENA Acquisition Corp, a newly formed Delaware corporation and an
indirect subsidiary of CEMEX. We have been formed for the purpose of making a
tender offer for all of the common stock of Southdown and have carried on no
activities other than in connection with the merger agreement among CEMEX,
Southdown and ourselves. CEMEX is a corporation organized under the laws of the
United Mexican States. CEMEX is the third largest cement company in the world.
See the "Introduction" and Section 1.

WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?

We are seeking to purchase all of the issued and outstanding shares of
common stock of Southdown, including the related rights to purchase preferred
stock. See the "Introduction" and Section 1.

HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?

We are offering to pay $73.00 per share, net to you, in cash, without
interest. If you are the record owner of your shares and you tender your shares
to us in the offer, you will not have to pay brokerage fees or similar
expenses. If you own your shares through a broker or other nominee, and your
broker tenders your shares on your behalf, your broker or nominee may charge
you a fee for doing so. You should consult your broker or nominee to determine
whether any charges will apply. See "Introduction."

DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?

CEMEX, our parent company, will provide us with sufficient funds to purchase
all shares validly tendered and not withdrawn in the tender offer and to
provide funding for the merger that is expected to follow the successful
completion of the tender offer. CEMEX has arranged for $1.5 billion of our
funding to come from a bridge equity facility and the remainder through a $1.4
billion Senior Credit Facility. However, our obligation to purchase the shares
of common stock, including the related rights to purchase preferred stock, is
not conditioned on any financing or subject to any financing condition. See
Section 9 for a description of our financing arrangements.

IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?

We do not think our financial condition is relevant to your decision whether
to tender in the offer because the form of consideration consists solely of
cash and our offer is not contingent upon our receipt of financing. See Section
9 for a description of our financing arrangements.

HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?

You will have until 12:01 a.m., New York City time, on Friday, November 3,
2000, to tender your shares in the offer, unless the offer is extended. If you
cannot deliver everything that is required in order to make a valid tender by
that time, you may be able to use a guaranteed delivery procedure, which is
described later in this Offer to Purchase. See Sections 1 and 3.

1

CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?

We expressly reserve the right, subject to the terms of the merger agreement
and applicable law, to extend the period of time during which the offer remains
open. We have agreed in the merger agreement that we may extend the offer if

(a) certain conditions to the offer have not been satisfied,

(b) any rule, regulation, interpretation or position of the Securities and
Exchange Commission or its staff applicable to the offer requires an
extension,

(c) immediately before the scheduled or extended expiration date of the
offer, the shares tendered and not withdrawn constitute more than 80%
and less then 90% of the issued and outstanding shares of Southdown
common stock, or

(d) in some circumstances, we receive written notice from Southdown with
respect to a third party proposal to purchase all of the shares of
Southdown's common stock that Southdown's board of directors decides is
superior to Southdown and you from a financial point of view.

If any condition to the tender offer is not satisfied or waived on any
scheduled or extended expiration date of the tender offer, subject to the terms
of the merger agreement, CENA Acquisition Corp. must extend the tender offer,
if such condition or conditions could reasonably be expected to be satisfied,
until such conditions are satisfied or waived.

If all conditions to the offer have been satisfied or waived but the
Southdown common stock tendered and not withdrawn pursuant to the offer
constitutes less than 90% of the outstanding common stock, we have the right to
accept for payment and pay for all shares validly tendered and not withdrawn at
such time (which shares may not thereafter be withdrawn) and extend the offer
to provide a "subsequent offering period" during which time shareholders whose
shares have not been accepted for payment may tender their shares and receive
the offer consideration. There will be no withdrawal rights during the
subsequent offering period. In addition, if we elect to provide a subsequent
offering period, the federal securities laws require a subsequent offering
period of three business days to 20 business days during which the tenders can
be accepted.

See Section 1 and "Termination" of Section 11 of this Offer to Purchase for
more details on our ability to extend the offer.

HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?

If we extend the offer, we will inform Citibank, N.A. (the depositary for
the offer) of that fact and will make a public announcement of the extension
not later than 9:00 a.m., New York City time, on the next business day after
the day on which the offer was scheduled to expire. See Section 1.

WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?

. We are not obligated to purchase any shares that are validly tendered
unless the number of shares validly tendered (other than by guaranteed
delivery where actual delivery has not occurred) and not withdrawn before
the expiration date of the offer represents at least two-thirds of the
then outstanding shares on a fully diluted basis (after giving effect to
the conversion or exercise of all outstanding options, warrants and other
rights and securities exercisable or convertible into shares of Southdown
common stock, whether or not exercised or converted at the time of
determination). See "Introduction" and Section 11.

. We are not obligated to purchase shares that are validly tendered if
there is a change in the business, assets, liabilities, financial
condition, capitalization, operations or results of operations of
Southdown that has had or would reasonably be expected to have a material
adverse effect on Southdown and its subsidiaries, taken as a whole, or
its ability to complete the transactions under the merger agreement.

2

. We are not obligated to purchase shares that are validly tendered if the
applicable waiting period under the Hart-Scott-Rodino Act has not expired
or been terminated. See Section 16.

. We are not obligated to purchase shares that are validly tendered if all
filings and consents required in connection with all federal, state,
local and foreign permits and licenses from governmental authorities are
not made or obtained, and the failure of which to make or obtain prior to
the closing of the offer would reasonably be expected to have (a) an
adverse effect on the continued operation following the offer and the
merger of Southdown's operations in all material respects as it is
presently conducted or (b) a material adverse effect on (i) the ability
of Southdown to perform in all material respects its obligations under
the merger agreement or to consummate the transactions contemplated by
the merger agreement or (ii) the business, assets, liabilities, results
of operations or financial condition of Southdown and its subsidiaries,
taken as a whole.

. We are not obligated to purchase shares that are validly tendered if (a)
necessary consents or approvals from the United States Maritime
Administration are not received with respect to the transfer or
termination of the capital construction fund and any transfer of vessels
or continued use of vessels owned and operated by Southdown or any of its
subsidiaries that are operated in the coastwise trade or (b) consents
from (or amendments to agreements with) the lenders under Southdown's
debt agreements (other than the Company's Series B 10% Senior
Subordinated Notes due 2006) to waive until the earlier of (i) the
effective time of the closing of the merger and (ii) March 31, 2000 any
"change of control" defaults that may occur thereunder by reason of the
closing of the offer and to defer any right to repayment thereunder by
reason of a "change of control" until the effective time of the closing
of the merger.

. We are not obligated to purchase shares that are validly tendered if
there shall have occurred (1) any general suspension of trading in, or
limitation on prices for, securities in the New York Stock Exchange
(excluding any coordinated trading halt triggered solely as a result of a
specified decrease in a market index and excluding any suspension or
limitation resulting from physical damage or interference with any
exchange not related to market conditions), (2) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States or the Republic of Mexico (whether or not mandatory),
(3) a commencement or escalation of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States or the Republic of Mexico which materially adversely
affects or delays the offer, (4) any limitation (whether or not
mandatory) by any governmental authority on the extension of credit by
banks or other financial institutions in a manner which prohibits the
extension of funds to CEMEX or us, (5) a change in general financial bank
or capital market conditions which materially or adversely affects the
ability of financial institutions in the European Union, the United
States or the Republic of Mexico to extend credit or syndicate loans or
(6) in the case of any of the foregoing existing at the time of the
commencement of the tender offer, a material acceleration or worsening
thereof.

The offer is also subject to a number of other conditions. We can waive some
of the conditions to the offer without Southdown's consent; however, we cannot
waive the minimum condition without Southdown's written consent. See Sections 1
and 15.

Our obligation to purchase shares under the offer is not conditioned on any
financing arrangements or subject to any financing condition. See Section 9 for
information about our financing arrangements.

HOW DO I TENDER MY SHARES?

To tender shares:

. You must deliver the certificates representing your shares, together with
a completed letter of transmittal and any other documents required by the
letter of transmittal, to Citibank, N.A., the depositary for the offer,
not later than the time the tender offer expires.

3

. If your shares are held in street name, your shares can be tendered by
your nominee through Citibank, N.A.

. If you are unable to deliver any required document or instrument to the
depositary by the expiration of the offer, you may gain some extra time
by having a broker, a bank or other fiduciary that is an eligible
institution guarantee that the missing items will be received by the
depositary within three New York Stock Exchange trading days. For the
tender to be valid, however, the depositary must receive the missing
items within that three trading day period.

See Section 3.

UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?

You may withdraw shares at any time until the offer has expired. You may
not, however, withdraw any shares that are tendered during the subsequent
offering period, if there is one. See Section 4.

HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?

To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to Citibank, N.A. while you
still have the right to withdraw the shares. See Section 4.

WHAT DOES SOUTHDOWN'S BOARD OF DIRECTORS RECOMMEND REGARDING THE OFFER?

We are making the offer pursuant to the merger agreement, which has been
unanimously approved by Southdown's board of directors. Southdown's board of
directors, at a special meeting held on September 28, 2000, unanimously:

(a) determined that the merger agreement and the transactions contemplated
thereby, including the tender offer and the merger, are fair to
Southdown's shareholders and in the best interests of Southdown and its
shareholders;

(b) approved and adopted the merger agreement and the transactions
contemplated by the merger agreement, including the tender offer and
the merger; and

(c) recommended that Southdown's shareholders (i) accept the tender offer
and (ii) if shareholder approval is necessary, approve the merger
agreement and the merger.

Accordingly, Southdown's board of directors recommends that you accept the
offer and tender all of your shares of common stock pursuant to the offer. See
"Introduction."

IF TWO-THIRDS OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL
SOUTHDOWN CONTINUE AS A PUBLIC COMPANY?

No. Following the purchase of shares in the offer we expect to consummate
the merger. If the merger takes place, Southdown will no longer be publicly
owned. Even if for some reason the merger does not take place, if we purchase
all of the tendered shares, there may be so few remaining shareholders and
publicly held shares that Southdown common stock will no longer be eligible to
be traded on the New York Stock Exchange, there may not be a public trading
market for Southdown common stock, and Southdown may cease making filings with
the SEC or otherwise cease being required to comply with the SEC rules relating
to publicly held companies. See Section 13.

WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE SOUTHDOWN SHARES
ARE NOT TENDERED IN THE OFFER?

Yes. If the number of shares of Southdown tendered represent at least two-
thirds of the shares of Southdown on a fully diluted basis, we will be merged
with and into Southdown. If that merger takes place,

4

CEMEX will indirectly own all of the shares of Southdown, and all remaining
shareholders of Southdown (other than shareholders properly exercising
dissenters' rights) will receive $73.00 per share in cash (or any higher price
per share that is paid in the offer). See "Introduction."

IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?

If the merger described above takes place, shareholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer, subject to any
dissenters' rights properly exercised under Louisiana law. Therefore, if the
merger takes place and you do not exercise dissenters' rights, the only
difference to you between tendering your shares and not tendering your shares
is that you will be paid earlier if you tender your shares. If the merger does
not take place, however, the number of shareholders and the number of shares of
Southdown common stock that are still in the hands of the public may be so
small that there no longer will be an active public trading market (or,
possibly, there may not be any public trading market) for Southdown common
stock. Also, as described above, Southdown may cease making filings with the
SEC or otherwise may not be required to comply with the SEC rules relating to
publicly held companies. See "Introduction" and Sections 12 and 13.

WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?

On September 28, 2000, the last trading day before we announced the
acquisition, the last sale price of Southdown common stock reported on the New
York Stock Exchange was $56.00 per share. On October 4, 2000, the last trading
day before we commenced the tender offer, the last sale price of Southdown
common stock reported on the New York Stock Exchange was $71.25. We encourage
you to obtain a recent quotation for shares of Southdown common stock in
deciding whether to tender your shares. See Section 6.

GENERALLY, WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
TENDERING SHARES?

The receipt of cash for shares pursuant to the tender offer or the merger
will be a taxable transaction for United States federal income tax purposes and
possibly for state, local and foreign income tax purposes as well. See Section
5. We encourage you to seek independent tax advise regarding the tax
consequences of tendering your shares.

TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?

You may call MacKenzie Partners, Inc. at (800) 322-2885 (toll free) or
Salomon Smith Barney Inc. at (877) 755-4456 (toll free). MacKenzie Partners,
Inc. is acting as the information agent and Salomon Smith Barney Inc. is acting
as the dealer manager for our tender offer. See the back cover of this Offer to
Purchase.

5

To the Holders of Shares of Common Stock
of Southdown, Inc.:

INTRODUCTION

CENA Acquisition Corp. ("Purchaser"), a Delaware corporation and an indirect
subsidiary of CEMEX, S.A. de C.V., a corporation organized under the laws of
the United Mexican States ("CEMEX"), hereby offers to purchase all of the
issued and outstanding shares of common stock, par value $1.25 per share (the
"Company Common Stock"), of Southdown, Inc., a Louisiana corporation (the
"Company" or "Southdown"), including the related rights to purchase preferred
stock (the "Rights") issued pursuant to the Rights Agreement, dated March 4,
1991, as amended as of September 28, 2000 (the "Rights Agreement"), between the
Company and American Stock Transfer and Trust Company (the shares of the
Company Common Stock and any related Rights are herein referred to as the
"Shares"), at a purchase price of $73.00 per Share (the "Offer Price"), net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (the "Letter of Transmittal"), (which, together with this Offer to
Purchase and any amendments or supplements hereto or thereto, collectively
constitute the "Offer").

The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of September 28, 2000 (the "Merger Agreement") among CEMEX, Purchaser, and
the Company. Capitalized terms used herein and not otherwise defined have the
meanings ascribed to them in the Merger Agreement. The Merger Agreement
provides that, following the Offer, Purchaser will be merged with and into the
Company (the "Merger"), with the Company continuing as the surviving
corporation (the "Surviving Corporation"). The Company will be an indirect
subsidiary of CEMEX. Pursuant to the Merger, at the effective time of the
Merger (the "Effective Time") each Share outstanding immediately prior to the
Effective Time (other than Shares owned by CEMEX, Purchaser, the Company or any
of their respective subsidiaries, all of which will be cancelled, and other
than Shares that are held by shareholders, if any, who properly exercise their
dissenters' rights under the Louisiana Business Corporation Law (the "LBCL"))
will be converted into the right to receive $73.00 or any greater per Share
price paid in the Offer in cash, without interest (the "Merger Consideration").
Without limiting the foregoing, effective upon acceptance for payment of Shares
pursuant to the Offer in accordance with the terms hereof, the holder of such
Shares will sell and assign to Purchaser all right, title and interest in and
to all of the Shares tendered (including, but not limited to, such holder's
right to any and all dividends and distributions with a record date before, and
a payment date after, the scheduled or extended expiration date). The Merger
Agreement is more fully described in Section 11.

Tendering shareholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the purchase
of Shares by Purchaser pursuant to the Offer. Shareholders who hold their
Shares through a broker or bank should consult such institution as to whether
it charges any service fees. CEMEX or Purchaser will pay all charges and
expenses of Salomon Smith Barney Inc. ("Salomon Smith Barney"), as dealer
manager (the "Dealer Manager"), Citibank, N.A., as depositary (the
"Depositary"), and MacKenzie Partners, Inc., as information agent (the
"Information Agent"), incurred in connection with the Offer. See Section 17.

The Company's Board of Directors, at a special meeting held on September 28,
2000, unanimously (1) determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to the
Company's shareholders and in the best interests of the Company and the
Company's shareholders; (2) approved and adopted the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger; and (3)
recommended that the Company's shareholders (A) accept the Offer and (B) if
shareholder approval is necessary, approve the Merger Agreement and the Merger.
Accordingly, the Company's Board of Directors recommends that you accept the
Offer and tender all of your Shares pursuant to the Offer.

6

Lehman Brothers Inc. ("Lehman Brothers"), the financial advisor to the
Company's Board of Directors, has delivered its written opinion, dated
September 28, 2000, to the effect that, as of the date of the opinion, the
consideration to be received by the Company's shareholders is fair, from a
financial point of view, to the Company's shareholders (other than CEMEX and
any of its affiliates). The full text of Lehman Brothers' written opinion,
which describes the assumptions made, procedures followed, matters considered
and limitations on the review undertaken, is included as Annex I to the
Company's Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which is being mailed to shareholders concurrently with
this Offer to Purchase. Shareholders are urged to read the full text of such
opinion carefully in its entirety.

The Offer is conditioned upon, among other things, (1) there being validly
tendered (other than by guaranteed delivery where actual delivery has not
occurred) and not withdrawn prior to the expiration of the Offer that number of
Shares which represents at least two-thirds of the then outstanding shares on a
fully diluted basis, after giving effect to the conversion or exercise of all
outstanding options, warrants and other rights and securities exercisable or
convertible into common stock, whether or not exercised or converted at the
time of determination (the "Minimum Condition") and (2) any waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the regulations thereunder having expired or been terminated. The Offer is also
subject to certain other conditions contained in Section 15. Please read
Section 15, which sets forth in full the conditions to the Offer. Purchaser's
obligation to purchase Shares under the Offer is not conditioned on any
financing arrangements or subject to any financing condition. See Section 9 for
a description of Purchaser's financing arrangements.

The Company has represented to CEMEX that, as of September 30, 2000, there
were 35,954,927 Shares issued and outstanding, 2,012,683 Shares reserved for
issuance under outstanding stock options, no shares of the Company's preferred
stock issued and outstanding, and 4,083,645 Shares issued and held in the
treasury of the Company. Accordingly, the Minimum Condition will be satisfied
if 25,311,740 Shares are tendered in the Offer and not withdrawn. See Section
11.

The Merger Agreement provides that promptly upon the purchase of and payment
for not less than a majority of the outstanding Shares on a fully diluted basis
by Purchaser pursuant to the Offer, CEMEX shall be entitled to designate for
appointment or election to the Company's Board of Directors, upon written
notice to the Company, such number of directors, rounded up to the next whole
number, on such Board of Directors such that the percentage of its designees on
such Board of Directors shall equal the percentage of the Shares beneficially
owned by Purchaser and its affiliates. In furtherance thereof, the Company
shall, upon request of Purchaser, use its reasonable best efforts promptly to
cause CEMEX's designees (and any replacement designees in the event that any
designee shall no longer be on the Company's Board of Directors) to be so
elected to the Company's Board of Directors, and in furtherance thereof, to the
extent necessary, increase the size of such Board of Directors or use its
reasonable best efforts to obtain the resignation of such number of its current
directors as is necessary to give effect to the foregoing provision. At such
time, the Company shall also, upon the request of Purchaser, use its reasonable
best efforts to cause Persons designated by CEMEX to constitute at least the
same percentage (rounded up to the next whole number) as is on the Company's
Board of Directors of (i) each committee of the Company's Board of Directors,
(ii) each board of directors (or similar body) of each subsidiary of the
Company and (iii) each committee (or similar body) of each such board (or, with
respect to clause (ii) and (iii) in the case of the Kosmos Cement Company, a
partnership (the "Partnership")). The Merger Agreement provides that, until the
Effective Time, the Company's Board of Directors will have at least three
directors who are directors of the Company on the date of the Merger Agreement
and who are not officers or affiliates of the Company or any of its
subsidiaries ("Independent Directors"); provided, however, that notwithstanding
the foregoing,

(a) in no event shall the requirement to have at least three Independent
Directors result in CEMEX's designees constituting less than a majority
of the Company's Board of Directors unless CEMEX shall have failed to
designate a sufficient number of persons to constitute at least a
majority and

7

(b) if the number of Independent Directors shall be reduced below three for
any reason whatsoever (or if immediately following consummation of the
Offer there are not at least three then-existing directors of the
Company who (1) are Qualified Persons (as defined below) and (2) are
willing to serve as Independent Directors), then the number of
Independent Directors required under the Merger Agreement shall be
reduced to equal to the number of then-serving Independent Directors,
unless the remaining Independent Director(s) are able to identify a
person(s) who are not officers or affiliates of the Company, CEMEX or
any of their respective subsidiaries (any such person being referred to
in the Merger Agreement as a "Qualified Person") willing to serve as an
Independent Director, in which case such remaining Independent
Director(s) shall be entitled to designate any such Qualified Person(s)
to fill such vacancies and such designated Qualified Person shall be
deemed to be an Independent Director for purposes of the Merger
Agreement, or if no Independent Directors then remain, the other
Directors shall be entitled to designate three Qualified Persons to
fill such vacancies, and such persons shall be deemed to be Independent
Directors for purposes of the Merger Agreement.

See Section 11.

The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval and adoption of the Merger Agreement by
the affirmative vote of the holders of the greater of (a) two-thirds of the
shares of Company Common Stock present at the shareholders' meeting and (b) not
less than a majority of the vote of all outstanding shares of the Company
Common Stock. If the Minimum Condition is satisfied, Purchaser would have
sufficient voting power to approve the Merger without the affirmative vote of
any other shareholder of the Company. The Company has agreed, if required, to
cause a meeting of its shareholders to be held as promptly as practicable
following consummation of the Offer for the purposes of considering and taking
action upon the approval and adoption of the Merger Agreement. See Section 11.

This Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.

8

THE TENDER OFFER

1. Terms of the Offer.

Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered (other than by guaranteed delivery where actual delivery has not
occurred) on or prior to the Expiration Date and not properly withdrawn as
permitted under Section 4. The term "Expiration Date" means 12:01 a.m., New
York City time, on Friday, November 3, 2000, unless Purchaser, in accordance
with the Merger Agreement, extends the period during which the Offer is open,
in which event the term "Expiration Date" means the latest time and date on
which the Offer, as so extended (other than any extension with respect to the
Subsequent Offering Period described below), expires.

The Offer is conditioned upon the satisfaction of the Minimum Condition and
the other conditions set forth in Section 15. Subject to the provisions of the
Merger Agreement, Purchaser may waive any or all of the conditions to its
obligation to purchase Shares pursuant to the Offer (other than the Minimum
Condition). If by the initial Expiration Date or any extended Expiration Date
any of the conditions to the Offer have not been satisfied or waived, subject
to the provisions of the Merger Agreement, Purchaser may elect to (i) subject
to Purchaser's obligation to extend the Offer described below, terminate the
Offer and return all tendered Shares to tendering shareholders, (ii) waive all
of the unsatisfied conditions (other than the Minimum Condition) and, subject
to any required extension, purchase all Shares validly tendered by the
Expiration Date and not properly withdrawn or (iii) extend the Offer and,
subject to the right of shareholders to withdraw Shares until the new
Expiration Date, retain the Shares that have been tendered until the expiration
of the Offer as extended.

Under the terms of the Merger Agreement, Purchaser may not, without the
prior written consent of the Company (i) waive or change the Minimum Condition
or (ii) change the form of consideration to be paid, decrease the Offer Price,
decrease the number of Shares sought in the Offer, add to or modify any of the
conditions to the Offer set forth in Section 15, make any other change in the
terms and conditions of the Offer that is in any manner adverse to the
shareholders of the Company, or (except as provided in the next paragraph)
change the expiration date of the Offer.

Subject to the terms of the Merger Agreement, Purchaser may, without the
consent of the Company, extend the expiration date of the Offer:

(i) if, at the scheduled or extended expiration date of the Offer, any of
the conditions to the Offer will not have been satisfied or, to the
extent permitted, waived, until such conditions are satisfied or
waived;

(ii) for any period required by any rule, regulation, interpretation or
position of the U.S. Securities and Exchange Commission (the "SEC") or
the staff thereof applicable to the Offer or any period required by
applicable law; and

(iii) for up to 10 additional business days in increments of not more than
two business days each (but in no event beyond the Termination Date
(as defined below)), if, immediately prior to the scheduled or
extended expiration date of the Offer, the Shares tendered and not
withdrawn pursuant to the Offer constitute more than 80% and less
than 90% of the outstanding Shares, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of
the Offer; or (iv) as contemplated in paragraph (c)(i) of
"Termination" in Section 11;

provided, that, in the case of any extension under clause (iii), CEMEX and
Purchaser may not thereafter assert the failure of any of the conditions
provided for in clauses (a)(iii), (a)(iv), (a)(v), and (b)(ii) of Section 15
hereof, or for purposes of clause (b)(iii) or (c) of Section 15, a Company
Material Adverse Effect (as defined in "Representations and Warranties" of
Section 11) or a material breach of a representation or warranty, in each such
case, by reasons of an event other than a breach of a covenant by the Company
occurring after the initial extension under clause (iii).

9

Rule 14d-11 under the Exchange Act permits Purchaser, subject to certain
conditions, to provide a subsequent offering period following the expiration of
the Offer on the Expiration Date (a "Subsequent Offering Period"). A Subsequent
Offering Period is an additional period of time from three business days to 20
business days in length, beginning after Purchaser purchases Shares tendered in
the Offer, during which stockholders may tender, but not withdraw, their Shares
and receive the Offer Price.

Purchaser has the right to include a Subsequent Offering Period in the event
that the Minimum Condition has been satisfied but the Shares tendered and not
withdrawn pursuant to the Offer constitute less than 90% of the outstanding
Company Common Stock as of the Expiration Date. Pursuant to Rule 14d-7 under
the Exchange Act, no withdrawal rights apply to Shares tendered during a
Subsequent Offering Period and no withdrawal rights apply during the Subsequent
Offering Period with respect to Shares tendered in the Offer and accepted for
payment. During a Subsequent Offering Period, Purchaser will promptly purchase
and pay for all Shares tendered at the same price paid in the Offer.

As agreed in the Merger Agreement, if any condition to the Offer is not
satisfied or waived on any scheduled or extended expiration date of the Offer,
Purchaser shall extend the Offer, if such condition or conditions could
reasonably be expected to be satisfied, from time to time until such conditions
are satisfied or waived; provided, that Purchaser shall not be required to
extend the Offer beyond, and in the case of clause (z) of this paragraph may
terminate the Offer upon, the earliest to occur of (x) the Termination Date,
(y) ten business days following satisfaction of the condition provided for in
clause (a) (ii) of Section 15 or (z) five business days following the public
announcement of any Takeover Proposal (as defined in "No Solicitation" of
Section 11) or amended Takeover Proposal that has not been publicly rejected by
the Company at the time of such expiration or termination (except that
Purchaser may not terminate the Offer pursuant to this clause (z) prior to the
twentieth business day following commencement of the Offer). For purposes of
the Merger Agreement, "Termination Date" means December 31, 2000; provided,
however, that if the expiration or termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has not occurred
on or prior to December 31, 2000, then the Termination Date shall be extended
until ten business days after such expiration or termination has occurred, but
in no event shall such date be extended beyond February 28, 2001.

The rights reserved by Purchaser with respect to extending, delaying and
terminating the Offer are in addition to Purchaser's rights pursuant to Section
15. Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date,
in accordance with the public announcement requirements of Rule 14e-1(d) under
the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-
6(c) under the Exchange Act, which require that material changes be promptly
disseminated to shareholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.

If Purchaser extends the Offer or if Purchaser is delayed in its acceptance
for payment of or payment for Shares or it is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described herein under
Section 4. However, the ability of Purchaser to delay the payment for Shares
that Purchaser has accepted for payment is limited by (i) Rule 14e-1(c) under
the Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of shareholders promptly after
the termination or withdrawal of such bidder's offer, unless such bidder elects
to offer a Subsequent Offering Period and pays for the Shares tendered during
the Subsequent Offering Period in accordance with Rule 14d-11 under the
Exchange Act, and (ii) the terms of the Merger Agreement, which

10

require that Purchaser pay for Shares that are tendered pursuant to the Offer
as soon as practicable after the Offer.

If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under
the Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer, other than a change in
price, percentage of securities sought or inclusion of or changes to a dealer's
soliciting fee, will depend upon the facts and circumstances, including the
materiality, of the changes. In the SEC's view, an offer should remain open for
a minimum of five business days from the date the material change is first
published, sent or given to shareholders and, if material changes are made with
respect to information that approaches the significance of price and share
levels, a minimum of ten business days may be required to allow for adequate
dissemination to shareholders. Accordingly, if, prior to the Expiration Date,
Purchaser decreases the number of Shares being sought or increases or decreases
the consideration offered pursuant to the Offer, and if the Offer is scheduled
to expire at any time earlier than the tenth business day from the date that
notice of such increase or decrease is first published, sent or given to
shareholders, the Offer will be extended at least until the expiration of such
tenth business day.

The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares whose
names appear on the Company's shareholder list and will be furnished, for
subsequent transmittal to beneficial owners of Shares, to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing.

2. Acceptance for Payment and Payment for Shares.

Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment) and the satisfaction or earlier waiver of all the conditions to the
Offer set forth in Section 15, Purchaser will accept for payment and will pay
for all Shares validly tendered (other than by guaranteed delivery where actual
delivery has not occurred) on or prior to the Expiration Date and not properly
withdrawn pursuant to the Offer as soon as it is permitted to do so under
applicable law. Subject to the Merger Agreement and compliance with Rule 14e-
1(c) under the Exchange Act, Purchaser expressly reserves the right to delay
payment for Shares in order to comply in whole or in part with any applicable
law. See Section 16.

In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) the
certificates evidencing such Shares (the "Share Certificates") or confirmation
(a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3, (2) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message (as defined below) in lieu of the Letter of
Transmittal and (3) any other documents required by the Letter of Transmittal.

For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered (other than by
guaranteed delivery where actual delivery has not occurred) and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the Offer Price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares

11

have been accepted for payment. If, for any reason whatsoever, acceptance for
payment of any Shares tendered pursuant to the Offer is delayed, or Purchaser
is unable to accept for payment Shares tendered pursuant to the Offer, then,
without prejudice to Purchaser's rights under Section 1 hereof, the Depositary
may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
shareholders are entitled to withdrawal rights as described in Section 4 and as
otherwise required by Rule 14e-1(c) under the Exchange Act.

Under no circumstances will interest on the Offer Price for Shares be paid,
regardless of any delay in making such payment.

If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing unpurchased Shares will be returned, without expense to the
tendering shareholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3, such Shares will be credited
to an account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.

Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering shareholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.

3. Procedures for Accepting the Offer and Tendering Shares.

Valid Tenders. In order for a shareholder validly to tender Shares pursuant
to the Offer, either (1) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message in
lieu of the Letter of Transmittal) and any other documents required by the
Letter of Transmittal must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either the
Share Certificates evidencing tendered Shares must be received by the
Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case on or prior to the Expiration
Date, or (2) the tendering shareholder must comply with the guaranteed delivery
procedures described below.

The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such
agreement against such participant.

Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer
Facility, either the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or an Agent's Message in lieu of the Letter of Transmittal, and any other
required documents, must, in any case, be received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date, or the tendering shareholder must comply with the
guaranteed delivery procedure described below.

12

Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.

Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of Transmittal is signed by the registered holder
of the Shares tendered therewith, unless such holder has completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (2) if the Shares are
tendered for the account of a firm that is participating in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and collectively the "Eligible Institutions"). In all
other cases, all signatures on a Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a
Share Certificate is registered in the name of a person or persons other than
the signer of the Letter of Transmittal, or if payment is to be made or
delivered to, or a Share Certificate not accepted for payment or not tendered
is to be issued, in the name of, a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate duly
executed stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificate, with the signature(s) on
such Share Certificate or stock powers guaranteed by an Eligible Institution as
provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter
of Transmittal.

Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such shareholder's Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered; provided that all of the following conditions are satisfied:

(1) such tender is made by or through an Eligible Institution;

(2) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and

(3) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any
other documents required by the Letter of Transmittal are received by
the Depositary within three New York Stock Exchange trading days after
the date of such Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the form of Notice of
Guaranteed Delivery made available by Purchaser.

In all cases, Shares will not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) is
received by the Depositary.

The method of delivery of Share Certificates, the Letter of Transmittal and
all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the option and risk of the tendering shareholder, and
the delivery will be deemed made only when actually received by the Depositary
(including, in the case of a book-entry transfer, receipt of a Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.

Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all

13

tenders determined by it not to be in proper form or the acceptance for payment
of which may, in the opinion of its counsel, be unlawful. Purchaser also
reserves the absolute right to waive any defect or irregularity in the tender
of any Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived to the satisfaction of Purchaser. None
of CEMEX, Purchaser, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any
such notification. Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the instructions thereto)
will be final and binding.

Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder
and accepted for payment by Purchaser (including, with respect to any and all
other Shares or other securities issued or issuable in respect of such Shares
on or after the date of this Offer to Purchase). All such proxies shall be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, Purchaser accepts such
Shares for payment. Upon such acceptance for payment, all prior proxies given
by such shareholder with respect to such Shares (and such other Shares and
securities) will be revoked without further action, and no subsequent proxies
may be given nor any subsequent written consent executed by such shareholder
(and, if given or executed, will not be deemed to be effective) with respect
thereto. The designees of Purchaser will, with respect to the Shares and other
securities for which the appointment is effective, be empowered to exercise all
voting and other rights of such shareholder as they in their sole discretion
may deem proper at any annual or special meeting of the Company's shareholders
or any adjournment or postponement thereof, by written consent in lieu of any
such meeting or otherwise. Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
payment for such Shares, Purchaser must be able to exercise full voting rights
with respect to such Shares.

The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well as
the tendering shareholder's representation and warranty that such shareholder
has the full power and authority to tender and assign the Shares tendered, as
specified in the Letter of Transmittal. Purchaser's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering shareholder and Purchaser upon the terms and subject to
the conditions of the Offer.

Backup Withholding. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31%
of the amount of any payments made pursuant to the Offer or the Merger, as the
case may be. In order to prevent backup federal income tax withholding with
respect to payments to certain shareholders of the Offer Price or Merger
Consideration, as the case may be, for Shares purchased pursuant to the Offer
or the Merger, as the case may be, each such shareholder must provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") and certify that such shareholder is not subject to backup withholding
by completing the Substitute Form W-9 in the Letter of Transmittal. Certain
shareholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. If a
shareholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service may impose a
penalty on the shareholder and payment of cash to the shareholder pursuant to
the Offer or the Merger, as the case may be, may be subject to backup
withholding. All shareholders surrendering Shares pursuant to the Offer or the
Merger, as the case may be, should complete and sign the Substitute Form W-9
included in the Letter of Transmittal to provide the information necessary to
avoid backup withholding. Non-corporate foreign shareholders should complete
and sign a Form W-8, Certificate of Foreign Status (a copy of which may be
obtained from the Depositary) in order to avoid backup withholding. See
Instruction 8 of the Letter of Transmittal.

14

4. Withdrawal Rights.

Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date. However, Shares tendered in any Subsequent Offering
Period may not be withdrawn.

For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to
Purchase. Any such notice of withdrawal must specify the name, address and
taxpayer identification number of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of such Shares, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Share Certificates, the serial numbers shown on such
Share Certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution, unless
such Shares have been tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares.

If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as described herein.

All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of CEMEX, Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.

Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date or during the Subsequent Offering Period by following one of
the procedures described in Section 3.

No withdrawal rights will apply to Shares tendered into a Subsequent
Offering Period and no withdrawal rights apply during the Subsequent Offering
Period with respect to the Shares tendered in the Offer and accepted for
payment. See Section 1.

5. Certain United States Federal Income Tax Consequences.

The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to shareholders of the Company whose
Shares are tendered and accepted for payment pursuant to the Offer or whose
Shares are converted into the right to receive cash in the Merger. The
discussion is for general information only and does not purport to consider all
aspects of United States federal income taxation that might be relevant to
shareholders of the Company. The discussion is based on current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing, proposed
and temporary regulations promulgated thereunder and administrative and
judicial interpretations thereof, all of which are subject to change, possibly
with a retroactive effect. The discussion applies only to shareholders of the
Company who hold their Shares as capital assets within the meaning of Section
1221 of the Code. This discussion does not apply to Shares received pursuant to
the exercise of employee stock options or otherwise as compensation, or to
certain types of shareholders (such as insurance companies, tax-exempt
organizations, financial institutions, broker-dealers

15

and shareholders who have acquired the Shares as part of a straddle, hedge,
conversion transaction or other integrated investment) who may be subject to
special rules. This discussion does not discuss the United States federal
income tax consequences to any shareholder of the Company who, for United
States federal income tax purposes, is a non-resident alien individual, a
foreign corporation, a foreign partnership or a foreign estate or trust, nor
does it consider the effect of any foreign, state or local tax laws.

Because individual circumstances may differ, each shareholder should consult
his or her own tax advisor to determine the applicability of the rules
discussed below and the particular tax effects of the Offer and the Merger, on
a beneficial holder of Shares, including the application and effect of the
alternative minimum tax, and any state, local and foreign tax laws and of
changes in such laws.

The exchange of Shares for cash pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes and
possibly for state, local and foreign income tax purposes as well. In general,
a shareholder who sells Shares pursuant to the Offer or receives cash in
exchange for Shares pursuant to the Merger will recognize gain or loss for
United States federal income tax purposes equal to the difference, if any,
between the amount of cash received and the shareholder's adjusted tax basis in
the Shares sold pursuant to the Offer or exchanged for cash pursuant to the
Merger. Gain or loss will be determined separately for each block of Shares
(i.e., Shares acquired at the same cost in a single transaction) tendered
pursuant to the Offer or exchanged for cash pursuant to the Merger. Such gain
or loss will be long-term capital gain or loss provided that a shareholder's
holding period for such Shares is more than one year at the time of
consummation of the Offer or the Merger, as the case may be. Capital gains
recognized by an individual upon a disposition of a Share that has been held
for more than one year generally will be subject to a maximum United States
federal income tax rate of 20% or, in the case of a Share that has been held
for one year or less, will be subject to tax at ordinary income tax rates.
Certain limitations apply to the use of a shareholder's capital losses.

A shareholder whose Shares are purchased in the Offer or the Merger, as the
case may be, may be subject to 31% backup withholding unless certain
information is provided to the Depositary or an exemption applies. See Section
3.

6. Price Range of Shares; Dividends.

The Shares are listed and traded on the New York Stock Exchange (the "NYSE")
under the symbol "SDW". The following table sets forth, for the quarters
indicated, the high and low sale prices per Share as well as the dividends paid
to shareholders for the periods indicated. Share prices are as reported on the
NYSE based on published financial sources.

Common Stock
-----------------------
High   Low   Dividends
------ ------ ---------

Fiscal Year 1998:
First Quarter...................................... $72.50 $55.31   $0.10
Second Quarter.....................................  74.00  63.06    0.10
Third Quarter......................................  73.75  42.25    0.10
Fourth Quarter.....................................  61.06  36.44    0.15
Fiscal Year 1999:
First Quarter...................................... $59.25 $45.88   $0.15
Second Quarter.....................................  69.94  53.63    0.15
Third Quarter......................................  65.88  48.56    0.15
Fourth Quarter.....................................  58.00  45.38    0.15
Fiscal Year 2000:
First Quarter...................................... $60.25 $47.81   $0.15
Second Quarter.....................................  67.19  56.50    0.15
Third Quarter......................................  65.38  52.75    0.15
Fourth Quarter (through October 4, 2000)...........  71.31  71.25      --

16

On September 28, 2000, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the last sale price of
the Shares on the NYSE was $56.00 per Share. On October 4, 2000, the last full
day of trading before the commencement of the Offer, the closing price of the
Shares on the NYSE was $71.25 per Share. Shareholders are urged to obtain a
current market quotation for the Shares.

7. Certain Information Concerning the Company.

General. Southdown is a Louisiana corporation with its principal offices
located at 1200 Smith Street, Suite 2400, Houston, Texas 77002-4486. The
telephone number of the Company is (713) 650-6200. According to the Company's
Form 10-K for the fiscal year ended December 31, 1999 (the "1999 10-K"), the
Company engages primarily in three business segments related to the production
of cement. Southdown operates twelve portland cement manufacturing plants
located in Alabama, California, Colorado, Florida, Georgia, Kentucky, Michigan,
Ohio, Pennsylvania, Tennessee and Texas, plus an extensive network of cement
distribution terminals. The Company also mines, processes and sells
construction aggregates and specialty mineral products in the eastern half of
the United States, in Florida and in California and installs highway safety
systems such as guardrails, traffic signals, highway signage and lighting. In
addition, the Company markets ready-mixed concrete products in two of its
largest cement markets, California and Florida.

Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational reporting requirements
of the Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration,
stock options granted to them, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the SEC. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located at Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Information
regarding the public reference facilities may be obtained from the SEC by
telephoning 1-800-SEC-0330. The Company's filings are also available to the
public on the SEC's Internet site (http://www.sec.gov). Copies of such
materials may also be obtained by mail from the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.

8. Certain Information Concerning CEMEX and Purchaser.

General. CEMEX, S.A. de C.V. is a stock corporation with variable capital
organized under the laws of the United Mexican States with its principal
offices located at Ave. Constitucion 444 Pte., Monterrey, Mexico 64000. The
telephone number of CEMEX is (011-528) 328-3000 or (800) 462-3639. CEMEX is the
third largest cement company in the world, based on installed capacity as of
December 31, 1999, of approximately 65.4 million tons, and is the world's
largest trader of cement and clinker, having traded over 13 million tons of
cement and clinker in 1999. CEMEX engages, through its operating subsidiaries,
primarily in the production, distribution, marketing and sale of cement, ready-
mix concrete and clinker. It is a global cement manufacturer, with operations
in North, Central and South America, Europe, the Carribean, Asia and Africa. As
of December 31, 1999, CEMEX had worldwide assets of $11.8 billion. On June 21,
2000, CEMEX had an equity market capitalization of approximately $5.8 billion.
The historical consolidated financial statements of CEMEX for the fiscal year
ended December 31, 1999 and the six months ended June 30, 2000 are attached to
this Offer to Purchase as Annex A.

Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger. The principal offices of Purchaser
are located at One Riverway, Suite 2200, Houston, Texas 77056. The telephone
number of Purchaser is (713) 881-1000. Purchaser is an indirect subsidiary of
CEMEX. Purchaser has not carried on any activities other than in connection
with the Merger Agreement.

17

The name, citizenship, principal business address, business phone number,
principal occupation or employment and five-year employment history for each of
the directors and executive officers of CEMEX and Purchaser and certain other
information are set forth in Schedule I hereto. None of the persons listed in
Schedule I has, during the past five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors). None of the
persons listed in Schedule I has, during the past five years, been a party to
any judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a judgment, decree
or final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws.

Except as described in this Offer to Purchase, neither Purchaser nor, to the
best knowledge of CEMEX and Purchaser, any of the persons listed in Schedule I
to this Offer to Purchase or any associate or majority-owned subsidiary of
CEMEX or Purchaser or any of the persons so listed beneficially owns or has any
right to acquire, directly or indirectly, any Shares. Furthermore, none of
CEMEX, Purchaser nor, to the best knowledge of CEMEX and Purchaser, any of the
persons or entities referred to above nor any director, executive officer or
subsidiary of any of the foregoing has effected any transaction in the Shares
during the past 60 days. Please see Section 11 for a description of the Merger
Agreement.

Except as provided in the Merger Agreement, none of CEMEX, Purchaser nor, to
the best knowledge of CEMEX and Purchaser, any of the persons listed in
Schedule I to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, guarantees of
profits, division of profits or loss or the giving or withholding of proxies.

On June 22, 2000, a U.S. subsidiary of CEMEX and the Company entered into an
arm's length cement supply agreement whereby the subsidiary agreed to make
certain volumes of cement available to the Company's California concrete
operations. The agreement provides for certain quantities of cement to be made
available from the subsidiary's terminal located in Long Beach, California from
June 1, 2000 through September 30, 2001. The Company agreed to pay for
approximately half of the cement in cash at specified prices and for the
remainder by making available to the subsidiary certain tonnages of cement from
the Company's cement plant in Victorville, California. The prices to be paid
are based on market prices and, at present, total payments over the life of
this agreement are not expected to exceed U.S.$10 million.

Except as set forth above, none of CEMEX, Purchaser nor, to the best
knowledge of CEMEX and Purchaser, any of the persons listed on Schedule I
hereto, has had any business relationship or transaction with the Company or
any of its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the SEC applicable to the Offer.
Except as set forth in this Offer to Purchase, there have been no material
contacts, negotiations or transactions between CEMEX or any of its subsidiaries
or, to the best knowledge of CEMEX and Purchaser, any of the persons listed in
Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.

9. Source and Amount of Funds.

Purchaser's obligation to purchase Shares under the Offer is not conditioned
on any financing arrangements or subject to any financing condition. The total
amount of funds required by Purchaser to consummate the Offer and the Merger
and to pay related fees and expenses is estimated to be approximately US$2.85
billion. Purchaser will obtain all necessary funds from a new credit facility
and from CEMEX or certain of CEMEX's subsidiaries. CEMEX expects to fund any
necessary capital contributions or intra-company loans to Purchaser from new
borrowing arrangements for which CEMEX has obtained commitments from several
financial institutions, which include a US$1.5 Billion Equity Swap Facility and
US$1.4 Billion in

18

Senior Unsecured Credit Facilities, certain terms and conditions of which are
described below. The terms and conditions of the definitive documentation
entered into in connection with these facilities may differ in certain respects
from those described below.

US$1.5 Billion Equity Swap Facility. On September 28, 2000, CEMEX, The Chase
Manhattan Bank, Deutsche Bank AG London, Chase Manhattan PLC and Deutsche Bank
Securities Inc. (collectively, "Chase/Deutsche") signed a commitment letter
(the "Chase/Deutsche Commitment Letter") pursuant to which Chase/Deutsche
agreed, subject to the satisfaction of specified conditions, to establish a
term loan facility in the amount of US$1.5 billion (the "Swap Facility"). The
Swap Facility consists of an 18-month US$1.5 billion term loan facility to be
provided to a newly formed special purpose company in which CEMEX will not have
any interest (together with its subsidiaries, the "Swap Borrower"), pursuant to
facility documentation (the "Facility Documentation") to be entered into on
terms set forth in the Chase/Deutsche Commitment Letter.

The Swap Borrower will use the funds advanced under the Swap Facility to
acquire preference shares (together with other preference shares of Dutch
Holdco subscribed for by the Swap Borrower, the "Preference Shares") of a newly
formed Dutch company ("Dutch Holdco"), a wholly owned subsidiary of Sunward
Acquisitions NV ("Sunward"), a Dutch company and wholly owned subsidiary of
CEMEX. Concurrently with the Swap Borrower's acquisition of the Preference
Shares, Sunward will contribute its 85.15% interest in Compenia Valenciana de
Cementos Portland, S.A., the Spanish holding company through which CEMEX holds
its non-Mexican businesses ("Valenciana"), to Dutch Holdco in exchange for all
of the ordinary shares of Dutch Holdco (the "Ordinary Shares"). The $1.5
billion received from the Swap Borrower for the issuance of Preference Shares
will be used in connection with the Offer and the Merger. The Swap Facility
will be non-recourse to CEMEX and its subsidiaries. It is anticipated that all
debt service payments to be made by the Swap Borrower will be derived from
payments made in respect of the Preference Shares in Dutch Holdco acquired by
the Swap Borrower.

Dutch Holdco and the Swap Borrower will enter into agreements that regulate
Sunward's and the Swap Borrower's interests in Dutch Holdco and that set forth
each of their respective rights under the Preference Shares and the Ordinary
Shares (the "Dutch Holdco Documentation"). Under the Dutch Holdco
Documentation, Sunward will have options to acquire the Preference Shares at a
purchase price sufficient to enable the Swap Borrower to repay all amounts due
under the Swap Facility. There will be no recourse against Sunward or any other
CEMEX entity in the event that Sunward fails to exercise any of these options.
However, among other things, the Dutch Holdco Documentation will permit Dutch
Holdco to be liquidated in the event that these options are not exercised.
These liquidation procedures contemplate selling Dutch Holdco's assets
(principally the Valenciana shares) at market prices in an amount sufficient to
satisfy the liquidation preference of the Preference Shares.

The availability of funds from the Swap Facility will be subject to the
satisfaction of specified conditions including:

. the Facility Documentation and the Dutch Holdco Documentation in form and
substance acceptable to the underwriters and arrangers having been
executed prior to or on November 30, 2000;

. the absence of either (i) any material adverse change in the operations,
condition or prospects (financial or otherwise) of CEMEX and its
subsidiaries including the Company and its subsidiaries or (ii) a
material disruption of or material adverse change in the financial,
banking or capital market conditions, in either case which may have an
adverse effect on the successful syndication of the Swap Facility;

. receipt by lenders of evidence that all regulatory and other approvals
for the closing of the Offer and the Merger have been obtained; and

. no material regulatory conditions or undertakings having been required of
CEMEX and its subsidiaries (including any divestment obligation) and none
of the conditions of the Offer relating to price, acceptances and
regulatory matters having been waived without in any such case the prior
written consent of at least 51% of the lenders having been obtained.

19

The Swap Facility shall be repaid:

(a) as to US$300,000,000, in installments of the following amounts on the
following dates after the first drawdown:

.  US$100,000,000 on the ninth month;

.  US$100,000,000 on the twelfth month;

.  US$100,000,000 on the fifteenth month; and

(b) as to the balance on the date falling 18 months after the execution of
the definitive agreement governing the Swap Facility.

The interest rate will be the London Interbank Offered Rate ("LIBOR")
(determined by reference to the applicable screen page for US dollars) plus the
Applicable Margin (as defined below) and any applicable additional costs rate.
Interest shall be paid on the last day of each interest period and will be
calculated on the basis of actual days elapsed and a year of 360 days. The
"Applicable Margin" will be determined by the ratio of Total Debt to EBITDA
(each as defined in the Chase/Deutsche Commitment Letter), tested quarterly.

The Swap Borrower may prepay all or, subject to an appropriate minimum
amount and multiple, any part of the Swap Facility upon 30 banking days' notice
without penalty, fee or premium unless the prepayment is otherwise than on the
last day of an interest period in which case the prepayment will be subject to
an indemnity for broken funding costs. Under certain circumstances, the Swap
Facility shall require mandatory prepayments, including:

. in full, on an initial public offering ("IPO") of Valenciana or, with
certain exceptions, any of its subsidiaries (together with Valenciana,
the "Valenciana Group") or on a change of control or sale of
substantially all of the business or assets of any material member of the
Valenciana Group;

. in full, on CEMEX ceasing to be the owner, directly or indirectly, of
100% of the issued capital of Sunward; and

. to the extent such application is legally permitted, from the net
proceeds of any disposal of assets or shares by any members of the
Valenciana Group in excess of an amount to be agreed to the extent that
such net proceeds are not reinvested by any member of the Valenciana
Group in the ordinary course of business or used to permanently repay
borrowed money of the Valenciana Group, within three months of the
receipt of such net proceeds.

The Swap Facility will contain representations and warranties, affirmative
covenants, financial covenants, negative covenants and events of default that
are usual and customary for facilities similar to the Swap Facility.

Neither CEMEX nor Purchaser has made any formal plans concerning the
repayment or refinancing of the Swap Facility.

US$1.4 Billion Senior Unsecured Credit Facilities. On September 28, 2000,
CEMEX, Salomon Smith Barney and Citibank, N.A. ("Citibank," and together with
Salomon Smith Barney, "Citi/SSB") signed a commitment letter (the "Citi/SSB
Commitment Letter" and, together with the Chase/Deutsche Commitment Letter, the
"Commitment Letters") pursuant to which Citi/SSB agreed to establish for
Purchaser and, following the Merger, the Surviving Corporation (the
"Borrower"):

(a) a Senior Unsecured US$350,000,000 364-Day Revolving Credit Facility,

(b) a Senior Unsecured US$500,000,000 364-Day Revolving Credit Facility,
and

(c) a Senior Unsecured US$550,000,000 5-Year Term Loan (each such loan, a
"Tranche" and collectively, the "Loan Facilities").

The Borrower's obligations under the Loan Facilities will be supported by a
guarantee of the Borrower's direct parent, Valenciana. Following the
consummation of the Offer and prior to the consummation of the Merger,
Valenciana will use best efforts to cause the Company to become a guarantor.

20

The funds from the Loan Facilities are to be used in connection with the
Offer and the Merger, and shall be made available for the Offer and the Merger
on and from the satisfaction of certain conditions including:

. the preparation, execution and delivery of mutually acceptable loan
documentation, including a guarantee of the Loan Facilities provided by
Valenciana (the "Operative Documents");

. no law, regulation or decree that imposes materially adverse conditions
upon the Borrower; and neither the Loan Facilities nor the transactions
contemplated by the Loan Facilities will conflict with, violate or result
in a default under any contract, agreement or instrument to which the
Borrower is a party;

. no material change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of Valenciana and the
Company taken as a whole; and

. the Borrower shall have received, or will receive on the date the Loan
Facilities are advanced, no less than US$1.5 billion as a capital
contribution from the Valenciana from the proceeds of the Swap Facility.

At the Borrower's option, any advance under the facilities made to it will
be available at the following rates:

(a) Base Rate: a fluctuating rate equal to Citibank's base rate plus the
applicable margin, which is zero basis points per annum; and

(b) Eurodollar Rate: a periodic fixed rate equal to LIBOR plus the
applicable margin, which is an amount that will vary based on a pricing
grid with applicable spreads based on the long-term senior unsecured
non-credit-enhanced debt ratings of Valenciana until the consummation
of the Merger, and thereafter, on the long-term unsecured debt ratings
of the Surviving Corporation taking into account the guarantee of
Valenciana.

Upon the occurrence of an event of default under the Loan Facilities and
during the continuance of any event of default, each Eurodollar Rate will
convert to a Base Rate at the end of the interest period then in effect for
such Eurodollar Rate advance. The Borrower shall make interest payments at the
end of each interest period for each advance under a Tranche.

The Borrower may request that Citibank solicit competitive bids from the
lenders under the Loan Facilities for advances under the two revolving credit
facilities with requested maturities of 30 days or more. Each lender will bid
at its discretion. The Borrower may accept one or more bids, provided that the
aggregate outstanding advances of all lenders on the date of, and giving effect
to, any advance under a competitive bid ("Competitive Bid Advance") may not
exceed the aggregate commitments for the applicable Tranche at such time.

Advances (other than Competitive Bid Advances) may be prepaid without
penalty, on the same day notice of the Base Rate advances and two business
days' notice for Eurodollar Rate advances, in minimum amounts of US$10,000,000
and increments of US$1,000,000 in excess thereof. Competitive Bid Advances
cannot be prepaid.

The Loan Facilities will contain representations and warranties, affirmative
covenants, financial covenants, negative covenants and events of default that
are usual and customary for facilities similar to the Loan Facilities.

Neither CEMEX nor Purchaser has made any formal plans concerning the
repayment or refinancing of the Loan Facilities.

The Commitment Letters have each been filed as an exhibit to the Tender
Offer Statement on Schedule TO filed by CEMEX and Purchaser pursuant to Rule
14d-3 of the General Rules and Regulations under the Exchange Act with the SEC
in connection with the Offer (the "Schedule TO"). The summaries of the
Commitment Letters are qualified in their entirety by reference to the
Commitment Letters, which are deemed to be incorporated by reference herein.

No alternative financing plans or arrangements have been made in the event
CEMEX is unable to finalize the credit facilities or the guarantee described
above in connection with the Offer and the Merger.

21

10. Background of the Offer; Past Contacts or Negotiations with the Company.

For a number of years, CEMEX and the Company have had occasional contacts,
including discussions related to antidumping litigation in which the Company
was a member of a plaintiff group and CEMEX was a defendant. From time to time,
CEMEX and the Company discussed a possible settlement of this litigation. In
the fall of 1999, the Company unilaterally withdrew as a plaintiff in the
antidumping litigation. During the same period, the Company and CEMEX also
discussed the possible formation of a joint venture to hold a portion of their
respective ready-mix operations in California. These discussions terminated
without any agreement being reached.

Following the Company's engagement of Lehman Brothers Inc. as its financial
advisor, Mr. Comer contacted Lorenzo Zambrano, the President and CEO of CEMEX,
to determine CEMEX's possible interest in an acquisition by CEMEX of the
Company. While dollar amounts were not specifically discussed, Mr. Comer did
mention the valuation multiples paid by other foreign cement manufacturers for
cement assets recently acquired in the United States. Mr. Zambrano subsequently
indicated that CEMEX would not be interested in acquiring the Company at those
levels.

On April 5, 2000, Mr. Zambrano met with Mr. Comer in Houston, where they
again discussed CEMEX's possible interest in an acquisition of the Company. Mr.
Zambrano indicated that there was probably a price at which CEMEX would be
interested in an acquisition of the Company, a price at which it would probably
be neutral, and a price at which it would be uninterested. Based on the
analysis CEMEX had done, Mr. Zambrano indicated that at a price of
approximately U.S.$65 per share CEMEX would be interested in acquiring the
Company. Mr. Comer said that he believed that the price at which the Company
might consider an acquisition would be in the range where CEMEX was either
neutral or uninterested, and that at the level indicated by Mr. Zambrano the
Company would not be interested in pursuing more serious discussions.

In July 2000, Jim Rowe, a financial advisor to CEMEX, contacted Mr. Comer
and indicated that while CEMEX was interested in an acquisition of the Company,
it had been unable to develop valuations consistent with the speculations of
analysts and the financial press. Mr. Rowe suggested a meeting to discuss Mr.
Rowe's financial acquisition model and valuation of the Company. On July 28,
2000, Mr. Rowe met with Mr. Comer in Houston to review the assumptions
underlying Mr. Rowe's financial acquisition model. Mr. Comer discussed those
assumptions with Mr. Rowe and suggested certain revisions. Mr. Rowe indicated
that he would adjust his model, discuss the revised financial model with Mr.
Zambrano, and contact Mr. Comer shortly.

As a result of the discussions with Mr. Rowe, in early August 2000, Mr.
Comer and Mr. Zambrano again discussed CEMEX's possible interest in acquiring
the Company. They also discussed Mr. Rowe's valuation model. Mr. Zambrano
suggested that the parties sign a confidentiality agreement that granted CEMEX
an exclusive period of time in which to develop an acquisition proposal and
commence due diligence activities. Mr. Comer indicated that in view of the
current state of the Company's discussions with other parties, the Company was
not in a position to grant CEMEX an exclusive negotiating arrangement.

On August 11, 2000, the Company and CEMEX entered into a confidentiality
agreement. Thereafter representatives of CEMEX and the Company met in Houston
to discuss various aspects of the Company's operations and exchange relevant
information. The Company agreed to permit CEMEX to tour the Company's plants,
subject to CEMEX proposing a range of values that might be acceptable to the
Company's senior management and the Company's Board of Directors.

During a meeting in Houston later in August 2000, Mr. Zambrano indicated to
Mr. Comer that CEMEX would be interested in pursuing an acquisition of the
Company in the range of U.S.$68 to U.S.$72 per Share, but that in order to
pursue such an acquisition CEMEX would need to conduct a thorough due diligence
investigation of the Company as well as explore financing arrangements. Mr.
Zambrano also indicated that this process would likely take until the end of
September. Mr. Comer indicated that it was highly unlikely that the Company's
Board of Directors would accept a price below U.S.$70 per share, and that there
was no assurance

22

that the Company's Board of Directors would accept a proposal at the higher end
of Mr. Zambrano's suggested range. During this meeting Mr. Zambrano agreed that
CEMEX would be interested in pursuing the acquisition of the Company in the
range of U.S.$70 to U.S.$72 per Share. Subsequently, representatives of CEMEX
visited the Company's manufacturing facilities and conducted additional in-
depth financial, environmental and operations due diligence.

In early September, Mr. Zambrano reviewed with Mr. Comer the preliminary
results of CEMEX's due diligence investigation and potential financing
discussions. Mr. Zambrano told Mr. Comer that he was encouraged by the progress
of both and believed that CEMEX would be in a position to make a definitive
acquisition proposal earlier than had been planned. Messrs. Zambrano and Comer
agreed that it would be appropriate to begin discussions concerning the form
the necessary merger agreement would take in the event that CEMEX made, and the
Company accepted, an acquisition proposal. These discussions began soon
thereafter and continued through the time of execution of the Merger Agreement.

During a conversation initiated by Mr. Comer on September 22, 2000, Mr.
Zambrano confirmed that CEMEX would be prepared to pay U.S.$73 per share if the
discussions concerning the Merger Agreement could be brought to a prompt and
successful conclusion and approval of the Company's Board of Directors promptly
obtained. The parties continued these discussions and CEMEX's acquisition
proposal was considered by the Company's Board of Directors at a meeting on
September 27, 2000. Late in the Company's Board of Directors meeting on
September 27, 2000, Mr. Comer called Mr. Zambrano and asked if CEMEX would
raise its offer from U.S.$73 per share. Mr. Zambrano responded that U.S.$73 was
the most CEMEX would pay. The Company's Board of Directors subsequently
adjourned until the afternoon of September 28, 2000. Representatives of the
Company and CEMEX continued to negotiate the terms of the Merger, and at a
meeting late in the afternoon of September 28, 2000, the Company's Board of
Directors ultimately approved the transaction, following which the parties
executed the Merger Agreement and publicly announced the transaction the next
morning.

Additionally, during the periods described above, representatives of Lehman
Brothers and Salomon Smith Barney, the financial advisors of the Company and
CEMEX, respectively, remained in periodic contact relating to the discussions
and negotiations between their clients.

11. The Merger Agreement and the Confidentiality Agreement.

General. The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Schedule TO. The
summary is qualified in its entirety by reference to the Merger Agreement,
which is deemed to be incorporated by reference herein.

The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 15.

The Merger. The Merger Agreement provides that upon the terms and subject to
the conditions set forth therein, at the Effective Time Purchaser will be
merged with and into the Company with the Company being the Surviving
Corporation in the Merger. Following the Merger, the separate corporate
existence of Purchaser will cease, and the Company will continue as the
Surviving Corporation and become an indirect subsidiary of CEMEX.

If required by the LBCL, the Company will call and hold a meeting of its
shareholders promptly following consummation of the Offer for the purpose of
voting upon the approval of the Merger Agreement. At any such meeting all
Shares then owned by CEMEX or Purchaser or any subsidiary of CEMEX will be
voted in favor of adopting the Merger Agreement.

Pursuant to the Merger Agreement, each Share outstanding at the Effective
Time (other than Shares owned by CEMEX, Purchaser, the Company or any of their
respective subsidiaries, all of which will be cancelled, and

23

other than Shares that are held by shareholders, if any, who properly exercise
their dissenters' rights under the LBCL) will be converted into the right to
receive the Merger Consideration. Shareholders who perfect their dissenters'
rights under the LBCL will be entitled to the amounts determined pursuant to
such proceedings. See Section 12.

Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to CEMEX and
Purchaser. The representations and warranties made by the Company include:

. representations relating to the Company's and its subsidiaries due
organization, good standing and corporate power, authorization and
validity of the Merger Agreement, the Company's capitalization, the
Company's reports and financial statements, broker's or finder's fees,
state takeover statutes, voting requirements and approval by the
Company's board of directors, the opinion of the Company's financial
advisor, and the Rights Agreement, and each such representation must be
true and correct in all material respects as of the date of the Merger
Agreement and as of any scheduled or extended expiration date of the
Offer as though made on such date (or, in each case, if made as of a
specified date, as of such date) (the "Absolute Representations"); and

. representations relating to the Company having the necessary consents and
approvals, no violations, information to be supplied, the absence of
certain events with respect to the Company, litigation, the Company's
title to properties and encumbrances on the Company's property,
compliance with laws, Company employee benefit plans, taxes, intellectual
property, environmental matters, contracts, the Company's books and
records, the Company's plant and equipment and labor and employment
matters ("Qualified Representations"), which must be true and correct as
of the date of the Merger Agreement and as of any scheduled or extended
expiration date of the Offer as though made on such date (or, in each
case, if made as of a specified date, as of such date). The Qualified
Representations shall be deemed untrue or incorrect for any purpose under
the Merger Agreement or the Offer and no party to the Merger Agreement
shall be deemed to have breached any such representation or warranty for
any purpose under the Merger Agreement, in any case as a consequence of
the existence or absence of any fact, circumstance or event unless such
fact, circumstance or event, individually or when taken together with all
other facts, circumstances or events inconsistent with any such
representations or warranties of the Company contained in Article VI of
the Merger Agreement has had or would reasonably be expected to have a
Company Material Adverse Effect (as defined below). The Merger Agreement
defines a "Company Material Adverse Effect" as a material adverse effect
on (a) the ability of the Company to perform in all material respects its
obligations under the Merger Agreement or to consummate the transactions
contemplated hereby or (b) the business, assets, liabilities, results of
operations or financial condition of the Company and its subsidiaries,
taken as a whole; provided, however, that any effect directly relating to
the economy in general or affecting the United States cement industry
generally shall be excluded for purposes of determining whether a Company
Material Adverse Effect has occurred.

Pursuant to the Merger Agreement, CEMEX and Purchaser have made customary
representations and warranties to the Company. The representations and
warranties made by CEMEX and Purchaser include representations relating to
their due organization, good standing and corporate power, authorization and
validity of the Merger Agreement, information to be supplied by them, broker's
or finder's fees, their obtaining consents and approvals, no violations, their
ownership of capital stock, Purchaser's activities prior to the signing of the
Merger Agreement and the availability of sufficient funds.

Covenants. The Merger Agreement contains various covenants of the parties
thereto. A description of certain of these covenants follows:

Company Conduct of Business Covenants. The Merger Agreement provides that,
prior to the Effective Time and except as may be agreed in writing by CEMEX,
and except as disclosed in or expressly contemplated or permitted by the Merger
Agreement:

24

(a) the Company and its subsidiaries will conduct their respective
operations only according to their ordinary and usual course of
business consistent with past practice and shall use their reasonable
best efforts to preserve intact their respective business
organizations, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, customers, clients, joint venture partners and
others having significant business relationships with them;

(b) neither the Company nor any of its subsidiaries will:

(1) make any change in or amendment to its articles of incorporation
or its by-laws or similar organizational documents;

(2) issue or sell, or authorize to issue or sell, any shares of its
capital stock or any other securities, voting debt, or issue or
sell, or authorize to issue or sell, any securities convertible
into, or options, warrants or rights to purchase or subscribe for,
or enter into any arrangement or contract with respect to the
issuance or sale of, any shares of its capital stock, voting debt,
or any other securities, or make any other changes in its capital
structure, other than (A) the issuance of Shares upon the exercise
of stock options outstanding on the date of the Merger Agreement,
in accordance with their terms and (B) subject to the continued
accuracy of the Company's representation regarding the Rights
Agreement and compliance with its covenants with respect to the
Rights Agreement, dividends with rights pursuant to a Permitted
Replacement Rights Agreement (see "--Rights Agreement");

(3) declare, pay or set aside any dividend or other distribution or
payment with respect to, or split, combine, redeem or reclassify,
or purchase or otherwise acquire, any shares of its capital stock
or its other securities, other than (A) normal quarterly cash
dividends not in excess of $0.15 per share declared and paid in
accordance with the Company's past dividend policy, including as
to the timing of the declaration, record and payment dates,
provided that no such cash dividends shall be declared after the
consummation of the Offer, or (B) dividends payable by a wholly
owned subsidiary of the Company to the Company or another wholly
owned subsidiary of the Company and (C) pro-rata distributions in
the ordinary course of business consistent with past practice by
the Partnership, to its partners;

(4) incur any capital expenditures or any obligations or liabilities
in respect thereof, except (A) with respect to expansion projects,
for expenditures for such projects which are consistent in amount
and scope with the 2000 Capital Budget and the 2001 Capital
Spending Forecast (provided that any such expenditure included in
the 2000 Capital Budget that is not made prior to January 1, 2001
may be made on or after January 1, 2001 provided that it is
consistent in amount and scope with the 2000 Capital Budget), (B)
those required for maintenance and replacement in the ordinary
course of business not to exceed (x) during the period from the
date of the Merger Agreement to December 31, 2000, the amounts
provided for matters other than expansion projects in the 2000
Capital Budget that have not been spent as of the date of the
Merger Agreement and (y) $23.5 million following December 31,
2000, or (C) those required for maintenance and replacement in the
ordinary course of business in excess of the amounts permitted by
clause (B) but not to exceed in the case of this clause (C)
$3,600,000 in the aggregate after the date of this Agreement;

(5) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint
venture, association or other business organization of division
thereof (including any of the Company's subsidiaries) or (B) any
assets, including real estate, except (x) purchases of inventory,
equipment, other non-material assets in the ordinary course of
business consistent with past practice or (y) expenditures
consistent with the Company's Capital Budget;

25

(6) (A) except in the ordinary course of business consistent with past
practice and except to the extent required under existing employee
and director benefit plans, agreements or arrangements as in
effect on the date of the Merger Agreement, increase the
compensation or fringe benefits of any of its directors, officers
or employees or grant any severance or termination pay not
currently required to be paid under existing severance plans or
(B) enter into (x) any employment or consulting agreement or
arrangement with any present or former director or officer of the
Company or any of its subsidiaries, or any employment or
consulting agreement with any other employee of the Company or any
of its Subsidiaries or (y) or severance agreement or arrangement
with any present or former director, officer or other employee of
the Company or any of its subsidiaries, except the Company or its
subsidiaries may enter into a severance agreement or arrangement
consistent with past practice where the Company and its
subsidiaries would not have any obligation or liability for the
payment of any amount in excess of U.S.$50,000 in any individual
case or U.S.$250,000 in the aggregate; or (C) hire or agree to
hire, or enter into any employment agreement or arrangement with,
any new or additional employee or officer (x) having an annual
base salary of U.S.$100,000 or more and (y) in the case of any new
or additional officer (or employee performing similar functions),
if the aggregate annual salaries of all such new officers and
employees performing similar functions would exceed U.S.$500,000;

(7) except as required to comply with applicable law or expressly
provided in the Merger Agreement, (A) adopt, enter into, terminate
or amend any Company Benefit Plan (as defined herein), collective
bargaining agreement or other arrangement for the current or
future benefit or welfare of any director, officer or current or
former employee, except to the extent necessary to coordinate any
such Company Benefit Plans with the terms of the Merger Agreement,
(B) pay any benefit not provided for under any Company Benefit
Plan, accelerate the payment, right of payment or vesting of any
bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or
benefits, (C) grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Company
Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing
restrictions in any Company Benefit Plans or agreements or awards
made thereunder) or (D) except as required by the current terms
thereof take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Company Benefit Plan;

(8) transfer, lease (as lessor), license, sell, mortgage, pledge,
dispose of, encumber or subject to any lien, any assets, other
than in the ordinary course of business and consistent with past
practice, except (x) as described below in "--Vessels Engaged in
Coastwide Trade" and (y) for the disposition in the ordinary
course of business of dormant real property;

(9) except as required by applicable law or GAAP, make any change in
its methods of accounting;

(10) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of
its subsidiaries (other than the Merger), except as contemplated
by the Merger Agreement (see "--No Solicitation");

(11) (A) incur or assume any long-term debt (other than under existing
revolving credit facilities, as may be amended as contemplated by
the Merger Agreement), or except in the ordinary course of
business consistent with past practice, incur or assume any short-
term indebtedness; (B) incur or modify any material indebtedness
or other liability; (C) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for the obligations or indebtedness of any other person
(other than any wholly owned direct or indirect subsidiary in the
ordinary course of business and consistent with past practice),
except in the ordinary course

26

of business and consistent with past practice and except for
guarantees by subsidiaries of the Company of indebtedness permitted
under the preceding clause (A); (D) make any loans, advances or
capital contributions to, or investments in, any other person (other
than in or to wholly owned subsidiaries of the Company or the
Partnership (in the ordinary course of business and consistent with
past practice), or by wholly owned subsidiaries to the Company, or
customary loans or advances to employees in accordance with past
practice); (E) settle any claims against the Company or any of its
subsidiaries (x) outside the ordinary course of business consistent
with past practice or (y) where the amounts payable by the Company
and its subsidiaries would exceed U.S.$1.0 million, in each such
case, without admission of liability; or (F) enter into any material
commitment or transaction other than in the ordinary course of
business;

(12) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of
any such claims, liabilities or obligations, in the ordinary
course of business and consistent with past practice, or of
claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the audited and reaudited financial
statements (or the notes thereto) of the Company and its
consolidated subsidiaries;

(13) enter into any agreement, understanding or commitment that
contains any material prohibition on the conduct of any business
or line of business, or any material limitation on the scope of
business that may be conducted, by the Company or any of its
subsidiaries, including geographic limitations on the Company's or
any of its subsidiaries' activities;

(14) (A) announce, implement or effect any material reduction in labor
force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment
of employees of the Company or its subsidiaries (other than
routine employee terminations for cause which are not subject to
this provision) or (B) terminate the employment of any officer of
the Company other than for cause or agree that any voluntary
termination of employment by an officer of the Company occurring
prior to the Effective Time shall be treated as having been with
"good reason";

(15) take any action including, without limitation, the adoption of any
shareholder rights plan or amendments to its articles of
incorporation or by-laws (or comparable governing documents),
which would, directly or indirectly, restrict or impair the
ability of CEMEX to vote, or otherwise to exercise the rights and
receive the benefits of a shareholder with respect to, securities
of the Company acquired by Purchaser in the Offer or, except with
respect to the exercise of stock options issued and outstanding on
the date of the Merger Agreement, permit any shareholder to
acquire securities of the Company on a basis not available to
CEMEX or Purchaser in the event that CEMEX or Purchaser were to
acquire any additional Shares (subject to the Company's right to
take action specifically permitted by the Merger Agreement prior
to the consummation of the Offer); provided, however, that prior
to the acceptance for payment of Shares pursuant to the Offer, the
Company may adopt a Permitted Replacement Rights Plan (as defined
in "--Rights Agreement") to replace the existing Rights Agreement
and authorize sufficient shares of preferred stock of the Company
issuable thereunder, provided that the record date for the
dividend of the rights under any such Permitted Replacement Rights
Plan shall not occur before March 1, 2001 (see "--Rights
Agreement");

(16) terminate or materially modify or amend any material contract to
which it is a party or waive or assign any of its material rights
or claims except in the ordinary course of business consistent
with past practice;

(17) other than consistent with past practice or as required by a
change of law or required by law because of a change in facts,
make any tax election or enter into any settlement or compromise
of any tax liability that in either case is material;

27

(18) permit any insurance policy naming it as a beneficiary or a loss
payable payee to be cancelled or terminated, other than pursuant
to an expiration in accordance with its terms, unless a new policy
with substantially similar coverage is in effect as of the date of
such cancellation or termination, except policies providing
coverage for losses not in excess of U.S.$250,000; or

(19) agree or commit, in writing or otherwise, to take any of the
foregoing actions.

For purposes of the Company's conduct of business covenants (other than clause
(13)), references to "material" (but not "materially") mean material to the
Company and its subsidiaries, taken as a whole.

(c) The Company (i) shall not, and shall not permit any of its subsidiaries
to, take any action that would, or would reasonably be expected to,
result in (A) any of the conditions of the Offer set forth in the
Merger Agreement not being satisfied or (B) a Company Material Adverse
Effect and (ii) shall not knowingly take, or permit any of its
subsidiaries to take, any action that would or would reasonably be
expected to, result in any of its representations and warranties set
forth in the Merger Agreement becoming untrue in any respect.

Special Meeting; Proxy Statement. As promptly as practicable following
acceptance for payment and purchase of Shares pursuant to the Offer and the
expiration of the Offer, if required by applicable law in order to consummate
the Merger, the Company, acting through its Board of Directors, will, in
accordance with applicable law:

(a) call, give notice of, convene and hold a special meeting of its
shareholders (the "Special Meeting") for the purposes of considering
and taking action upon the approval of the Merger and adoption of the
Merger Agreement;

(b) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and the Merger Agreement (the "Proxy
Statement") and obtain and furnish the information required to be
included by the SEC in the Proxy Statement and, after consultation with
CEMEX, respond promptly to any comments made by the SEC with respect to
the preliminary proxy or information statement and cause a definitive
proxy or information statement, to be mailed to its shareholders at the
earliest practicable date, provided that no amendments or supplements
to the Proxy Statement will be made by the Company without consultation
with CEMEX and its counsel;

(c) include in the Proxy Statement the recommendation of the Board of
Directors of the Company that shareholders of the Company vote in favor
of approval of the Merger and adoption of the Merger Agreement; and

(d) use reasonable best efforts to take all action necessary to solicit
from its shareholders proxies, and shall take all other action
necessary and advisable, to secure the vote of shareholders required by
applicable law and the Company's Restated Articles of Incorporation or
By-Laws to obtain the approval for the Merger Agreement and the Merger.

CEMEX will vote, or cause to be voted, all of the Shares acquired in the
Offer or otherwise then owned by it, Purchaser or any of CEMEX's other
subsidiaries in favor of the approval and adoption of the Merger Agreement.

In the event that Purchaser acquires, in the aggregate, at least 90% of the
outstanding shares of each class of capital stock of the Company pursuant to
the Offer or otherwise, the parties hereto will, subject to the conditions to
the Merger set forth in the Merger Agreement, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of shareholders of the
Company, in accordance with Section 253 of the General Corporation Law of the
State of Delaware and Section 112G of the LBCL.

Reasonable Best Efforts. The Merger Agreement provides that CEMEX, Purchaser
and the Company will use all reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to

28

assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer and the Merger, and the other transactions
contemplated by the Merger Agreement, including:

(a) the obtaining of all necessary actions or nonactions, waivers, consents
and approvals from any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision ("Governmental Authority") and the making of all
necessary registrations and filings (including filings with any
Governmental Authority, if any) and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid
an action or proceeding by, any Governmental Authority;

(b) the obtaining of all necessary consents, approvals or waivers from
third parties;

(c) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging the Merger Agreement or the
consummation of any of the transactions contemplated by the Merger
Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Authority vacated or
reversed; and

(d) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, the Merger Agreement; provided, however, that no loan
agreement or contract for borrowed money entered into by the Company or
any of its subsidiaries shall be repaid except as currently required by
its terms, in whole or in part, and no contract shall be amended to
increase the amount payable thereunder or otherwise to be more
burdensome to the Company or any of its subsidiaries in order to obtain
any such consent, approval or authorization without first obtaining the
written approval of CEMEX (which approval shall not be unreasonably
withheld).

In addition to the obligations presented above, the Company shall cooperate
with CEMEX's reasonable requests in connection with CEMEX's efforts to finalize
the financing, on terms reasonably satisfactory to CEMEX, necessary to provide
CEMEX and Purchaser with sufficient funds to purchase at the Offer Price all of
the Shares outstanding on a fully diluted basis, including the Company's
providing financial statements and financial and other business information
reasonably required to be disclosed by CEMEX in connection therewith.

The Merger Agreement provides that the Company shall give prompt notice to
CEMEX of (i) any representation or warranty made by it contained in the Merger
Agreement becoming untrue or incorrect in any respect, subject in the case of
Qualified Representations to the standard described under "--Representations
and Warranties" (including the Company receiving knowledge of any fact, event
or circumstance which may cause any representation qualified as to the
knowledge of the Company to be or become untrue or incorrect, subject in the
case of Qualified Representations to the standard described under "--
Representations and Warranties") in any respect that would cause the condition
to the Offer set forth in clause (c)(2) in Section 15 hereof to fail to be
satisfied; or (ii) the failure by the Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under the Merger Agreement. However, no such notification shall
affect the representations, warranties, covenants or agreements of the Company
or the conditions to the obligations of the parties under the Merger Agreement.
The Company acknowledges that if after the date of the Merger Agreement the
Company receives knowledge of any fact, event or circumstance that would cause
any representation or warranty that is conditioned as to the knowledge of the
Company to be or become untrue or incorrect (subject in the case of Qualified
Representations to the standard described under "--Representations and
Warranties" and in the case of Absolute Representations, subject to such
Absolute Representation becoming untrue or incorrect in any material respect),
the receipt of such knowledge shall mean that such representation or warranty
shall be deemed to have become untrue or incorrect as of the date of such
receipt.

29

CEMEX also agrees to give prompt notice to the Company of (i) any
representation or warranty made by CEMEX contained in the Merger Agreement
becoming untrue or inaccurate in any material respect or (ii) the failure by
CEMEX or Purchaser to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
the Merger Agreement; provided that no such notification shall affect the
representations, warranties, covenants or agreements of CEMEX or Purchaser or
the conditions to the obligations of the parties under the Merger Agreement.

Stock Options. The Company, the Company's Board of Directors and each
relevant committee of the Company's Board of Directors shall (i) cause any
option or right to purchase, acquire or receive shares of Company Common Stock
granted under any Stock Option Plan (as defined below) to any employee,
consultant or director of the Company or any of its subsidiaries (each a "Stock
Option) that is outstanding upon consummation of the Offer, whether granted
under any Company Stock Plan, or otherwise, to become fully exercisable and
(ii) take action to permit each such Stock Option to be exercisable for a
period (the "Option Exercise Period") beginning promptly following the
acceptance for payment and purchase of the Shares by Purchaser pursuant to the
Offer and ending on the day prior to the Effective Time in accordance with the
terms and conditions of the Company Stock Plans. For purposes of each Stock
Option, the Company shall cause the Company's Board of Directors or each
relevant committee of the Company's Board of Directors acting as administrator
of each such Company Stock Plan to determine prior to the consummation of the
Offer that the consummation of the Offer and the Merger constitute a single
"Change in Control" occurring at the time of acceptance for payment of Shares
pursuant to the Offer. The Company shall cause each Stock Option that is
outstanding immediately prior to the Effective Time to be cancelled in exchange
for an amount in cash, payable at the Effective Time, equal to the product of
(i) the number of shares of Company Common Stock subject to such Stock Option
and (ii) the excess, if any, of the Merger Consideration over the per share
exercise price of such Stock Option. The Company, the Company's Board of
Directors or the relevant committee of the Company's Board of Directors acting
as administrator of a Company Stock Plan, as appropriate, shall obtain the
written consent of the holder of each Stock Option to such cancellation, if
required in accordance with the terms and conditions of the Company Stock Plans
to such cancellation. Subject to having obtained any necessary consents from
the holders of Stock Options, the Company shall cause the Company's Board of
Directors or each relevant committee of the Company's Board of Directors to
make any amendments to the Company Stock Plans or stock option agreements
thereunder which may be needed or desirable to implement such cancellation. For
purposes of the Merger Agreement, "Company Stock Plan" means the Company's 1987
Stock Option Plan, as amended, 1989 Stock Option Plan, as amended, 1991
Nonqualified Stock Option Plan for Non-employee Directors, as amended, Phantom
Stock and Deferred Compensation Plan for Non-employee Directors, 1999 Phantom
Stock Plan for Non-employee Directors, 1999 Restricted Stock Grants Plan, as
amended, and any other stock-based incentive plan, program, agreement, grant or
arrangement, sponsored, maintained, entered into or made by the Company or any
of its Subsidiaries for the benefit of any employee, consultant or director
thereof.

Except as provided in the next sentence, all Company Stock Plans shall
terminate as of the Effective Time and the provisions in any other Company
benefit plan or any other plan providing for the issuance, transfer or grant of
any capital stock of the Company or any interest in respect of any capital
stock of the Company shall be deleted as of the Effective Time, and the Company
shall ensure that following the Effective Time no holder of a Stock Option or
any participant in any Company Stock Plan or Company benefit plan or any other
plan shall have any right thereunder to acquire any capital stock of the
Company, CEMEX or the Surviving Corporation. Notwithstanding the foregoing and
the prior paragraph, (i) promptly following the execution and delivery of the
Merger Agreement, the Company shall take all action necessary to terminate each
of the Phantom Stock and Deferred Compensation Plan for Non-employee Directors
and the 1999 Phantom Stock Plan for Non-employee Directors as promptly as
practicable in accordance with their respective terms (but in no event shall
such termination occur later than the fifth day after the date of the Merger
Agreement) and for shares of Company Common Stock to be distributed to the
participants in such plans in accordance with their terms, and (ii) the
consummation of the Offer shall constitute a "change of control" under the 1999
Restricted Stock Grants Plan and the related agreements, and the shares of
Company Common Stock issued thereunder

30

shall become Transferable Shares (as provided therein) and shall be delivered
to the participants in such plan in accordance with their terms.

No Solicitation. The Merger Agreement provides that the Company shall, and
shall use its reasonable best efforts to cause its affiliates, officers,
directors, employees, financial advisors, attorneys and other advisors,
representatives and agents to, immediately cease any existing activities,
discussions or negotiations conducted with any third parties other than CEMEX
or Purchaser with respect to any Takeover Proposal (as defined below). The
Company shall not, nor shall it authorize or permit any of its affiliates to,
nor shall it authorize or permit any officer, director or employee of or any
financial advisor, attorney or other advisor, representative or agent of it or
any of its affiliates, to

(i) directly or indirectly solicit, facilitate, initiate or encourage the
making or submission of, any Takeover Proposal (including, without
limitation, the taking of any action which would make Section 133 of
the LBCL inapplicable to a Takeover Proposal),

(ii) enter into any agreement, arrangement or understanding with respect to
any Takeover Proposal or enter into any agreement, arrangement or
understanding requiring it to abandon or terminate the Merger
Agreement or to fail to consummate the Merger or any other transaction
contemplated by the Merger Agreement,

(iii) initiate or participate in any way in any discussions or negotiations
regarding, or furnish or disclose to any person (other than a party
to the Merger Agreement) any information with respect to, or take any
other action to facilitate or in furtherance of any inquiries or the
making of any proposal that constitutes, or could reasonably be
expected to lead to, any Takeover Proposal, or

(iv) grant any waiver or release under any standstill or similar agreement
with respect to any class of the Company's equity securities (other
than to permit the Company to receive an Takeover Proposal that did
not result from a breach of this provision);

provided that prior to the acceptance for payment of shares of the Shares
pursuant to the Offer, in response to a Takeover Proposal that did not result
from the breach of this provision and following delivery to CEMEX of notice of
the Takeover Proposal in compliance with its obligations under this provision,
the Company may participate in discussions or negotiations with or furnish
information (pursuant to a confidentiality/standstill agreement with customary
terms as reasonably determined in good faith by the Company after consultation
with outside counsel; provided that each such agreement is at least as limiting
as any such agreement between CEMEX and the Company) to any third party which
makes a bona fide written Takeover Proposal if (A) the Company's Board of
Directors reasonably determines in good faith (after consultation with its
financial advisor) that taking such action would be reasonably likely to lead
to the delivery to the Company of a Superior Proposal and (B) the Company's
Board of Directors determines in good faith (after consultation with outside
legal counsel) that it is necessary to take such actions in order to comply
with its fiduciary duties under applicable law. Without limiting the foregoing,
the Company agrees that any violation of the restrictions set forth in this
provision directly or indirectly by any of its, or any of its subsidiaries',
officers, affiliates or directors or any advisor, representative, consultant or
agent retained by the Company or any of its subsidiaries or affiliates in
connection with the transactions contemplated in the Merger Agreement, whether
or not such Person is purporting to act on behalf of the Company or any of its
subsidiaries, shall constitute a breach of this provision by the Company. The
Company will take all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the prior sentence of the obligations
undertaken in this provision. For purposes of this provision, a person shall be
deemed to have facilitated or encouraged an action or result only if any act or
omission by such person (i) would reasonably be expected to facilitate or
encourage such action or result or (ii) was intended by such person to
facilitate or encourage such action or result.

For purposes of the Merger Agreement, "Takeover Proposal" means any inquiry,
proposal or offer from any person or group relating to:

(i) any direct or indirect acquisition or purchase of 15% or more of the
assets of the Company or any of its subsidiaries or 15% or more of any
class of equity securities of the Company or any of its subsidiaries;

31

(ii) any tender offer or exchange offer that, if consummated, would result
in any Person beneficially owning 15% or more of any class of equity
securities of the Company or any of its subsidiaries; or

(iii) any merger, consolidation, business combination, sale of all or any
substantial portion of the assets, recapitalization, liquidation or a
dissolution of, or similar transaction of the Company or any of its
subsidiaries other than the Offer or the Merger and except for any
transaction described in "--Vessels Engaged in Coastwise Trade."

For purposes of the Merger Agreement, "Superior Proposal" means a bona fide
written Takeover Proposal made by a third party to purchase all of the
outstanding equity securities of the Company pursuant to a tender offer,
exchange offer, merger or other business combination:

(x) on terms which the Company's Board of Directors determines in good
faith to be superior to the Company and its shareholders (other than
CEMEX, Purchaser and their affiliates), in their capacity as
shareholder) from a financial point of view (taking into account, among
other things, all legal, financial, regulatory and other aspects of the
proposal and identity of the offeror and the financial capacity of the
offeror to consummate the transaction) as compared to the transactions
contemplated in the Merger Agreement and any alternative proposed by
CEMEX or Purchaser in accordance with the Merger Agreement, such
determination having been made only after consultation with the
Company's financial advisor;

(y) which is reasonably capable of being consummated; and

(z) for which financing is committed and which financing is no more
conditional than CEMEX's financing at that time (taking into account
whether any of the conditions to CEMEX's financing shall have been
satisfied at that time).

In the Merger Agreement, the Company agrees that, except as described in the
following paragraph, neither its Board of Directors nor any committee thereof
shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to CEMEX or Purchaser, the approval or recommendation of the
Company's Board of Directors of the Offer, the Merger or the Merger Agreement,
unless the Board of Directors of the Company shall have determined in good
faith, after consultation with its outside counsel, that such withdrawal or
modification is necessary in order to satisfy its fiduciary duties to the
Company's shareholders under applicable law; (ii) approve or recommend, or, in
the case of a committee, propose publicly to the Company's Board of Directors
to approve or recommend any Takeover Proposal; or (iii) approve, recommend or
cause it to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal. For purposes of this provision,
if any such board or committee proposal is publicly disclosed, regardless of
the source of, or the circumstances surrounding, the disclosure, such board or
committee proposal shall be deemed to have been made publicly.

Prior to the acceptance for payment of the Shares pursuant to the Offer, the
Company and/or its Board of Directors may take the actions otherwise prohibited
by the Merger Agreement if (i) a third party makes a Superior Proposal, (ii)
the Company complies with its obligations under the Merger Agreement to inform
CEMEX of the Superior Proposal, (iii) all of the conditions to the Company's
right to terminate the Merger Agreement have been satisfied, and (iv)
simultaneously therewith, the Merger Agreement is terminated due to the
Company's acceptance of a Superior Proposal.

The Merger Agreement also provides that the Company will promptly notify
CEMEX in writing of any Takeover Proposal or any inquiry regarding the making
of any Takeover Proposal (but in no event more than 24 hours after receipt by
the Company of such Takeover Proposal or inquiry).

Nothing contained in the Merger Agreement prohibits the Company or the
Company's Board of Directors from at any time taking and disclosing to its
shareholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act or from making any required disclosure to the Company's
shareholders if, in the

32

reasonable good faith judgment of the Company's Board of Directors, after
consultation with outside counsel, failure so to disclose would be inconsistent
with its fiduciary or disclosure obligations under applicable law.

Indemnification; Insurance. In the Merger Agreement, CEMEX, Purchaser and
the Surviving Corporation agree that all rights to indemnification existing in
favor of the present or former directors, officers, employees, fiduciaries and
agents of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") for acts or omissions of such persons occurring at or
prior to the Effective Time, as provided in the Company's Restated Articles of
Incorporation or By-Laws or the certificate or articles of incorporation, by-
laws or similar organizational documents of any of the subsidiaries and on the
terms of any existing individual indemnity agreement or other arrangement with
any director or officer, which has been disclosed to CEMEX prior to the date of
the Merger Agreement, in each case, as in effect as of the date of the Merger
Agreement, shall survive the Merger and shall continue in full force and effect
for six years after the Effective Time (without modification or amendment,
except as required by applicable law) in accordance with their terms, to the
fullest extent permitted by law, and shall be enforceable by the Indemnified
Parties against the Surviving Corporation, and the Surviving Corporation shall
also advance fees and expenses (including reasonable attorneys' fees) as
incurred to the fullest extent permitted under applicable law upon receipt of
any undertaking required by applicable law.

Purchaser or the Surviving Corporation will cause to be maintained in effect
for not less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company
(provided that Purchaser may substitute therefor policies of at least
equivalent coverage containing terms and conditions which are no less
advantageous) with respect to matters occurring prior to the Effective Time,
provided that in no event will Purchaser or the Surviving Corporation be
required to expend to maintain or procure insurance coverage pursuant to this
provision any amount per annum in excess of 200% of the amount currently
expended by the Company (the "Maximum Premium"), which annual amount currently
expended is U.S.$492,500. In the event the payment of the Maximum Premium for
any year is insufficient to maintain such insurance or equivalent coverage
cannot otherwise be obtained, Purchaser or the Surviving Corporation shall
purchase as much insurance as may be purchased for the amount indicated;
provided, however, if such insurance coverage cannot be obtained at all, the
Surviving Corporation shall purchase coverage for all available extended
reporting periods with respect to pre-existing insurance in an amount which,
together with all other insurance purchased pursuant to this provision, does
not exceed the Maximum Premium. The provisions of this provision shall survive
the consummation of the Merger and expressly are intended to benefit each of
the Indemnified Parties.

Nothing in the Merger Agreement is intended to, shall be construed to, or
shall release, waive or impair any rights to directors' and officers' insurance
claims under any policy that is or has been in existence with respect to the
Company or any of its subsidiaries or any of their respective officers,
directors or employees, it being understood and agreed that the indemnification
provided for in this provision is not prior to or in substitution for any such
claims under such policies.

Public Announcements. CEMEX and the Company have agreed that they will
consult with each other before issuing any press release or otherwise making
any public statements with respect to the transactions contemplated by the
Merger Agreement and shall not issue any such press release or make any such
public statement prior to such consultation and review by the other party of
such release or statement, except as may be required by law, court process or
by obligations pursuant to any listing agreement with a national securities
exchange.

Option to Acquire Additional Shares. The Merger Agreement provides that the
Company shall grant to Purchaser an irrevocable option (the "Option") to
purchase up to that number of newly issued Shares (the "Option Shares") equal
to the number of Shares that, when added to the number Shares owned by CEMEX,
Purchaser and its affiliates immediately following consummation of the Offer,
shall constitute one share more than 90% of the shares of Common Company Stock
then outstanding on a fully diluted basis (after giving effect to the issuance
of the Option Shares) for a consideration per Option Share equal to the Offer
Price. Such

33

Option shall be exercisable only within five business days following the
purchase of and payment for Shares pursuant to the Offer by CEMEX or Purchaser
as a result of which CEMEX and its affiliates own beneficially at least 80% of
the outstanding Shares on a fully diluted basis. Such Option shall not be
exercisable if (i) the number of Shares subject thereto exceeds the number of
authorized Shares available for issuance, or (ii) the exercise of the Option
would violate the applicable rules of the NYSE applicable to the Company.

In the event Purchaser wishes to exercise the Option, Purchaser shall give
the Company a one-day prior written notice of its exercise of the Option
specifying the number of Shares that are or will be beneficially owned by
CEMEX, Purchaser and its affiliates immediately following consummation of the
Offer and a place and a time (which may be concurrent with the consummation of
the Offer) for the closing of such purchase. The Company shall, as soon as
practicable following receipt of the notice, deliver written notice to
Purchaser specifying the number of Option Shares. At the closing of the
purchase of the Option Shares, the portion of the purchase price owing upon
exercise of such Option which equals the product of (x) the number of Shares
purchased pursuant to such Option multiplied by (y) the Offer Price shall be
paid to the Company in cash by wire transfer or cashier's check.

Rights Agreement. Except as contemplated by the Merger Agreement or approved
in writing by CEMEX, the Company's Board of Directors shall not: (a) amend the
Rights Agreement, (b) redeem or exchange, or resolve to redeem or exchange, the
Rights, (c) permit a "Distribution Date" to occur under the Rights Agreement or
(d) take any action except as provided in clause (c) with respect to, or make
any determination under, the Rights Agreement, except, in each case, to the
extent necessary to comply with the fiduciary obligations of the Company's
Board of Directors, as determined by it in good faith after consultation with
outside counsel.

Vessels Engaged in Coastwise Trade. The Company has agreed that, prior to
consummation of the Offer, it shall, and shall cause each of its subsidiaries
to, take all actions necessary to transfer to the Company any vessels engaged
in the coastwise trade owned by such subsidiaries, including the Southdown
Conquest (Official Number 236823) and Steelton (Official Number 243587) (other
than the Southdown Challenger (Official Number 202859)(the "Ship")), and shall
obtain all consents, permits and licenses associated therewith, in each such
case without incurring tax payments (other than those occasioned by termination
of the capital construction fund) by the Company or any of its subsidiaries or
restrictions on operation of such vessels materially different than those
restrictions in place as of the date of the Merger Agreement.

The Company has agreed that, prior to consummation of the Offer, it shall,
and shall cause its subsidiaries to (i)(A) sell or transfer the Ship to a
citizen of the United States, which citizen is designated by CEMEX and entitled
to register the Ship in unrestricted coastwise trade, and (B) enter into a
leaseback or time charter agreement on terms approved by CEMEX (which approval
shall not be unreasonably withheld) and in compliance with United States
maritime law or (ii) subject to CEMEX's approval (which approval shall not be
unreasonably withheld), make such other arrangements (which may include a sale,
other transfer or disposal, lease or charter, including a transfer to a trust
that is qualified under 46 U.S.C. Section 12102(d)(2)) and agreements with
respect to the Ship as may be necessary to permit the purchase of the Shares by
Purchaser pursuant to the Offer without contravention of the United States
citizenship and other requirements of United States maritime law, without
incurring tax payments (other than those occasioned by termination of the
capital construction fund) by the Company or any of its subsidiaries or
restrictions on operation of such vessels materially different than those
restrictions in place as of the date of the Merger Agreement.

Employee Benefits Plans. From and after the first to occur (a) the date upon
which CEMEX first designates one or more directors of the Company and (b) the
date upon which the Effective Time occurs (the "Measurement Date"), the Company
and the Surviving Corporation, as the case may be, shall honor in accordance
with their respective terms (as in effect on the date of the Merger Agreement),
all the Company's written employment, severance and termination agreements,
plans and policies existing prior to the date of the Merger Agreement which are
between the Company or any of its subsidiaries and any director, officer or
employee thereof. CEMEX acknowledges and agrees that (i) the consummation of
the Offer would constitute a

34

"Change in Control" (or similar relevant defined term) for all purposes
pursuant to those agreements and arrangements indicated in the Merger Agreement
and (ii) consummation of the Merger would constitute a "good reason" under
those agreements and arrangements indicated in the Merger Agreement.

For a period of not less than six months following the Measurement Date,
CEMEX shall, unless employees of the Company and its subsidiaries as of the
Measurement Date (each, a "Company Employee") shall otherwise agree or
different terms are negotiated with the relevant union representing such
employees, cause the Surviving Corporation to provide to Company Employees
employee benefits that are, in the aggregate, no less favorable than those
provided immediately prior to the Measurement Date; provided, however, that
nothing contained in this provision shall require CEMEX or Purchaser to
continue or replace, or cause to be continued or replaced, any Company Stock
Plan or any employee benefit plans, programs, policies or arrangements (each, a
"Company Benefit Plan") after the Measurement Date.

Subject to compliance with this provision, nothing contained in this
provision or elsewhere in the Merger Agreement shall be construed to prevent
the termination of employment of any Company Employee or any change in the
compensation or employee benefits available to any Company Employee or the
amendment or termination of any particular Company Benefit Plan, to the extent
permitted by its terms as in effect immediately before the Measurement Date.

For all purposes under any employee benefit plans of CEMEX and its
subsidiaries providing benefits to any Company Employee after the Effective
Time, other than CEMEX's employee stock option plan (the "CEMEX Option Plan")
(all such employee benefit plans, other than the CEMEX Option Plan, are
hereinafter referred to as the "New Plans"), each such Company Employee shall
be credited with his or her years of service with the Company and its
subsidiaries before the Effective Time, to the same extent as such employee was
entitled, before the Effective Time, to credit for such service under any
similar Company Benefit Plans for purposes of (i) eligibility to participate
and (ii) vesting, but in no event shall such service be taken into account in
determining the accrual of benefits under any New Plan, including, but not
limited to, a defined benefit plan. In addition, and without limiting the
generality of the foregoing, (x) each Company Employee shall be immediately
eligible to participate, without any waiting time, in any and all New Plans to
the extent coverage under such New Plan replaces coverage under a comparable
benefit plan of the Company in which such employee participated immediately
before the Effective Time and which plans were previously disclosed to CEMEX
and (y) for purposes of each New Plan providing medical, dental, pharmaceutical
or vision benefits to any Company Employee, CEMEX shall cause all pre-existing
condition exclusions of such New Plan to be waived for such employee and his or
her covered dependents (other than limitations or waiting periods that are
already in effect with respect to such employees and dependents and that have
not been satisfied as of the Effective Time), and CEMEX shall cause any
eligible expenses incurred by such employee and his or her covered dependents
during the portion of the plan year of the Company Benefit Plan ending on the
date such employee's participation in the corresponding New Plan begins, to be
taken into account under such New Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year as
if such amounts had been paid in accordance with such New Plan.

Definitive Financing Agreements. Prior to the close of business on the
earlier to occur of the expiration date of the Offer (as it may be extended by
Purchaser as permitted by the Merger Agreement) and 60 days following the date
of the Merger Agreement (the "Delivery Date"), CEMEX and Purchaser agree to (a)
execute and deliver definitive financing agreements (the "Definitive Financing
Agreements") (i) pursuant to which financial institutions agree to provide to
CEMEX and/or Purchaser funds which, when taken together with cash otherwise
available to CEMEX and/or Purchaser, will constitute sufficient funds to
purchase the Shares accepted for payment pursuant to the Offer in accordance
with its terms and (ii) with conditions to funding no more onerous in the
aggregate to CEMEX and Purchaser than those contemplated by the Commitment
Letters and (b) deliver true, complete and correct copies of the Definitive
Financing Agreements to the Company.

35

Conditions to the Merger. The Merger Agreement provides that the obligations
of CEMEX, Purchaser and the Company to consummate the Merger are subject to the
satisfaction of the following conditions:

. the Merger Agreement shall have been approved and adopted by the
requisite vote of the shareholders of the Company, if required by
applicable law, in order to consummate the Merger;

. no provision of any applicable law or regulation and no judgment,
injunction, order or decree of any Governmental Authority of competent
jurisdiction shall prohibit the consummation of the Merger; and

. Purchaser, CEMEX or any affiliate of CEMEX shall have purchased Shares
pursuant to the Offer; provided, however, that neither CEMEX nor
Purchaser shall be entitled to rely on this clause if either of them
shall have failed to purchase Shares pursuant to the Offer in breach of
their obligations under the Merger Agreement.

Pursuant to the Merger Agreement, the obligations of CEMEX and Purchaser to
consummate the Merger are subject to the satisfaction of the following further
conditions:

(a) that the Company shall have performed in all material respects all of
its obligations under the Merger Agreement required to be performed by
it at or prior to the Effective Time, except for an action or inaction
after the Measurement Date that would constitute a breach thereunder
that is approved by a majority of CEMEX's designees to the Company's
Board of Directors or is otherwise consented to by CEMEX; and

(b) the Option Exercise Period shall have commenced and shall have been in
effect for at least 30 consecutive days as of the day immediately prior
to the Effective Time; provided, however, that (x) for purposes of this
clause (b), the Option Exercise Period shall not be deemed to have
commenced until any required notice thereof shall have been provided to
participants (or their personal representatives) in accordance with the
Company Stock Plans under which Stock Options then remain unexercised
and (y) this condition shall be satisfied prior to such time if each
holder of a then-unexercised Stock Option shall have consented to the
cancellation of such Stock Option at the Effective Time in exchange for
the payment contemplated in "--Stock Options", each such consent to be
(A) in form and substance reasonably acceptable to CEMEX and (B) in
full force and effect as of the Effective Time.

Termination. The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after adoption of the Merger Agreement by
shareholders:

(a) by mutual written consent of CEMEX and the Company (which, if required
by the Merger Agreement, must be approved by the Independent Directors
as provided in the Merger Agreement); or

(b) by CEMEX:

(i) if at any time prior to the acceptance for payment of Shares
pursuant to the Offer, the Company has breached any representation
or warranty, or prior to the Effective Time has breached any,
covenant or other agreement contained in the Merger Agreement,
which (A) would give rise to the failure of a condition set forth
in paragraph (c) of Section 15 of this Offer to Purchase, (B)
cannot be or has not been cured within 30 days after receipt of
notice thereof by the Company or by the Termination Date, which
ever is earlier, and (C) has not been waived by CEMEX pursuant to
the provisions of the Merger Agreement (provided that CEMEX may not
terminate the Merger Agreement pursuant to this clause (b) (i) if
either CEMEX or Purchaser is then in material breach of any
representation, warranty, covenant or other agreement contained in
the Merger Agreement);

(ii) if at any time prior to the acceptance for payment of Shares
pursuant to the Offer, (A) the Company, or its Board of Directors,
as the case may be, shall have (w) entered into any agreement
other than a confidentiality standstill agreement permitted under
the Merger Agreement with respect to any Takeover Proposal other
than the Offer or the Merger under the

36

Merger Agreement, (x) amended, conditioned, qualified, withdrawn,
modified or contradicted, or, in the case of a committee, publicly
proposed to the Board of Directors, or resolved to do any of the
foregoing, in a manner adverse to CEMEX or Purchaser, its approval
and recommendation of the Offer, the Merger and the Merger Agreement
(regardless of whether such action was permitted under the Merger
Agreement), (y) approved or recommended, or, in the case of a
committee, publicly proposed to the Company's Board of Directors, to
approve or recommend, any Takeover Proposal other than the Offer or
the Merger or (z) failed to reject any Takeover Proposal or amended
Takeover Proposal within five business days following the public
announcement of such Takeover Proposal or amendment (except that
CEMEX may not terminate this Agreement pursuant to this clause (z)
prior to the twentieth business day following commencement of the
Offer), or (B) the Company or the Company's Board of Directors or any
committee thereof shall have resolved to do any of the foregoing (it
being understood and agreed that for purposes of this provision, if
any board or committee proposal is publicly disclosed, regardless of
the source of, or the circumstances surrounding, the disclosure, such
board or committee proposal shall be deemed to have been made
publicly); or

(iii) if the Company breaches in any material respect its obligations
under the Merger Agreement;

(c) by the Company:

(i) if at any time prior to the acceptance for payment of Shares
pursuant to the Offer (A) a Superior Proposal is received by the
Company and (B) the Board of Directors of the Company reasonably
determines in good faith (after consultation with outside counsel)
that it is necessary to terminate the Merger Agreement and enter
into an agreement to effect the Superior Proposal in order to comply
with its fiduciary duties to the Company's shareholders under
applicable law; provided that the Company may not terminate the
Merger Agreement pursuant to this provision unless and until

(x) five business days have elapsed following delivery to CEMEX of a
written notice of such determination by the Board of Directors
of the Company and during such five business day period the
Company has fully cooperated with CEMEX, including, without
limitation, informing CEMEX of the terms and conditions of such
Superior Proposal, and the identity of the Person making such
Superior Proposal, with the intent of enabling both parties to
agree to a modification of the terms and conditions of the
Merger Agreement so that the transactions contemplated hereby
may be effected;

(y) at the end of such five business day period the Takeover
Proposal continues to constitute a Superior Proposal and the
Board of Directors of the Company confirms its determination
(after consultation with outside counsel) that it is necessary
to terminate the Merger Agreement and enter into an agreement to
effect the Superior Proposal to comply with its fiduciary duties
under applicable law; and

(z) (1) at or prior to such termination, CEMEX has received the
Termination Fee set forth in the Merger Agreement by wire
transfer in immediately available funds and (2) immediately
following such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior
Proposal;

provided, however, that, if the written notice contemplated in
clause (x) above is given to CEMEX less than five business days, but
more than two business days, prior to the then-scheduled expiration
of the Offer, then the Company will be permitted to terminate the
Merger Agreement under this provision no earlier than 24 hours
before such scheduled expiration if the Company has complied with
all of the requirements of this provision (with the five business
day period set forth in clauses (x) and (y) above being deemed to
end when such 24-hour period begins for purposes of determining such
compliance) unless, prior to the beginning of such 24-hour period,
Purchaser shall have extended the Offer to a date that is at least
five business days

37

after the delivery of such notice to CEMEX, in which case the
Company's right to terminate the Merger Agreement pursuant to this
provision shall be determined without regard to this proviso;
provided, further, that it is understood and agreed that if the
written notice contemplated in clause (x) above is given to CEMEX
less than two business days prior to the then-scheduled expiration
of the Offer, the Company's right to terminate the Merger Agreement
pursuant to this provision shall be subject to compliance with all
of the requirements of this provision, including the five business
day period set forth in clauses (x) and (y) hereof without regard to
the immediately preceding provision;

(ii) provided the Company is not in material breach of its obligations
under the Merger Agreement, if CEMEX or Purchaser shall have (x)
failed to commence the Offer as provided in the Merger Agreement,
(y) failed to pay for Shares pursuant to the Offer in accordance
with Merger Agreement, or (z) breached in any material respect any
of their respective representations, warranties, covenants or
other agreements contained in the Merger Agreement, which breach
cannot be or has not been cured within 30 business days after
receipt of notice thereof by CEMEX or by the Termination Date,
whichever is earlier; or

(iii) CEMEX or Purchaser breach their obligation to execute and
deliver, and deliver to the Company copies of, the Definitive
Financing Agreements on or prior to the Delivery Date; or

(d) by either CEMEX or the Company:

(i) if the Offer has not been consummated on or before the Termination
Date; provided that the right to terminate the Merger Agreement
pursuant to this clause shall not be available to any party whose
failure to fulfill any material obligation of the Merger Agreement
or other material breach of the Merger Agreement has been the cause
of, or resulted in, the failure of the Offer to have been
consummated on or prior to the aforesaid date; or

(ii) if, as a result of the failure of any of the conditions set forth
in the Merger Agreement, the Offer shall have terminated or
expired in accordance with its terms without Purchaser having
purchased any Shares pursuant to the Offer; provided that the
right to terminate the Merger Agreement pursuant to this clause
shall not be available to any party whose failure to fulfill any
material obligation under the Merger Agreement or other material
breach of the Merger Agreement has resulted in the failure of such
condition; or

(iii) if any court of competent jurisdiction or any Governmental
Authority shall have issued an order, decree or ruling or taken
any other action permanently restricting, enjoining, restraining
or otherwise prohibiting acceptance for payment of, and payment
for, Shares pursuant to the Offer or consummation of the Merger
and such order, decree, ruling or other action shall have become
final and nonappealable.

Payment of Certain Fees and Expenses. If the Merger Agreement is terminated
by CEMEX as set forth in paragraphs (b)(ii) or (b)(iii) above or by the Company
as set forth in paragraph (c)(i) above, then the Company shall pay to CEMEX in
immediately available funds a termination fee in an amount equal to U.S.$80
million (the "Termination Fee").

If the Merger Agreement is terminated by (A) CEMEX pursuant to paragraph
(b)(i) above, (B) by CEMEX or the Company as set forth in paragraphs (d)(i) or
(d)(iii) above or (C) CEMEX or the Company pursuant to paragraph (d)(ii) above
and either the Minimum Condition or any conditions listed in paragraphs (c) of
Section 15 of this Offer shall fail to have been satisfied and (x) a Takeover
Proposal has been made and publicly announced or communicated to the Company's
shareholders after the date of the Merger Agreement and prior to the effective
date of such termination and (y) concurrently with or within 12 months of the
date of such termination a Third Party Acquisition Event (as defined below)
occurs, then the Company shall within one business day of the occurrence of
such a Third Party Acquisition Event (including any revisions or amendments
thereto), if any, pay to CEMEX the Termination Fee.

38

"Third Party Acquisition Event" shall mean (i) the consummation of a
Takeover Proposal involving the purchase of a majority of either the equity
securities of the Company or of the consolidated assets of the Company and its
subsidiaries, taken as a whole, or any such transaction that, if it had been
proposed prior to the termination of the Merger Agreement would have
constituted a Takeover Proposal or (ii) the entering into by the Company or any
of its subsidiaries of a definitive agreement with respect to any such
transaction.

Effect of Termination. In the event of termination of the Merger Agreement
by CEMEX or the Company, the Merger Agreement shall forthwith become void and
there shall be no liability hereunder on the part of the Company, CEMEX or
Purchaser or their respective officers or directors (except for the
Confidentiality Agreement and the provisions described in "--Effect of
Termination," "--Payment of Certain Fees and Expenses" and "--Assignment," and
certain other provisions of the Merger Agreement relating to notices, entire
agreement, enforcement, applicable law, waiver of jury trial and CEMEX
guarantee, which shall survive the termination). However, no provision
described in "Effect of Termination" and "Payment of Certain Fees and Expenses"
shall relieve any party hereto from any liability for any breach of the Merger
Agreement.

Assignment. Neither the Merger Agreement nor any of the rights, interests or
obligations under the Merger Agreement may be assigned by any of the parties to
the Merger Agreement (CEMEX, Purchaser and the Company) without the prior
written consent of the other parties, except that Purchaser may assign and
transfer its right and obligations hereunder to any of its affiliates, provided
that such assignment will not release CEMEX of its obligations under the Merger
Agreement, including its guarantee with respect to obligations of Purchaser
under the Merger Agreement.

Amendment or Supplement. Subject to applicable law, the Merger Agreement may
be amended, modified and supplemented in writing by CEMEX, Purchaser and the
Company in any and all respects before the Effective Time (notwithstanding the
Company Shareholder Approval contemplated by the Merger Agreement), by action
taken by the respective Boards of Directors of CEMEX, Purchaser and the Company
(or, if required by the Merger Agreement, the Independent Directors) or by the
respective officers authorized by such Boards of Directors or the Independent
Directors, as the case may be. However, that after the Company Shareholder
Approval, no amendment shall be made which by law requires further approval by
the shareholders of the Company without such further approval.

Guarantee. CEMEX has guaranteed the performance of any and all obligations
and liabilities of Purchaser under or arising out of the Merger Agreement and
the transactions contemplated thereby.

Confidentiality Agreement. The following is a summary of certain provisions
of the Confidentiality Agreement, dated August 11, 2000, between the Company
and CEMEX (the "Confidentiality Agreement"). This summary is qualified in its
entirety by reference to the Confidentiality Agreement, which is incorporated
herein by reference, and a copy of which has been filed with the SEC as an
exhibit to the Schedule TO. The Confidentiality Agreement may be examined and
copies may be obtained at the places set forth in Section 7.

Pursuant to the terms of the Confidentiality Agreement, each of CEMEX and
the Company agreed to provide the other company certain non-public confidential
and proprietary information concerning the company's business, financial
condition, operations, prospects, assets and liabilities ("Evaluation
Materials"). Each of CEMEX and the Company (together with their respective
subsidiaries and affiliates that received such information) agreed among other
things:

(a) to use the Evaluation Materials solely for the purpose of evaluating a
possible transaction between the companies;

(b) to keep the Evaluation Materials confidential and that neither it nor
its respective directors, officers, employees, agents or advisors
(including, without limitation, attorneys, accountants, consultants,
bankers and financial advisors) (collectively, "Representatives") will
disclose any of the Evaluation Materials in any manner whatsoever;
provided, however, that (i) either company may make any disclosure of
such information to which the other company gives its prior written
consent, (ii) any of

39

such information may be disclosed to each company's respective
Representatives who need to know such information for the sole purpose
of evaluating a possible transaction between CEMEX and the Company and
(iii) any of such information may be disclosed to the extent it is
legally required to be disclosed;

(c) that, for a period of one year from the date hereof, neither it nor any
of its affiliates will solicit to employ any of the current officers or
employees of the other company who were directly involved with the
other company in connection with the evaluation of a transaction
hereunder, so long as they are employed by the other company, without
obtaining the prior written consent of the other Company; and

(d) that, without the prior written consent of the board of directors of
the other company, for a period of two years from the date hereof, it
shall not (i) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any equity securities, or
any direct or indirect rights to acquire any equity securities or any
property, of the other company; (ii) propose to enter into, directly or
indirectly, any merger, business combination or other extraordinary
transaction involving the other company or to purchase, directly or
indirectly, a material portion of the assets of the other company;
(iii) make, or in any way participate, in any "solicitation" of
"proxies" to vote (as those terms are used in the rules of the SEC) any
voting securities of the other company or act, alone or in concert with
others, to seek to control or influence the management, board of
directors or policies of the other company; (iv) form, join or in any
way participate in a "group" as defined in Section 13(d)(3) of the
Exchange Act in connection with any of the foregoing; (v) enter into or
disclose any intention, plan or arrangement inconsistent with the
foregoing; or (vi) advise, assist or encourage any other persons in
connection with any of the foregoing.

12. Purpose of the Offer; Plans for the Company.

Purpose of the Offer. The purpose of the Offer is to acquire control of,
and the entire equity interest in, the Company. The purpose of the Merger is
to acquire all outstanding Shares not tendered and purchased pursuant to the
Offer. If the Offer is successful, Purchaser intends to consummate the Merger
as promptly as practicable.

The Company's Board of Directors has unanimously approved the Merger and
the Merger Agreement. Depending upon the number of Shares purchased by
Purchaser pursuant to the Offer, the Company's Board of Directors may be
required to submit the Merger Agreement to the Company's shareholders for
approval and adoption at a shareholder's meeting convened for that purpose in
accordance with the LBCL. If shareholder approval is required, the Merger
Agreement must be approved by the holders of the greater of (a) two-thirds of
the shares of Company Common Stock present at the Company shareholders'
meeting or (b) not less than a majority of a vote of all outstanding shares of
Company Common Stock. If the Minimum Condition is satisfied, Purchaser will
have sufficient voting power to approve the Merger Agreement at the
shareholders' meeting without the affirmative vote of any other shareholder.

If Purchaser acquires at least 90% of the then outstanding Shares pursuant
to the Offer, the Merger may be consummated without a shareholder meeting and
without the approval of the Company's shareholders under the "short form"
merger provisions of Section 112(G) of the LBCL. The Merger Agreement provides
that Purchaser will be merged into the Company and that the Restated Articles
of Incorporation and Bylaws of the Company will be the articles of
incorporation and bylaws of the Surviving Corporation following the Merger.

Dissenters' Rights. Under Section 131 of the LBCL, holders of record of
Shares who have the right to dissent and who file a written objection to the
Merger prior to or at the meeting at which the vote on the Merger is taken,
and who vote against the Merger, may demand in writing to be paid in cash the
fair cash value of such shares, as of the day before the meeting, as
determined by agreement between such shareholder and the Company or by a state
district court in Louisiana, if the shareholder and the Company are unable to
agree upon the fair cash value. If the Merger Agreement is approved by the
holders of 80% or more of the outstanding Shares, Section 131 of the LBCL
provides that no Company shareholder will have dissenters' rights. However,

40

if the Merger occurs under the "short form" merger provisions of Section 112(G)
of the LBCL, the shareholders of the Company shall have dissenters' rights
without regard to the proportion of the voting power that approved the Merger
and despite the fact that the Merger was not approved by vote of the
shareholders of the Company. In the case of a merger pursuant to Section 112(G)
of the LBCL, the dissenting shareholder need not file an objection with the
Company or vote against the Merger, but must comply with certain other
procedural requirements set forth in Section 131 of the LBCL. A person who is a
beneficial owner, but not a registered owner, of Shares who wishes to exercise
the rights of a dissenting shareholder under the LBCL cannot do so in his own
name and should have the record ownership of the shares transferred to his or
her name or instruct the record owner thereof to take all required action to
comply on his behalf with the procedures under Section 131 of the LBCL.

Any shareholder of record contemplating exercising dissenters' rights is
urged to review carefully the provisions of Section 131 of the LBCL,
particularly the procedural steps required to perfect dissenters' rights
thereunder. Dissenters' rights will be lost if the procedural requirements of
Section 131 are not fully satisfied.

Plans for the Company. Pursuant to the terms of the Merger Agreement,
promptly upon the purchase of and payment for any Shares by Purchaser pursuant
to the Offer, CEMEX currently intends to seek maximum representation on the
Company's Board of Directors, subject to the requirement in the Merger
Agreement that if Shares are purchased pursuant to the Offer, there shall be
until the Effective Time at least three Independent Directors, as described in
more detail in "Introduction."

After the Merger, CEMEX intends to operate all of its U.S. operations as a
combined entity. It is anticipated that Mr. Comer will be President and CEO of
the combined entity. CEMEX and Mr. Comer have had only preliminary discussions
with respect to this matter, and no definitive agreement with respect to the
terms on which he might be so engaged have been determined. CEMEX may reach
ongoing employment arrangements with other executive officers of the Company,
but discussions have been preliminary.

Except as otherwise set forth in this Offer to Purchase, it is expected
that, initially following the Merger, the business and operations of the
Company will be continued substantially as they are currently being conducted.
CEMEX will continue to evaluate the business and operations of the Company
during the pendency of the Offer. In addition, CEMEX intends to conduct a
comprehensive review of the Company's business, operations, capitalization,
corporate structure and management with a view to optimizing development of the
Company's potential in conjunction with CEMEX's businesses. CEMEX hopes to
realize roughly US$60 million in annual cost savings following the Merger.
Although CEMEX has preliminarily identified different areas where it may be
able to realize costs savings, it has not completed its review or made any
definitive decisions.

Except as described above or elsewhere in this Offer to Purchase, Purchaser
and CEMEX have no present plans or proposals that would relate to or result in
(i) any extraordinary corporate transaction involving the Company or any of its
subsidiaries (such as a merger, reorganization, liquidation, relocation of any
operations or sale or other transfer of a material amount of assets), (ii) any
sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any material change in the Company's capitalization or
dividend policy or (v) any other material change in the Company's corporate
structure or business.

13. Certain Effects of the Offer.

Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly, which could adversely affect the liquidity and market
value of the remaining Shares held by shareholders other than Purchaser.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Offer Price.

41

NYSE Listing. Depending upon the number of Shares purchased pursuant to the
Offer, the Shares may no longer meet the standards for continued listing on the
NYSE. According to the NYSE's published guidelines, the Shares would not be
eligible to be included for listing if, among other things, the number of
Shares publicly held falls below 600,000, or the number of holders of Shares
falls below 400, or the number of holders of shares falls below 1,200 and the
average monthly trading volume (for most recent 12 months) is less than 100,000
shares. If, as a result of the purchase of Shares pursuant to the Offer, the
Merger, the Merger Agreement or otherwise, the Shares no longer meet the
requirements of the NYSE for continued listing, the listing of the Shares will
be discontinued. In such event, the market for the Shares would be adversely
affected. In the event the Shares were no longer eligible for listing on the
NYSE, quotations might still be available from other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of such Shares remaining at such
time, the interest in maintaining a market in such Shares on the part of
securities firms, the possible termination of registration of such Shares under
the Exchange Act as described below and other factors.

Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the SEC if the Shares are not listed on a "national securities
exchange" and there are fewer than 300 record holders. The termination of the
registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to holders of Shares
and to the SEC and would make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b) of the Exchange
Act, the requirement of furnishing a proxy statement in connection with
shareholders' meetings pursuant to Section 14(a) or 14(c) of the Exchange Act
and the related requirements of an annual report, and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be eligible for NYSE
reporting. Purchaser currently intends to seek to cause the Company to
terminate the registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of registration
are met.

Margin Regulations. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral of such
securities. Depending upon factors similar to those described above regarding
listing and market quotations, following the Offer it is possible that the
Shares might no longer constitute "margin securities" for purposes of the
margin regulations of the Federal Reserve Board, in which event such Shares
could no longer be used as collateral for loans made by brokers. In addition,
if registration of the Shares under the Exchange Act were terminated, the
Shares would no longer constitute "margin securities."

14. Dividends and Distributions.

As discussed in Section 11, the Merger Agreement provides that from the date
of the Merger Agreement to the Effective Time, without the prior written
approval of CEMEX, the Company will not and will not permit any of its
subsidiaries to authorize or pay any dividends on or make any distribution with
respect to its outstanding shares of capital stock other than (a) normal
quarterly cash dividends not in excess of $0.15 per share declared and paid in
accordance with the Company's past dividend policy, including as to the timing
of the declaration, record and payment dates, provided that no such cash
dividends shall be declared after the consummation of the Offer, or (b)
dividends or distributions by wholly owned subsidiaries of the Company. Without
limiting the foregoing, effective upon acceptance for payment of Shares
pursuant to the Offer in accordance with the terms hereof, the holder of such
Shares will sell and assign to Purchaser all right, title and interest in and
to all of the Shares tendered (including, but not limited to, such holder's
right to any and all dividends and distributions with a record date before, and
a payment date after, the scheduled or extended expiration date).

42

15. Certain Conditions of the Offer.

Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act (relating to Purchaser's obligations to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer), pay for any shares
of Shares tendered pursuant to the Offer, and may terminate or amend the Offer
in accordance with the Merger Agreement, if:

(a) immediately prior to any scheduled or extended expiration date of the
Offer:

(i) the Minimum Condition shall not have been satisfied;

(ii) the applicable waiting period under the Hart-Scott-Rodino Act
shall not have expired or been terminated;

(iii) necessary consents or approvals from the United States Maritime
Administration are not received with respect to the transfer or
termination of the capital construction fund and any transfer of
vessels owned and operated by the Company or any of its
subsidiaries that are operated in the coastwise trade or consents
from (or amendments to agreements with) the lenders under the
Company's debt agreements (other than the Company's Series B 10%
Senior Subordinated Notes due 2006) to waive until the earlier of
(x) the Effective Time and (y) March 31, 2001 any "change of
control" defaults that may occur thereunder by reason of the
closing of the Offer and to defer any right to repayment
thereunder by reason of a "change of control" until the Effective
Time;

(iv) all filings and consents required in connection with or under the
permits of the Company, the failure of which to make or obtain
prior to the consummation of the Offer would reasonably be
expected to have an adverse effect on continued operation
following the Offer and the Merger of the Company's operations in
all material respects as they are presently conducted, shall not
have been obtained; or

(v) all consents necessary to the consummation of the Offer or the
Merger including, without limitation, consents from parties to
loans, contracts, leases or other agreements shall not have been
obtained, other than (x) consents the failure to obtain which would
not have, or be reasonably expected to have, a Company Material
Adverse Effect, (y) consents in respect of permits and (z) any
consents from lenders under the Company's debt agreements to waive
any "change of control" defaults that may occur by reason of
consummation of the Merger;

(b) immediately prior to any scheduled or extended expiration date of the
Offer, any of the following conditions exists:

(i) there shall have been any action threatened or taken, or any
statute, rule, regulation, judgment, order or injunction
promulgated, entered, enforced, enacted, issued or deemed
applicable to the Offer or the Merger by any domestic or foreign
Federal or state governmental regulatory or administrative agency
or authority or court or legislative body or commission which
directly or indirectly (l) prohibits, or imposes any material
limitations, other than limitations generally affecting the
industries in which the Company and CEMEX and their respective
subsidiaries conduct their business, on, CEMEX's or Purchaser's
ownership or operation (or that of any of their respective
subsidiaries or affiliates) of all or a material portion of the
Company's and its subsidiaries' businesses or assets as a whole, or
compels CEMEX or Purchaser or their respective subsidiaries and
affiliates to dispose of or hold separate any material portion of
the business or assets of the Company or CEMEX in each case taken
as a whole, (2) prohibits, or makes illegal, the acceptance for
payment, payment for or purchase of Shares or the consummation of
the Offer, the Merger or the other transactions contemplated by the
Merger Agreement, (3) results in the material delay in the ability
of Purchaser, or renders Purchaser

43

unable, to accept for payment, pay for or purchase a material amount
of the Shares, or (4) imposes material limitations on the ability of
Purchaser or CEMEX effectively to exercise full rights of ownership
of the Shares including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to the
Company's shareholders;

(ii) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities in the NYSE (excluding
any coordinated trading halt triggered solely as a result of a
specified decrease in a market index and excluding any suspension
or limitation resulting from physical damage or interference with
any exchange not related to market conditions), (2) a declaration
of a banking moratorium or any suspension of payments in respect
of banks in the United States or the Republic of Mexico (whether
or not mandatory), (3) a commencement or escalation of a war,
armed hostilities or other international or national calamity
directly or indirectly involving the United States or the Republic
of Mexico which materially adversely affects or delays the Offer,
(4) any limitation (whether or not mandatory) by any Governmental
Authority on the extension of credit by banks or other financial
institutions in a manner which prohibits the extension of funds to
CEMEX or Purchaser, (5) a change in general financial bank or
capital market conditions which materially or adversely affects
the ability of financial institutions in the European Union, the
United States or the Republic of Mexico to extend credit or
syndicate loans or (6) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;

(iii) other than as explicitly disclosed in the Merger Agreement or the
Company's reports filed with the SEC prior to the date of the
Merger Agreement any change shall have occurred (or any
development shall have occurred) after December 31, 1999, in the
business, assets, liabilities, financial condition,
capitalization, operations or results of operations of the
Company or any of its subsidiaries that has had or would
reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect;

(iv) the Company's Board of Directors shall have withdrawn, or modified
or changed in a manner adverse to CEMEX or Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer,
the Merger Agreement, or the Merger, or recommended another
proposal or offer regarding a Takeover Proposal, or shall have
resolved to do any of the foregoing; or

(v) the Merger Agreement shall have been terminated in accordance with
its terms; or

(c) immediately prior to any scheduled or extended expiration date of the
Offer, (i) the Company shall have breached or failed to perform in any
material respect any of its obligations under the Merger Agreement
required to have been performed at or prior to such time, or (ii) (1)
subject in the case of Qualified Representations to the standard
described under "--Representations and Warranties", the representations
and warranties of the Company set forth in the Merger Agreement (other
than the Absolute Representations) shall fail to be true and correct as
of the date of the Merger Agreement and as of any scheduled or extended
expiration date of the Offer as though made on such date (or, in each
case, if made as of a specified date, as of such date) and (2) the
Absolute Representations shall fail to be true and correct in all
material respects as of the date of the Merger Agreement and as of any
scheduled or extended expiration date of the Offer as though made on
such date (or, in each case, if made as of a specified date, as of such
date),

which conditions in the reasonable judgment of CEMEX or Purchaser but subject
to the provisions of the Merger Agreement, in any such case, and regardless of
the circumstances (including any action or inaction by CEMEX or Purchaser)
giving rise to such conditions makes it inadvisable to proceed with the Offer
and/or with such acceptance for payment of or payments for shares of Shares.

44

Purchaser's obligation to purchase Shares under the Offer is not conditioned
on any financing arrangements or subject to any financing condition. See Sec-
tion 9 for a description of the financing arrangements for the Offer and the
Merger.

Subject to the provisions of the Merger Agreement, the foregoing conditions
are for the sole benefit of CEMEX and Purchaser and may be asserted by
Purchaser or, subject to the terms of the Merger Agreement, may be waived by
CEMEX or Purchaser, in whole or in part at any time and from time to time up to
the expiration of the Offer. The failure by CEMEX or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time up to the expiration of the Offer.

16. Certain Legal Matters; Regulatory Approvals.

General. Purchaser is not aware of any pending legal proceeding relating to
the Offer. Except as described in this Section 16, based on its examination of
publicly available information filed by the Company with the SEC and other
publicly available information concerning the Company, Purchaser is not aware
of any governmental license or regulatory permit that appears to be material to
the Company's business that might be adversely affected by Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action
by any governmental, administrative or regulatory authority or agency, domestic
or foreign, that would be required for the acquisition or ownership of Shares
by Purchaser or CEMEX as contemplated herein. Should any such approval or other
action be required, Purchaser currently contemplates that, except as described
below under "--State Takeover Statutes," such approval or other action will be
sought. While Purchaser does not currently intend to delay acceptance for
payment of Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial
conditions or that if such approvals were not obtained or such other actions
were not taken, adverse consequences might not result to the Company's
business, or certain parts of the Company's business might not have to be
disposed of, any of which could cause Purchaser to elect to terminate the Offer
without the purchase of Shares thereunder under certain conditions. See Section
15.

State Takeover Statutes. A number of states have adopted laws that purport,
to varying degrees, to apply to attempts to acquire corporations that are
incorporated in, or that have substantial assets, shareholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws.

In Edgar v. MITE Corp., the Supreme Court of the United States invalidated
on constitutional grounds the Illinois Business Takeover Statute which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court held that the State of Indiana could, as a matter of
corporate law, constitutionally disqualify a potential acquirer from voting
shares of a target corporation without the prior approval of the remaining
shareholders where, among other things, the corporation is incorporated in, and
has a substantial number of shareholders in, the state. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they apply to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v.
McReynolds, a Federal District Court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit.

The Company is incorporated under the laws of the State of Louisiana. In
general, in the event of a "business combination" (defined to include mergers
and certain other actions) with a Louisiana corporation, Section of the 133
LBCL ("Section 133") requires the affirmative vote of at least (a) 80% of the
votes entitled to be cast by outstanding shares of voting stock of the
corporation and (b) two-thirds of the votes entitled to be cast by holders of
voting stock other than voting stock held by the "interested shareholder"
(including a person

45

who has the right to acquire 10% or more of the corporation's outstanding
voting stock or an affiliate of the corporation who at any time within the two-
year period immediately prior to the date in question owned, directly or
indirectly 10% or more of the corporation's outstanding voting stock) who is a
party to the business combination. The Company's Board of Directors approved
for purposes of Section 133 the entering into by Purchaser, CEMEX and the
Company of the Merger Agreement and the consummation of the transactions
contemplated thereby and has taken all appropriate action so that Section 133,
with respect to the Company, will not be applicable to CEMEX and Purchaser by
virtue of such actions.

Sections 135 through 140.2 of the LBCL provide generally that in the event
that any person acquires shares entitling the person to exercise at least one-
fifth of the voting power of a corporation that is an "issuing public
corporation" (a "control share acquisition"), the shares so acquired have only
the voting rights that are conferred by the shareholders of the corporation by
a vote of the shareholders, unless the corporation's articles of incorporation
or bylaws in effect prior to the control share acquisition provide that the
provisions of Sections 135 through 140.2 of the LBCL do not apply to control
share acquisitions of shares of the corporation. Immediately prior to the
execution of the Merger Agreement, Southdown's Board of Directors adopted an
amendment to Southdown's bylaws providing that the provisions of Sections 135
through 140.2 of the LBCL do not apply to control share acquisitions of shares
of Southdown. Accordingly, the provisions of Sections 135 through 140.2 of the
LBCL will not apply to the Shares acquired by Purchaser pursuant to the Offer.

If any government official or third party should seek to apply any state
takeover law to the Offer or the Merger or other business combination between
Purchaser or any of its affiliates and the Company, Purchaser will take such
action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate court proceedings. In
the event it is asserted that one or more state takeover statutes is applicable
to the Offer or the Merger and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer or the Merger, Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities or holders of Shares, and Purchaser might
be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in continuing or consummating the Offer or the Merger. In
such case, Purchaser may not be obligated to accept for payment or pay for any
tendered Shares. See Section 15.

United States Antitrust Compliance. Under the Hart-Scott-Rodino Act and the
rules that have been promulgated thereunder by the Federal Trade Commission
(the "FTC"), certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The purchase of Shares
pursuant to the Offer is subject to such requirements.

Pursuant to the requirements of the Hart-Scott-Rodino Act, Purchaser expects
to file a Notification and Report Form with respect to the Offer and Merger
with the Antitrust Division and the FTC not later than October 10, 2000. The
waiting period applicable to the purchase of Shares pursuant to the Offer will
expire at 11:59 p.m., New York City time, fifteen days after such filing.
However, prior to such time, the Antitrust Division or the FTC may extend the
waiting period by requesting additional information or documentary material
relevant to the Offer from Purchaser. If such a request is made, the waiting
period will be extended until 11:59 p.m., New York City time, on the tenth day
after substantial compliance by Purchaser with such request. Thereafter, such
waiting period can be extended only by court order.

The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer. At any time before or after the consummation of any such
transactions, the Antitrust Division or the FTC could take such action under
the antitrust laws of the United States as it deems necessary or desirable in
the public interest, including seeking to enjoin the purchase of Shares
pursuant to the Offer or seeking divestiture of the Shares so acquired or
divestiture of substantial assets of CEMEX or the Company. Private parties
(including individual States) may also bring legal actions under the antitrust
laws of the United States. Purchaser does not believe that the consummation of
the Offer or the Merger will result in a violation of any applicable antitrust
laws. However, there can be no assurance that a

46

challenge to the Offer or the Merger on antitrust grounds will not be made, or
if such a challenge is made, what the result will be. See Section 15, including
conditions with respect to litigation and certain governmental actions and
Section 11 for certain termination rights.

Other Filings. CEMEX and the Company each conduct operations in a number of
foreign countries, and filings may have to be made with foreign governments
under their pre-merger notification statutes. The filing requirements of
various nations are being analyzed by the parties and, where necessary, such
filings will be made.

17. Fees and Expenses.

Salomon Smith Barney is acting as Dealer Manager for the Offer and as
financial advisor to CEMEX in connection with the Offer and the Merger, for
which services Salomon Smith Barney will receive customary compensation. In
addition, Salomon Smith Barney and its affiliates will be participating in the
financing of the Offer and the Merger, for which services Salomon Smith Barney
and its affiliates also will receive customary compensation. CEMEX has agreed
to reimburse Salomon Smith Barney for reasonable travel and other expenses
incurred by Salomon Smith Barney in performing its services, including
reasonable fees and expenses of its legal counsel, and to indemnify Salomon
Smith Barney and certain related parties against certain liabilities, including
liabilities under the federal securities laws, arising out of its engagement.
In the ordinary course of business, Salomon Smith Barney and its affiliates may
actively trade or hold the securities of the Company and CEMEX for their own
account or for the account of customers and, accordingly, may at any time hold
a long or short position in such securities.

CEMEX and Purchaser have retained MacKenzie Partners, Inc. to be the
Information Agent and Citibank, N.A. to be the Depositary in connection with
the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telegraph and personal interview and may request banks, brokers,
dealers and other nominees to forward materials relating to the Offer to
beneficial owners of Shares.

The Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under federal securities laws.

Neither CEMEX nor Purchaser will pay any fees or commissions to any broker
or dealer or to any other person (other than to the Dealer Manager, the
Depositary and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.

18. Miscellaneous.

The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Purchaser may, in its discretion, take such action
as it may deem necessary to make the Offer in any such jurisdiction and extend
the Offer to holders of Shares in such jurisdiction.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF CEMEX OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

47

Purchaser and CEMEX have filed with the SEC a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under
the Exchange Act, together with exhibits furnishing certain additional
information with respect to the Offer, and may file amendments thereto. In
addition, the Company has filed with the SEC a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9, together with
exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the
recommendation of the Company's Board of Directors with respect to the Offer
and the reasons for such recommendation and furnishing certain additional
related information. A copy of such documents, and any amendments thereto, may
be examined at, and copies may be obtained from, the SEC (but not the regional
offices of the SEC) in the manner set forth under Section 7 above.

CENA Acquisition Corp.

October 5, 2000

48

SCHEDULE I

INFORMATION CONCERNING
DIRECTORS AND EXECUTIVE OFFICERS
OF CEMEX AND THE PURCHASER

1. Directors and Executive Officers of CEMEX.

The following tables set forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years for each member of the Board of Directors and each executive
officer of CEMEX. Unless indicated otherwise, each person is a citizen of
Mexico with a principal business address at Ave. Constitucin 444 Pte.,
Monterrey, Mexico 64000.

Principal Occupation or Employment and
Material Positions Held During the Past
Name                     Title                    Five Years
----                     -----                    ---------------------------------------

Lorenzo H. Zambrano..... Chairman, Chief          Chairman of the Board of Directors of
Executive                CEMEX since 1995, Director since 1979
Officer and Director     and Chief Executive Officer of CEMEX
since 1985. Mr. Zambrano is 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., Cydsa, S.A., Vitro, S.A., and
Grupo Televisa, S.A. He is Chairman of
the Board of Directors of Consejo de
EnseZanza e Investigacion Superior,
A.C., which manages ITESM. He is also a
member of the Stanford Business School's
advisory group and a member of the board
of directors and of the executive
committee of Grupo Financiero Banamex
Accival, S.A. de C.V. In addition, he is
a member of the board of directors of
The Museum of Modern Art, The Economic
Development Institute of the World Bank,
Americas Society, Inc., Museo de Arte
Contemporaneo, and the Mexico-United
States Commission for Educational and
Cultural Exchange.

Armando J. Garcia        Director, Executive Vice Director since 1983 and Executive Vice
Segovia................ President of Development President of Development of CEMEX since
1996. Mr. Segovia was Director of
Development of CEMEX from 1994 to 1996.
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.,
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, Confederacibn
Patronal de la Repdblica Mexicana,
Centro Patronal de Nuevo Leon, and
Instituto Mexicano del Cemento y del
Concreto. He is also Chairman of the
Board of Directors of Centro de Estudios
del Sector Privado para el Desarrollo
Sostenible.

Marcelo Zambrano         Director                 Honorary Chairman of the Board of
Hellion................                          Directors of CEMEX since 1995 and
Director since 1957. Mr. Hellion is
President of Ceramica Industrial de
Monterrey, S.A., de C.V., since 1979 and
General de Ceramica, S.A., since 1979.
He was Chairman of the Board of
Directors of CEMEX from 1979 to 1995. He
is currently a member of the board of
directors of Consejo Industrial de Nuevo
Leon, Consejo Empresarial de America
Latina, Seguros La Comercial, S.A., Club
Industrial, A.C. and Grupo Serfin-OBSA
(Regional Board).

Eduardo Brittingham      Director                 Director since 1967. Mr. Sumner is
Sumner.................                          currently General Director of Laredo
Autos, S.A. de C.V., since 1988, and of
Auto Express Rapido Nuevo Laredo, S.A.
de C.V., since 1980 He is a member of
the board of directors of Consorcio
Industrial de Exportacion, S.A. de C.V.
since 1988, and an alternate member of
the board of directors of Vitro, S.A.

Lorenzo Milmo            Director                 Director since 1977. Mr. Zambrano is
Zambrano...............                          General Director of Inmobiliaria Ermiza,
S.A. de C.V., since 1988 and as a member
of the board of directors of Seguros la
Comercial, S.A., Banco Santander
Mexicano, S.A. (Regional), Nacional
Financiera S.N.C. and Bancomer, S.A.
(Regional).

Rodolfo Garcia Muriel... Director                 Director since 1985. Mr. Muriel is the
Chief Executive Officer of Compania
Industrial de Parras, S.A. de C.V.,
since 1996 and its Chairman of the Board
of Directors since 1996. Mr. Muriel is
also Chairman of the Board of Directors
of Parras Cone de Mexico, S.A. de C.V.,
since 1993, Hilapar, S.A. de C.V., since
1996 and Vice-Chairman of the Board of
Directors of the Camara Nacional de la
Industria Textil since 1994. He is also
a member of the board of directors of
Parras Williamson, S.A. de C.V., Telas
de Parras, S.A. de C.V., Prendas
Textiles, S.A. de C.V., Iusacell, S.A.
de C.V., Iusa-GE, S. de R.L., Cambridge
Lee Industries Inc., Industrias Unidas,
S.A., Apollo Operadora de Sociedades de
Inversion, S.A. de C.V., and Sinkro,
S.A. de C.V.

Rogelio Zambrano         Director                 Director since 1987. Mr. Lozano is
Lozano.................                          General Director of Carza S.A. de C.V.,
since 1985 and Plaza Sesamo S.A. de
C.V., since 1992. Mr. Lozano is also a
member of the consultive board of Grupo
Financiero Banamex Accival, S.A. de C.V.
Zona Norte.

2

Roberto Zambrano         Director                 Director since 1987. Mr. Villarreal is
Villarreal.............                          Chairman of the Board of Directors of
Desarrollo Integrado, S.A. de C.V.,
since 1994, Pronatura S.A. de C.V.,
since 1997, Administracion Ficap, S.A.
de C.V., since 1994, Aero Zano, S.A. de
C.V., since 1994, Ciudad Villamonte,
S.A. de C.V., Focos, S.A. de C.V., since
1994, C & I Capital, S.A. de C.V., since
1997, Industrias Diza, S.A. de C.V.,
since 1994, Inmobiliaria Sanni, S.A. de
C.V., since 1994, Inmuebles Trevisa,
S.A. de C.V., since 1994, Servicios
TJcnicos Hidraulicos, S.A. de C.V.,
since 1994, and Mantenimiento Integrado,
S.A. de C.V. since 1993. He is a member
of the board of directors of S.L.I. de
Mexico, S.A. de C.V., CompaZia de Vidrio
Industrial, S.A. de C.V., Radio Digital
220, S.A. de C.V., Eicon, S.A. de C.V.
and Telecomunicaciones Publicas y
Privadas, S.A. de C.V.

Bernardo Quintana        Director                 Director since 1990. Mr. Isaac is
Isaac..................                          Chairman of the Board of Directors of
Grupo ICA, S.A. de C.V., and its Chief
Executive Officer since 1994. He is also
a member of the board of directors of
TelJfonos de Mexico, S.A. de C.V., Grupo
Financiero Banamex Accival, S.A. de
C.V., Grupo Financiero Inbursa, 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 the Consejo Mexicano de
Hombres de Negocios.

Dionisio Garza Medina... Director                 Director since 1995. Mr. Medina is
Chairman of the Board and Chief
Executive Officer of Alfa, S.A. de C.V.,
since 1990. He is Chairman of the Board
of Hylsamex, S.A. de C.V., since 1993
and of Sigma Alimentos, S.A. de C.V.,
since 1990. He is also a member of the
board of directors of Vitro, S.A.,
Cydsa, S.A., Seguros Comercial America,
S.A., and Grupo Financiero Bancomer,
S.A. de C.V. He is also a member of
Consejo Mexicano de Hombres de Negocios,
the consultive committee of the School
of Business of Harvard University, and
the David Rockefeller Center for Latin
American Studies and the consultive
committee of the New York Stock
Exchange. He is also Chairman of the
Executive Board of the Universidad de
Monterrey, A.C.

Alfonso Romo Garza...... Director                 Director since 1995. Mr. Garza is
Chairman of the Board of Directors and
Chief Executive Officer of Pulsar
Internacional, S.A. de C.V., since 1984,
Chairman of the Board of Directors and
Chief Executive Officer of Savia, S.A.
de C.V., since 1986, Chairman of the
Board of Directors and Chief Executive
Officer of Seguros Comercial America,
S.A. de C.V., since 1989, Chairman of
the Board of Directors and Chief
Executive Officer of Empaques Ponderosa,
S.A. de C.V., since 1994, and Chairman
of the Board of Directors and Chief
Executive Officer of Seminis Inc., since
1996. He is also a member of the board
of Nacional de Drogas, S.A. de C.V. and
Grupo Maseca S.A. de C.V. He is an
external advisor of the World Bank Board
for Latin America and the Caribbean, and
member of the board of directors of The
Donald Danford Plant Science Center.

3

Jorge Garcia Segovia.... Alternate Director       Alternate Director since 1985. Mr.
Segovia was Retail Banking Executive
Director of Banca Sefin (North Region)
from 1995 to 1998. Since 1998, he has
served as Director of Vector Casa de
Bolsa, S.A. de C.V. He is also a member
of the board of directors of Compania
Industrial de Parras., S.A. de C.V.,
Vitro Vidrio Plano, S.A., ABA Seguros,
S.A., and director of Vector Casa de
Bolsa, S.A. de C.V.

Tomas Brittingham        Alternate Director       Alternate Director since 1987. He is the
Longoria...............                          Chief Executive Officer of Laredo Autos,
S.A. de C.V., since 1983.

Mauricio Zambrano        Alternate Director       Alternate Director since 1995. Mr.
Villareal..............                          Villareal is General Vice-President of
Desarrollo Integrado, S.A. de C.V.,
since 1978. He is also 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.,
Inmobiliaria Sanni, S.A. de C.V.,
Inmuebles Trevisa, S.A. de C.V., Praxis
Accesorios, S.A. de C.V. and Servicios
TJcnicos Hidraulicos, S.A. de C.V., and
a member of the board of directors of
Sylvania Lighting International Mexico,
S.A. de C.V., Invercap, S.A. de C.V. and
Precision Auto Care, Inc.

Luis Santos de la        Board Examiner           Board Examiner since 1989 and Alternate
Garza..................                          Director from 1987 to 1988. He was a
Senator of Mexico for the State of Nuevo
Leon from 1997 to 2000. He is also a
member of the board of directors of
Grupo Industrial Ramirez, S.A. de C.V.,
since 1981 and Productora de Papel, S.A.
de C.V., since 1985. He was a founding
partner of Bufete de Abogados Santos-
Elizondo-Cantd-Rivera-Gonzalez-De la
Garza, S.C.

Fernando Ruiz            Alternate Board Examiner Alternate Board Examiner since 1981.
Arredondo..............

Hector Medina........... Executive Vice President Executive Vice President of Planning and
of Planning and Finance  Finance of CEMEX since 1996. Mr. Medina
was President of CEMEX Mexico from 1994
to 1996.

Rodrigo Trevino......... Chief Financial Officer  Chief Financial Officer of CEMEX since
1997. Prior to joining CEMEX, Mr.
Trevino was the Country Corporate
Officer for Citicorp/Citibank Chile from
1995 to 1996.

Ramiro G. Villarreal.... General Counsel          General Counsel of CEMEX since 1987.
Although not a director, Mr. Villarreal
has served as Secretary of the Board of
Directors since 1995.

Mario de la Garza....... Vice President of        Vice President of Administration of
Administration           CEMEX since 1996. Mr. de la Garza was
Director of Administration of CEMEX from
1994 to 1996.

Francisco Garza......... President of CEMEX North President of CEMEX North America and
America and Trading      Trading since 1998. Mr. Garza was
President of CEMEX Mexico and CEMEX USA
from 1996 to 1998 and President of
Vencemos and Cemento Bayano from 1994 to
1996.

4

Jose Luis Saenz de       President of CEMEX       President of the Europe and Asia region
Miera.................. Europe and Asia          since 1998. Mr. de Miera was President
of Valenciana from 1994 to 1998.

Victor Romo............. President of CEMEX South President of the South American and
America and the          Caribbean region since 1998. Mr. Romo
Caribbean                was President of Vencemos from 1996 to
1998 and General Director of
Administration and Finance of Valenciana
from 1994 to 1996.

Gilberto Perez.......... President of CEMEX USA   President of CEMEX USA since 1998. Prior
to that time, Mr. Perez of was Vice
President of Planning and Marketing for
CEMEX Mexico and Planning Vice President
of CEMEX Venezuela. Mr. Perez has been
employed with CEMEX since 1989.

2. Directors and Executive Officers of Purchaser

The following tables set forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years for each member of the Board of Directors and each executive
officer of Purchaser. Unless indicated otherwise, each person is a citizen of
Mexico with a principal business address at One Riverway, Suite 2200, Houston,
Texas 77056.

Principal Occupation or Employment;
Material
Name                     Title                    Positions Held During the Past Five Years
----                     -----                    -----------------------------------------

Jill Simeone............ Director, Chief          Director and Chief Executive Officer of
Executive Officer        Purchaser since 2000. Ms. Simeone is
General Counsel of CEMEX USA since 1999.
From 1998 to 1999, Ms. Simeone was a
visiting law professor at the Facultad
Libre Derecho in Monterrey and a
Fulbright Scholar at ITESM in Monterrey,
Mexico, as from 1998 to 1999, From 1993
to 1998, she was a prosecutor in the
Manhattan District Attorney's office.
Ms. Simeone is a citizen of the United
States of America.

Jeffrey H. Smith........ Director, Treasurer      Director and Treasurer of Purchaser
since 2000. Mr. Smith is Senior Vice
President of Administration of CEMEX USA
since 1994. Mr. Smith is a citizen of
the United States of America.

Andrew M. Miller........ Director, Secretary      Director and Secretary of Purchaser
since 2000. Mr. Miller is Senior Vice
President of Human Resources of CEMEX
USA. He was Vice President of Human
Resources of Molex, Inc., from 1996 to
1998. He was also Vice President of
Human Resources of Little Tikes, Inc., a
division of Rubbermaid, Inc. from 1995
to 1996. Prior to that time, Mr. Miller
was Vice President of Human Resources of
Rubbermaid Specialty Products. He
currently serves on the Development
Board of the Diocese of Galveston-
Houston, Texas. Mr. Miller is a citizen
of the United States of America.

Lorenzo Milmo            President                See--Directors and Executive Officers of
Zambrano...............                          CEMEX above. Mr. Zambrano's principal
business address is Ave. Constitucion
444 Pte. Monterrey, Mexico 64000.

Rodrigo Trevino......... Vice President           See--Directors and Executive Officers of
CEMEX above. Mr. Trevino's principal
business address is Ave. Constitucion
444 Pte. Monterrey, Mexico 64000.

5

Francisco Garza......... Vice President           See--Directors and Executive Officers of
CEMEX above. Mr. Garza's principal
business address is Ave. Constitucion
444 Pte. Monterrey, Mexico 64000.

Hector Medina........... Vice President           See--Directors and Executive Officers of
CEMEX above. Mr. Medina's principal
business address is Ave. Constitucion
444 Pte. Monterrey, Mexico 64000.

6

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

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

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

Audited consolidated balance sheets at December 31, 1998 and 1999 and
June 30, 2000 (unaudited)...............................................   F-3

Audited consolidated statements of income for the years ended December
31, 1997, 1998 and 1999 and the six month periods ended June 30, 1999
and 2000 (unaudited)....................................................   F-4

Audited statements of changes in stockholders' equity for the years ended
December 31, 1997, 1998 and 1999 and the six month periods ended June
30, 2000 (unaudited)....................................................   F-5

Audited statements of changes in stockholders' equity, consolidated
comprehensive net income for the years ended December 31, 1997, 1998 and
1999....................................................................   F-6

Audited consolidated statements of changes in financial position for the
years ended December 31, 1997, 1998 and 1999 and the six month periods
ended June 30, 1999 and 2000 (unaudited)................................   F-7

Notes to the consolidated financial statements...........................   F-8

Reports of Other Independent Accountants--PricewaterhouseCoopers (for
which the financial statements are not separately presented)............  F-83

F-1

INDEPENDENT AUDITORS' REPORT

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, 1998 and 1999, and the related consolidated
statements of income, changes in stockholders' equity and changes in financial
position for each of the years in the three-year period ended December 31,
1999. 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 did not audit the consolidated financial
statements of certain consolidated subsidiaries which were audited by other
auditors. The financial statements of these subsidiaries reflect total assets
of 12% and 11% in 1998 and 1999, respectively, and total revenues constituting
9%, 9% and 9% in 1997, 1998 and 1999, respectively, of the related consolidated
totals. Our opinion expressed herein, in so far as it relates to the amounts
included for such subsidiaries, is based solely upon the reports of the other
auditors.

We conducted our audits in accordance with generally accepted auditing
standards in Mexico which are substantially the same as those followed in the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatements and are prepared in accordance with generally accepted
accounting principles. An audit consists of 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 and the reports of other
auditors provide a reasonable basis for our opinion.

As discussed in note 3B to the consolidated financial statements, Bulletin
B-15 issued by the Mexican Institute of Public Accountants requires the
restatement of prior periods consolidated financial statements to constant
pesos as of the most recent balance sheet presented by applying a weighted
average index that takes into consideration the inflation rates of the
countries in which the subsidiaries operate and the exchange rate related to
the Mexican peso. The above mentioned consolidated financial statements have
been restated from amounts previously presented to reflect the purchasing power
of the Mexican peso as of June 30, 2000.

In our opinion, based upon our audits and reports of other auditors, 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, 1999 and 1998, 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 in the three-year period ended
December 31, 1999, in accordance with generally accepted accounting principles
in Mexico.

Generally accepted accounting principles in Mexico vary in certain
significant respects from generally accepted accounting principles in the
United States. Application of generally accepted accounting principles in the
United States would have affected results of operations for each of the years
in the three-year period ended December 31, 1999, and stockholders' equity as
of December 31, 1998 and 1999, to the extent summarized in note 23 to the
consolidated financial statements.

KPMG Cardenas Dosal, S.C.

Rafael Gomez Eng

Monterrey, N.L., Mexico
January 17, 2000, except for the restatement
described in the third paragraph of this
report which is as of September 1, 2000 and
note 23 which is as of June 7, 2000.

F-2

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

Consolidated Balance Sheets
(Thousands of constant Mexican pesos as of June 30, 2000)

December 31,
--------------------------   (Unaudited)
1998          1999      June 30, 2000
Assets                  -------------  -----------  -------------

Current Assets
Cash and temporary investments......    Ps4,147,606    3,193,079     3,297,769
Trade accounts receivable, less
allowance for doubtful accounts
Ps623,978 in 1998 and Ps525,728 in
1999...............................      5,141,485    5,189,379     6,296,946
Other receivables (note 4)..........      2,150,453    2,299,651     1,932,935
Inventories (note 5)................      4,498,463    5,436,085     5,454,156
Other current assets (note 6).......        819,281      594,404       783,903
-------------  -----------   -----------
Total current assets............     16,757,288   16,712,598    17,765,709
-------------  -----------   -----------
Investments And Noncurrent
Receivables (note 7)
Investments in affiliated
companies..........................      3,919,249    6,014,024     5,347,787
Other investments...................        270,356      808,514       855,450
Other accounts receivable...........        236,688      879,315     1,019,569
-------------  -----------   -----------
Total investments and noncurrent
receivables....................      4,426,293    7,701,853     7,222,806
-------------  -----------   -----------
Property, Machinery And Equipment
(note 8)
Land and buildings..................     29,629,305   32,774,118    33,443,635
Machinery and equipment.............     90,487,643   94,146,827    91,158,603
Accumulated depreciation............    (61,095,482) (62,184,559)  (62,666,973)
Construction in progress............      3,597,107    2,978,065     3,476,291
-------------  -----------   -----------
Total property, machinery and
equipment......................     62,618,573   67,714,451    65,411,556
-------------  -----------   -----------
Deferred Charges (note 9)............     22,837,557   23,938,653    25,550,076
-------------  -----------   -----------
Total Assets....................  Ps106,639,711  116,067,555   115,950,147
=============  ===========   ===========
Liabilities and Stockholders' Equity
Current Liabilities
Bank loans (note 10)................    Ps4,085,923    1,876,448       648,363
Notes payable (note 10).............        834,535      407,792       326,014
Current maturities of long-term
debt (notes 10 and 11).............      6,354,481    7,792,561     8,019,922
Trade accounts payable..............      3,131,743    3,791,039     4,528,201
Other accounts payable and accrued
expenses...........................      3,928,771    3,998,260     4,115,580
-------------  -----------   -----------
Total current liabilities.......     18,335,453   17,866,100    17,638,080
-------------  -----------   -----------
Long-Term Debt (note 11)
Bank loans..........................     20,242,455   22,677,087    21,960,600
Notes payable.......................     18,087,447   17,795,420    16,723,911
Current maturities of long-term
debt...............................     (6,354,481)  (7,792,561)   (8,019,902)
-------------  -----------   -----------
Total long-term debt............     31,975,421   32,679,946    30,664,609
-------------  -----------   -----------
Other Noncurrent Liabilities
Pension and seniority premium (note
12)................................        986,178      543,576       259,858
Deferred income taxes (note 15).....      1,106,552    1,077,053     6,275,098
Other noncurrent liabilities........      1,850,174      951,223     1,166,553
-------------  -----------   -----------
Total other noncurrent
liabilities....................      3,942,904    2,571,852     7,701,509
-------------  -----------   -----------
Total liabilities...............     54,253,778   53,117,898    56,004,198
-------------  -----------   -----------
Stockholders' Equity (note 13)
Majority interest:
Common stock-historical cost
basis............................         47,619       49,312        51,291
Common stock-accumulated inflation
adjustments......................      2,860,636    2,860,792     2,860,793
Additional paid-in capital........     17,477,797   19,563,959    21,391,863
Deficit in equity restatement.....    (42,360,557) (40,957,792)  (47,916,266)
Retained earnings.................     53,417,438   59,665,281    66,902,720
Net income........................      8,189,321    9,514,494     4,719,708
-------------  -----------   -----------
Total majority interest.........     39,632,254   50,696,046    48,010,109
-------------  -----------   -----------
Minority interest...................     12,753,679   12,253,611    11,935,840
-------------  -----------   -----------
Total stockholders' equity......     52,385,933   62,949,657    59,945,949
-------------  -----------   -----------
Total Liabilities and
Stockholders' Equity...........  Ps106,639,711  116,067,555   115,950,147
=============  ===========   ===========

See accompanying notes to consolidated financial statements.

F-3

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

Consolidated Statements of Income
(Thousands of constant Mexican pesos as of June 30, 2000, except for Earnings
Per Share)

(Unaudited)
Six months ended
Years ended on December 31,                June 30,
---------------------------------------  ------------------------
1997          1998         1999         1999         2000
-------------  -----------  -----------  -----------  -----------

Net sales..............  Ps 39,611,572   43,994,866   47,231,676   22,958,756   26,140,145
Cost of sales..........    (24,273,649) (25,437,568) (26,315,262) (12,763,820) (14,456,104)
-------------  -----------  -----------  -----------  -----------
Gross profit..........     15,337,923   18,557,298   20,916,414   10,194,936   11,684,041
-------------  -----------  -----------  -----------  -----------
Operating expenses:
Administrative........     (4,049,499)  (4,735,603)  (5,115,880)  (2,417,379)  (2,895,675)
Selling...............     (1,928,265)  (1,813,716)  (1,747,398)    (851,320)    (876,330)
-------------  -----------  -----------  -----------  -----------
Total operating
expenses.............     (5,977,764)  (6,549,319)  (6,863,278)  (3,268,699)  (3,772,005)
-------------  -----------  -----------  -----------  -----------
Operating income.......      9,360,159   12,007,979   14,053,136    6,926,237    7,912,036
-------------  -----------  -----------  -----------  -----------
Comprehensive financing
income (cost):
Financial expenses....     (5,332,829)  (4,948,604)  (4,772,402)  (2,351,927)  (2,328,828)
Financial income......      1,081,876      109,473      398,841      138,770      115,758
Foreign exchange
result, net..........       (123,636)  (2,257,656)     269,996      637,531     (227,525)
Monetary position
result...............      6,033,910    5,749,015    3,820,556    2,431,447    1,551,080
-------------  -----------  -----------  -----------  -----------
Net comprehensive
financing income
(cost)...............      1,659,321   (1,347,772)    (283,009)     855,821     (889,515)
-------------  -----------  -----------  -----------  -----------
Other expense, net.....     (1,438,101)  (1,551,054)  (2,904,148)  (1,586,489)    (985,355)
-------------  -----------  -----------  -----------  -----------
Income before income
taxes, employees'
statutory profit
sharing and equity in
income of
affiliates...........      9,581,379    9,109,153   10,865,979    6,195,569    6,037,166
-------------  -----------  -----------  -----------  -----------
Income tax and business
assets tax, net (note
15)...................       (523,394)    (471,083)    (668,985)    (421,234)    (995,705)
Employees' statutory
profit sharing (note
15)...................       (170,675)    (206,162)    (374,536)    (144,250)    (167,437)
-------------  -----------  -----------  -----------  -----------
Total income tax,
business assets tax
and employees'
statutory profit
sharing..............       (694,069)    (677,245)  (1,043,521)    (565,484)  (1,163,142)
-------------  -----------  -----------  -----------  -----------
Income before equity
in income of
affiliates..........      8,887,310    8,431,908    9,822,458    5,630,085    4,874,024
Equity in income of
affiliates............        182,821      159,786      243,382       81,636       94,091
-------------  -----------  -----------  -----------  -----------
Consolidated net
income...............      9,070,131    8,591,694   10,065,840    5,711,721    4,968,115
Minority interest net
income...............      1,115,010      402,373      551,346      282,533      248,407
-------------  -----------  -----------  -----------  -----------
Majority interest net
income...............  Ps  7,955,121    8,189,321    9,514,494    5,429,188    4,719,708
=============  ===========  ===========  ===========  ===========
Basic Earnings Per
Share (note 2A and
note 19).............  Ps       2.06         2.16         2.52         2.61         2.16
Diluted Earnings Per
Share (note 2A and
note 19).............  Ps       2.03         2.16         2.51         2.60         2.15
=============  ===========  ===========  ===========  ===========

See accompanying notes to consolidated financial statements.

F-4

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

Statements of Changes in Stockholders' Equity
(Thousands of constant Mexican pesos as of June 30, 2000)

Common stock        Additional  Deficit in                                                        Total
-----------------------   paid-in      equity      Retained                 Majority    Minority   stockholders'
Series A    Series B    capital    restatement   earnings   Net income    interest    Interest      Equity
------------  ---------  ----------  -----------  ----------  -----------  ----------  ----------  -------------

Balances at
December 31,
1996............  Ps 1,783,702  1,124,253  16,042,281  (31,052,440) 37,766,270   10,626,449  36,290,515  10,877,236   47,167,751
Acquisition of
shares under
repurchase
program.........          (469)      (678)        --           --   (1,238,785)         --   (1,239,932)        --    (1,239,932)
Appropriation of
net income from
prior year......           --         --          --           --   10,626,449  (10,626,449)        --          --           --
Issuance of
common stock
(note 13B)......           --          26      18,796          --          --           --       18,822         --        18,822
Result from
holding
nonmonetary
assets..........           --         --          --    (4,021,661)        --           --   (4,021,661)        --    (4,021,661)
Updating of
investments and
other
transactions
relating to
minority
interest........           --         --          --           --          --           --          --      357,407      357,407
Investment by
subsidiaries
(note 7)........           --         --          --    (2,249,557)        --           --   (2,249,557)        --    (2,249,557)
Net income......           --         --          --           --          --     7,955,121   7,955,121   1,115,010    9,070,131
------------  ---------  ----------  -----------  ----------  -----------  ----------  ----------   ----------
Balances at
December 31,
1997............     1,783,233  1,123,601  16,061,077  (37,323,658) 47,153,934    7,955,121  36,753,308  12,349,653   49,102,961
Dividends
declared (Ps0.41
pesos per
share)..........         1,407        --    1,406,585          --   (1,691,617)         --     (283,625)        --      (283,625)
Appropriation of
net income from
prior year......           --         --          --           --    7,955,121   (7,955,121)        --          --           --
Issuance of
common stock
(note 13B)......           --          14      10,135          --          --           --       10,149         --        10,149
Result from
holding
nonmonetary
assets..........           --         --          --      (950,238)        --           --     (950,238)        --      (950,238)
Updating of
investments and
other
transactions
relating to
minority
interest........           --         --          --           --          --           --          --        1,653        1,653
Investment by
subsidiaries
(note 7)........           --         --          --    (4,086,661)        --           --   (4,086,661)        --    (4,086,661)
Net income......           --         --          --           --          --     8,189,321   8,189,321     402,373    8,591,694
------------  ---------  ----------  -----------  ----------  -----------  ----------  ----------   ----------
Balances at
December 31,
1998............     1,784,640  1,123,615  17,477,797  (42,360,557) 53,417,438    8,189,321  39,632,254  12,753,679   52,385,933
Dividends
(Ps0.45 pesos
per share)......         1,726        --    1,752,140          --   (1,941,478)         --     (187,612)        --      (187,612)
Appropriation of
net income from
prior year......           --         --          --           --    8,189,321   (8,189,321)        --          --           --
Issuance of
common stock
(note 13B)......           --         123      91,948          --          --           --       92,071         --        92,071
Issuance of
appreciation
warrants (note
2C).............           --         --      242,074          --          --           --      242,074         --       242,074
Result from
holding
nonmonetary
assets..........           --         --          --    (2,979,075)        --           --   (2,979,075)        --    (2,979,075)
Updating of
investments and
other
transactions
relating to
minority
interest........           --         --          --           --          --           --          --   (1,051,414)  (1,051,414)
Investment by
subsidiaries
(note 7)........           --         --          --     4,381,840         --           --    4,381,840         --     4,381,840
Net income......           --         --          --           --          --     9,514,494   9,514,494     551,346   10,065,840
------------  ---------  ----------  -----------  ----------  -----------  ----------  ----------   ----------
Balances at
December 31,
1999............     1,786,366  1,123,738  19,563,959  (40,957,792) 59,665,281    9,514,494  50,696,046  12,253,611   62,949,657
Dividends
(Ps0.50 pesos
per share)
(Unaudited).....         1,965        --    1,898,446          --   (2,277,055)         --     (376,644)        --      (376,644)
Appropriation of
net income from
prior year
(Unaudited).....           --         --          --           --    9,514,494   (9,514,494)        --          --           --
Issuance of
common stock
(Unaudited).....           --          15      12,119          --          --           --       12,134         --        12,134
Issuance of
appreciation
warrants
(Unaudited).....           --         --      (82,661)         --          --           --      (82,661)        --       (82,661)
Result from
holding
nonmonetary
assets
(Unaudited).....           --         --          --       833,151         --           --      833,151         --       833,151
Updating of
investments and
other
transactions
relating to
minority
interest
(Unaudited).....           --         --          --           --          --           --          --     (566,178)    (566,178)
Accumulated
effect of income
tax.............           --         --          --    (3,575,914)        --           --   (3,575,914)        --    (3,575,914)
Investment by
subsidiaries
(Unaudited).....           --         --          --    (4,215,711)        --           --   (4,215,711)        --    (4,215,711)
Net income
(Unaudited).....           --         --          --           --          --     4,719,708   4,719,708     248,407    4,968,115
------------  ---------  ----------  -----------  ----------  -----------  ----------  ----------   ----------
Balances at June
30, 2000
(Unaudited).....     1,788,331  1,123,753  21,391,863  (47,916,266) 66,902,720    4,719,708  48,010,109  11,935,840   59,945,949
============  =========  ==========  ===========  ==========  ===========  ==========  ==========   ==========

See accompanying notes to consolidated financial statements.

F-5

CEMEX, S.A. DE C.V. AND SUBSIDIARIES
Statements of Changes in Stockholders' Equity, continued
Consolidated Comprehensive Net Income
(Thousands of constant Mexican pesos as of June 30, 2000)

For U.S. GAAP purposes, SFAS 130 requires the display of certain items
resulting from the change in equity of a business enterprise during a period
from transactions and other events and circumstances from non-owners to be
presented as a separate component of stockholders' equity and net income. The
following table illustrates the comprehensive income and accumulated other
comprehensive income under Mexican GAAP as of and for the years ended December
31, 1997, 1998 and 1999.

Years ended on December 31,
----------------------------------------
1997          1998         1999
--------------  -----------  -----------

Majority interest net income......... Ps   7,955,121    8,189,321    9,514,494
Other comprehensive income:
Foreign currency translation
adjustment.........................        696,017    6,045,988     (849,435)
Foreign exchange gains (losses)
accounted as a hedge of a net
Investment.........................       (459,755)  (3,098,900)     613,612
Effects from holding non-monetary
assets.............................     (2,924,251)  (1,447,780)  (2,467,756)
Other hedge derivative instruments..       (198,659)    (289,320)    (146,744)
Bulletin B-15 constant pesos
adjustment.........................     (1,135,013)  (2,160,226)    (128,752)
--------------  -----------  -----------
Other comprehensive income (loss)...     (4,021,661)    (950,238)  (2,979,075)
--------------  -----------  -----------
Comprehensive income (loss) for the
year...............................      3,933,460    7,239,083    6,535,419
--------------  -----------  -----------
Accumulated other comprehensive
income:
Balance at beginning of year.........    (16,372,761) (20,394,422) (21,344,660)
--------------  -----------  -----------
Balance at end of year............... Ps (20,394,422) (21,344,660) (24,323,735)
==============  ===========  ===========

For the periods ended June 30, 1999 and 2000, other comprehensive income
amounts (loss) income of Ps(2,270,068) and Ps286,472 respectively (unaudited).
The comprehensive income for the periods ended June 30, 1999 and 2000 was
Ps3,159,121 and Ps5,006,180 respectively (unaudited).

The Company has not presented the individual components of the accumulated
balance of other comprehensive income disclosure requirements of SFAS 130 as
permitted when it is impracticable to obtain this information.

For Mexican GAAP purposes, deficit in equity restatement includes (i)
foreign currency translation adjustments, (ii) foreign exchange losses derived
from debt identified as hedge of a net investment, (iii) the accumulated effect
of holding non-monetary assets, (iv) certain other hedge derivative instruments
and (v) investments by subsidiaries in the Parent Company. For SFAS 130
purposes, all of the foregoing, except for investments by subsidiaries in the
Parent Company, are considered to be part of comprehensive income.

F-6

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

Consolidated Statements of Changes in Financial Position
(Thousands of constant Mexican pesos as of June 30, 2000)

(Unaudited)
Six months ended
Years ended on December 31,              June 30,
-------------------------------------  ----------------------
1997         1998        1999         1999        2000
------------  ----------  -----------  ----------  ----------

Operating activities
Majority interest net
income................  Ps 7,955,121   8,189,321    9,514,494   5,429,188   4,719,708
Charges to operations
which did not require
resources (note 18)...     5,448,015   4,555,066    5,498,947   2,290,251   2,546,367
------------  ----------  -----------  ----------  ----------
Resources provided by
operating
activities...........    13,403,136  12,744,387   15,013,441   7,719,439   7,266,075
------------  ----------  -----------  ----------  ----------
Changes in working
capital, excluding
effect of acquisitions:
Trade accounts
receivable, net......      (271,973)   (814,332)     501,916    (355,462) (1,204,549)
Other receivable and
other assets.........       286,372    (322,756)     107,310     111,732     186,446
Inventories...........      (287,944)   (532,227)     101,440     391,764    (190,337)
Trade accounts
payable..............       744,911     387,635      325,412     393,266     683,570
Other accounts payable
and accrued
Expenses..............      (638,128)    949,053     (968,115)   (320,082)     63,929
------------  ----------  -----------  ----------  ----------
Net change in working
capital..............      (166,762)   (332,627)      67,963     221,218    (460,941)
------------  ----------  -----------  ----------  ----------
Net resources provided
by operating
activities...........    13,236,374  12,411,760   15,081,404   7,940,657   6,805,134
------------  ----------  -----------  ----------  ----------
Financing activities
Proceeds from bank
loans (repayments),
net...................       (81,429)  3,133,018   (3,179,979)  1,684,698    (830,208)
Notes payable, net,
excluding foreign
exchange effect (note
3E)...................    (4,281,751) (7,167,794)  (4,220,764)   (313,702) (1,817,268)
Investment by
subsidiaries..........      (747,918) (2,537,345)   4,891,479      55,186  (1,190,640)
Dividends paid.........           --   (1,691,617)  (1,941,478) (1,955,393) (2,277,055)
Issuance of common
stock from
reinvestment of
dividends.............           --    1,407,992    1,753,866   1,754,537   1,900,411
Issuance of preferred
stock by
subsidiaries..........           --    2,548,833          --          --          --
Other financing
activities, net.......      (491,968)   (436,778)  (3,345,024)   (979,977)  1,102,679
Acquisition of shares
under repurchase
program...............    (1,239,932)        --           --          --          --
Issuance of common
stock.................        18,822      10,149      334,145      50,864     (70,527)
------------  ----------  -----------  ----------  ----------
Resources used in
financing
activities...........    (6,824,176) (4,733,542)  (5,707,755)    296,213  (3,182,608)
------------  ----------  -----------  ----------  ----------
Investing activities
Property, machinery and
equipment, net........    (3,499,610) (3,324,203)  (2,600,880)    204,013  (1,387,440)
Acquisitions, net of
cash acquired.........      (970,633) (2,587,522)  (9,666,931) (5,648,531)   (532,616)
Disposal of assets.....           --    2,456,775          --       70,363   1,172,895
Minority interest......    (1,066,549)   (882,191)  (1,424,189)   (968,053)    (40,900)
Deferred charges.......      (690,962)    (41,577)    (900,011)     15,073     227,910
Other investments and
monetary foreign
currency effect.......      (652,858) (3,128,624)   4,263,835  (2,448,197) (2,957,685)
------------  ----------  -----------  ----------  ----------
Resources used in
investing
activities...........    (6,880,612) (7,507,342) (10,328,176) (8,775,332) (3,517,836)
------------  ----------  -----------  ----------  ----------
(Decrease) increase in
cash and temporary
investments..........      (468,414)    170,876     (954,527)   (538,462)    104,690
Cash and temporary
investments at
beginning of year....     4,445,144   3,976,730    4,147,606   4,147,606   3,193,079
------------  ----------  -----------  ----------  ----------
Cash and temporary
investments at end of
year.................  Ps 3,976,730   4,147,606    3,193,079   3,609,144   3,297,769
============  ==========  ===========  ==========  ==========

See accompanying notes to consolidated financial statements.

F-7

CEMEX, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

1.DESCRIPTION OF BUSINESS

Cemex, S.A. de C.V. (Cemex or the Company) is a Mexican parent company of
entities engaged in the production and marketing of cement and concrete in the
construction industry. The Company also has subsidiaries that participate in
the tourism industry.

2. OUTSTANDING EVENTS DURING 1999

A) EXCHANGE OF SHARES FOR THE NEW ORDINARY PARTICIPATION CERTIFICATE ("CPO")

On September 14, 1999, the Company concluded an exchange offer of its old
series "A" and "B" shares, and its old Ordinary Participation Certificates
("CPOs"), for new CPOs. As a result, most of the holders of the old series "A"
and "B" shares and old CPOs, received for each of those securities a new CPO,
which represents, the participation in two new series "A" shares and one new
series "B" share of the Company. As a part of the exchange offer, on September
15, 1999, the Company effected a stock split of two series "A" shares and one
series "B" share, for each of the old shares of any series. The proportional
equity interest participation of the shareholders in the Company's common stock
did not change as a result of the exchange offer and the stock split mentioned
above.

Earnings per share, prices per share, and the number of shares outstanding
disclosed in these notes to the financial statements for the years ended
December 31, 1997 and 1998, as well as the transactions occurred in 1999 prior
to September 14, have been restated to give effect to the stock split mentioned
in the preceding paragraph.

B) REGISTRATION IN THE NEW YORK STOCK EXCHANGE

On September 15, 1999, the Company successfully completed its registration
before the United States Securities and Exchange Commission ("SEC") and the
listing of the new American Depositary Shares ("ADS") on the New York Stock
Exchange ("NYSE"), as well as the exchange process of the new CPO mentioned in
note 2A. On that same date, the new CPOs began trading on the Mexican Stock
Exchange ("BMV") and of the new ADSs in the NYSE under the stock symbol CX.
Each new ADS represents 5 new CPOs. As a result of the Company's registration
with the SEC and the listing of the new ADS in the NYSE, beginning in the year
2000, the Company is required to file with the SEC, financial information
according to the rules established by the SEC, including the annual financial
statements with the reconciliation of stockholders' equity and net income to
Generally Accepted Accounting Principles in the United States ("US GAAP").

C) PUBLIC OFFER OF WARRANTS

During December 1999, through a simultaneous public offer in the Mexican
Stock Exchange ("BMV") and the New York Stock Exchange ("NYSE"), the Company
issued 105 million warrants at a subscription price of Ps3.3750 per warrant.
The warrants allow the holder to benefit from the future increment in the
market price of the Company's CPO above the strike price of $ 6.20 per warrant,
within certain limits. The benefit, if any, will be paid in CPOs of the
Company. The warrants were issued for a term of three years and are exercisable
at maturity. The warrants were subscribed as American Depositary Warrants
("ADWs") in the NYSE, each ADW is equivalent to 5 warrants.

As part of the same transaction, the Company carried out a hedge transaction
in order to cover the future obligations for the warrants exercise. Through
this transaction, 105 million CPOs of the Company and

F-8

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

33,751,566 shares of Compania Valenciana de Cementos Portland, S.A.
("Valenciana"), a subsidiary of the Company in Spain, were sold to a group of
foreign banks. Simultaneously, a subsidiary of the Company entered into forward
contracts with the same group of banks, to repurchase the basket of shares with
a three-year maturity and prepaid approximately $ 439.9 million of the forward
purchase price to the bank

As a result of the overall transaction, the Company received proceeds for
the subscription of the warrants and the sale of the basket of shares of
approximately $ 490.9 million, after applying the prepayment to the banks under
the forward, fees and other expenses related to this transaction.

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
include the recognition of the effects of inflation on the financial
information.

The corresponding notes have been revised from the notes originally prepared
under Mexican GAAP in order to comply with the disclosure requirements of
Accounting Principles Generally Accepted in the United States of America (U.S.
GAAP) and with the regulations of the U.S. Securities and Exchange Commission
(SEC).

When reference is made to pesos or "Ps", it means Mexican pesos; when
reference is made to dollars or "$", it means currency of the United States of
America.

When reference is made to "CPOs", it is the Ordinary Participation
Certificates of the Company, which include two series "A" shares and one series
"B" share per each CPO. When reference is made to "ADS's", it is the "American
Depositary Shares" of the Company. Each ADS includes 5 CPO's.

B) PRESENTATION OF COMPARATIVE FINANCIAL STATEMENTS

In accordance with Bulletin B-15, "Foreign Currency Transactions and
Translation of Foreign Currency Financial Statements", the inflation
restatement factors applied to the financial statements of prior periods were
calculated based upon a weighted average index, which takes into consideration
the inflation rates of the countries in which the subsidiaries operate, and the
fluctuations in the exchange rate of each country vis-a-vis the Mexican peso.

December 31, December 31, June 30,
1998         1999       2000
------------ ------------ --------

Inflation restatement factor using
weighted average index................    1.2581       1.0011     1.0287
Inflation restatement factor for
inflation in Mexico...................    1.1861       1.1232     1.0442

The inflation restatement adjustments for common stock and additional paid-
in capital are determined by using the Mexican inflation. The weighted average
restatement index was used for all other inflation restatement adjustments to
stockholders' equity.

F-9

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

C) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include those of Cemex and the
subsidiary companies in which Cemex holds a majority interest and/or has
control. All significant intercompany balances and transactions have been
eliminated in consolidation.

The main subsidiaries are:

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

.  Beeston Investments Holdings Limited

.  Compania Valenciana de Cementos Portland, S.A.

.  Corporacion Venezolana de Cementos, S.A.C.A.

.  Cemex USA, Inc.

.  Cementos Diamante, S.A.

.  Cemento Bayano, S.A.

.  Cementos Nacionales, S.A.

.  Rizal Cement Company, Inc.

.  APO Cement Corporation

.  Assiut Cement Company

.  Cementos del Pacifico, S.A.

.  Turismo Cemex, S.A. de C.V.

D) ADMINISTRATIVE IMPROVEMENT PROGRAM DURING 1999

During 1999, as part of an administrative improvement program, the Company
integrated within the structure of one entity the cement and concrete
operations in Mexico in order to eliminate redundant processes and take
advantage of synergies. This administrative process included mergers, as well
as sales-purchases of companies within the Cemex group, for which the
following actions were taken:

1) Effective July 31, 1999, the Company changed the legal name of Cemex
Control, S.A. de C.V. ("Control") to Empresas Tolteca de Mexico, S.A. de
C.V. ("ETM").

2) Effective December 31, 1999, a merger took place of most of the cement
subsidiaries in Mexico, including Tolmex, S.A. de C.V. ("Tolmex"). The
merging entity was Serto Construcciones, S.A. de C.V. ("Serto"), company
which before the merger was a direct subsidiary of Tolmex. Likewise, on
December 10, 1999, the legal name of Serto was changed to Cemex Mexico,
S.A. de C.V. ("Cemex Mexico").

3) Effective December 31, 1999, a merger took place of most of the concrete
subsidiaries in Mexico. The merging entity was Cemex Concretos, S.A. de
C.V., before named Concretos de Alta Calidad y Agregados, S.A. de C.V.

4) Additionally, on December 15, 1999, through a sale and purchase of
shares within the Group, ETM became a direct subsidiary of Cemex Mexico.

F-10

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Through these mergers and the intercompany sale of ETM (see note 22), from
January 1, 2000, the cement and concrete operations of the Company in Mexico
are integrated in Cemex Mexico and subsidiaries.

E)  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 or liquidation. Monetary assets
and liabilities denominated in foreign currencies are adjusted into pesos at
the exchange rates prevailing at the balance sheet date. The resulting foreign
exchange fluctuations are reflected in the results of operations as part of the
comprehensive financing income (cost) or as a charge directly to the
stockholders' equity when the indebtedness is directly related to the
acquisition of a foreign subsidiary.

The financial statements of consolidated foreign subsidiaries are restated
for inflation in their functional currency based on the subsidiary country's
inflation rate and subsequently translated to Mexican pesos by using the
foreign exchange rate at the end of the corresponding reporting period for
balance sheet and income statement accounts.

The exchange rate of the Mexican peso against the U.S. dollar used by the
Company is based upon the weighted average of free market rates available to
settle its overall foreign currency transactions.

F) CASH AND TEMPORARY INVESTMENTS

Cash and temporary investments include fixed-income marketable securities
investments with original maturities of three months or less. Investments in
marketable securities are stated at market value. Gains or losses resulting
from changes in market values and the effects of inflation are included in the
accompanying statements of income as part of the comprehensive financing income
or cost.

G) INVENTORIES AND COST OF SALES (note 5)

Inventories are stated at the lower of replacement cost or market value.
Replacement cost is based upon the latest purchase price or production cost.
The cost of sales reflects replacement cost of inventories at the time of sale,
expressed in constant pesos as of the date of the latest balance sheet.

H) INVESTMENTS AND NONCURRENT RECEIVABLES (note 7)

In the consolidated financial statements, investments in affiliated
companies in which the Company holds between 10% and 50% of the issuer's
capital stock are accounted for by the equity method. Under the equity method,
the investments are stated at cost, adjusted for the Company's equity in the
investee's earnings after acquisition and the effects of inflation on the
investee's equity.

Investments available for sale for which the Company has no intention to
sell in the short-term are carried at market value, and valuation effects are
recognized in the stockholders' equity. The application of the accumulated
effect to the income statement will occur at the moment of sale.

F-11

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

I) PROPERTY, MACHINERY AND EQUIPMENT (note 8)

Property, machinery and equipment are restated for inflation in accordance
with the fifth amendment to Bulletin B-10, by using the inflation index of the
country of origin of the assets and the change in the foreign exchange rate
between the country of origin and the functional currency.

Net comprehensive financing cost incurred during the construction or
installation period of fixed asset additions is capitalized, as part of the
value of the assets.

Depreciation of property, machinery and equipment is provided on the
straight-line method over the estimated useful lives of the assets less salvage
value. The useful lives of the assets are as follows:

Years
--------

Administrative buildings............................................    50
Industrial buildings, machinery and equipment....................... 10 to 35

The Company continuously evaluates the physical state and performance of its
machinery and equipment, as well as the impact of its sales and production
forecasts, in order to determine if there are judgement elements indicating
that the book value of these assets need to be adjusted for impairment. An
impairment loss would be recorded in the income statement of the period if such
determination is made (see note 8).

J) DEFERRED CHARGES AND AMORTIZATION (note 9)

Deferred charges are adjusted to reflect current values. Amortization of
deferred charges is determined using the straight-line method based on the
current value of the assets.

Amortization of the excess of cost over book value of subsidiaries acquired
(goodwill) is determined under the present worth or sinking fund method, which
intends a better matching of the amortization of goodwill with the revenues
generated from the acquired affiliated companies. The amortization periods are
as follows:

Years
-----

Goodwill from years before 1992........................................   40
Goodwill from acquisitions starting January 1, 1992....................   20

At each balance sheet date, the Company evaluates the recoverability of
goodwill based on an evaluation of factors such as the occurrence of a
significant adverse event, change in the environment in which the business
operates and expectations of operating results for each subsidiary, this to
determine if there are judgement elements to believe that the goodwill balance
would not be recovered. An impairment loss would be recorded in the period if
such determination is made.

Deferred financing costs originated from our financing operations are
amortized over the term in which the related transactions are outstanding, in
proportion to their maturity dates. These costs include the expenses incurred
for fees paid to lawyers, printers and consultants, as well as commissions paid
to banks in the credit approval process. Deferred financing costs are adjusted
to reflect current values.

K) PENSION PLANS AND SENIORITY PREMIUM (note 12)

Pension benefits and accumulated seniority premium rights to which employees
are legally entitled are recognized in the results of operations on the basis
of the present value of the benefit determined under

F-12

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

actuarial estimations. The amortization of unrecognized prior service cost is
based on the employee's estimated active service life. As of December 31, 1999,
the estimated active service life of the personnel's under benefit plan is
approximately 22 years.

Some subsidiaries have established pension plans supplementary to the
benefits provided by law. The obligations under these plans are determined
based on actuarial calculations and, in some cases, certain irrevocable trust
funds have been established for these plans. The actuarial assumptions utilized
in these calculations are based upon "real" rates (nominal rates reduced by
inflation).

Other benefits to which employees may be entitled are recognized as an
expense in the year in which they are paid. These benefits consist principally
of severance benefits and vacation.

L) INCOME TAX AND EMPLOYEES' STATUTORY PROFIT SHARING (note 15)

Income Tax and Employees' Statutory Profit Sharing expense recognize the
amounts incurred, and the effects of material timing differences between tax
and book income on which it may be reasonably estimated that, over a defined
period, a benefit or liability will arise.

M) MONETARY POSITION GAIN OR LOSS

The monetary position gain or loss is calculated by applying the inflation
rate of each country in which the Company has operations to the average net
monetary assets or liabilities in that country.

N) DEFICIT IN EQUITY RESTATEMENT

The deficit in equity restatement includes the accumulated effect from
holding non-monetary assets as well as the effects of translation of financial
statements of foreign subsidiaries.

O) DERIVATIVE FINANCIAL INSTRUMENTS (note 14)

The Company uses derivative financial instruments such as interest rate
swaps, forward contracts, options and future contracts in order to reduce its
exposure to market risks from changes in interest rates, foreign exchange
rates, the price of the Company's shares and the price of energy. Some
financial instruments have been designated as hedges of the Company's costs,
debt or equity and their economic effects are recognized as part of the cost of
sales, comprehensive financing income (cost) or in stockholders' equity,
according to their designation. Premiums paid or received on derivative
instruments, are deferred and amortized to the income statement or
stockholders' equity, depending on their destination, over the life of the
underlying hedge instrument or immediately when they are settled.

Equity derivatives on the Company's common stock are accounted for as equity
instruments and gains and losses are recognized as an adjustment to
stockholders' equity. At maturity, these contracts provide for physical or net
cash settlement at the Company's option.

Currency forward instruments that have been designated as, and are effective
as, a hedge of the Company's net investments in foreign subsidiaries are
recorded at their estimated fair value in the balance sheet. The realized or
unrealized gains or losses are recognized in stockholders' equity as part of
foreign currency translation gain or loss.

F-13

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The results of derivative instruments contracted as a hedge of interest
rates are accounted for as part of the effective interest rate of the related
debt within the financial expense. At settlement, the results are deferred and
recognized over the shorter term of the remaining contractual life of the
derivative instrument or the remaining life of the liability as an adjustment
to interest expense.

P) REVENUE RECOGNITION

Revenue is recorded upon shipment of the cement and ready-mix concrete to
customers.

Q) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from these estimates.

R) RECLASSIFICATIONS

Certain amounts reported in the notes to the consolidated financial
statements as of December 31, 1997 and 1998 have been reclassified to conform
to the 1999 presentation.

4. OTHER RECEIVABLES

Other current receivables consist of:

December 31,      (Unaudited)
---------------------  June 30,
1998       1999       2000
----------- --------- -----------

Non-trade receivables..................... Ps1,321,516 1,581,597  1,550,946
Refundable income tax.....................     653,471   399,368    381,989
Other refundable taxes....................     175,466   318,686        --
----------- ---------  ---------
Ps2,150,453 2,299,651  1,932,935
=========== =========  =========

As of December 31, 1998 and 1999, non trade receivables consisted primarily
of interest receivable, notes receivable, advances to employees for travel
expenses, loans made to employees and receivable from the sale of assets.

5. INVENTORIES

Inventories are summarized as follows:

December 31,      (Unaudited)
---------------------  June 30,
1998       1999       2000
----------- --------- -----------

Finished goods............................. Ps1,027,325   765,997    941,726
Work-in-process............................     499,634   603,303    642,230
Raw materials..............................     523,773   528,908    516,961
Supplies and spare parts...................   2,045,907 2,833,428  2,669,125
Advances to suppliers......................     175,300   430,419    386,316
Inventory in transit.......................      31,979   121,196    202,655
Real estate held for sale..................     194,545   152,834     95,143
----------- ---------  ---------
Ps4,498,463 5,436,085  5,454,156
=========== =========  =========

F-14

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

As of December 31, 1998 and 1999, real estate held for sale corresponds to
undeveloped land in different tourist locations in Mexico, originally acquired
by the Company for future tourism projects. Currently, this real estate is
held for sale in the short-term. In accordance to the Fifth Amendment to
Bulletin B-10, until December 31, 1996, independent appraisers determined the
amounts, which represented their estimated realizable value. Beginning in
1997, such amounts have been restated using the inflation factors arising from
the NCPI.

6. OTHER CURRENT ASSETS

Other current assets include Ps486,915 and Ps132,470, as of December 31,
1998 and 1999, respectively and Ps134,191 as of June 30, 2000 (unaudited), of
non-cement related assets which are intended to be sold in the short-term, and
that are stated at their estimated realizable value. These assets include
securities and assets for lines of business other than the Company's, which
are mainly originated from (i) non-cement related assets acquired in the
acquisition of our international subsidiaries, and (ii) assets held for sale
including land and buildings received from customers as payment of trade
receivables.

As of December 31, 1998, within non-cement related assets acquired as part
of the acquisition of subsidiaries, were included approximately Ps432.9
million for an uncompleted real estate project in Spain. During 1999, the
Company sold part of this asset in Spain, recording a net loss of
approximately Ps165 million in the caption Other Expenses, net. Additionally,
as of December 31, 1999, the Company recognized an impairment allowance
related to this asset for approximately Ps38.6 million in the income
statement. The fair value of the remaining non-cement assets in Spain as of
December 31, 1999 is approximately Ps29.3 million and was reclassified to
fixed assets.

7. INVESTMENTS AND NONCURRENT RECEIVABLES

Investments in shares of affiliated companies are accounted for by the
equity method, which considers the results of operations and the stockholders'
equity of the investee's. Investment in shares of affiliated companies are
summarized as follows:

December 31,      (Unaudited)
---------------------  June 30,
1998       1999       2000
----------- --------- -----------

Contribution or book value at acquisition
date........................................ Ps2,534,811 4,383,583  4,064,838
Equity in income and other changes in
stockholders' equity of subsidiaries and
affiliated companies........................   1,384,438 1,630,441  1,282,949
----------- ---------  ---------
Ps3,919,249 6,014,024  5,347,787
=========== =========  =========

Investment held by subsidiaries in the Parent Company amounting to
Ps4,469,334 (171,064,911 CPO's) and Ps6,318,929 (113,625,709 CPO's and
3,663,615 warrants) as of December 31, 1998 and 1999, respectively, are offset
against majority interest stockholders' equity in the accompanying financial
statements. As part of the hedge transaction carried out by the Company during
1999 (see notes 2C and 14(d)), a total of 105 million CPOs held by
subsidiaries in the Parent Company were sold.

a)  On November 22, 1999, the Company acquired from the Egyptian government
a 77% equity interest in Assiut Cement, Co. ("Assiut"), the largest
cement-producing company in Egypt, for $318.8 million (Ps3,119
million). Additionally, the Company has an option until June 30, 2000
to acquire an additional

F-15

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

13% equity interest for an approximate amount of $53.8 million. As of
December 31, 1999, the consolidated financial statements of the Company
include the balance sheet of Assiut with figures as of November 30,
1999, and the results of the one-month period ended November 30, 1999.

b) During 1999, the Company entered into capitalization and subscription of
shares agreements with institutional investors in Asia, represented by
AIG Asian Infrastructure Fund II, L.P. and GIC Special Investments Pte
Ltd., to co-invest in Cemex Asia Holdings Ltd. ("CAH"), a subsidiary of
the Company created to make cement investments in Asia. Based on the
agreements, on September 30, 1999, the investors in Asia contributed
capital to CAH of approximately $87 million, and the Company, through
subsidiaries, contributed to CAH its direct participation and its
economic benefits in Rizal Cement and APO Cement, subsidiaries in the
Philippines. As a result of this transaction, on September 30, 1999, the
direct participation and economic benefits of the Company in Rizal and
APO decreased to 60% and 86%, respectively. Due to this transaction, a
minority interest increase in the consolidated stockholders' equity was
reflected.

c) On September 21, 1999, the Company successfully completed a tender offer
for the acquisition of the Costa Rican cement producer, Cementos del
Pacifico, S.A. ("Cempasa"). Through this transaction, a subsidiary of
the Company acquired an additional 79.5% of the shares outstanding of
Cempasa for approximately $72 million (Ps704 million), increasing the
equity interest of the Company in Cempasa to 95.3%. As of December 31,
1999 the consolidated financial statements of the Company, include the
balance sheet of Cempasa with figures as of December 31, 1999, and the
results for the three-month period ended December 31, 1999.

d) In June 1999, the Company acquired an 11.92% equity interest in Cementos
Bio Bio, S.A., the largest cement producer of Chile. The total of this
transaction amounted to approximately $34 million. As of December 31,
1999, the investment in Cementos Bio Bio was accounted for under the
equity method of accounting, and is included in the investments in
affiliated companies' caption for Ps302,567.

e) In February 1999, a subsidiary of the company acquired 99.9% interest in
the economic benefits of APO Cement Corporation ("APO"), a Philippine
cement producer, for approximately $400 million. As of December 31,
1999, the consolidated financial statements of the Company include the
balance sheet and results of APO for the year ended December 31, 1999.

f) Through transactions carried out in 1998 and 1999 for approximately
$114.6 and $126 million, respectively, a subsidiary of the Company
acquired 25.53% of the common stock of PT Semen Gresik (Persero), Tbk.
("Gresik"), an Indonesian company with several cement plants. As of
December 31, 1999, the investment in Gresik was included in the
consolidated financial statements under the equity method of accounting,
and is included in the investments in affiliated companies' caption for
Ps2,793,724. As of December 31, 1998, the investment in Gresik was
accounted under the cost method of accounting and totaled Ps1,203,009.
Under the terms of the Company's agreement, entered into with the
Indonesian government in connection with the Company's investment in
Gresik, the Indonesian government has an option until October 2001 to
require the Company to purchase its 51% interest in Gresik for a
purchase price of approximately $418 million (Ps4,113 million), plus
accrued interests since October 1998 at 8.2% per annum.

g) In December 1998, through a public offering, the Company acquired an
additional 21.96% of the shares representative of the capital stock of
its Colombian subsidiary. Through this acquisition, the Company's
investment in this subsidiary increased from a 68.7% to 90.7%. This
transaction amounted to approximately $47.3 million (approximately Ps
482 million).

F-16

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

h)  In November 1998, a subsidiary of the Company increased its equity
interest in Rizal Cement, Inc. ("Rizal"), a Philippine cement producer
to 40%, for an approximate amount of $130 million. Likewise, as part of
this transaction, a Philippine investor, through the subscription of a
special series of shares, purchased an additional 30% of Rizal. The
Philippine investor and Cemex formed an alliance that grants the
Company control of the operations not reserved for nationals under
Philippine law, and the administration of Rizal. Through these
transactions, the Company has 70% of the economic benefits of Rizal. As
of December 31, 1999, the consolidated financial statements include the
balance sheet and results of Rizal for the year 1999. As of December
31, 1998, the investment in Rizal was accounted for by the purchase
method of accounting and the accounts of Rizal are included in the
Company's consolidated financial statements based upon Rizal's November
30, 1998 amounts.

Certain condensed financial information of the balance sheets and income
statements of the acquired companies during 1999, for the periods mentioned
above, are presented below:

a) Assiut   c) Cempasa  e) APO
-----------  ---------- ---------

Total assets.................................. Ps4,187,915   655,051   3,686,583
Total liabilities.............................   2,789,953   261,611   1,214,783
Stockholders' equity..........................   1,397,962   393,440   2,471,800
-----------   -------   ---------
Sales.........................................  Ps 141,638    93,812     634,753
Operating income..............................      15,834    20,676     114,258
Net (loss) income.............................      (7,407)  (18,237)     75,318
-----------   -------   ---------

8. PROPERTY, MACHINERY AND EQUIPMENT

During 1999, through the analysis of the economic and market conditions
prevailing in the countries where the Company operates, the marketing plans,
as well as the future production needs, the Company decided to cease
operations in 4 operating cement assets located in Mexico and Colombia, as
well as to partially close 4 other operating cement assets located in the same
countries, in order to avoid a production overload. Based on this analysis,
the Company estimated that the expected future cash flows to be generated by
such assets would not be sufficient to recover their book value.

As a result of the above and, according to the guidelines established in
Bulletin C-6 "Property, Machinery and Equipment", during 1999, the Company
determined an impairment provision of approximately $63.1 million (Ps617.3
million), which is reflected in the consolidated income statement under the
caption Other Expenses, net. As of December 31, 1999, the assets subject to
impairment described above are valued at their estimated realizable value, net
of the expenses estimated for their disposal and, their depreciation has been
suspended. The remaining book value of these assets is approximately Ps322
million and it is the Company's intention to dispose of those that were
completely closed. The impact at December 31, 1999 of having suspended
depreciation of these assets on the 1999 results was approximately Ps31.07
million.

The Company continues with the assessment process of its subsidiaries'
fixed assets; therefore, the possibility of future provisions for impairment
of additional assets exists.

In 1998, the Company sold a cement plant and its related assets of its
Spanish subsidiary for approximately $260 million (Ps2,651million), resulting
in a gain in the consolidated income statement of approximately Ps335 million.
The sale included the ready-mix concrete, mortar and aggregates operations
related to that plant.

F-17

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

9. DEFERRED CHARGES

Deferred charges are summarized as follows:

December 31,         (Unaudited)
------------------------   June 30,
1998         1999        2000
------------  ----------  -----------

Excess of cost over book value of
subsidiaries and affiliated companies
acquired............................... Ps23,693,664  25,040,419  25,090,683
Terminal installation costs and other
intangible assets......................       47,207      60,822      73,728
Deferred financing costs................      427,685     547,953     595,743
Others..................................    3,020,599   3,532,609   5,170,730
Accumulated amortization................   (4,351,598) (5,243,150) (5,380,808)
------------  ----------  ----------
Ps22,837,557  23,938,653  25,550,076
============  ==========  ==========

As of December 31, 1999, as a result of the acquisitions made by the Company
during 1999 (see note 7), goodwill increased approximately $249 million
(Ps2,436 million), in relation to the prior year.

10. SHORT-TERM BANK LOANS AND NOTES PAYABLE

Short-term debt is summarized by currency as of December 31, 1998 and 1999,
as follows:

1998         Rate        1999        Rate
------------ ------------ ---------- -------------

US Dollars................... Ps10,532,324 5.8% - 10.0%  8,047,747 5.4% - 10.8%
Euros........................          --      --          907,792  3.5% - 4.1%
Egyptian Pounds..............          --      --          693,394     10.5%
Philippine Pesos.............      201,969    16.8%        233,217 13.0% - 15.7%
Spanish Pesetas..............      392,672 3.9% - 5.8%     189,057     3.8%
Colombian Pesos..............      147,974    19.8%          5,594     19.8%
------------              ----------
Ps11,274,939              10,076,801
============              ==========

F-18

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

11. LONG-TERM BANK LOANS AND NOTES PAYABLE

The consolidated long-term debt is summarized as follows:

1998          Rate        1999         Rate
------------  ------------ ----------  ------------
A) Bank Loans

1. Syndicated loans
denominated in foreign
currency, due from
2000 to 2006.......... Ps 9,779,892  6.1% - 8.2%  13,839,623  4.1% - 9.5%
2. Bank loans denominated
in foreign currency,
due from 2000 to
2007..................    5,466,849  3.9% - 19.8%  4,924,289  3.5% - 15.7%
3. Revolving line of
credit in foreign
currency, due from
2001 to 2002..........    4,995,714      6.6%      3,913,175      7.1%
------------               ----------
20,242,455               22,677,087
============               ==========

B) Notes Payable
4. Euro medium-term Notes
denominated in foreign
currency, due from
2000 to 2006..........   13,403,353  8.5% - 12.8% 14,523,925  8.5% - 12.8%
5. Commercial paper
denominated in foreign
currency with
revolving maturities
every one or two
years.................    1,977,895  5.3% - 7.7%   1,633,751      7.3%
6. Yankee Notes, due in
2003..................    1,785,812      8.4%        805,136      8.4%
7. Other notes
denominated in foreign
currency, due from
2000 to 2009..........      920,387  6.7% - 9.8%     832,608  7.1% - 8.9%
------------               ----------
18,087,447               17,795,420
------------               ----------
38,329,902               40,472,507
Current maturities....   (6,354,481)              (7,792,561)
------------               ----------
Ps31,975,421               32,679,946
============               ==========

1.  Syndicated loans denominated in foreign currency had a weighted average
floating interest rate of 6.8% in 1998 and 6.2% in 1999. These loans
had a weighted average spread based on LIBOR of 132 basis points in
1998 and 98 in 1999.

2.  Bank loans denominated in foreign currency, of which 93% in 1998 and
48% in 1999 were floating rate with a weighted average interest rate of
6.5% in 1998 and 5.4% in 1999. These loans had a weighted average
spread based on LIBOR of 122 basis points in 1998 and 45 basis points
in 1999.

3.  Revolving line of credit in foreign currency with an average floating
rate of 6.6% in 1998 and 7.1% in 1999. These loans had a spread based
on LIBOR of 125 basis points.

4.  Euro medium-term Notes denominated in foreign currency with a weighted
average fixed rate of 10.5% in 1998 and 10.3% in 1999.

5.  Commercial paper denominated in foreign currency with revolving
maturities every one or two years with a weighted average floating
interest rate of 6.0% in 1998 and 7.3% in 1999. These loans had a
spread based on LIBOR of 73 basis points in 1998 and 116 basis points
in 1999.

6.  Yankee Notes had a fixed rate of 8.375% in 1998 and 1999.

F-19

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

7.  Other notes denominated in foreign currency of which Ps412,057 and
Ps124,170 were floating rate with a weighted average interest rate of
6.9% and 5.9% in 1998 and 1999, respectively. These loans had a
weighted average spread based on LIBOR of 162 basis points in 1998 and
16 basis point in 1999. The remaining Ps482,652 in 1998 and Ps685,209
in 1999 were fixed rate with a weighted average interest rate of 8.9%
and 6.4% in 1998 and 1999, respectively.

Long-term debt is summarized by currency as of December 31, 1998 and 1999
as follows:

Consolidated                                              1998        1999
------------                                          ------------ ----------

US Dollars........................................... Ps31,087,266 25,840,051
Euros................................................          --   4,479,781
Egyptian Pounds......................................          --   1,604,900
Philippine Pesos.....................................      141,793    203,075
Spanish Pesetas......................................      687,259    512,299
Colombian Pesos......................................       13,989     39,840
Venezuela Bolivars...................................       45,114        --
------------ ----------
Ps31,975,421 32,679,946
============ ==========

As of December 31, 1999, the Company has interest rate swap contracts for
up to $450 million (Ps4,428 million), exchanging fixed for floating rates.
Additionally, the Company has interest rate collars for 7,500 million pesetas
(Ps426 million) and $50 million (Ps492 millions) in 1998 and 2,500 million
pesetas (Ps141 million) in 1999, related to the debt negotiated at variable
rates in a range of LIBOR and MIBOR. Furthermore, there are forward range swap
contracts covering up to $405 million (Ps3,985 million) and $80 million (Ps787
million) in 1998 and 1999, respectively, to protect the financial cost of debt
negotiated at variable rates.

The Company has these interest rate hedge instruments and derivative
instruments as part of its strategy to manage the overall cost of borrowing.
The results of these instruments are recognized as part of the financial
expense.

As of December 31, 1999, the Company's maturity dates, interest rates being
hedged, current interest rates and estimated market value of interest rate
collars and swaps related to the debt hedged as described above are presented
as follows:

Interest rate
Maturity     hedged or     Effective    Estimated
date       exchanged   interest rate market value
------------ ------------- ------------- ------------

Debt denominated in
Pesetas................   April 2000     3.11%         3.68%      Ps    (479)
Debt denominated in US
dollars................   March 2001     6.51%         6.33%          (2,319)
Debt denominated in US
dollars................    June 2002     9.25%         8.19%         (56,105)
Debt denominated in US
dollars................ October 2009     9.63%         8.47%         (59,324)
----------
Ps(118,227)
==========

As of December 31, 1998, the estimated market value of these instruments
showed a loss of approximately Ps(225,100).

The estimated market value of the interest rate collars and swaps will
fluctuate over time and will be determined by the market future pricing of the
rates. Fair values should not be viewed in isolation, but rather in relation
to the fair values of the underlying transactions and the overall reduction in
the Company's exposure to

F-20

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

fluctuations in interest 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 for the use
of these derivatives. The amounts exchanged are calculated on the basis of the
notional amounts and the other items included in the derivative instruments.

The maturities of long-term debt as of December 31, 1999 are as follows:

Total
------------

2001............................................................ Ps 9,772,968
2002............................................................    8,490,719
2003............................................................    3,576,631
2004............................................................    3,227,391
2005 and thereafter.............................................    7,612,237
------------
Ps32,679,946
============

As of December 31, 1998, the subsidiaries that guaranteed indebtedness of
the Company for an aggregate of $2,010 million were: Tolmex, S.A. de C.V.,
Serto Construcciones, S.A. de C.V., Cemento Portland Nacional, S.A. de C.V.,
Cementos Mexicanos, S.A. de C.V. and Cemex Control, S.A. de C.V. As of December
31, 1999, Cemex Mexico, S.A. de C.V. and Empresas Tolteca de Mexico, S.A. de
C.V., guaranteed indebtedness of the Company for an aggregate amount of $2,090
million. The change of the subsidiaries, which guaranteed the Company's
indebtedness resulted from the mergers mentioned in note 3D. The combined
summarized financial information of these guarantors as of December 31, 1998
and 1999 is as follows:

1998        1999
------------ ----------

Assets............................................... Ps64,825,009 47,914,331
Liabilities..........................................   13,636,454 30,036,240
Stockholders' equity.................................   51,188,555 17,878,091
------------ ----------
Net sales............................................ Ps 8,780,028 19,808,271
Operating income.....................................    2,638,008  9,084,215
Net income...........................................    3,839,882  6,419,143
------------ ----------

As of December 31, 1999, the Company and its subsidiaries have the following
lines of credit, both committed and subject to the bank's availability, at
annual interest rates ranging from 5.4% to 12.8%, in accordance with the
negotiated currency:

Line of
Credit    Available
------------ ----------

Euro medium-term Notes ($1,250 million).............. Ps12,228,671  8,415,087
European commercial paper ($600 million).............    5,869,762  4,236,012
US commercial paper ($250 million)...................    2,445,734  2,445,734
Current line of credit ($250 million)................    2,445,734  2,445,734
Lines of credit of foreign subsidiaries..............    5,606,503  3,707,155
Other lines of credit from Mexican banks.............    5,531,154  4,632,944
Other lines of credit from foreign banks.............    4,324,481  2,358,138
------------ ----------
Ps38,452,039 28,240,804
============ ==========

At December 31, 1998 and 1999 in the consolidated balance sheets there are
current liabilities amounting to $168 million and $226 million, respectively,
classified as long-term debt due to the ability and intention of the Company to
refinance such indebtedness with the available amounts of the long-term lines
of credit.

F-21

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

As of December 31, 1999, the Company established deposits in trusts
amounting to $120 million (Ps1,174 million). Such deposits are committed to the
repayment of $30 million in short-term debt and $90 million in long-term debt,
to repay part of the Yankee Bond purchase offer (see note 22). These deposits
have been offset for presentation purposes.

Certain credit agreements are guaranteed by the Company and/or some of its
subsidiaries and contain restrictive covenants that limit the sale of assets,
maintain control of the shares of certain subsidiaries, establish liens and
require the Company to comply with certain financial ratios. When a default
event has occurred, the Company has obtained the respective waivers.

12. PENSION PLANS AND SENIORITY PREMIUM

The net periodic pension cost of the pension plans and seniority premium and
the actuarial present value of the benefit obligation and the funded status of
the plans described in note 3K, were determined based on computations prepared
by independent actuaries as of December 31, 1998 and 1999, and are summarized
as follows:

1998        1999
------------  ---------

Change in benefit obligation:
Benefit obligation ("PBO") at beginning of year...... Ps   594,439  1,358,899
Service cost........................................      158,956    175,600
Interest cost.......................................      130,483    116,904
Amendments..........................................      590,393      1,068
Actuarial results...................................          262     82,174
Acquisitions........................................       13,084      4,022
Foreign exchange rate changes and inflation
adjustments........................................      (48,164)    48,761
Benefits paid.......................................      (80,553)   (84,177)
------------  ---------
Benefit obligation ("PBO") at end of year............    1,358,900  1,703,251
------------  ---------
Change in plan asset:
Fair value of plan assets at beginning of year.......       66,570    189,346
Actuarial return on plan assets.....................        5,761     24,217
Actuarial differences...............................        5,628    166,310
Acquisitions........................................       10,670        823
Foreign exchange rate changes and inflation
adjustments........................................          --      25,732
Employer contribution...............................      100,717    339,162
Benefits paid from the funds........................          --         --
------------  ---------
Fair value of plan assets at end of year.............      189,346    745,590
------------  ---------
Amounts recognized in the statements of financial
position consist of:
Funded status.......................................   (1,169,554)  (957,661)
Unrecognized prior service cost.....................      575,201    631,293
Unrecognized net actuarial results..................      (42,187)   (82,976)
------------  ---------
Accrued benefit liability..........................     (636,540)  (409,344)
Additional minimum liability.......................     (349,638)  (134,232)
------------  ---------
Net liability recognized in the consolidated
balance sheet.................................... Ps  (986,178)  (543,576)
============  =========

F-22

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The Actuarial Present Obligation ("APO") as of December 31, 1998 and 1999
amounted to Ps1,171,440 and Ps1,407,681, respectively. Of these APO amounts,
the vested portion was Ps645,430 in 1998 and Ps703,061 in 1999. As of December
31, 1997, the net cost derived from the pension plans and seniority premium
was Ps141,805.

As of December 31, 1998 and 1999, the plan assets are mainly composed by
fixed return instruments and stock of companies traded in formal stock
exchanges.

The most significant assumptions used in the determination of the net
periodic costs were the following:

1998        1999
----------- -----------

Range of discount rates used to reflect the
obligations present value............................ 4.5% - 6.0% 4.5% - 6.0%
Rate of return on plan assets.........................     7%          6%

Commencing in January 1998, most of the subsidiaries of the Company in
Mexico were incorporated to include pension plans. Therefore, the initial
actuarial valuation of the labor obligation for all Mexican subsidiaries under
the plan benefits was made as of January 1, 1998. As mentioned in note 3K, the
Company applies real rates (nominal rates discounted for inflation) in the
actuarial assumptions used to determine the pension plans and seniority
premium liabilities. With the use of real rates, there is a decrease in the
difference between the APO and the PBO. As a result of the use of real rates
and the initial valuation in Mexico as of January 1, 1998, and according to
generally accepted accounting principles, the Company recognizes a minimum
liability against an intangible asset, which as of December 31, 1998 and 1999
was Ps349,638 and Ps134,232, respectively.

13. STOCKHOLDERS' EQUITY

A) CAPITAL STOCK

The previously reported share and per share amounts corresponding to 1998
and the 1999 changes done before September 14, 1999, have been restated to
give effect to the stock split made during 1999 (see note 2A).

Capital stock of the Company as of December 31, 1999 is as follows:

Series A (1)  Series B (2)
------------- -------------

Subscribed and paid shares........................ 2,959,216,418 1,479,608,209
Treasury shares...................................   105,241,768    52,620,884
Unissued shares authorized for Executive Stock
Option Plans.....................................   132,350,424    66,175,212
------------- -------------
3,196,808,610 1,598,404,305
============= =============

--------
(1)  Series "A" or Mexican shares represent at least 64% of capital stock.
(2)  Series "B" or free subscription shares represent at most 36% of capital
stock.

Of the total shares, 3,267,000,000 correspond to the fixed portion and
1,528,212,915 correspond to the variable portion.

During 1999, at the annual stockholders' meeting, a dividends program was
established through which shareholders elected between receiving a dividend in
cash of Ps0.45 per share or reinvesting such dividend in

F-23

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

the subscription of new shares representative of the capital stock. As a result
of the program, cash dividends were declared in the amount of Ps1,941,478. Of
the total of dividends declared, shareholders reinvested Ps1,753,866;
therefore, a total of 94,758,232 series "A" shares and 47,379,116 series "B"
shares were subscribed and paid, generating an additional paid-in capital of
Ps1,752,140.

B) EXECUTIVE STOCK OPTION PLAN (see note 2A)

The Company has adopted a Stock Option Plan for shares of the variable
portion of the common stock. Through this program, the Company grants to
eligible executives, designated by a technical committee, stock option "rights"
to subscribe up to 72,100,000 new CPO's. As of December 31, 1998 and 1999 the
option balances were as follows:

1998                 1999
-------------------- --------------------
Number of   Exercise Number of   Exercise
options    price *   options    price *
----------  -------- ----------  --------

Granted............................... 30,399,005   32.92   47,000,318   35.09
Canceled..............................        --      --       (55,608)  43.43
Exercised............................. (2,481,194)  26.42   (5,924,788)  26.32
----------           ----------
Outstanding........................... 27,917,811           41,019,922
==========           ==========

--------
*  Weighted average exercise price per CPO

The option rights may be exercised up to 25% of the total number of options
during the first four years after having been granted. The option rights expire
after a maximum of ten years or when the employee leaves the Company. A portion
of the options has an exercise maturity period of five years, which can be
extended to ten years if certain conditions are met during the first five
years. Under the Stock Option Plan, the Company has no obligation to recognize
a liability for the amount of options.

During 1998 and 1999, options were granted to purchase 9,246,120 and
16,601,313 CPOs at a weighted average purchase price per option of Ps43.47 and
Ps39.16 per CPO, respectively. The options exercised were 234,671 and 3,443,594
at a weighted average purchase price per CPO of Ps24.20 and Ps25.40 for 1998
and 1999, respectively. The balance of CPOs available for the Stock Option Plan
as of December 31, 1998 and 1999 were 41,700,995 CPOs and 25,099,682 CPOs,
respectively. As of December 31, 1999 the outstanding options have a remaining
average exercise period of approximately 7.3 years.

The CPOs issued upon the exercise of options were paid at their purchase
price per CPO, generating an additional paid-in capital of Ps10,135 and
Ps91,948 in 1998 and 1999, respectively.

The Company's is obligated under the Stock Option Plan, to issue CPOs
representing the capital stock of the Company, on each exercise date, which
represents an increase in such capital.

C) RETAINED EARNINGS

Retained earnings as of December 31, 1999 include Ps43,815,683 earnings
generated by subsidiaries and affiliated companies, which may be distributed by
the Company when the respective dividends are declared by these companies.
Furthermore, retained earnings include a reserve to repurchase the Company's
shares in the amount of Ps11,004,774.

F-24

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Net income of the year is subject to a 5% allocation to constitute a legal
reserve, until such reserve equals one fifth of the capital stock. As of
December 31, 1999, the legal reserve amounted to Ps1,268,318.

Earnings distributed as dividends in excess of tax earnings will be subject
to tax as defined by the Mexican Income Tax Law, in which case, only 65% of
retained earnings may be distributed to the shareholders.

D) EFFECTS OF INFLATION

The effects of inflation on the majority interest stockholders' equity as of
December 31, 1999 are summarized as follows:

December 31, 1999
-------------------------------------
Historical   Inflation
cost     adjustment      Total
------------ -----------  -----------

Common stock.......................... Ps    49,312   2,860,792    2,910,104
Additional paid-in capital............    9,255,558  10,308,401   19,563,959
Deficit in equity restatement.........          --  (40,957,792) (40,957,792)
Retained earnings.....................   29,637,268  30,028,013   59,665,281
Net income of the year................    9,178,227     336,267    9,514,494
============ ===========  ===========

(Unaudited) June 30, 2000
-------------------------------------
Historical   Inflation
cost     adjustment      Total
------------ -----------  -----------

Common stock.......................... Ps    51,291   2,860,793    2,912,084
Additional paid-in capital............   11,317,341  10,074,522   21,391,863
Deficit in equity restatement.........          --  (47,916,266) (47,916,266)
Retained earnings.....................   36,538,440  30,364,280   66,902,720
Net income of the year................    4,600,541     119,167    4,719,708
============ ===========  ===========

E) FOREIGN CURRENCY TRANSLATION

Net foreign currency translation results, amounting to Ps236,262,
Ps2,947,088 and Ps(235,823) in 1997, 1998 and 1999, respectively and for the
six months ended in 1999 and 2000 Ps(50,587) (unaudited) and Ps1,351,600
(unaudited), respectively, have been recorded directly to stockholders' equity,
and are summarized as follows:

(Unaudited)
December 31,                  June 30,
--------------------------------  -------------------
1997        1998       1999      1999      2000
----------  ----------  --------  --------  ---------

Foreign currency
translation
adjustment............. Ps 696,017   6,045,988  (849,435) (817,547) 1,856,324
Foreign exchange gain
(loss) (1).............   (459,755) (3,098,900)  613,612   766,960   (504,724)
----------  ----------  --------  --------  ---------
Ps 236,262   2,947,088  (235,823)  (50,587) 1,351,600
==========  ==========  ========  ========  =========

--------
(1)  Foreign exchange losses from the financing identified with the
acquisitions of foreign subsidiaries in accordance with Bulletin B-15.

F-25

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The foreign currency translation adjustment includes foreign exchange
results from financing related to the acquisition of foreign subsidiaries by a
subsidiary of the Company in Spain for Ps(877,040), Ps465,978 and
Ps(1,930,758), in 1997, 1998 and 1999, respectively and Ps(1,598,932) and
Ps(391,179) for the six month periods ended June 30, 1999 and 2000
(unaudited), respectively.

F) OTHER EQUITY TRANSACTIONS

In May 1998, a subsidiary of the Company in Spain issued $250 million of
preferred shares ("Putable Capital Securities") at a dividend rate of 9.66%
per year. The Company has an option to repurchase the balance on November 15,
2004, or on any other subsequent dividend payment date. Additionally, the
holders of the instrument have the right to sell the instrument to the Company
on May 15, 2005.

As of December 31, 1999 there are financial transactions totaling $604.6
million (Ps5,949.3 million), some of which include guarantees, which have been
offset for presentation purposes in the Company's consolidated balance sheet.
These financial transactions have been offset as follows: $500 million for a
minority interest without voting rights or dividend rights of the subsidiary
in Spain and $104.6 million for the transfer of assets to a trust. These
financial transactions require certain collateral guarantees. The maturity of
the described transactions varies between the year 2000 and 2007, and the
Company has the option to reacquire the related assets at different dates. As
of December 31, 1998, $78 million were compensated with stock of the Parent
Company, amount that was refinanced in 1999 as a part of the transaction,
which includes stock of the subsidiary in Spain.

As of December 31, 1999, the Company has recognized valuation effects in
the stockholders' equity for Ps538,456, derived from investments available for
sale (see note 3H).

14. DERIVATIVE FINANCIAL INSTRUMENTS

As of December 31, 1999, the Company has entered into various derivative
financial instrument transactions in order to reduce its risks resulting from
changes in interest rates (see note 11), foreign exchange rates and the price
of its common shares. These instruments have been negotiated with major
domestic and international institutions and corporations, which have a solid
financial capacity. Therefore, the Company considers that the risk of non-
compliance of the obligations agreed upon by such counterparties is minimum.
The notional amount, as well as the estimated fair value of the derivative
instruments as of December 31, 1998 and 1999, is as follows:

December 31,      December 31,      (Unaudited)
1998              1999         June 30, 2000
----------------  ----------------  ----------------
Notional  Fair    Notional  Fair    Notional  Fair
amount   value    amount   value    amount   value
-------- -------  -------- -------  -------- -------
(Thousands of US dollars)

a)  Equity forward
contracts........... 220,638  (48,011) 222,719   89,650  427,116   70,272
b)  Foreign exchange
forward contracts... 250,000  (60,848) 410,000   12,423  200,000    1,498
c)  Call options........     --       --    51,530  (15,427)  24,493  (10,862)
d)  Warrants related
forward contracts...     --       --   606,005  122,690  579,850   25,924
-------  -------  -------  -------  -------  -------

--------
a)  The Company has entered in to forward agreements and has sold (put)
options related to its outstanding common stock at an established price
that covers up to approximately $137 and $106 million as of December 31,
1998 and 1999, respectively. At maturity, these agreements provide for
physical or net cash settlement,

F-26

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

at the Company's option, and the gains or losses are recognized in
stockholders' equity. In addition, the Company has forwards related to its
ADSs, in order to fully cover its voluntary stock option plans for
employees for up to $84 and $116 million, in 1998 and 1999, respectively.
Through these programs, the Company's executives elected to purchase
options to buy 7,293,675 ADSs of the Company. These options are exercisable
quarterly over a period of 5 years, and they have an exercise price which
increases quarterly in dollars taking into account the funding cost in the
market. For the sale of the options, the Company received a premium
equivalent to a percentage of the option price at the beginning of the
program. As of December 31, 1999, the Company had voluntary stock options
outstanding for 4,527,369 ADS's.
b)  The Company has entered into foreign exchange forward contracts in order
to protect itself from variations in foreign exchange rates. These
contracts have been designated as a hedge on the Company's net investment
in foreign subsidiaries for up to $250 and $410 million as of December 31,
1998 and 1999, respectively. The fair value effects arising from these
instruments are recorded for as part of the translation effect of foreign
subsidiaries (see note 13 E).
c)  At December 31, 1999 the Company has outstanding call options for
1,229,260 of its ADSs. The Company may exercise these call options until
October 15, 2000, at a weighted average strike price of $41.89 per ADS.
d)  Regarding the public offer for warrants' subscription made by the Company
during December 1999, and the related sale of CPOs and shares of a
subsidiary mentioned in note 2C, the Company, through a subsidiary,
carried out a hedge transaction by means of which forward contracts were
entered into to repurchase the total of CPOs and shares over a period of
three years, and prepaid approximately $439.9 million (Ps4,303.5 million)
of the forward purchase price. At maturity, the forward contracts provide
for the physical exchange of the shares, and the effects are recognized as
part of stockholders' equity. In the financial statements as of December
31, 1999, anticipated effect has been given to the liquidation of the
forward for the portion corresponding to the shares of the subsidiary, due
to the prepayment of the forward and the withholding of all economic and
voting rights over such shares. Therefore, a net prepayment of
approximately $51.7 million (Ps505.8 million), is reflected in Other Long-
Term Accounts Receivable corresponding to the CPO's portion.

Additionally, during 1999, the Company terminated a derivative transaction
from which gains or losses, depended on the performance of its common shares
in relation to the Price and Quotation Index in Mexico. The effects derived
from this transaction are included in the statements of income.

The estimated fair values of derivative financial instruments used to hedge
the Company's risks will fluctuate over time, and are based on estimated
settlement costs or quoted market prices. Fair values should not be viewed in
isolation, but rather in relation to the fair values of the underlying hedge
transactions and the overall reduction in the Company's exposure to adverse
fluctuations in foreign exchange rates and price of shares. The notional
amounts of derivatives summarized above do not necessarily represent amounts
exchanged by the parties and, therefore, are not a direct measure of the
exposure of the Company though its use of derivatives. The amounts exchanged
are calculated on the basis of the notional amounts and the other items of the
derivatives, which relate to interest rates, exchange rates or other financial
index.

15.  INCOME TAX ("IT"), BUSINESS ASSETS TAX ("BAT"), EMPLOYEES' STATUTORY
PROFIT SHARING ("ESPS") AND DEFERRED TAXES

In accordance with present tax legislation in Mexico, corporations must pay
either Income Tax ("IT") or Business Assets Tax ("BAT") depending on which
amount is greater for their operations in Mexico. Both taxes recognize the
effects of inflation in a manner different from generally accepted accounting
principles. Employees' Statutory Profit Sharing ("ESPS") is calculated on a
similar basis as Income Tax, but without recognizing the effects of inflation.

F-27

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

A) IT, BAT AND ESPS

The Company and its subsidiaries in Mexico consolidate for IT and BAT
purposes. Beginning in 1999, the determination of the consolidated IT for the
Mexican companies considered 100% of the taxable income or tax loss of the
holding company, and a maximum of 60% of the taxable income or tax loss of each
of the subsidiaries. For the period of 1999 and after, the taxable income of
the subsidiaries that have tax loss carryforwards generated before 1999, will
be taken according to its equity participation at the end of the period.
Therefore, the amounts of these items included in the accompanying financial
statement, in respect of 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.

Income Tax benefit (expense) is summarized as follows:

Year ended December 31,
------------------------------------
1997         1998        1999
------------  ----------  ----------

Current Income Tax................... Ps(1,561,382) (1,541,753) (4,125,769)
Received from subsidiaries...........          --          --          --
Deferred taxes.......................          --          --       (5,394)
Utilization of tax loss
carryforwards.......................      999,415   1,005,250   3,452,098
Effects of inflation (note 3B).......       38,573      65,420      10,080
------------  ----------  ----------
Ps  (523,394)   (471,083)   (668,985)
============  ==========  ==========

Total IT includes Ps247,493, Ps298,723 and Ps349,842 from foreign
subsidiaries and Ps275,901, Ps172,360 and Ps319,143 from Mexican subsidiaries
for 1997, 1998 and 1999, respectively. The Company, as a holding company,
prepares its IT and BAT returns on a consolidated basis for its operations in
Mexico, which resulted in tax benefits of Ps793,889 in 1997, Ps1,838,812 in
1998 and Ps67,669 in 1999.

The effects of inflation are not recognized for income tax purposes in some
countries in which the Company operates, or are recognized differently from the
generally accepted accounting principles used by the Company. These effects, as
well as other differences between the accounting and the income tax basis,
arising from the several income tax rates and laws to which the Company is
entitled in the countries in which it has operations, give rise to temporary
differences between the statutory tax rate and the effective tax rate presented
in the income statement:

December 31,
-------------------
1997   1998   1999
-----  -----  -----
%      %      %

Statutory tax rate....................................  34.0   34.0   35.0
Utilization of tax loss carryforwards................. (14.2) (14.9) (27.9)
Additional deductions and tax credits for income tax
purposes............................................. (12.9) (20.0)   8.0
Expenses and other non-deductible items...............   4.8    5.9   (9.1)
Non-taxable sale of marketable securities and fixed
assets...............................................  (3.6)   0.4   (2.4)
Difference between book and tax inflation.............  (6.7)  (6.9)   2.4
Business assets tax...................................   3.5    2.1    3.7
Depreciation..........................................  (0.3)   2.8    3.5
Inventories...........................................  (0.1)  (1.5)  (6.6)
Others................................................   1.0    3.3   (0.4)
-----  -----  -----
Effective consolidated tax rate.......................   5.5    5.2    6.2
=====  =====  =====

F-28

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The Company, for its operations in Mexico has accumulated tax loss
carryforwards regarding IT, which may be offset against taxable income in the
succeeding ten years according to the Income Tax Law:

Amount of    Year of
Year in which tax loss occurred                      carryforwards expiration
-------------------------------                      ------------- ----------

1995................................................   Ps892,939      2005

For the year ending December 31, 1999, the Company utilized accumulated tax
loss carryforwards against the period's taxable income of its operations in
Mexico in the amount of Ps9,863,136, which generated a benefit of Ps3,452,098.
The Company and its subsidiaries in Mexico must generate returns to keep the
benefit of the tax loses carryforwards generated from 1999 and future years.

The BAT Law establishes a 1.8% tax levy on assets, indexed for inflation in
the case of inventory, property, plant and equipment after deducting certain
liabilities.

The 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 levied
exceeds BAT levied in such period. The recoverable BAT as of December 31, 1999
is as follows:

Year in which Business Assets Tax exceeded Income     Amount of    Year of
Tax                                                 carryforwards expiration
-------------------------------------------------   ------------- ----------

1997.............................................    Ps 139,269      2007
1999.............................................       328,296      2009
----------
Ps 467,565
==========

B) DEFERRED INCOME TAX

As of December 31, 1999, the Company has created a deferred income tax
provision for the temporary differences of results, over which it is reasonably
estimated that in a defined period a benefit or liability is originated for tax
effects in the amount of Ps1,077 million.

During 1999, the Mexican Institute of Public Accountants ("IMCP"), issued
the new Bulletin D-4 Accounting treatment of income tax, business assets tax
and employees' profit sharing ("Bulletin D-4"). Bulletin D-4 requires the
determination of deferred IT through the application of the statutory IT rate,
to the amount of temporary differences resulting from comparing the book and
taxable value of the assets and liabilities, applying when available the tax
loss carryforwards, as well as the BAT balances or other tax credits to be
recovered. Likewise, it is required to determine the effect of deferred ESPS
for those temporary differences arising from the reconciliation of the net
income of the period and the taxable income for ESPS, of a non-recurring
nature.

The provisions of Bulletin D-4 are mandatory starting January 1, 2000. The
beginning net accumulated effect from deferred income tax derived from the
adoption of the Bulletin, must be recognized in the financial statements
affecting the stockholders' equity in the account named "Accumulated Effect of
Income Tax".

So far, the Company is in the process of determining the final effect that
Bulletin D-4 will generate on the financial statements in 2000, for such
purpose, an estimated consolidated calculation was determined, which can be
representative of the position as of December 31, 1999. Through this
calculation, the Company estimated that due to the adoption of the new Bulletin
D-4, it would be necessary recognize an additional deferred income tax
liability for an approximate amount of Ps3,908 million. Such additional
liability would be recorded against stockholders' equity.

F-29

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

As of June 30, 2000, resulting from the new accounting rule on deferred
taxes in Mexico, the Company recorded a deferred tax liability of approximately
$98 million. The initial balance of this provision, amounting to approximately
$363 million was recorded directly to stockholders' equity; $29 million, which
represents the deferred income tax expense for the period was recorded in the
income statement (unaudited).

16. FOREIGN CURRENCY POSITION

The exchange rate of the Mexican peso to the U.S. dollar as of December 31,
1997, 1998, 1999 and as of June 30, 2000 (unaudited) was Ps8.07, Ps9.90, Ps9.51
and Ps9.84 per dollar, respectively. As of January 17, 2000, the exchange rate
was Ps9.43 per dollar.

As of December 31, 1999 and for the year then ended, the principal balances
denominated in foreign currencies, as well as non-monetary assets in Mexico of
foreign origin are presented as follows:

(Unaudited)
December 31, 1999                   June 30, 2000
--------------------------------- -----------------------------
Mexico       Foreign    Total    Mexico    Foreign    Total
----------    --------- --------- --------- --------- ---------
(Thousands of U.S. dollars)

Current assets.......... $  123,376      939,677 1,063,053   129,872 1,172,798 1,302,670
Non-current assets......    693,858(1) 5,840,472 6,534,330   697,795 5,633,289 6,331,084
----------    --------- --------- --------- --------- ---------
Total assets.......... $  817,234    6,780,149 7,597,383   827,667 6,806,087 7,633,754
==========    ========= ========= ========= ========= =========
Current liabilities..... $  804,253      856,126 1,660,379   676,385 1,028,085 1,704,470
Long-term liabilities...  1,848,675    1,641,939 3,490,614 1,580,647 1,433,288 3,013,935
----------    --------- --------- --------- --------- ---------
Total liabilities..... $2,652,928    2,498,065 5,150,993 2,257,032 2,461,373 4,718,405
==========    ========= ========= ========= ========= =========

--------
(1)  Non-monetary assets in Mexico of foreign origin.

Additionally, the Mexican operations in foreign currencies during 1997, 1998
and 1999, are summarized as follows:

(Unaudited)
Six months
ended June
December 31,            30,
------------------------ -------------
1997    1998    1999    1999   2000
-------- ------- ------- ------ ------
(Thousands of U.S. dollars)

Export sales............................. $131,773  92,170  83,190 40,226 55,938
Import purchases.........................   43,452  36,563  29,954  9,402  9,907
Interest income..........................   12,652  24,035  14,575  7,675 11,069
Interest expense.........................  225,300 202,748 221,057 88,042 92,053
======== ======= ======= ====== ======

F-30

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

17. GEOGRAPHIC SEGMENT DATA

The Company is engaged principally in one industry segment, which is the
construction industry through the production and marketing of cement and
concrete. The following table presents information about the Company by
geographic area for 1997, 1998 and 1999:

Net Sales
------------------------------------------------------------
(Unaudited)
Six months ended
December 31,                     June 30,
------------------------------------  ----------------------
1997         1998        1999        1999        2000
------------  ----------  ----------  ----------  ----------

Mexico.................. Ps17,964,512  19,875,254  22,814,207  10,606,180  12,439,073
Spain...................    7,655,259   9,165,612   7,545,849   3,892,531   4,392,150
Venezuela...............    4,835,060   5,321,484   4,701,741   2,382,711   2,183,411
United States...........    4,612,626   5,511,346   5,840,563   2,950,018   2,821,392
Colombia................    3,873,409   2,687,358   1,644,889     865,349     978,389
Caribbean and Central
America................    2,429,500   2,691,937   3,609,846   1,640,658   2,226,060
Philippines.............          --          --    1,197,894     620,307     754,223
Egypt...................          --          --      141,638         --      838,674
Others..................    3,158,965   2,824,574   3,806,838   1,881,118   1,921,208
------------  ----------  ----------  ----------  ----------
44,529,331  48,077,565  51,303,465  24,838,872  28,554,580
Eliminations............   (4,917,759) (4,082,699) (4,071,789) (1,880,116) (2,414,435)
------------  ----------  ----------  ----------  ----------
Consolidated............ Ps39,611,572  43,994,866  47,231,676  22,958,756  26,140,145
============  ==========  ==========  ==========  ==========

Operating Income
------------------------------------------------------------
(Unaudited)
Six months ended
December 31,                     June 30,
------------------------------------  ----------------------
1997         1998        1999        1999        2000
------------  ----------  ----------  ----------  ----------

Mexico.................. Ps 5,327,762   8,029,867  10,103,561   4,806,643   5,505,813
Spain...................    1,648,158   2,492,978   2,455,522   1,254,344   1,292,626
Venezuela...............    1,674,214   1,786,217   1,283,321     656,623     496,912
United States...........      292,774     774,452   1,205,804     614,814     495,822
Colombia................      855,618     113,855     389,632     157,532     378,883
Caribbean and Central
America................      625,762     451,094     660,516     331,854     382,760
Philippines.............          --          --       24,564     (13,623)    121,618
Egypt...................          --          --       15,834         --      308,998
Others..................   (1,064,129) (1,640,484) (2,085,618)   (881,950) (1,071,396)
------------  ----------  ----------  ----------  ----------
9,360,159  12,007,979  14,053,136   6,926,237   7,912,036
Eliminations............          --          --          --          --          --
------------  ----------  ----------  ----------  ----------
Consolidated............  Ps9,360,159  12,007,979  14,053,136   6,926,237   7,912,036
============  ==========  ==========  ==========  ==========

F-31

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Depreciation and Amortization
------------------------------------------------------------
(Unaudited)
Six months ended
December 31,                      June 30,
---------------------------------------  -------------------
1997          1998         1999        1999      2000
-------------  -----------  -----------  --------- ---------

Mexico..................  Ps 1,552,967    1,483,980    1,489,793    725,236   616,836
Spain...................     1,003,972      799,482      579,270    301,825   262,751
Venezuela...............       539,360      533,363      569,295    251,389   307,661
United States...........       230,754      206,973      223,862    101,186   116,346
Colombia................       552,651      535,678      312,582    165,124   219,376
Caribbean and Central
America................       176,861      176,510      190,780     80,391    82,991
Philippines.............           --           --       237,036    127,851   115,208
Egypt...................           --           --        20,897        --    111,921
Others..................       317,455      270,090      618,077    340,094   414,340
-------------  -----------  -----------  --------- ---------
Consolidated............  Ps 4,374,020    4,006,076    4,241,592  2,093,096 2,247,430
=============  ===========  ===========  ========= =========

Total Assets
---------------------------------------
(Unaudited)
December 31,           June 30,
--------------------------  -----------
1998          1999         2000
-------------  -----------  -----------

Mexico.................. Ps 55,767,156   48,062,234   50,846,443
Spain...................    22,855,017   20,743,883   21,105,013
Venezuela...............    10,711,602   10,920,583   11,204,426
United States...........     6,866,424    6,867,835    7,079,885
Colombia................    10,983,596    8,406,318    7,919,659
Caribbean and Central
America................     4,244,931    5,712,525    6,482,320
Philippines.............     3,277,128    7,946,087    7,703,034
Others Asian............     1,203,009    2,313,160    2,316,575
Egypt...................           --     6,173,543    6,610,686
Others..................     8,220,400   28,652,603   27,864,327
-------------  -----------  -----------
124,129,263  145,798,771  149,132,368
Eliminations............   (17,489,552) (29,731,216) (33,182,221)
-------------  -----------  -----------
Consolidated............ Ps106,639,711  116,067,555  115,950,147
=============  ===========  ===========

F-32

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Investment in Fixed Assets*
---------------------------------------
(Unaudited)
December 31,          June 30,
--------------------- -----------------
1998       1999     1999     2000
----------- --------- ------- ---------

Mexico.......................... Ps  622,968   884,302 220,972   397,110
Spain...........................     375,741   328,883 140,512   136,664
Venezuela.......................     618,612   363,266  98,100    69,194
United States...................     159,009   158,851  49,885    45,767
Colombia........................   1,144,650   177,761 122,883    12,737
Caribbean and Central America...     169,900   245,370  70,506   222,057
Philippines.....................         --    177,624  27,119   162,803
Others Asian....................         --        --      --        --
Egypt...........................         --        --      --    172,509
Others..........................     460,692   242,767  75,954   154,584
----------- --------- ------- ---------
3,551,572 2,578,824 805,931 1,373,425
Eliminations....................         --        --      --        --
----------- --------- ------- ---------
Consolidated.................... Ps3,551,572 2,578,824 805,931 1,373,425
=========== ========= ======= =========

--------
* Corresponds to investments in fixed assets without considering the effects of
inflation.

18. CHARGES TO OPERATIONS NOT REQUIRING RESOURCES

Items charged or credited to the results of operations, which did not
generate the use of resources, are summarized as follows:

1997        1998       1999
-----------  ---------  ---------

Depreciation of property, machinery and
equipment................................. Ps3,117,496  3,089,617  3,397,798
Amortization of deferred charges and
credits, net..............................   1,256,524    916,459    843,794
Impairment of assets.......................         --         --     651,845
Seniority premium..........................     141,805    306,403    297,546
Equity in income of subsidiaries and
affiliates................................    (182,820)  (159,786)  (243,382)
Minority interest..........................   1,115,010    402,373    551,346
-----------  ---------  ---------
Ps5,448,015  4,555,066  5,498,947
===========  =========  =========

19. 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 net earnings per share reflects the effects of the stock options not
exercised on the weighted average number of common shares outstanding (see note
13B).

F-33

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The weighted average number of shares utilized in the calculations is as
follows:

Basic        Diluted
------------- -------------

June 30, 2000(1) (unaudited)........................ 4,073,005,495 4,097,328,615
June 30, 1999(1) (unaudited)........................ 3,750,321,732 3,761,416,902
December 31, 1997................................... 3,851,983,824 3,908,702,910
December 31, 1998................................... 3,786,281,775 3,797,376,945
December 31, 1999................................... 3,767,646,462 3,787,200,759
============= =============

Included in 1997 and 1998, are 187,733,226 and 118,919,607 shares related
to financial transactions, respectively, (see note 13F).

(1)  For purposes of calculating earnings per share as of June 30, 1999 and
2000, net income for a twelve month period was determined, amounting
to Ps9,784,926 and Ps8,805,014 (unaudited), respectively.

The difference between the basic and diluted average number of shares for
1997, 1998 and 1999 above is attributable to the additional shares issued
under the Company's executive stock option plan (see note 13B).

20. CONTINGENCIES AND COMMITMENTS

A) GUARANTEES

At December 31, 1999, Cemex, S.A. de C.V. has signed as guarantor for loans
made to certain subsidiaries for approximately $101 million.

B) TAX ASSESSMENTS

As of December 31, 1999, the Company and some of its subsidiaries in Mexico
have been notified of several tax assessments determined by the Tax
Authorities related to years prior to 1996. These tax assessments total
approximately Ps2,732 million. The tax assessments result primarily from: (i)
disallowed deductions resulting from employee benefit plans; and (ii)
recalculation of the inflationary tax deduction, since the tax authorities
purport that "Advance Payments to Suppliers" are not by their nature credits.
The companies involved have legally contested the assessments by seeking legal
remedies available before the courts.

During 1998, three indirect subsidiaries of the Company in Colombia,
acquired as a part of the purchase of Cementos Diamante, S.A., were
individually notified by the Domestic Taxes and Costumes Office of Colombia
("DIAN"), of special assessments corresponding to income taxes of the 1995
fiscal year, for approximately $143 million (Ps1,407 million). The Colombian
subsidiaries filed a timely response to such special assessments within the
required legal period. During 1999, the DIAN issued a formal deficiency note
and the Colombian subsidiaries made a motion for reconsideration against such
assessments within the required legal period. The Company estimates that the
final resolution of these procedures may delay as long as 2 years, so far, it
can not be established if the reconsideration resources will succeed.

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

F-34

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Portland cement and clinker from Mexico since April 1990. The order is likely
to continue for an indefinite period, however, it will be reviewed by the
United States government no later than July 2001, taking into consideration the
World Trade Organization new rules in order to determine whether the conditions
for imposing the order still exist. The Company and its subsidiaries have used
the available legal means in this matter and will continue to do so in order to
determine the actual dumping margins within each period of the administration
reviews carried out by the DOC.

As of December 31, 1999, the Company has accrued a liability of $37 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 of the reviewed periods.

As of December 31, 1999, the Company finds itself in the ninth
administrative review period by the DOC, and will expect a preliminary
resolution in the second semester of the year 2000. With respect of the first 4
review periods, the DOC has issued a final resolution of the anti-dumping
duties. With respect of the remaining review periods, the final resolutions are
suspended until all the procedures before the NAFTA Panel have been concluded,
for which, the final results may be different form those registered in the
accompanying consolidated financial statements.

D) LEASES

The Company has entered into various non-cancelable operating leases,
primarily for the lease of operating facilities, cement storage and
distribution facilities and certain transportation and other equipment, which
require annual rental payments plus the payment of certain operating expenses.
Future minimum annual rentals due under such leases are summarized as follows:

(Thousands of
Year ending December 31,                                      U.S. dollars)
------------------------                                      -------------

2000.........................................................     32,811
2001.........................................................     38,560
2002.........................................................     32,891
2003.........................................................     30,472
2004.........................................................     27,272
2005 and thereafter..........................................    130,333
-------
292,339
=======

Rental expense for the years ended December 31, 1997, 1998 and 1999 was
approximately $22, $25 and $41 million, respectively.

E) PLEDGE ASSETS

At December 31, 1999 there are liabilities amounting to $91 million secured
by property, plant and equipment.

F) COMMITMENTS

As of December 31, 1999, subsidiaries of the Company have future commitments
for the purchase of raw material for an approximate amount of $38 million.

F-35

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

As of December 31, 1999, the Company has entered into agreements with an
international partnership, which will build and operate an electrical energy
generating plant. These agreements establish that when the plant begins
operations, the Company will acquire, starting the second half of 2002, all the
electrical energy generated by such plant for a term no less than 20 years. As
part of these agreements, the Company has agreed to supply the electric plant
with enough fuel for its operation. This commitment will be covered through an
20-year agreement that the Company has with Petroleos Mexicanos. By means of
this transaction, the Company expects to have enough decreases in the
electrical energy costs, and the supply will be enough to cover approximately
60% of the electrical energy use of 12 cement plants in Mexico. For effect of
these agreements, the Company is not required to make capital investment in the
project.

21. YEAR 2000 PROGRAM

The CEMEX 2000 program was completed according to the schedule. The Company
achieved its objective of maintaining continuous operations in all its
manufacturing plants, technological platforms and information systems according
to the work plan. During the transition period to the year 2000, all operations
have been performing normally and during the following months, the Company will
continue monitoring the performance of all Y2K sensitive elements its worldwide
operations.

The Company invested approximately 400 thousand man-hours and a budget of
$36 million (Ps352.2 million) in the Y2K preparation.

The Company has undertaken the necessary efforts to ensure business as usual
during the year 2000 and beyond.

22. SUBSEQUENT EVENTS

As a result of the natural disaster occurred in Venezuela, country where the
Company operates, during December 1999, an approximate amount of $2.6 million
was recorded in the results under the caption other expenses, net. This
provision corresponds to the book value of the portion of assets of the
subsidiary in Venezuela, which as of December 31, 1999 are estimated to be
unrecoverable. These assets include accounts receivable from clients,
inventory, investments in shares, as well as fixed assets. As of the date of
the financial statements, the Company cannot assure that it will not be
necessary to record extraordinary losses in addition to those recognized during
1999, due to the effects of the natural disaster mentioned above, since some of
the effects are not yet known.

Regarding the sale of shares mentioned in note 3D with effects as of
December 31, 1999, Cemex Mexico required consent of 51% or more of the holders
of the 8.375% Yankee Notes, in order to modify certain restrictions in the
indenture that limited the Company's ability to complete the transaction. For
this purpose, on January 3, 2000, the Company announced a purchase offer for
the notes outstanding, through which the holders were offered a premium
equivalent to 2% of the value of the notes in exchange for their consent, and
simultaneously the redemption of the notes at 98% of their nominal value. In
case the consent was not obtained from 51% or more of the note holders, the
trading of shares would have been invalid, since it was conditioned upon
receipt of such consent. The term to receive the consent expired January 14,
while the term for the purchase of the notes expired on February 2, 2000.

As of the date of the financial statements, the Company obtained consent of
approximately 85% of the note holders, and therefore validated the sale of
shares with retroactive effects to December 31, 1999. For the

F-36

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Company, the consent received from the note holders represents the redemption
of notes for approximately $148.8 million before the due date in 2003; however,
such amount could be increased until the purchase offer expires on February 2,
2000.

23. DIFFERENCES BETWEEN MEXICAN AND UNITED STATES ACCOUNTING PRINCIPLES

The Company's 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 as of December 31, 1997 and 1998, 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
the fifth amendment to Bulletin B-10 (modified) 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 requirement 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.

F-37

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The other principal differences between Mexican GAAP and U.S. GAAP and the
effect on consolidated net income and consolidated stockholders' equity are
presented below, with an explanation of the adjustments.

(Unaudited)
Six months ended
Year ended December 31,                 June 30,
------------------------------------  -----------------------
1997         1998        1999        1999         2000
------------  ----------  ----------  -----------  ----------

Net income as reported
under Mexican GAAP.....  Ps 7,955,121   8,189,321   9,514,494  Ps5,429,188   4,719,708
NCPI inflation
adjustment.............       586,249   1,137,260     143,360      258,179         --
------------  ----------  ----------  -----------  ----------
Net income as reported
under Mexican GAAP
after NCPI adjustment..     8,541,370   9,326,581   9,657,854    5,687,367   4,719,708
Approximate U.S. GAAP
adjustments:
1. Amortization of
goodwill (see 23
(a))................       197,101     403,979     (64,634)    (116,930)     29,469
2. Deferred income
taxes (see 23 (b))..    (2,318,612) (2,138,660) (3,338,896)    (384,767)    (42,705)
3. Deferred employees'
statutory profit
sharing (see
23(b))..............      (317,497)   (451,105)   (349,570)    (261,538)   (129,330)
4. Other employee
benefits (see
23(c))..............       (57,970)      6,512     (74,481)     (41,501)    (42,619)
5. Marketable
securities (see
23(d))..............      (152,540)    324,533         --           --          --
6. Capitalized interest
(see 23(e)).........       (40,316)     (4,250)     80,951        6,308      (4,264)
7. Minority interest
(see 23(f)):
a) Financing
Transactions........       795,821    (210,773)    222,657      165,720      11,213
b) Effect of U.S. GAAP
adjustments.........       448,178      34,375     (23,572)      85,155      50,398
8. Hedge accounting
(see 23(m)).........    (1,231,914) (3,256,190) (1,745,225)    (837,713) (1,145,204)
9. Depreciation (see
23(g)):                      6,946      57,872     144,923       81,540     103,679
10. Accruals for
Contingencies (see
23(h))..............       111,870     (34,432)     (2,745)       5,457        (947)
11. Equity in net income
of affiliated
companies (see 23
(i))................       (56,583)    (61,376)    (23,456)     (25,639)        --
12. Inflation adjustment
of machinery and
equipment (see
23(j))..............      (235,053)    (91,647)   (399,051)    (231,525)   (205,297)
13. Other U.S. GAAP
adjustments (see
23(l))..............        70,873     109,277    (113,428)    (180,630)     37,689
14. Monetary effect of
U.S. GAAP
adjustments.........     1,638,788   1,853,217   1,628,023      985,524     674,397
------------  ----------  ----------  -----------  ----------
Total approximate U.S.
GAAP adjustments.......    (1,140,908) (3,458,668) (4,058,504)    (750,539)   (663,521)
------------  ----------  ----------  -----------  ----------
Approximate net income
under U.S. GAAP........  Ps 7,400,462   5,867,913   5,599,350  Ps4,936,828   4,056,187
============  ==========  ==========  ===========  ==========
Basic U.S. GAAP earnings
per share..............  Ps      1.92        1.55        1.48  Ps     1.31        1.00
============  ==========  ==========  ===========  ==========
Diluted U.S. GAAP
earnings per share.....  Ps      1.83        1.54        1.47  Ps     1.30        0.99
============  ==========  ==========  ===========  ==========

F-38

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Year ended December 31,      (Unaudited)
--------------------------  Six months ended
1998          1999       June 30, 2000
-------------  -----------  ----------------

Total stockholders' equity
reported under Mexican GAAP.....  Ps 52,385,933   62,949,657     59,945,949
NCPI inflation adjustment........      7,274,896      948,498            --
-------------  -----------    -----------
Total stockholders' equity after
NCPI adjustment.................     59,660,829   63,898,155     59,945,949
Approximate U.S. GAAP
adjustments:
1. Goodwill net (see 23(a)).....     (2,242,948)  (3,031,272)    (2,730,639)
2. Deferred income taxes (see
23(b)).......................     (6,528,022)  (8,783,144)    (4,839,782)
3. Deferred employees' statutory
profit sharing (see 23(b))...     (2,910,838)  (2,939,077)    (2,940,259)
4. Other employee benefits (see
23(c)).......................       (193,370)    (249,008)      (279,963)
5. Capitalized interest (see
23(e)).......................        (44,894)    (458,755)      (428,143)
6. Minority interest--effect of
financing transactions
(see 23(f))..................     (6,160,186)  (6,004,128)    (5,911,135)
7. Minority interest--U.S. GAAP
presentation (see 23(f)).....     (9,181,511)  (9,118,507)    (9,154,732)
8. Depreciation (see 23(g)).....         11,929      157,229        217,934
9. Accruals for contingencies
(see 23(h))..................        321,888      233,552        220,130
10. Investment in net assets of
affiliated companies
(see 23(i))..................       (543,642)    (497,414)       (24,365)
11. Inflation adjustment for
machinery and equipment
(see 23(j))..................      3,595,821    8,469,542      8,278,679
12. Temporary equity from forward
contracts (see 23(k))........            --    (5,113,768)    (5,041,271)
13. Other U.S. GAAP adjustments
(see 23(l))..................        485,319      297,573        302,286
-------------  -----------    -----------
Total approximate U.S. GAAP
adjustments.....................    (23,390,454) (27,037,177)   (22,331,260)
-------------  -----------    -----------
Total approximate stockholders'
equity under U.S. GAAP..........  Ps 36,270,375   36,860,978     37,614,689
=============  ===========    ===========

For purposes of the following notes, the Mexican GAAP prior years amounts
have been restated using the Mexican inflation rate instead of the weighted
average index described in note 3B. Therefore the amounts shown for prior years
in these notes do not agree with the amounts shown in footnotes 1 to 22.

The term "SFAS" as used herein refers to Statements of Financial Accounting
Standards.

(a) Goodwill

The Company's goodwill recognized under Mexican GAAP has been adjusted for
U.S. GAAP purposes for (i) the effect of the U.S. GAAP adjustments as of the
dates of acquisition on the goodwill of the subsidiaries acquired (ii) the
difference between sinking fund amortization of goodwill over 20 to 40 years
for Mexican GAAP purposes (see note 3J) and the straight line method over 40
years for U.S. GAAP purposes and (iii) the conversion of goodwill applicable to
foreign subsidiaries in accordance with SFAS 52, utilizing inflation of each
country to restate the goodwill for inflation purposes. In addition,
amortization of goodwill is reflected as an operating expense for U.S. GAAP
purposes versus other income and expense for Mexican GAAP purposes.

For U.S. GAAP purposes, the Company assesses the recoverability of goodwill
by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating cash
flows of the acquired operation. The amount of goodwill impairment, if any, is
measured based on projected discounted future operating cash flows using a
discount rate reflecting the Company's average cost

F-39

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

of funds. The assessment of the recoverability of goodwill will be impacted if
estimated future operating cash flows are not achieved.

(b) Deferred Income Taxes and Employees' Statutory Profit Sharing

Until December 31, 1999, Mexican GAAP provided that deferred taxes should
not be recorded for those temporary differences whose origin is not
specifically identifiable or whose realization is not presently
determinable because upon turnaround they will be replaced by other temporary
differences of a similar nature and amount.

For U.S. GAAP purposes, the Company accounts for income taxes utilizing SFAS
109 "Accounting for Income Taxes", which requires the asset and liability
method of accounting for income taxes. Under the asset and liability method,
deferred tax asset and liabilities are recognized for the future tax
consequences of "temporary differences" by applying 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 and
operating loss carryforwards. The amount of deferred income taxes charged or
credited to operations in each period for U.S. GAAP is based upon the
difference between the beginning and ending balances of the deferred tax assets
or liabilities for each period, expressed in nominal pesos. A monetary position
gain or loss of the deferred tax assets or liabilities was also recognized. The
effect on deferred taxes of a change in tax rates is recognized in income in
the period that includes the enactment date.

F-40

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1998 and 1999 are presented below.

December 31,
------------------------
1998         1999
------------  ----------

Deferred tax assets:
Net operating loss and assets tax carryforwards..... Ps 5,178,015   2,404,076
Trade accounts receivable...........................      440,054     417,266
Investment in affiliated companies..................      341,742         479
Accounts payable and accrued expenses...............      679,268     513,303
Other...............................................      397,871     160,899
------------  ----------
Total gross deferred tax assets.....................    7,036,950   3,496,023
Less valuation allowance............................      244,442     195,615
------------  ----------
Net deferred tax assets under U.S. GAAP.............    6,792,508   3,300,408
------------  ----------
Deferred tax liabilities:
Property, plant and equipment.......................   15,143,876  14,714,639
Inventories.........................................      682,365     420,510
Other...............................................      335,788     162,190
------------  ----------
Total gross deferred tax liability under U.S. GAAP..   16,162,029  15,297,339
------------  ----------
Net deferred tax liability under U.S. GAAP..........    9,369,521  11,996,931
Deferred tax liability recognized under Mexican
GAAP...............................................    1,106,552   1,077,053
------------  ----------
Excess of liability recognized under U.S. GAAP over
that recognized under
Mexican GAAP.......................................    8,262,969  10,919,878
Less--U.S. GAAP deferred income taxes of acquired
subsidiaries at date of
Acquisition........................................    1,581,278   2,120,506
Inflation adjustment (note 3B)......................     (153,669)    (16,228)
------------  ----------
U.S. GAAP adjustment to stockholders' equity........ Ps 6,528,022   8,783,144
============  ==========

As of June 30, 1999 and 2000 (unaudited), deferred income tax expense
amounts to Ps384,767 and Ps42,705, respectively, with a net effect in
stockholders' equity under U.S. GAAP of Ps(4,839,782) at June 30, 2000
(unaudited).

Management believes that it is more likely than not that it will generate
taxable income sufficient to realize the tax benefit associated with future
deductible temporary differences and operating tax loss carryforwards prior to
their expiration. If the Company is unable to generate sufficient taxable
income in the future through operating results, or alternative tax strategies
are no longer viable, a valuation allowance will be required through a charge
to expense.

The Company has recorded a valuation allowance for the estimated amount of
the recoverable tax on assets, which may not be realized due to their
expiration during the carryforwards period. However, through the continuous
evaluation of the effects of tax strategies, among other economic factors,
during 1999 the Company canceled a net effect on the valuation allowance of
approximately Ps22 million.

F-41

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Effective December 31, 1998, the income tax rate increased from 34% to 35%
for temporary differences in Mexico to give effect to the enactment of the new
income tax law in Mexico. This resulted in an additional deferred tax expense
of Ps257,729 for U.S. GAAP purposes in 1998.

Deferred income taxes for interim periods are measured by the use of an
estimated annual effective tax rate for the annual periods.

The Company also recorded a deferred liability for U.S. GAAP purposes,
related to employees' statutory profit sharing 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
employees' profit sharing liabilities at December 31, 1998 and 1999 are
presented below:

December 31,
---------------------
1998       1999
----------- ---------

Deferred assets:
Employee benefits........................................ Ps   15,414    44,095
Trade accounts receivable................................     130,005    11,578
Other....................................................         --        --
----------- ---------
Gross deferred assets under U.S. GAAP.....................     145,419    55,673
----------- ---------
Deferred liabilities:
Property, plant and equipment............................   2,931,981 2,841,333
Inventories..............................................     106,285   134,743
Other....................................................      17,991    18,674
----------- ---------
Gross deferred liabilities under U.S. GAAP................   3,056,257 2,994,750
----------- ---------
Net deferred liabilities under U.S. GAAP.................. Ps2,910,838 2,939,077
=========== =========

As of June 30, 1999 and 2000 (unaudited), deferred employees profit sharing
expense amounts to Ps261,538 and Ps129,330, respectively, with a net effect in
stockholders' equity under U.S. GAAP of Ps(2,940,259) at June 30, 2000
(unaudited).

For purposes of the condensed financial information presented under U.S.
GAAP in note 23(p), employees' statutory profit sharing expense, both current
and deferred, is deducted in the determination of operating income.

Additionally, as it is mentioned in note 15B, beginning in the year 2000,
new Bulletin D-4, requires the determination of deferred income tax through the
balance sheet methodology. Even when Bulletin D-4 establishes a methodology
similar to US GAAP, in the application of the Bulletin, differences will
prevail in the reconciliation to US GAAP, arising from i) the recognition of
the initial balance as of January 1, 2000 will be recorded directly to
stockholders' equity, ii) certain adjustments to Mexican GAAP recorded in the
foreign subsidiaries for consolidation purposes, are to be treated as permanent
differences, iii) the treatment of deferred tax consequences in business
combinations under Mexican GAAP, does not consider the provisions of APB
Opinion 16, and iv) for Mexican GAAP purposes, deferred tax assets and
liabilities, should be considered as long-term items. For Mexican GAAP
purposes, it is required to determine the effect of deferred ESPS for those
temporary differences arising from the reconciliation of the net income of the
period and the taxable income for ESPS, of a non-recurring nature.

F-42

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

As of June 30, 2000, a net deferred tax liability under Bulletin D-4 of
Ps4,904,463, has been canceled for purposes of the U.S. GAAP reconciliation of
stockholders' equity. The net effect in the reconciliation of net income
arising from the cancelation of Bulletin D-4 amounts to Ps292,002 of a deferred
tax expense as of June 30, 2000 (unaudited).

(c) Other Employee Benefits

Vacations

Under Mexican GAAP, vacation expense is recognized when taken rather than
during the period the employees earn it. In order to comply with SFAS 43, as of
December 31, 1997, 1998, 1999 and as of June 30, 1999 and 2000 (unaudited), the
vacation expense recorded for U.S. GAAP purposes was Ps4,717, Ps9,103, Ps8,501,
Ps6,619 and Ps7,617, respectively with an accrual of Ps39,439, Ps43,564 and
Ps49,147 at December 31, 1998, 1999 and June 30, 2000 (unaudited) respectively.

Severance

Before 1997, under Mexican GAAP, postemployment benefit expenses other than
pension benefits were recorded when retirement occurred and the Company did not
provide for any severance benefits. Beginning in 1997, in accordance with
Mexican GAAP (Circular 50), SFAS 112 is the supplementary accounting standard
for postemployment benefits. As of December 31, 1998, 1999 and June 30 2000,
the Company did not accrue a provision for these benefits for Mexican GAAP due
to their insignificance. However, under U.S. GAAP, postemployment benefits for
former or inactive employees excluding retirement benefits, are accounted for
under the provisions of SFAS 112, which requires the Company to accrue the cost
of certain benefits, including severance over an employee's service life. As of
December 31, 1997, 1998, 1999 and as of June 30, 1999 and 2000 (unaudited), the
severance provisions recorded for U.S. GAAP purposes were an expense of
Ps21,684, Ps41,829, Ps39,063, Ps30,427 and Ps35,002, respectively with an
accrual of Ps181,227, Ps200,181 and Ps225,833 at December 31, 1998, 1999 and
June 30, 2000 (unaudited), respectively. Severance payments relating to any
specific event or restructuring are excluded from the SFAS 112 calculation.

SFAS 106, requires accrual of these benefits during the years an employee
provides services. The Company does not provide to its employees any
postretirement benefits subject to the provisions of SFAS 106.

Pension Benefits

The Company records liabilities for employee pension benefits determined by
actuarial computations, which are similar to SFAS 82 under U.S. GAAP. The
pension benefits recorded for U.S. GAAP purposes were an expense of Ps31,569 in
1997, an income of Ps57,444 in 1998, an expense of Ps26,917 in 1999 and an
expense of Ps 4,455 as of June 30 1999 (unaudited), with an additional (asset)
liability of Ps(27,296) in 1998, Ps5,263 in 1999 and Ps4,983 at June 30, 2000
(unaudited), respectively.

(d) Marketable Securities

Included in other investments at December 31, 1998 are Ps270,356 of an
investment in common stock of a third party company. This investment is
recorded at market value based upon its quoted price. Although the Company does
not have the intention to sell these shares, this investment is classified as
available-for-sale for purposes of complying with SFAS 115. Unrealized holding
loss of Ps152,540 and gain of Ps324,533 (loss

F-43

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Ps114,560 and gain of Ps227,835, after the related deferred income tax effect
which has been credited directly to stockholders' equity) for the years ended
December 31, 1997 and 1998, respectively, are included as a component of
stockholders' equity for purposes of the Company's reconciliation to U.S. GAAP.
Beginning in January 1, 1999, the Company adopted the provisions of SFAS 115
under Mexican GAAP, therefore, no additional reclassification is needed for
purposes of the net income reconciliation.

(e) Capitalized Interest

Under Mexican GAAP, the Company is allowed, but no required, to capitalize
interest on assets under construction. Mexican GAAP states that the amount of
financing cost to be capitalized during the construction period of property,
machinery and equipment must be comprehensively measured in order to include
properly the effects of inflation. Therefore, the amount capitalized includes
(i) the interest cost of the debt incurred, plus (ii) any foreign currency
exchange loss that results from the related debt, and less (iii) the related
monetary position result recognized on the debt incurred to finance the
construction project. Under U.S. GAAP, interest must be considered an
additional cost of constructed assets to be capitalized in property, machinery
and equipment and depreciated over the lives of the related assets.

The U.S. GAAP reconciliation removes the foreign currency gain or loss
capitalized for Mexican GAAP derived from borrowings denominated in foreign
currency.

(f) Minority Interest

Financing Transactions

As of December 31, 1998 the Company had $422.5 million and $500 million, as
of December 31, 1999 and June 30, 2000 (unaudited), of an outstanding equity
financing transaction involving shares of its Spanish subsidiary. The
transferred shares represented 25.4% in 1998 and 24.8% in 1999 and June 30,
2000 (unaudited) of the outstanding capital stock of this subsidiary. The
Company has considered the shares involved in this transaction, as if those
were owned by a third party and therefore, has recorded a minority interest in
the consolidated balance sheet under Mexican GAAP. For U.S. GAAP purposes, this
financing transaction had been classified as debt in the amount of Ps4,905
million, Ps4,965 million and Ps4,920 million at December 31, 1998, 1999 and
June 30, 2000 (unaudited), respectively. For Mexican GAAP purposes, the costs
related to this transaction are recorded as part of the net financing cost in
the income statement. Differences between the amount of minority interest
recognized for Mexican GAAP purposes and the amount of net debt for U.S. GAAP
purposes for this financing transaction are reflected as a reconciliation of
Mexican GAAP stockholders' equity. This financing transaction bears interest at
3 month-LIBOR plus 100 basis points (approximately 7.0% and 8.0% at December
31, 1999 and June 30, 2000 (unaudited), respectively), and matures with $125
million of the principal due in July 2000, $125 million in December 2000, and
the remaining $250 million due in June 2001. This transaction was terminated in
August 31, 2000 (unaudited) (see note 23X).

For purposes of U.S. GAAP presentation, Putable Capital Securities described
in note 13(F) are presented as a separate component of minority interest. Under
Mexican GAAP these instruments are presented as part of the minority interest
in stockholders' equity. Dividends declared are recorded as part of the
minority interest in the consolidated statements of income under both Mexican
GAAP and U.S. GAAP.

In December 1995, the Company entered into a financial transaction in which
a subsidiary transferred some of its cement assets to a trust, while
simultaneously a third party purchased a beneficial interest in the trust for
approximately $123.5 million in exchange for notes issued by the trust. The
Company has the right to

F-44

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

reacquire these assets on various dates until 2007. As of December 31, 1998,
1999 and June 30, 2000 (unaudited), $108 million (Ps1,255 million), $104.6
million (Ps1,039 million) and $100.7 million (Ps991 million), respectively,
were outstanding under this transaction. For U.S. GAAP purposes the amount
outstanding under this arrangement is treated as debt. Under Mexican GAAP this
transaction has been treated as minority interest (see note 13(F)).

U.S. GAAP adjustments

Under Mexican GAAP the minority interest in consolidated subsidiaries is
presented as a separate component within the stockholders' equity section in
the consolidated balance sheets. According to U.S. GAAP, minority interest is
excluded from consolidated stockholders' equity and classified as a separate
component between total liabilities and stockholders' equity in the
consolidated balance sheets. The U.S. GAAP adjustment to stockholders' equity
included herein represents the minority interests in the Company's subsidiaries
determined in accordance with U.S. GAAP.

(g) Depreciation

One of the Company's subsidiaries 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,
the Company has decided to maintain this accounting practice due to tax
consequences in Colombia arising from a change in methodology, and the
immateriality of the effects in the Company's consolidated results. During the
year 2000, the Company will evaluate changing the depreciation methodology of
this subsidiary, in order to align all subsidiary practices to the Company's
policy for depreciation. For U.S. GAAP purposes, depreciation is calculated on
a straight-line basis over the estimated useful lives of the assets. As a
result of this accounting difference, as of December 31, 1997, 1998, 1999 and
as of June 30, 1999 and 2000 (unaudited) Ps6,946, Ps57,872, Ps122,049, Ps81,540
and Ps93,204 respectively, have been credited to income in the U.S. GAAP
reconciliation.

Additionally, as a result of the application of APB 16 in the acquisition of
Rizal for U.S. GAAP purposes, at December 31, 1999, the Company reduced the
value of its fixed assets by Ps264,156, corresponding to the portion of the
appraisal value related to the minority owners. The change in the fixed assets'
amount for under U.S. GAAP arising from this concept, led to a decrease in the
depreciation expense under U.S. GAAP of Ps22,874 during 1999 and Ps10,475 as of
June 30, 2000 (unaudited).

(h) Accruals for Contingencies

For Mexican GAAP purposes the Company has recorded accruals for certain
contingencies that do not meet the accrual criteria of SFAS 5 of U.S. GAAP. Our
Spanish subsidiary has recorded a liability for guarantees given to third
parties by former subsidiaries and other general accruals. At the balance sheet
dates the likelihood of a loss occurring is considered to be possible but not
probable. Therefore, the Company does not consider that the criteria of SFAS 5
for accrual were met and the recorded liabilities were reversed for U.S. GAAP
purposes.

In addition, with respect to the Mexican and Colombian tax assessments
described in note 20(B), the Company believes that while it is reasonably
possible for a loss to occur as a result of these assessments, the likelihood
of a loss is not probable. Therefore, the Company does not consider that the
criteria of SFAS 5 for accrual were met (see also note 23(v)). In January 2000,
the company had a final resolution on the Colombian tax assesment (see note
23x).

F-45

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

(i) Affiliated Companies

The Company has adjusted its investment in and its equity in the earnings of
affiliated companies for the Company's share of the approximate U.S. GAAP
adjustments applicable to these affiliates.

(j) Inflation Adjustment of Machinery and Equipment

On December 2, 1997, the International Practices Task Force of the American
Institute of Certified Public Accountants encouraged Mexican companies to
restate their fixed assets of foreign origin by applying the inflation rate of
each country in which the Company operates, instead of using the methodology
included in the fifth amendment to Bulletin B-10, which consists of restating
the fixed assets of foreign origin on the basis of the devaluation of the
functional currency against the currency of origin and applying a factor of
inflation in such foreign country. 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.

(k) Temporary Equity from Forward Contracts

As mentioned in notes 2C and 14D to the financial statements, the Company
has entered in to forward contracts in connection with its warrant offering
transaction. According to EITF 96-13, forward contracts involving the Company's
own stock that will be physically settled by delivering cash, should be
initially measured at fair value and recorded in permanent equity, and an
amount equivalent to the cash redemption at the date of reporting, should be
reclassified to temporary equity, which is to be considered as a mezzanine item
for the balance sheet presentation under U.S. GAAP. As a result, for purposes
of reconciliation the Company presents an adjustment to its stockholders'
equity under Mexican GAAP for Ps5,113,768 in 1999 and Ps5,041,271 at June 30,
2000 (unaudited), which represents the cash obligation of the Company in the
forward contract at the reporting date. This amount is presented as a mezzanine
for purposes of note 23(p).

(l) Other U.S. GAAP Adjustments

Inventory costs--As permitted by Mexican GAAP, certain inventories are
valued under the direct cost system, which includes material, labor and other
direct costs. For purposes of complying with U.S. GAAP, inventories have been
valued under the full absorption cost method, including all costs and expenses
necessary for the manufacturing process. At December 31, 1998 and 1999, the
Company recognized an income of Ps293,861 and Ps108,338, respectively, in the
stockholders' equity reconciliation to U.S. GAAP. Beginning January 1, 2000,
the company has adopted the full absorption cost method for al its producing
facilities, therefore, as of June 30, 2000 (unaudited) the reconciling item
arising from this concept has been cancelled, recognizing an expense of
Ps65,446 in the net income reconciliation to U.S. GAAP.

Capitalization of costs of computer development Under U.S. GAAP--Statement
of Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use", provides guidance on accounting for the costs of
computer software developed or obtained for internal use. SOP 98-1 requires
that certain costs related to the development or purchase of internal-use
software be capitalized and amortized over the estimated useful life of the
software and that costs related to the preliminary project stage and the post-
implementation/operations stage (as defined in SOP 98-1) in an internal-use
computer software development project be expensed as incurred. SOP 98-1 is
effective for financial statements issued for fiscal years beginning after
December 15, 1998. The estimated average useful lives period to amortize these
capitalized costs is

F-46

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

between 3 and 5 years. The cumulative effect recognized an income in
stockholders' equity reconciliation to U.S. GAAP at December 31, 1998, 1999 and
June 30, 2000 (unaudited) is Ps345,454, Ps513,876 and Ps613,185, respectively.

Sale of own stock--In 1997, the Company had a gain in the sale of its own
stock of Ps62,189, recorded in the income statement under Mexican GAAP, which
has been reclassified to stockholders' equity for purposes of the U.S. GAAP
reconciliation of net income.

Deferred charges--For U.S. GAAP purposes other deferred charges net of
accumulated amortization, that did not qualified for deferral under U.S. GAAP
had been charged to expense in the year or period incurred for Ps102,278 in
1998, Ps188,642 in 1999 and Ps101,476 as of June 30, 1999 (unaudited). The net
effect in the stockholders' equity reconciliation to U.S. GAAP is Ps153,996,
Ps324,641 and Ps310,899 at December 31, 1998, 1999and June 30, 2000
(unaudited), respectively. Mexican GAAP allowed the deferral of these expenses.

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 with a weighted average inflation factor for the period.

Reclassifications--Real estate held for sale amounting to Ps194,543 in 1998,
Ps152,834 in 1999 and Ps95,143 at June 30, 2000 (unaudited), and non-cement
related assets amounting to Ps486,915 in 1998, Ps132,470 in 1999 and Ps134,191
at June 30, 2000 (unaudited), have been reclassified to long-term assets for
purposes of U.S. GAAP presentation in note 23(p). These assets are stated at
their estimated fair value. Estimated costs to sell, are not significant.

(m) Financial Instruments

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 the Company's long-term debt and the related fair
value based on the quoted market prices for the same or similar issues or on
the current rates offered to the Company for debt of the same remaining
maturities (or determined by discounting future cash flows using borrowing
rates currently available to the Company) at December 31, 1999 is summarized as
follows:

Carrying   Estimated
Amount    Fair value
------------ ----------

Bank loans.............................................. Ps22,677,087 22,673,771
Notes payable...........................................   17,795,420 18,358,606
============ ==========

F-47

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

As discussed in note 3E, the Company has designated certain debt as hedges
of its investment in foreign subsidiaries and for Mexican GAAP purpose, records
foreign exchange fluctuations on such debt in equity. For purposes of the U.S.
GAAP net income reconciliation, Ps1,231,914, Ps3,256,190 and Ps1,745,225 for
1997, 1998 and 1999, respectively, and Ps837,713 and Ps1,145,204 as of June 30,
1999 and 2000 respectively (unaudited), were recognized as foreign exchange
losses since the related debt does not meet the conditions set forth in SFAS 52
for hedge accounting purposes.

Concentration of Credit Risk

The Company sells its products primarily to distributors for 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 and there were no significant account
receivables from a single customer at December 31, 1998, 1999 and June 30,
2000. The Company performs evaluations of its customers' credit histories and
establishes an allowance for doubtful accounts based upon the credit risk of
specific customers and historical trends. In addition, there is no
concentration of suppliers for the purchases of raw materials.

(n) Stock Option Programs

As described in note 13B, pursuant to the Company's Stock Option Plan to
which eligible officers and key employee's are entitled to the Company's Boards
of Directors may grant stock options for up to 216,300,000 shares of authorized
but unissued Series "A" and "B" common stock. Stock option activity during the
periods is indicated in note 13B.

The Company applies APB Opinion No. 25 ("APB 25") in accounting for its Plan
under U.S. GAAP. According to APB 25, the Company's Plan fulfills the type of a
compensatory for services plan, where the price required from the employee at
the measurement date, is materially equal to the quoted market price of the
stock, therefore, no compensation cost has been recognized for its stock
options in the financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under SFAS
123, using the Black-Scholes pricing model, the Company's net income would have
been reduced to the proforma amounts indicated below:

1997       1998      1999
----------- --------- ---------

Net income, as reported (Mexican GAAP).......... Ps7,955,121 8,189,321 9,514,494
Net income, proforma............................   7,788,609 7,929,620 9,317,603
----------- --------- ---------
Basic earnings per share, as reported........... Ps     2.06      2.16      2.52
----------- --------- ---------
Basic earnings per share, proforma.............. Ps     2.02      2.09      2.47
=========== ========= =========

--------
* See note 2A.

The assumptions for the Black-Scholes model were:

1997     1998     1999
-------- -------- --------

Expected dividend yield..............................    2%       2%       2%
Volatility...........................................   30%      30%      30%
Risk free interest rate..............................   22%      22%      15%
Tenure............................................... 10 years 10 years 10 years

F-48

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

(o) Supplemental Cash Flow Information Under U.S. GAAP

The Company presents a consolidated statement of changes in financial
position under Mexican GAAP in accordance with Bulletin B-12, which identifies
the sources and uses of resources determined based upon the differences
between beginning and ending financial statements balances in constant pesos.
It also requires monetary position result and unrealized foreign exchange gain
and loss to be treated as cash items in the determination of resources
provided by operations. U.S. GAAP requires a statement of cash flow presenting
only cash movements and excluding non-cash items. SFAS 95 does not provide any
specific guidance with respect to inflation-adjusted financial statements.

The classifications of cash flows under Mexican GAAP and U.S. GAAP are
basically the same, in respect to the transactions presented under each
caption. The nature of the differences between Mexican GAAP and U.S. GAAP in
the amounts reported, is mainly due to (i) the elimination of inflationary
effects of monetary assets and liabilities from financing and investing
activities variations, against the corresponding monetary position result in
operating activities, (ii) the elimination of exchange rates fluctuations from
financing and investing activities variations, 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.

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, 1997, 1998 and 1999, 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 on a historical peso
basis and it is not presented in constant purchasing power.

(Unaudited)
Six months ended
Years ended December 31,                June 30,
-------------------------------------  ----------------------
1997         1998        1999         1999        2000
------------  ----------  -----------  ----------  ----------

Net cash provided by
operating activities... Ps 7,677,497  11,779,184   10,275,197   4,332,227   5,438,583
Net cash provided by
(used in) financing
activities.............   (3,697,605) (2,821,576)     148,447   2,208,518  (3,572,379)
Net cash used in
investing activities...   (4,691,195) (8,027,317) (10,351,043) (6,783,690) (2,911,897)
------------  ----------  -----------  ----------  ----------

Net cash flow from operating activities reflects cash payments for
interests and income taxes as follows:

(Unaudited)
Six months ended
Years ended December 31,          June 30,
------------------------------- -------------------
1997       1998      1999      1999      2000
----------- --------- --------- --------- ---------

Interest paid............... Ps4,269,714 3,652,444 3,291,193 1,764,718 2,277,346
Income taxes paid...........     311,859   321,372   431,144    65,656   551,629
----------- --------- --------- --------- ---------

Non-cash activities are comprised of the following:

.  Acquisition of property and equipment through capital leases amounted to
Ps77 in 1997, Ps24,150 in 1998 and Ps159,480 in 1999.

.  Liabilities assumed through the acquisition of businesses (see note 7)
was Ps498,834 in 1998 and Ps4,147,318 in 1999.

F-49

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

(p) Condensed Financial Statements under U.S. GAAP

The following table presents consolidated condensed balance sheets at
December 31, 1998 and 1999 and statements of income at December 31, 1997, 1998
and 1999 of the Company as prepared under U.S. GAAP. This summarized financial
information includes all differences described in this footnote as well as
certain other reclassifications required for purposes of U.S. GAAP:

At December 31,      (Unaudited)
------------------------- At June 30,
1998         1999        2000
------------- ----------- -----------

Balance sheets
Current assets.......................  Ps 18,387,873  17,747,462  17,274,824
Investments and non-current assets...      4,802,358   7,567,962   7,473,093
Property, machinery and equipment....     75,205,472  76,562,289  73,255,249
Deferred charges.....................     26,003,775  23,877,138  24,176,109
------------- ----------- -----------
Total assets........................    124,399,478 125,754,851 122,179,275
============= =========== ===========
Current liabilities..................     22,818,586  23,538,841  24,954,561
Long-term debt.......................     40,585,068  35,306,001  29,859,238
Other non-current liabilities........     15,543,938  16,102,966  15,807,829
------------- ----------- -----------
Total liabilities...................     78,947,592  74,947,808  70,621,628
------------- ----------- -----------
Mezzanine items:
Putable Capital Securities (see note
13F)...............................      2,902,792   2,482,586   2,460,000
Temporary equity....................            --    5,113,768   5,041,271
Minority interest...................      6,278,719   6,349,711   6,441,687
------------- ----------- -----------
9,181,511  13,946,065  13,942,958
------------- ----------- -----------
Stockholders' equity.................     36,270,375  36,860,978  37,614,689
------------- ----------- -----------
Total liabilities and stockholders'
equity.............................  Ps124,399,478 125,754,851 122,179,275
============= =========== ===========

(Unaudited)
Six months
As of December 31,               ended June 30,
------------------------------------  ----------------------
1997         1998        1999        1999        2000
------------  ----------  ----------  ----------  ----------

Statements of income
Net sales............... Ps42,014,290  49,446,465  47,305,572  23,712,692  25,832,913
Gross profit............   15,385,647  20,314,461  19,368,106   9,493,156  11,205,365
Operating income........    7,342,267  11,076,690  10,487,745   4,853,357   6,725,553
Comprehensive financial
income (cost)..........    2,673,833  (3,080,340)   (301,113)  1,098,041  (1,414,637)
Other expenses, net.....      318,648     526,830    (636,922)   (289,552)   (266,831)
Income tax (including
deferred)..............   (2,838,551) (2,581,223) (3,972,872)   (804,901) (1,018,570)
Equity in income of
affiliates.............      266,968     305,160     425,945     179,195     183,375
------------  ----------  ----------  ----------  ----------
Consolidated net
income.................    7,763,165   6,247,117   6,002,783   5,036,140   4,208,890
------------  ----------  ----------  ----------  ----------
Minority net income.....      362,703     379,204     403,433      99,312     152,703
------------  ----------  ----------  ----------  ----------
Majority net income.....  Ps7,400,462   5,867,913   5,599,350   4,936,828   4,056,187
============  ==========  ==========  ==========  ==========

F-50

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

For purposes of the consolidated condensed financial statements, the 1997
and 1998 figures were updated to constant pesos at December 31, 1999 using the
Mexican inflation rate, in order to comply with current requirements of
Regulation S-X.

(q) Restatement to Constant Pesos of Prior Years

The following table presents summarized financial information under Mexican
GAAP of the consolidated statements of income for the years ended December 31,
1997 and 1998 and of the consolidated balance sheet at December 31, 1998, in
Mexican pesos of equivalent constant purchasing power of December 31, 1999
using the Mexican inflation rate:

(Unaudited)
Six months ended
June 30,
1997         1998         1999           1999
------------ ------------ ------------ ----------------

Sales................... Ps42,530,726   50,104,482   47,943,342    25,124,263
Gross profit............   16,468,244   21,134,371   21,231,573    12,787,083
Operating income........   10,049,952   13,675,541   14,264,882     8,658,312
Majority net income.....    8,541,370    9,326,581    9,657,854     5,941,276
------------ ------------ ------------    ----------
Current assets..........              Ps19,084,393 Ps16,964,416
Non-current assets......               102,364,495  100,851,993
Current liabilities.....                20,881,718   18,135,298
Non-current
liabilities............                40,906,342   35,782,957
Majority interest
stockholders' equity...                45,136,033   51,459,911
Minority interest
stockholders' equity...                14,524,795   12,438,243
------------ ------------

(r) Environmental Costs

Environmental expenditures related to current operations are expensed or
capitalized, as appropriate. Remediation costs related to an existing condition
caused by past operations are accrued when it is probable that these costs will
be incurred and can be reasonably estimated. The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. Costs of future expenditures for
environmental remediation obligations are not discounted to their present
value. Recoveries of environmental remediation costs from other parties are
recorded as assets when their receipt is deemed probable. Prior to its
acquisition in 1989, one subsidiary of the Company in the United States
employed the use of underground storage tanks in their operations.
Subsequently, the use of those tanks resulted in environmental remediation
liabilities for several of the subsidiary's plant sites. Per a 1996 settlement
agreement with the former owners, the subsidiary is responsible for 10% of
remediation costs at one of the plant sites and 100% of remediation costs for
the remaining sites.

As of December 31, 1998 and 1999, the subsidiary had accrued its best
estimate of its obligation with respect to the sites of approximately Ps9
million in 1998 and Ps8 million in 1999, which are included in accrued
liabilities.

In May 1999, several companies filed a civil liability suit against two of
our Colombian subsidiaries, alleging that these subsidiaries were responsible
for deterioration in the rice producing capacity of certain land of the
plaintiffs, caused by pollution emanating from our cement plants located in
Ibague, Colombia. The plaintiffs have asked for relief in the amount of U.S.
$12.6 million. This proceeding has not yet reached the

F-51

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

evidentiary stage, since both parties have appealed the court's evidentiary
decree. Upon resolution of the appeals, the evidentiary stage will begin. We
estimate that this proceeding will continue for approximately six years before
final resolution. For accounting purposes under both Mexican and U.S. GAAP, the
Company believes that the accrual criteria, has not been met in connection with
this civil action (unaudited).

The Company is not currently facing other situation as those described above
which might result in the recognition of an environmental remediation
liability.

(s) Supplemental Debt Information

Classification of Short-term debt Expected to be Refinanced--In accordance
with U.S. GAAP, and for purposes of the condensed information of note 23(p), at
December 31, 1998, 1999 and June 30, 2000 (unaudited), $168 million (Ps1,950
million), $226 million (Ps2,243 million) and $178 million (Ps1,752 million),
respectively, were reclassified from long-term debt to short-term debt for U.S.
GAAP purposes.

(t) Impairment of Long Lived Assets

In accordance with the provisions of SFAS 121 "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Off" long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by comparison of
the carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value, less costs to sell
(see note 8).

For Mexican GAAP purposes the impairment provisions are reported in other
income and expense. For purposes of note 23(p), these provisions are reported
as a component of operating income.

(u) Business combinations

As mentioned in note 7, during September 1999, the Company acquired a
majority equity interest in Cempasa, and during November 1999 acquired a
majority equity interest in Assiut Cement Co. For purposes of disclosure under
U.S. GAAP according to APB 16, companies must provide in proforma basis, the
effects of having being consolidating the acquired companies since the
beginning of the reported period. In respect to APO, the Company consolidated
for Mexican GAAP purposes, its results of operations for the twelve-month
period ended December 31, 1999. Therefore, for purposes of compliance with APB
16 disclosure requirement, the Company is providing proforma selected income
statement amounts for the consolidation of Cempasa and Assiut, as if they were
consolidated for the full year 1999.

F-52

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The approximated amounts are as follows:

Assiut   Cempasa
Cemex as    twelve-  twelve-                Cemex
reported    months   months   Elimination  proforma
------------ --------- -------  ----------- ----------

Net sales............... Ps47,231,676 1,928,358 406,348   (235,449)  49,330,933
Operating income........   14,053,136   486,989  40,995    (36,511)  14,544,609
Majority interest net
income (loss)..........    9,514,494   277,173  (1,809)    25,644    9,815,502
============ ========= =======   ========   ==========

Basic earnings per
share.................. Ps      2.52                                      2.60
Diluted earnings per
share.................. Ps      2.51                                      2.59
============                                ==========

For purposes of the table above, the "Elimination" column represents the sum
of the Assiut's one-month period results, and Cempasa's three-month period
results, that were included in to the Company's consolidated income statement
under Mexican GAAP as of December 31, 1999.

(v) Guaranteed debt

In June 2000 the Company concluded the issuance of up to 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 outstanding 9.625% Notes due 2009
(unaudited). The Exchange Notes are fully and unconditionally guaranteed, on a
joint and several basis, as to payment of principal and interest by two of the
Company's Mexican subsidiaries: CEMEX Mexico, S.A. de C.V. (formerly, TOLMEX,
S.A. de C.V.), and Empresas Tolteca de Mexico, S.A. de C.V. (formerly, CEMEX
Control, S.A. de C.V.). These two companies, together with their subsidiaries,
account for substantially all the revenues and operating income of the
Company's Mexican operations.

As described in note 3D, through a series of mergers during 1999, the cement
and ready-mix concrete operations of the Company in Mexico were integrated into
CEMEX Mexico, S.A. de C.V. ("CEMEX Mexico"). Prior to these mergers, Tolmex,
S.A. de C.V., Serto Construcciones, S.A. de C.V., Cemento Portland Nacional,
S.A. de C.V., Cementos Mexicanos, S.A. de C.V. and CEMEX Control, S.A. de C.V.
were the guarantors of part of the indebtedness of the Company (the
"Guarantors"). Concurrent with this merging process, the legal name of CEMEX
Control, S.A. de C.V. was changed to Empresas Tolteca de Mexico, S.A. de C.V.
(this subsidiary was not part of the merging process described above). As of
December 31, 1998, the Guarantors fully, unconditionally, jointly and severally
guaranteed indebtedness of the Company in an aggregate amount of US dollars
$2,010 million (see note 11).

As mentioned in note 11, as of December 31, 1999, indebtedness of the
Company in an aggregate amount of US dollars $2,090 million is fully and
unconditionally guaranteed, on a joint and several basis, by CEMEX Mexico and
Empresas Tolteca de Mexico, S.A. de C.V. ("ETM"). The Company's indebtedness
guaranteed by these two subsidiaries will not increase as a result of the
exchange offer described above.

As of December 31, 1999, the Company owned a 99.8% equity interest in CEMEX
Mexico, including a 2.5% equity interest held by a Mexican trust in connection
with an equity financing transaction due in 2007 (see note 13F), and CEMEX
Mexico owned a 99.9% equity interest in ETM. The current "General Law of
Commercial Corporations" in Mexico prescribes a minimum participation of two
shareholders on the equity of a Mexican corporation; therefore, no single
company or person can own 100% equity interest of another entity.

F-53

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

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 other material operations than its investments in subsidiaries and
affiliated companies. The second column, "Combined Guarantors", represents the
combined amounts of CEMEX Mexico and ETM, after adjustments and eliminations
relating to their consolidation. As mentioned above, the Guarantors represent
substantially all the Company's Mexican operations. The third column, "Combined
non-guarantors", represents the amounts of the international subsidiaries of
the Company, CEMEX Mexico and ETM non-Guarantor subsidiaries, and other
immaterial Mexican non-guarantor subsidiaries of the Company. The fourth
column, "Adjustments and eliminations", includes all the amounts resulting from
consolidation of the Company, the Guarantors and the non-guarantor
subsidiaries, as well as the corresponding constant pesos adjustment as of June
30, 2000, for the periods ended December 31, 1997, 1998 and 1999 described
below. The fifth column, "CEMEX Consolidated", represents the Company's
consolidated amounts as reported in the audited consolidated financial
statements. Additionally, all 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.

The accompanying condensed consolidating financial information as of
December 31, 1998 and for the years ended December 31, 1997 and 1998, reflects
the total combined equity of the Guarantors and related transactions as if the
mergers described in the previous paragraphs had been completed on January 1,
1997, as a reorganization of entities under common control (similar to pooling
of interest). All significant intercompany balances and transactions between
the Guarantors and the merged entities have been eliminated in the "Combined
Guarantors" column. Such information is presented in Mexican GAAP, and net
income and stockholders' equity have also been reconciled to US GAAP.

As mentioned in note 3B, according the Mexican GAAP Bulletin B-15, 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 "non-
guarantors" amounts have been adjusted to reflect constant pesos as of June 30,
2000, using the Mexican inflation index arising from the NCPI. Therefore, the
corresponding inflation adjustment derived from the application of Bulletin B-
15 in the consolidated amounts is presented within the "Adjustments and
eliminations" column.

F-54

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

The information is as follows:

Condensed consolidating balance sheets:

Combined  Adjustments
Combined     non-        and          CEMEX
1998               CEMEX     Guarantors guarantors eliminations  Consolidated
----            ------------ ---------- ---------- ------------  ------------

Current assets..........  Ps 2,562,379 19,361,219 15,226,137  (20,392,447)  16,757,288
Investment in
affiliates.............    73,533,652  2,329,802  2,813,683  (74,757,888)   3,919,249
Other non-current
assets.................     1,153,993        --     428,732   (1,075,681)     507,044
Property, machinery and
equipment..............     1,486,057 29,994,194 39,721,469   (8,583,147)  62,618,573
Deferred charges........     2,335,649  5,834,207 20,102,428   (5,434,727)  22,837,557
------------ ---------- ---------- ------------  -----------
Total assets...........    81,071,730 57,519,422 78,292,449 (110,243,890) 106,639,711
------------ ---------- ---------- ------------  -----------
Current liabilities.....    19,578,735  2,869,464 16,836,641  (20,949,387)  18,335,453
Long-term debt..........    21,819,177  2,144,834 16,590,489   (8,579,079)  31,975,421
Other non-current
liabilities............        41,564 31,289,376    526,270  (27,914,306)   3,942,904
------------ ---------- ---------- ------------  -----------
Total liabilities......    41,439,476 36,303,674 33,953,400  (57,442,772)  54,253,778
------------ ---------- ---------- ------------  -----------
Majority interest
stockholders' Equity...    39,632,254 21,215,748 31,494,384  (52,710,132)  39,632,254
------------ ---------- ---------- ------------  -----------
Minority interest.......           --         --  12,844,665      (90,986)  12,753,679
------------ ---------- ---------- ------------  -----------
Stockholders' equity
under Mexican GAAP.....  Ps39,632,254 21,215,748 44,339,049  (52,801,118)  52,385,933
============ ========== ========== ============  ===========

Combined  Adjustments
Combined     non-        and          CEMEX
1999               CEMEX     Guarantors guarantors eliminations  Consolidated
----            ------------ ---------- ---------- ------------  ------------

Current assets..........  Ps   783,483  9,417,876 17,117,195 (10,605,956)   16,712,598
Investment in
affiliates.............    45,648,605  5,139,659  4,391,445 (49,165,685)    6,014,024
Other non-current
assets.................    23,570,972    513,919  1,346,410 (23,743,472)    1,687,829
Property, machinery and
equipment..............     1,483,846 25,687,234 41,568,909  (1,025,538)   67,714,451
Deferred charges........     4,474,684  5,081,912 16,674,353  (2,292,296)   23,938,653
------------ ---------- ---------- -----------   -----------
Total assets...........    75,961,590 45,840,600 81,098,312 (86,832,947)  116,067,555
------------ ---------- ---------- -----------   -----------
Current liabilities.....     9,395,768  3,774,951 15,089,499 (10,394,118)   17,866,100
Long-term debt..........    15,848,084    295,150 16,423,223     113,489    32,679,946
Other non-current
liabilities............        21,692 24,689,939  1,751,846 (23,891,625)    2,571,852
------------ ---------- ---------- -----------   -----------
Total liabilities......    25,265,544 28,760,040 33,264,568 (34,172,254)   53,117,898
------------ ---------- ---------- -----------   -----------
Majority interest
stockholders' equity...    50,696,046 17,080,560 36,692,183 (53,772,743)   50,696,046
------------ ---------- ---------- -----------   -----------
Minority interest.......           --         --  11,141,561   1,112,050    12,253,611
------------ ---------- ---------- -----------   -----------
Stockholders' equity
under Mexican GAAP.....  Ps50,696,046 17,080,560 47,833,744 (52,660,693)   62,949,657
============ ========== ========== ===========   ===========

F-55

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Combined   Adjustments
Combined      non-         and          CEMEX
June 30, 2000           CEMEX      Guarantors  guarantors  eliminations  Consolidated
-------------       -------------  ----------  ----------  ------------  ------------

Current assets.......... Ps  2,005,493   7,555,618  15,867,759   (7,663,161)   17,765,709
Investment in
affiliates.............    42,759,295   4,465,164   4,162,902  (46,039,574)    5,347,787
Other non-current
assets.................    21,030,720   3,492,265   5,680,149  (28,328,115)    1,875,019
Property, machinery and
equipment..............     1,481,654  25,250,858  38,650,554       28,490    65,411,556
Deferred charges........     4,568,601   5,503,171  16,259,351     (781,047)   25,550,076
-------------  ----------  ----------  -----------   -----------
Total assets..........    71,845,763  46,267,076  80,620,715  (82,783,407)  115,950,147
-------------  ----------  ----------  -----------   -----------
Current liabilities.....     7,662,584   3,777,669  14,504,018   (8,306,191)   17,638,080
Long-term debt..........    16,159,628     251,345  14,638,073     (384,437)   30,664,609
Other non-current
liabilities............        13,442  28,941,998   5,379,490  (26,633,421)    7,701,509
-------------  ----------  ----------  -----------   -----------
Total liabilities.....    23,835,654  32,971,012  34,521,581  (35,324,049)   56,004,198
-------------  ----------  ----------  -----------   -----------
Majority interest
stockholders' equity...    48,010,109  13,296,064  34,818,601  (48,114,665)   48,010,109
-------------  ----------  ----------  -----------   -----------
Minority interest.......           --          --   11,280,533      655,307    11,935,840
-------------  ----------  ----------  -----------   -----------
Stockholders' equity
under Mexican
GAAP................... Ps 48,010,109  13,296,064  46,099,134  (47,459,358)   59,945,949
=============  ==========  ==========  ===========   ===========

Condensed consolidating income statements:

Combined   Adjustments
Combined      non-         and          CEMEX
1997               CEMEX      Guarantors  guarantors  eliminations  Consolidated
----           -------------  ----------  ----------  ------------  ------------

Sales................... Ps        --   18,404,732  30,500,582   (9,293,742)   39,611,572
Operating income........       (99,625)  5,370,337   4,639,471     (550,024)    9,360,159
Comprehensive financing
result.................       923,143   4,287,743   1,117,282   (4,668,847)    1,659,321
Other income (expense),
net....................       120,315     744,758    (595,413)  (1,707,761)   (1,438,101)
Income tax..............       793,889  (1,901,614)   (331,871)     745,527      (694,069)
Equity in income of
affiliates.............     6,217,399    (427,037) (1,116,675)  (4,490,866)      182,821
-------------  ----------  ----------  -----------   -----------
Consolidated net
income.................     7,955,121   8,074,187   3,712,794  (10,671,971)    9,070,131
-------------  ----------  ----------  -----------   -----------
Minority interest.......           --          --    1,216,695     (101,685)    1,115,010
-------------  ----------  ----------  -----------   -----------
Majority net income..... Ps  7,955,121   8,074,187   2,496,099  (10,570,286)    7,955,121
=============  ==========  ==========  ===========   ===========

Combined   Adjustments
Combined      non-         and          CEMEX
1998               CEMEX      Guarantors  guarantors  eliminations  Consolidated
----           -------------  ----------  ----------  ------------  ------------

Sales................... Ps        --   19,956,766  30,783,288   (6,745,188)   43,994,866
Operating income........      (121,510)  8,552,216   4,596,916   (1,019,643)   12,007,979
Comprehensive financing
result.................      (593,030)   (505,311)    134,102     (383,533)   (1,347,772)
Other income (expense),
net....................        39,285  (1,323,784)    108,876     (375,431)   (1,551,054)
Income tax..............     1,838,812  (2,089,144)   (721,955)     295,042      (677,245)
Equity in income of
affiliates.............     7,025,764      81,940    (436,744)  (6,511,174)      159,786
-------------  ----------  ----------  -----------   -----------
Consolidated net
income.................     8,189,321   4,715,917   3,681,195   (7,994,739)    8,591,694
-------------  ----------  ----------  -----------   -----------
Minority interest.......           --          --      396,028        6,345       402,373
-------------  ----------  ----------  -----------   -----------
Majority net income..... Ps  8,189,321   4,715,917   3,285,167   (8,001,084)    8,189,321
=============  ==========  ==========  ===========   ===========

F-56

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Combined   Adjustments
Combined      non-         and          CEMEX
1999              CEMEX      Guarantors  guarantors  eliminations  Consolidated
----           ------------  ----------  ----------  ------------  ------------

Sales................... Ps       --   20,106,733  31,724,423   (4,599,480)   47,231,676
Operating income........     (111,650)  9,218,339   5,295,527     (349,080)   14,053,136
Comprehensive financing
result.................      893,707   5,011,910   2,621,773   (8,810,399)     (283,009)
Other income (expense),
net....................     (636,555) (3,814,170) (1,245,474)   2,792,051    (2,904,148)
Income tax..............       67,669    (487,972)   (668,718)      45,500    (1,043,521)
Equity in income of
affiliates.............    9,301,323     507,945    (265,102)  (9,300,784)      243,382
------------  ----------  ----------  -----------    ----------
Consolidated net
income.................    9,514,494  10,436,052   5,738,006  (15,622,712)   10,065,840
------------  ----------  ----------  -----------    ----------
Minority interest.......          --          --      346,901      204,445       551,346
------------  ----------  ----------  -----------    ----------
Majority net income..... Ps 9,514,494  10,436,052   5,391,105  (15,827,157)    9,514,494
============  ==========  ==========  ===========    ==========

Combined   Adjustments
Combined      non-         and          CEMEX
June 30, 1999          CEMEX      Guarantors  guarantors  eliminations  Consolidated
-------------       ------------  ----------  ----------  ------------  ------------

Sales................... Ps       --    9,902,998  15,491,842   (2,436,084)   22,958,756
Operating income........      (60,019)  4,785,676   2,829,582     (629,002)    6,926,237
Comprehensive financing
result.................      607,825   4,199,448      70,520   (4,021,972)      855,821
Other income (expense),
net....................      (38,143) (1,286,059)   (817,254)     554,967    (1,586,489)
Income tax..............          --     (422,173)   (421,568)     278,257      (565,484)
Equity in income of
affiliates.............    4,919,525     427,727     (77,870)  (5,187,746)       81,636
------------  ----------  ----------  -----------    ----------
Consolidated net
income.................    5,429,188   7,704,619   1,583,410   (9,005,496)    5,711,721
------------  ----------  ----------  -----------    ----------
Minority interest.......          --          --          --       282,533       282,533
------------  ----------  ----------  -----------    ----------
Majority net income..... Ps 5,429,188   7,704,619   1,583,410   (9,288,029)    5,429,188
============  ==========  ==========  ===========    ==========

Combined   Adjustments
Combined      non-         and          CEMEX
June 30, 2000          CEMEX      Guarantors  guarantors  eliminations  Consolidated
-------------       ------------  ----------  ----------  ------------  ------------

Sales................... Ps       --   10,294,232  17,869,132   (2,023,219)   26,140,145
Operating income........      (34,777)  5,146,146   3,145,927     (345,260)    7,912,036
Comprehensive financing
result.................      364,902  (1,270,002)   (262,483)     278,068      (889,515)
Other income (expense),
net....................      384,795  (1,633,079)   (246,630)     509,559      (985,355)
Income tax..............          --     (302,079)   (682,693)    (178,370)   (1,163,142)
Equity in income of
affiliates.............    4,004,788    (135,504)    (81,506)  (3,693,687)       94,091
------------  ----------  ----------  -----------    ----------
Consolidated net
income.................    4,719,708   1,805,482   1,872,615   (3,429,690)    4,968,115
------------  ----------  ----------  -----------    ----------
Minority interest.......          --          --          --       248,407       248,407
------------  ----------  ----------  -----------    ----------
Majority net income..... Ps 4,719,708   1,805,482   1,872,615   (3,678,097)    4,719,708
============  ==========  ==========  ===========    ==========

F-57

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Condensed consolidating statements of changes in financial position:

Combined   Adjustments
Combined      Non-         and          CEMEX
1997                CEMEX      Guarantors  guarantors  eliminations  Consolidated
----            -------------  ----------  ----------  ------------  ------------

Operating activities:
Majority net income.....  Ps  7,955,121   8,074,187   2,496,099  (10,570,286)    7,955,121
Non-cash items..........     (5,491,560)  1,975,231    (789,688)   9,754,032     5,448,015
-------------  ----------  ----------  -----------    ----------
Resources provided by
operating Activities..      2,463,561  10,049,418   1,706,411     (816,254)   13,403,136
Net change in working
capital................     14,837,433  (3,944,085)  2,109,806  (13,169,916)     (166,762)
-------------  ----------  ----------  -----------    ----------
Resources provided by
operating activities,
net...................     17,300,994   6,105,333   3,816,217  (13,986,170)   13,236,374
-------------  ----------  ----------  -----------    ----------
Financing activities:
Bank loans and notes
payable, net...........     (4,286,784)   (160,639)   (237,661)     321,904    (4,363,180)
Dividends paid..........            --     (804,712)        --       804,712           --
Issuance (repurchase) of
common Stock...........     (1,221,110)        --          --           --     (1,221,110)
Others..................            --   (3,888,467)  2,258,547      390,034    (1,239,886)
-------------  ----------  ----------  -----------    ----------
Resources used in
financing Activities..     (5,507,894) (4,853,818)  2,020,886    1,516,650    (6,824,176)
-------------  ----------  ----------  -----------    ----------
Investing activities:
Property, machinery and
equipment, net.........            --     (732,742) (3,024,770)     257,902    (3,499,610)
Acquisitions, net of
cash acquired..........    (13,086,221)        --   (1,042,163)  13,157,751      (970,633)
Dividends received......        804,729         --          --      (804,729)          --
Minority interest.......            --          --   (1,145,148)      78,599    (1,066,549)
Deferred charges........        (47,594)   (237,526)   (511,998)     106,156      (690,962)
Others..................            --          --     (699,307)      46,449      (652,858)
-------------  ----------  ----------  -----------    ----------
Resources used in
investing Activities..    (12,329,086)   (970,268) (6,423,386)  12,842,128    (6,880,612)
-------------  ----------  ----------  -----------    ----------
Change in cash and
temporary
Investments...........       (535,986)    281,247    (586,283)     372,608      (468,414)
Cash and temporary
investments initial
balance...............        547,899     313,797   4,253,951     (670,503)    4,445,144
-------------  ----------  ----------  -----------    ----------
Cash and temporary
investments ending
balance...............  Ps     11,913     595,044   3,667,668     (297,895)    3,976,730
=============  ==========  ==========  ===========    ==========

F-58

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Condensed consolidating statements of changes in financial position:

Combined   Adjustments
Combined      Non-         and         CEMEX
1998               CEMEX      Guarantors  guarantors  eliminations Consolidated
----            ------------  ----------  ----------  ------------ ------------

Operating activities:
Majority net income.....  Ps 8,189,321   4,715,917   3,285,167   (8,001,084)   8,189,321
Non-cash items..........    (6,207,732)  1,405,221   3,164,363    6,193,214    4,555,066
------------  ----------  ----------   ----------   ----------
Resources provided by
operating activities..     1,981,589   6,121,138   6,449,530   (1,807,870)  12,744,387
Net change in working
capital................    (1,650,345) (1,252,735)   (986,006)   3,556,459     (332,627)
------------  ----------  ----------   ----------   ----------
Resources provided by
operating activities,
net...................       331,244   4,868,403   5,463,524    1,748,589   12,411,760
------------  ----------  ----------   ----------   ----------
Financing activities:
Bank loans and notes
payable, net...........    (4,221,319) (1,166,999)    793,230      560,312   (4,034,776)
Dividends paid..........    (1,691,617) (3,035,677)        --     3,035,677   (1,691,617)
Issuance (repurchase) of
common stock...........     1,418,141         --          --           --     1,418,141
Others..................      (122,520)    937,071     687,744   (1,927,585)    (425,290)
------------  ----------  ----------   ----------   ----------
Resources used in
financing activities..    (4,617,315) (3,265,605)  1,480,974    1,668,404   (4,733,542)
------------  ----------  ----------   ----------   ----------
Investing activities:
Property, machinery and
equipment, net.........           --     (509,384)   (478,504)     120,460     (867,428)
Acquisitions, net of
cash acquired..........     6,019,091         --   (2,946,856)  (5,659,757)  (2,587,522)
Minority interest.......           --          --   (1,004,702)     122,511     (882,191)
Deferred charges........      (383,629)   (481,228)    486,383      336,897      (41,577)
Others..................    (1,143,191)        --   (3,366,159)   1,380,726   (3,128,624)
------------  ----------  ----------   ----------   ----------
Resources used in
investing activities..     4,492,271    (990,612) (7,309,838)  (3,699,163)  (7,507,342)
------------  ----------  ----------   ----------   ----------
Change in cash and
temporary
investments...........       206,200     612,186    (365,340)    (282,170)     170,876
Cash and temporary
investments initial
balance...............        11,913     595,044   3,667,668     (297,895)   3,976,730
------------  ----------  ----------   ----------   ----------
Cash and temporary
investments ending
balance...............  Ps   218,113   1,207,230   3,302,328     (580,065)   4,147,606
============  ==========  ==========   ==========   ==========

F-59

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Condensed consolidating statements of changes in financial position:

Combined   Adjustments
Combined       Non-         and          CEMEX
1999                CEMEX      Guarantors   guarantors  eliminations  Consolidated
----            -------------  -----------  ----------  ------------  ------------

Operating activities:
Majority net income.....  Ps  9,514,494   10,436,052   5,391,105  (15,827,157)    9,514,494
Non-cash items..........     (7,754,197)   1,857,853  (4,620,405)  16,015,696     5,498,947
-------------  -----------  ----------  -----------   -----------
Resources provided by
operating activities..      1,760,297   12,293,905     770,700      188,539    15,013,441
Net change in working
capital...............     (6,945,275)  11,577,034   1,720,002   (6,283,798)       67,963
-------------  -----------  ----------  -----------   -----------
Resources provided by
operating activities,
net...................     (5,184,978)  23,870,939   2,490,702   (6,095,259)   15,081,404
-------------  -----------  ----------  -----------   -----------
Financing activities:
Bank loans and notes
payable, net...........     (6,967,864)  (2,105,559)  1,561,168      111,512    (7,400,743)
Dividends paid..........     (1,941,478) (12,160,438)        --    12,160,438    (1,941,478)
Issuance (repurchase) of
common stock...........      2,088,011          --          --           --      2,088,011
Others..................          7,038   (6,599,435)  1,158,638    6,980,214     1,546,455
-------------  -----------  ----------  -----------   -----------
Resources used in
financing activities..     (6,814,293) (20,865,432)  2,719,806   19,252,164    (5,707,755)
-------------  -----------  ----------  -----------   -----------
Investing activities:
Property, machinery and
equipment, net.........            --      (398,980) (2,241,089)      39,189    (2,600,880)
Acquisitions, net of
cash acquired..........     23,857,456          --   (6,275,956) (27,248,431)   (9,666,931)
Dividends received......     12,656,483          --     (496,045) (12,160,438)          --
Minority interest.......            --           --   (1,445,647)      21,458    (1,424,189)
Deferred charges........     (2,257,334)     418,812     780,208      158,303      (900,011)
Others..................    (22,418,163)  (2,039,091)  3,681,934   25,039,155     4,263,835
-------------  -----------  ----------  -----------   -----------
Resources used in
investing activities..     11,838,442   (2,019,259) (5,996,595) (14,150,764)  (10,328,176)
-------------  -----------  ----------  -----------   -----------
Change in cash and
temporary
investments...........       (160,829)     986,248    (786,087)    (993,859)     (954,527)
Cash and temporary
investments initial
balance...............        218,113    1,207,230   3,302,328     (580,065)    4,147,606
-------------  -----------  ----------  -----------   -----------
Cash and temporary
investments ending
balance...............  Ps     57,284    2,193,478   2,516,241   (1,573,924)    3,193,079
=============  ===========  ==========  ===========   ===========

F-60

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Combined   Adjustments
Combined       Non-         and          CEMEX
June 30, 1999           CEMEX      Guarantors   guarantors  eliminations  Consolidated
-------------        ------------  -----------  ----------  ------------  ------------

Operating activities:
Majority net income.....  Ps 5,429,188    7,704,619   1,583,410   (9,288,029)    5,429,188
Non-cash items..........    (4,287,425)     221,753  (7,792,404)  14,148,327     2,290,251
------------  -----------  ----------  -----------    ----------
Resources provided by
operating activities..     1,141,763    7,926,372  (6,208,994)   4,860,298     7,719,439
Net change in working
capital................    (9,145,574)  12,750,789   2,498,272   (5,882,269)      221,218
------------  -----------  ----------  -----------    ----------
Resources provided by
operating activities,
net...................    (8,003,811)  20,677,161  (3,710,722)  (1,021,971)    7,940,657
Financing activities:
Bank loans and notes
payable, net...........    (4,319,431)    (579,701)  6,270,128          --      1,370,996
Dividends paid..........    (1,955,393) (12,877,845)    213,465   12,664,380    (1,955,393)
Issuance (repurchase) of
common stock...........     1,805,401          --          --           --      1,805,401
Others..................       (10,820)  (4,601,177)  2,858,854      828,352      (924,791)
------------  -----------  ----------  -----------    ----------
Resources used in
financing activities..    (4,480,243) (18,058,723)  9,342,447   13,492,732       296,213
------------  -----------  ----------  -----------    ----------
Investing activities:
Property, machinery and
equipment, net.........           --       (22,222)    226,235          --        204,013
Acquisitions, net of
cash acquired..........      (731,709)         --   (5,578,168)     731,709    (5,578,168)
Dividends received......    12,664,380          --          --   (12,664,380)          --
Minority interest.......           --           --     (968,053)         --       (968,053)
Deferred charges........       210,195     (118,914)   (402,276)     326,068        15,073
Others..................       131,462   (1,761,635)   (782,218)     (35,806)   (2,448,197)
------------  -----------  ----------  -----------    ----------
Resources used in
investing activities..    12,274,328   (1,902,771) (7,504,480) (11,642,409)   (8,775,332)
------------  -----------  ----------  -----------    ----------
Change in cash and
temporary
investments...........      (209,726)     715,667  (1,872,755)     828,352      (538,462)
Cash and temporary
investments initial
balance...............       218,113    1,207,230   3,302,328     (580,065)    4,147,606
------------  -----------  ----------  -----------    ----------
Cash and temporary
investments ending
balance...............  Ps     8,387    1,922,897   1,429,573      248,287     3,609,144
============  ===========  ==========  ===========    ==========

Combined   Adjustments
Combined       Non-         and          CEMEX
June 30, 2000           CEMEX      Guarantors   guarantors  eliminations  Consolidated
-------------        ------------  -----------  ----------  ------------  ------------

Operating activities:
Majority net income.....  Ps 4,719,708    1,805,482   1,872,615   (3,678,097)    4,719,708
Non-cash items..........    (3,803,840)     623,292   1,770,868    3,956,047     2,546,367
------------  -----------  ----------  -----------    ----------
Resources provided by
operating activities..       915,868    2,428,774   3,643,483      277,950     7,266,075
Net change in working
capital................    (2,000,227)   2,106,730      77,669     (645,113)     (460,941)
------------  -----------  ----------  -----------    ----------
Resources provided by
operating activities,
net...................    (1,084,359)   4,535,504   3,721,152     (367,163)    6,805,134
Financing activities:
Bank loans and notes
payable, net...........    (2,053,557)    (644,757)     50,838          --     (2,647,476)
Dividends paid..........    (2,277,055)         --     (441,662)     441,662    (2,277,055)
Issuance (repurchase) of
common stock...........     1,829,884          --          --           --      1,829,884
Others..................          (283)  (3,308,973)  4,373,432   (1,152,137)      (87,961)
------------  -----------  ----------  -----------    ----------
Resources used in
financing activities..    (2,501,011)  (3,953,730)  3,982,608     (710,475)   (3,182,608)
------------  -----------  ----------  -----------    ----------
Investing activities:
Property, machinery and
equipment, net.........           --      (220,432)      5,887          --       (214,545)
Acquisitions, net of
cash acquired..........      (139,251)         --     (532,616)     139,251      (532,616)
Dividends received......       441,662          --          --      (441,662)          --
Minority interest.......           --           --      (40,900)         --        (40,900)
Deferred charges........      (145,120)    (445,381)    371,728      446,683       227,910
Others..................     3,430,635     (190,363) (7,282,020)   1,084,063    (2,957,685)
------------  -----------  ----------  -----------    ----------
Resources used in
investing activities..     3,587,926     (856,176) (7,477,921)   1,228,335    (3,517,836)
------------  -----------  ----------  -----------    ----------
Change in cash and
temporary
investments...........         2,556     (274,402)    225,839      150,697       104,690
Cash and temporary
investments initial
balance...............        57,284    2,193,478   2,516,241   (1,573,924)    3,193,079
------------  -----------  ----------  -----------    ----------
Cash and temporary
investments ending
balance...............  Ps    59,840    1,919,076   2,742,080   (1,423,227)    3,297,769
============  ===========  ==========  ===========    ==========

F-61

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

In addition to the information presented above, the tables below present
consolidating balance sheets as of December 31, 1998 and 1999, and income
statements and statements of changes in financial position for each of the
three-year period ended December 31, 1999 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 intercompany balances and transactions, between the Guarantors
and the merged entities have been eliminated in the "Combined Guarantors"
column.

The amounts presented in the column "Combined Guarantors" are readily
comparable with the information on the Guarantors included in the condensed
consolidating 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:

F-62

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Balance Sheets:

December 31, 1998

Guarantors
(Parent Company Only)    Adjustments
-------------------------     and        Combined
CEMEX Mexico      ETM     eliminations  Guarantors
-------------  ---------- ------------  -----------

Assets
Current Assets
Cash and temporary
investments.............. Ps    809,881     397,349         --      1,207,230
Trade accounts
receivable, net..........     1,433,396         --          --      1,433,396
Other receivables and
other current assets.....     1,413,633       2,621     (81,030)    1,335,224
Intercompany
receivables..............    14,881,216   7,306,391  (7,958,297)   14,229,310
Inventories...............     1,156,059         --          --      1,156,059
-------------  ---------- -----------   -----------
Total current assets....    19,694,185   7,706,361  (8,039,327)   19,361,219
-------------  ---------- -----------   -----------
Other Investments
Investments in
subsidiaries and
affiliates...............    17,043,509  20,600,959 (35,314,666)    2,329,802
Long-term intercompany
receivables..............           --      595,311    (595,311)          --
Other investments.........           --          --          --            --
-------------  ---------- -----------   -----------
Total other
investments............    17,043,509  21,196,270 (35,909,977)    2,329,802
-------------  ---------- -----------   -----------
Property, Plant and
Equipment
Property, plant and
equipment................    61,549,653         --          --     61,549,653
Accumulated
depreciation.............   (31,555,459)        --          --    (31,555,459)
-------------  ---------- -----------   -----------
Total property, plant
and equipment..........    29,994,194         --          --     29,994,194
-------------  ---------- -----------   -----------
Deferred Charges...........     1,362,110   4,472,097         --      5,834,207
-------------  ---------- -----------   -----------
Total Assets............ Ps 68,093,998  33,374,728 (43,949,304)   57,519,422
=============  ========== ===========   ===========
Liabilities and
Stockholders' Equity
Current Liabilities
Bank loans and notes
payable..................    Ps 290,276         --          --        290,276
Current maturities of
long-term debt...........        96,972         --          --         96,972
Trade accounts payable....       484,704         --          --        484,704
Other accounts payable
and accrued expenses.....       811,847     174,688    (120,097)      866,438
Intercompany payables.....    10,247,118     517,149  (9,633,193)    1,131,074
-------------  ---------- -----------   -----------
Total current
liabilities............    11,930,917     691,837  (9,753,290)    2,869,464
-------------  ---------- -----------   -----------
Long-Term Debt
Notes payable.............     2,241,806         --          --      2,241,806
Current maturities of
long-term debt...........       (96,972)        --          --        (96,972)
-------------  ---------- -----------   -----------
Total long-term debt....     2,144,834         --          --      2,144,834
-------------  ---------- -----------   -----------
Other Noncurrent
Liabilities
Pension and seniority
premium..................       221,142         --          --        221,142
Deferred income taxes.....     1,223,468         --          --      1,223,468
Long-term intercompany
payables.................    30,437,955         --     (593,189)   29,844,766
Other noncurrent
liabilities..............           --       51,947     (51,947)          --
-------------  ---------- -----------   -----------
Total other noncurrent
liabilities............    31,882,565      51,947    (645,136)   31,289,376
-------------  ---------- -----------   -----------
Total Liabilities.......    45,958,316     743,784 (10,398,426)   36,303,674
-------------  ---------- -----------   -----------
Stockholders' Equity
Stockholders' equity.......    19,585,100  28,253,958 (31,339,227)   16,499,831
Net income.................     2,550,582   4,376,986  (2,211,651)    4,715,917
-------------  ---------- -----------   -----------
Total stockholders'
equity.................    22,135,682  32,630,944 (33,550,878)   21,215,748
-------------  ---------- -----------   -----------
Total Liabilities and
Stockholders' Equity... Ps 68,093,998  33,374,728 (43,949,304)   57,519,422
=============  ========== ===========   ===========

F-63

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Balance Sheets:

December 31, 1999

Guarantors (Parent
Company Only)        Adjustments
-------------------------     and        Combined
CEMEX Mexico      ETM     eliminations  Guarantors
-------------  ---------- ------------  -----------

Assets
Current Assets
Cash and temporary
investments............. Ps    653,148   1,540,330         --      2,193,478
Trade accounts
receivable, net.........     1,430,109         --          --      1,430,109
Other receivables and
other current assets....       766,343      92,260         --        858,603
Intercompany
receivables.............     3,108,486   7,131,012  (7,115,756)    3,123,742
Inventories..............     1,811,944         --          --      1,811,944
-------------  ---------- -----------   -----------
Total current assets....     7,770,030   8,763,602  (7,115,756)    9,417,876
-------------  ---------- -----------   -----------
Other Investments
Investments in
subsidiaries and
affiliates..............    17,742,032  16,563,453 (29,165,826)    5,139,659
Long-term intercompany
receivables.............           --      446,817    (446,817)          --
Other investments........           --      513,919         --        513,919
-------------  ---------- -----------   -----------
Total other
investments............    17,742,032  17,524,189 (29,612,643)    5,653,578
-------------  ---------- -----------   -----------
Property, Plant and
Equipment
Property, plant and
equipment...............    53,716,407         --          --     53,716,407
Accumulated
depreciation............   (28,029,173)        --          --    (28,029,173)
-------------  ---------- -----------   -----------
Total property, plant
and equipment..........    25,687,234         --          --     25,687,234
-------------  ---------- -----------   -----------
Deferred Charges.........     1,563,522   3,518,390         --      5,081,912
-------------  ---------- -----------   -----------
Total Assets............ Ps 52,762,818  29,806,181 (36,728,399)   45,840,600
=============  ========== ===========   ===========
Liabilities and
Stockholders' Equity
Current Liabilities
Bank loans and notes
payable................. Ps    619,178         --          --        619,178
Current maturities of
long-term debt..........        26,112         --          --         26,112
Trade accounts payable...       722,186         --          --        722,186
Other accounts payable
and accrued expenses....       637,842     123,441         --        761,283
Intercompany payables....     9,034,776     516,915  (7,905,499)    1,646,192
-------------  ---------- -----------   -----------
Total current
liabilities............    11,040,094     640,356  (7,905,499)    3,774,951
-------------  ---------- -----------   -----------
Long-Term Debt
Bank loans and notes
payable.................       321,262         --          --        321,262
Current maturities of
long-term debt..........       (26,112)        --          --        (26,112)
-------------  ---------- -----------   -----------
Total long-term debt....       295,150         --          --        295,150
-------------  ---------- -----------   -----------
Other Noncurrent
Liabilities
Pension and seniority
premium.................        39,031         --          --         39,031
Deferred income taxes
(note 15)...............     1,089,273         --          --      1,089,273
Long-term intercompany
payables................    24,008,452         --     (446,817)   23,561,635
Other noncurrent
liabilities.............           --          --          --            --
-------------  ---------- -----------   -----------
Total other noncurrent
liabilities............    25,136,756         --     (446,817)   24,689,939
-------------  ---------- -----------   -----------
Total Liabilities.......    36,472,000     640,356  (8,352,316)   28,760,040
-------------  ---------- -----------   -----------
Stockholders' Equity
Stockholders' equity.....     6,635,880  24,984,992 (24,976,364)    6,644,508
Net income...............     9,654,938   4,180,833  (3,399,719)   10,436,052
-------------  ---------- -----------   -----------
Total stockholders'
equity.................    16,290,818  29,165,825 (28,376,083)   17,080,560
-------------  ---------- -----------   -----------
Total Liabilities and
Stockholders' Equity... Ps 52,762,818  29,806,181 (36,728,399)   45,840,600
=============  ========== ===========   ===========

F-64

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Balance Sheets:
June 30, 2000

Guarantors
(Parent Company Only)    Adjustments
-------------------------     and        Combined
CEMEX Mexico      ETM     eliminations  Guarantors
-------------  ---------- ------------  -----------

Assets
Current Assets
Cash and temporary
investments.............. Ps    329,679   1,589,397         --      1,919,076
Trade accounts
receivable, net..........     1,271,440         --          --      1,271,440
Other receivables and
other current assets.....       348,807      88,549         --        437,356
Intercompany
receivables..............     2,327,151   7,397,869  (7,576,578)    2,148,442
Inventories...............     1,779,304         --          --      1,779,304
-------------  ---------- -----------   -----------
Total current assets....     6,056,381   9,075,815  (7,576,578)    7,555,618
-------------  ---------- -----------   -----------
Other Investments
Investments in
subsidiaries and
affiliates...............    21,883,777  15,634,435 (33,053,048)    4,465,164
Long-term intercompany
receivables..............           --    3,503,608    (900,000)    2,603,608
Other investments.........       165,778     722,879         --        888,657
-------------  ---------- -----------   -----------
Total other
investments............    22,049,555  19,860,922 (33,953,048)    7,957,429
-------------  ---------- -----------   -----------
Property, Plant and
Equipment
Property, plant and
equipment................    53,116,349         --          --     53,116,349
Accumulated
depreciation.............   (27,865,491)        --          --    (27,865,491)
-------------  ---------- -----------   -----------
Total property, plant
and equipment..........    25,250,858         --          --     25,250,858
-------------  ---------- -----------   -----------
Deferred Charges                2,001,501   4,205,655    (703,985)    5,503,171
-------------  ---------- -----------   -----------
Total Assets............    55,358,295  33,142,392 (42,233,611)   46,267,076
=============  ========== ===========   ===========
Liabilities and
Stockholders' Equity
Current Liabilities
Bank loans and notes
payable.................. Ps     39,897         --          --         39,897
Current maturities of
long-term debt...........         4,657         --          --          4,657
Trade accounts payable....       873,461         --          --        873,461
Other accounts payable
and accrued expenses.....       490,589      66,590         --        557,179
Intercompany payables.....     9,856,299      22,754  (7,576,578)    2,302,475
-------------  ---------- -----------   -----------
Total current
liabilities............    11,264,903      89,344  (7,576,578)    3,777,669
-------------  ---------- -----------   -----------
Long-Term Debt
Bank loans and notes
payable..................       256,002         --          --        256,002
Current maturities of
long-term debt...........        (4,657)        --          --         (4,657)
-------------  ---------- -----------   -----------
Total long-term debt....       251,345         --          --        251,345
-------------  ---------- -----------   -----------
Other Noncurrent
Liabilities
Pension and seniority
premium..................           --          --          --            --
Deferred income taxes
(note 15)................     6,765,263         --     (703,985)    6,061,278
Long-term intercompany
payables.................    23,780,720         --     (900,000)   22,880,720
Other noncurrent
liabilities..............           --          --          --            --
-------------  ---------- -----------   -----------
Total other noncurrent
liabilities............    30,545,983         --   (1,603,985)   28,941,998
-------------  ---------- -----------   -----------
Total Liabilities.......    42,062,231      89,344  (9,180,563)   32,971,012
-------------  ---------- -----------   -----------
Stockholders' Equity
Stockholders' equity.......    11,490,582  33,030,892 (33,030,892)   11,490,582
Net income.................     1,805,482      22,156     (22,156)    1,805,482
-------------  ---------- -----------   -----------
Total stockholders'
equity.................    13,296,064  33,053,048 (33,053,048)   13,296,064
-------------  ---------- -----------   -----------
Total Liabilities and
Stockholders' Equity... Ps 55,358,295  33,142,392 (42,233,611)   46,267,076
=============  ========== ===========   ===========

F-65

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Income Statements:

December 31, 1997

Guarantors
(Parent Company Only)    Adjustments
------------------------      and       Combined
CEMEX Mexico      ETM     eliminations Guarantors
-------------  ---------  ------------ -----------

Net sales..................  Ps 19,161,737        --     (757,005)   18,404,732
Cost of sales..............    (12,002,342)       --      774,997   (11,227,345)
-------------  ---------   ---------   -----------
Gross profit..............      7,159,395        --       17,992     7,177,387
-------------  ---------   ---------   -----------
Operating expenses:
Administrative............        985,222        394       3,054       988,670
Selling...................        802,230        --       16,150       818,380
-------------  ---------   ---------   -----------
Total operating
expenses................      1,787,452        394      19,204     1,807,050
-------------  ---------   ---------   -----------
Operating income.........      5,371,943       (394)     (1,212)    5,370,337
-------------  ---------   ---------   -----------
Comprehensive financing
income (cost):
Financial expenses........     (1,974,312)   (57,124)    712,617    (1,318,819)
Financial income..........      2,814,079    636,746    (712,971)    2,737,854
Foreign exchange result,
net......................       (738,731)    56,100         --       (682,631)
Monetary position result..      4,145,658   (594,319)        --      3,551,339
-------------  ---------   ---------   -----------
Net comprehensive
financing income
(cost)..................      4,246,694     41,403        (354)    4,287,743
-------------  ---------   ---------   -----------
Other income (expense),
net.......................     (1,154,664) 1,001,082     898,340       744,758
-------------  ---------   ---------   -----------
Income before income
taxes, business assets
tax, employees' statutory
profit sharing and equity
in income of affiliates..      8,463,973  1,042,091     896,774    10,402,838
-------------  ---------   ---------   -----------
Income tax and business
assets tax, net...........     (1,486,172)  (345,721)        --     (1,831,893)
Employees' statutory profit
sharing...................        (69,721)       --          --        (69,721)
-------------  ---------   ---------   -----------
Total income tax,
business assets tax and
employees' statutory
profit sharing..........     (1,555,893)  (345,721)        --     (1,901,614)
-------------  ---------   ---------   -----------
Income before equity in
income of affiliates....      6,908,080    696,370     896,774     8,501,224
Equity in income of
affiliates.............       (630,855)     2,843     200,975      (427,037)
-------------  ---------   ---------   -----------
Net income.................  Ps  6,277,225    699,213   1,097,749     8,074,187
=============  =========   =========   ===========

F-66

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Income Statements:

December 31, 1998

Guarantors
(Parent Company Only)    Adjustments
-----------------------      and       Combined
CEMEX Mexico     ETM     eliminations Guarantors
------------  ---------  ------------ ----------

Net sales....................  Ps19,956,766        --           --   19,956,766
Cost of sales................    (9,403,760)       --       (24,096) (9,427,856)
------------  ---------   ----------  ----------
Gross profit...............    10,553,006        --       (24,096) 10,528,910
------------  ---------   ----------  ----------
Operating expenses:
Administrative.............     1,173,602      3,276        2,754   1,179,632
Selling....................       782,432        --        14,630     797,062
------------  ---------   ----------  ----------
Total operating
expenses................     1,956,034      3,276       17,384   1,976,694
------------  ---------   ----------  ----------
Operating income.........     8,596,972     (3,276)     (41,480)  8,552,216
------------  ---------   ----------  ----------
Comprehensive financing
income (cost):
Financial expenses.........    (2,742,584)   (87,994)   1,065,791  (1,764,787)
Financial income...........     4,178,291  1,074,270   (1,066,128)  4,186,433
Foreign exchange result,
net.......................    (6,909,534)   335,812          --   (6,573,722)
Monetary position result...     4,526,922   (880,157)         --    3,646,765
------------  ---------   ----------  ----------
Net comprehensive
financing income
(cost)..................      (946,905)   441,931         (337)   (505,311)
------------  ---------   ----------  ----------
Other income (expense), net..    (3,305,868) 4,088,729   (2,106,645) (1,323,784)
------------  ---------   ----------  ----------
Income before income taxes,
business assets tax,
employees' statutory
profit sharing and equity
in income of affiliates...     4,344,199  4,527,384   (2,148,462)  6,723,121
------------  ---------   ----------  ----------
Income tax and business
assets tax, net.............    (1,648,292)  (539,642)     170,483  (2,017,451)
Employees' statutory profit
sharing.....................       (71,693)       --           --      (71,693)
------------  ---------   ----------  ----------
Total income tax, business
assets tax and employees'
statutory profit sharing..    (1,719,985)  (539,642)     170,483  (2,089,144)
------------  ---------   ----------  ----------
Income before equity in
income of affiliates......     2,624,214  3,987,742   (1,977,979)  4,633,977
Equity in income of
affiliates..............       (73,632)   389,244     (233,672)     81,940
------------  ---------   ----------  ----------
Net income...................  Ps 2,550,582  4,376,986   (2,211,651)  4,715,917
============  =========   ==========  ==========

F-67

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Income Statements:

December 31, 1999

Guarantors
(Parent Company Only)    Adjustments
-----------------------      and       Combined
CEMEX Mexico     ETM     eliminations Guarantors
------------  ---------  ------------ ----------

Net sales....................  Ps20,106,733        --           --   20,106,733
Cost of sales................    (8,718,669)       --           --   (8,718,669)
------------  ---------   ----------  ----------
Gross profit...............    11,388,064        --           --   11,388,064
------------  ---------   ----------  ----------
Operating expenses:
Administrative.............     1,480,067        638        2,755   1,483,460
Selling....................       686,265        --           --      686,265
------------  ---------   ----------  ----------
Total operating
expenses................     2,166,332        638        2,755   2,169,725
------------  ---------   ----------  ----------
Operating income.........     9,221,732       (638)      (2,755)  9,218,339
------------  ---------   ----------  ----------
Comprehensive financing
income (cost):
Financial expenses.........    (2,448,619)   (21,754)   1,589,537    (880,836)
Financial income...........     2,323,834  1,743,012   (1,589,537)  2,477,309
Foreign exchange result,
net.......................       797,115      6,036          --      803,151
Monetary position result...     3,599,466   (987,180)         --    2,612,286
------------  ---------   ----------  ----------
Net comprehensive
financing income
(cost)..................     4,271,796    740,114          --    5,011,910
------------  ---------   ----------  ----------
Other income (expense), net..    (3,676,247)   389,268     (527,191) (3,814,170)
------------  ---------   ----------  ----------
Income before income taxes,
business assets tax,
employees' statutory
profit sharing and equity
in income of affiliates...     9,817,281  1,128,744     (529,946) 10,416,079
------------  ---------   ----------  ----------
Income tax and business
assets tax, net.............      (315,169)   (47,135)         --     (362,304)
Employees' statutory profit
sharing.....................      (125,668)       --           --     (125,668)
------------  ---------   ----------  ----------
Total income tax, business
assets tax and employees'
statutory profit sharing..      (440,837)   (47,135)         --     (487,972)
------------  ---------   ----------  ----------
Income before equity in
income of affiliates......     9,376,444  1,081,609     (529,946)  9,928,107
Equity in income of
affiliates................       278,494  3,099,224   (2,869,773)    507,945
------------  ---------   ----------  ----------
Net income...................  Ps 9,654,938  4,180,833   (3,399,719) 10,436,052
============  =========   ==========  ==========

F-68

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Income Statements:

June 30, 1999

Guarantors
(Parent Company Only)    Adjustments
---------------------        and       Combined
CEMEX Mexico     ETM     eliminations Guarantors
------------  ---------  ------------ ----------

Net sales....................  Ps 9,902,998         --           --   9,902,998
Cost of sales................    (4,116,357)        --           --  (4,116,357)
------------  ---------   ----------  ----------
Gross profit...............     5,786,641         --           --   5,786,641
------------  ---------   ----------  ----------
Operating Expenses:
Administrative.............       656,418        561                  656,979
Selling....................       343,986         --           --     343,986
------------  ---------   ----------  ----------
Total operating
expenses................     1,000,404        561           --   1,000,965
------------  ---------   ----------  ----------
Operating income.........     4,786,237       (561)          --   4,785,676
------------  ---------   ----------  ----------
Comprehensive financing
income (cost):
Financial expenses.........    (1,049,433)   (39,503)     864,232    (224,704)
Financial income...........     1,653,706    880,483     (864,232)  1,669,957
Foreign exchange result,
net.......................     1,462,805        822                1,463,627
Monetary position result...     1,842,368   (551,800)          --   1,290,568
------------  ---------   ----------  ----------
Net comprehensive
financing income
(cost)..................     3,909,446    290,002           --   4,199,448
------------  ---------   ----------  ----------
Other income (expense), net..    (1,543,811)   257,752           --  (1,286,059)
------------  ---------   ----------  ----------
Income before income taxes,
business assets tax,
employees' statutory
profit sharing and equity
in income of affiliates...     7,151,872    547,193           --   7,699,065
------------  ---------   ----------  ----------
Income tax and business
assets tax, net.............      (243,510)   (24,327)          --    (267,837)
Employees' statutory profit
sharing.....................      (154,336)        --           --    (154,336)
------------  ---------   ----------  ----------
Total income tax, business
assets tax and employees'
statutory profit
sharing...................      (397,846)   (24,327)          --    (422,173)
------------  ---------   ----------  ----------
Income before equity in
income of affiliates......     6,754,026    522,866           --   7,276,892
Equity in income of
affiliates................       950,593  1,828,985   (2,351,851)    427,727
------------  ---------   ----------  ----------
Net income.................  Ps 7,704,619  2,351,851   (2,351,851)  7,704,619
============  =========   ==========  ==========

F-69

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Income Statements:

June 30, 2000

Guarantors
(Parent Company Only)   Adjustments
----------------------      and       Combined
CEMEX Mexico    ETM     eliminations Guarantors
------------  --------  ------------ ----------

Net sales.....................  Ps10,294,232        --          --   10,294,232
Cost of sales.................    (4,399,199)       --          --   (4,399,199)
------------  --------    --------   ----------
Gross profit................     5,895,033        --          --    5,895,033
------------  --------    --------   ----------
Operating expenses:
Administrative..............       485,724       134          --      485,858
Selling.....................       263,029        --          --      263,029
------------  --------    --------   ----------
Total operating expenses..       748,753       134          --      748,887
------------  --------    --------   ----------
Operating income..........     5,146,280      (134)         --    5,146,146
------------  --------    --------   ----------
Comprehensive financing income
(cost):
Financial expenses..........    (1,783,512) (318,315)    507,899   (1,593,928)
Financial income............       175,532   604,121    (507,899)     271,754
Foreign exchange result,
net........................      (916,500)   98,053          --     (818,447)
Monetary position result....     1,269,643  (399,024)         --      870,619
------------  --------    --------   ----------
Net comprehensive
financing income (cost)..    (1,254,837)  (15,165)         --   (1,270,002)
------------  --------    --------   ----------
Other income (expense), net...    (1,836,624)  203,545          --   (1,633,079)
------------  --------    --------   ----------
Income before income taxes,
business assets tax,
employees' statutory profit
sharing and equity in
income of affiliates.......     2,054,819   188,246          --    2,243,065
------------  --------    --------   ----------
Income tax and business assets
tax, net.....................      (115,471) (105,232)         --     (220,703)
Employees' statutory profit
sharing......................       (81,376)       --          --      (81,376)
------------  --------    --------   ----------
Total income tax, business
assets tax and employees'
statutory profit sharing...      (196,847) (105,232)         --     (302,079)
------------  --------    --------   ----------
Income before equity in
income of affiliates.......     1,857,972    83,014          --    1,940,986
Equity in income of
affiliates.................       (52,490)  (60,858)    (22,156)    (135,504)
------------  --------    --------   ----------
Net income....................  Ps 1,805,482    22,156     (22,156)   1,805,482
============  ========    ========   ==========

F-70

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Statements of Changes in Financial Position:

December 31, 1997

Guarantors
(Parent Company Only)    Adjustments
-----------------------      and       Combined
CEMEX Mexico     ETM     eliminations Guarantors
------------  ---------  ------------ ----------

Operating activities
Net income..................  Ps 6,277,225    699,213    1,097,749   8,074,187
Charges to operations which
did not require resources..     2,179,049     (2,843)    (200,975)  1,975,231
------------  ---------   ----------  ----------
Resources provided by
operating activities.......     8,456,274    696,370      896,774  10,049,418
------------  ---------   ----------  ----------
Changes in working capital:
Trade accounts receivable,
net.......................      (149,649)       --           --     (149,649)
Other receivables and other
current assets............        52,170     81,334    2,032,580   2,166,084
Intercompany receivables
and payables, net.........    (2,494,002)   298,287      (91,847) (2,287,562)
Inventories................      (836,273)       --        89,548    (746,725)
Trade accounts payable.....      (101,857)       --           (21)   (101,878)
Other accounts payable and
accrued expenses..........      (763,977)   (27,824)  (2,032,554) (2,824,355)
------------  ---------   ----------  ----------
Net change in working
capital..................    (4,293,588)   351,797       (2,294) (3,944,085)
------------  ---------   ----------  ----------
Net resources provided by
operating activities.....     4,162,686  1,048,167      894,480   6,105,333
------------  ---------   ----------  ----------
Financing activities
Bank loans and notes
payable, net...............      (160,639)       --           --     (160,639)
Dividends...................           --         --      (804,712)   (804,712)
Long-term intercompany
receivables and payables,
net........................    (3,859,914)       --       110,591  (3,749,323)
Other noncurrent assets and
liabilities, net...........      (139,144)       --           --     (139,144)
------------  ---------   ----------  ----------
Resources used in financing
activities.................    (4,159,697)       --      (694,121) (4,853,818)
------------  ---------   ----------  ----------
Investing activities
Property, plant and
equipment, net.............      (732,742)       --           --     (732,742)
Investments in subsidiaries
and affiliates.............       545,678   (345,319)    (200,359)        --
Deferred charges............       145,579   (383,105)         --     (237,526)
Other investments...........           --         --           --          --
------------  ---------   ----------  ----------
Resources used in investing
activities.................       (41,485)  (728,424)    (200,359)   (970,268)
------------  ---------   ----------  ----------
Change in cash and temporary
investments................       (38,496)   319,743          --      281,247
Cash and temporary
investments initial
balance....................       584,775   (270,978)         --      313,797
------------  ---------   ----------  ----------
Cash and temporary
investments ending
balance....................  Ps   546,279     48,765          --      595,044
============  =========   ==========  ==========

F-71

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Statements of Changes in Financial Position:

December 31, 1998

Guarantors
(Parent Company Only)    Adjustments
------------------------      and       Combined
CEMEX Mexico     ETM      eliminations Guarantors
------------  ----------  ------------ ----------

Operating activities
Net income.................  Ps 2,550,582   4,376,986   (2,211,651)  4,715,917
Charges to operations which
did not require
resources.................     1,543,142    (371,123)     233,202   1,405,221
------------  ----------   ----------  ----------
Resources provided by
operating activities......     4,093,724   4,005,863   (1,978,449)  6,121,138
------------  ----------   ----------  ----------
Changes in working capital:
Trade accounts receivable,
net......................      (162,409)        --           --     (162,409)
Other receivables and
other current assets.....    (1,036,957)    129,544      (51,342)   (958,755)
Intercompany receivables
and payables, net........     4,411,558  (4,257,227)    (117,696)     36,635
Inventories...............        82,614         --      (101,306)    (18,692)
Trade accounts payable....        26,791     221,830     (221,832)     26,789
Other accounts payable and
accrued expenses.........      (358,462)        --       182,159    (176,303)
------------  ----------   ----------  ----------
Net change in working
capital.................     2,963,135  (3,905,853)    (310,017) (1,252,735)
------------  ----------   ----------  ----------
Net resources provided by
operating activities....     7,056,859     100,010   (2,288,466)  4,868,403
------------  ----------   ----------  ----------
Financing activities
Bank loans and notes
payable, net..............    (1,166,999)        --           --   (1,166,999)
Dividends..................    (3,035,677)        --           --   (3,035,677)
Long-term intercompany
receivables and payables,
net.......................       879,123     108,267        2,123     989,513
Other noncurrent assets and
liabilities, net..........       (52,442)    254,851     (254,851)    (52,442)
------------  ----------   ----------  ----------
Resources used in financing
activities................    (3,375,995)    363,118     (252,728) (3,265,605)
------------  ----------   ----------  ----------
Investing activities
Property, plant and
equipment, net............      (509,384)        --           --     (509,384)
Investments in subsidiaries
and affiliates............    (2,426,650)   (114,544)   2,541,194         --
Deferred charges...........      (481,228)        --           --     (481,228)
Other investments..........           --          --           --          --
------------  ----------   ----------  ----------
Resources used in investing
activities................    (3,417,262)   (114,544)   2,541,194    (990,612)
------------  ----------   ----------  ----------
Change in cash and
temporary investments.....       263,602     348,584          --      612,186
Cash and temporary
investments initial
balance...................       546,279      48,765          --      595,044
------------  ----------   ----------  ----------
Cash and temporary
investments ending
balance...................  Ps   809,881     397,349          --    1,207,230
============  ==========   ==========  ==========

F-72

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Statements of Changes in Financial Position:

December 31, 1999

Guarantors (Parent
Company Only)         Adjustments
-------------------------      and       Combined
CEMEX Mexico      ETM      eliminations Guarantors
-------------  ----------  ------------ -----------

Operating activities
Net income............... Ps  9,654,938   4,180,833   (3,399,719)  10,436,052
Charges to operations
which did not require
resources...............     1,119,757   1,864,881   (1,126,785)   1,857,853
-------------  ----------   ----------  -----------
Resources provided by
operating activities....    10,774,695   6,045,714   (4,526,504)  12,293,905
-------------  ----------   ----------  -----------
Changes in working
capital:
Trade accounts
receivable, net........         3,287         --           --         3,287
Other receivables and
other current assets...       669,984     (89,640)     (81,030)     499,314
Intercompany receivables
and payables, net......    10,537,696     175,145      885,151   11,597,992
Inventories.............      (655,884)        --           --      (655,884)
Trade accounts payable..       237,481         --           --       237,481
Other accounts payable
and accrued expenses...      (174,006)    (51,247)     120,097     (105,156)
-------------  ----------   ----------  -----------
Net change in working
capital...............    10,618,558      34,258      924,218   11,577,034
-------------  ----------   ----------  -----------
Net resources provided
by operating
activities............    21,393,253   6,079,972   (3,602,286)  23,870,939
-------------  ----------   ----------  -----------
Financing activities
Bank loans and notes
payable, net............    (1,591,641)        --      (513,918)  (2,105,559)
Dividends................   (12,386,179) (5,091,265)   5,317,006  (12,160,438)
Long-term intercompany
receivables and
payables, net...........    (6,429,145)    148,493       (2,121)  (6,282,773)
Other noncurrent assets
and liabilities, net....      (316,662)   (513,919)     513,919     (316,662)
-------------  ----------   ----------  -----------
Resources used in
financing activities....   (20,723,627) (5,456,691)   5,314,886  (20,865,432)
-------------  ----------   ----------  -----------
Investing activities
Property, plant and
equipment, net..........      (398,980)        --           --      (398,980)
Investments in
subsidiaries and
affiliates..............      (330,264)    571,646   (2,280,473)  (2,039,091)
Deferred charges.........       (97,115)        --       515,927      418,812
Other investments........           --      (51,946)      51,946          --
-------------  ----------   ----------  -----------
Resources used in
investing activities....      (826,359)    519,700   (1,712,600)  (2,019,259)
-------------  ----------   ----------  -----------
Change in cash and
temporary investments...      (156,733)  1,142,981          --       986,248
Cash and temporary
investments initial
balance.................       809,881     397,349          --     1,207,230
-------------  ----------   ----------  -----------
Cash and temporary
investments ending
balance................. Ps    653,148   1,540,330          --     2,193,478
=============  ==========   ==========  ===========

F-73

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Statements of Changes in Financial Position:

June 30, 1999

Guarantors
(Parent Company Only)     Adjustments
-------------------------      and       Combined
CEMEX Mexico      ETM      eliminations Guarantors
-------------  ----------  ------------ -----------

Operating activities
Net income............... Ps  7,704,619   2,351,851   (2,351,851)   7,704,619
Charges to operations
which did not require
resources...............      (310,447)  3,053,203   (2,521,003)     221,753
-------------  ----------   ----------  -----------
Resources provided by
operating activities....     7,394,172   5,405,054   (4,872,854)   7,926,372
-------------  ----------   ----------  -----------
Changes in working
capital:
Trade accounts
receivable, net........       (24,501)        --           --       (24,501)
Other receivables and
other current assets...     1,106,178      (1,933)     (80,585)   1,023,660
Intercompany receivables
and payables, net......     8,852,415    (142,226)   1,665,711   10,375,900
Inventories.............      (230,797)        --           --      (230,797)
Trade accounts payable..       106,230         --           --       106,230
Other accounts payable
and accrued expenses...     1,285,252      95,607      119,438    1,500,297
-------------  ----------   ----------  -----------
Net change in working
capital...............    11,094,777     (48,552)   1,704,564   12,750,789
-------------  ----------   ----------  -----------
Net resources provided
by operating
activities............    18,488,949   5,356,502   (3,168,290)  20,677,161
-------------  ----------   ----------  -----------
Financing activities
Bank loans and notes
payable, net............      (579,701)        --           --      (579,701)
Dividends................   (13,169,877) (5,089,803)   5,381,835  (12,877,845)
Long-term intercompany
receivables and
payables, net...........    (4,510,637)   (468,183)     589,936   (4,388,884)
Other noncurrent assets
and liabilities, net....      (183,073)    (51,662)      22,442     (212,293)
-------------  ----------   ----------  -----------
Resources used in
financing activities....   (18,443,288) (5,609,648)   5,994,213  (18,058,723)
-------------  ----------   ----------  -----------
Investing activities
Property, plant and
equipment, net..........       (22,222)        --           --       (22,222)
Investments in
subsidiaries and
affiliates..............      (203,834)  1,274,743   (2,832,544)  (1,761,635)
Deferred charges.........      (118,914)        --           --      (118,914)
Other investments........           --          --           --           --
-------------  ----------   ----------  -----------
Resources used in
investing activities...      (344,970)  1,274,743   (2,832,544)  (1,902,771)
-------------  ----------   ----------  -----------
Change in cash and
temporary investments..      (299,309)  1,021,597       (6,621)     715,667
Cash and temporary
investments initial
balance................       805,439     395,170        6,621    1,207,230
-------------  ----------   ----------  -----------
Cash and temporary
investments ending
balance................ Ps    506,130   1,416,767          --     1,922,897
=============  ==========   ==========  ===========

F-74

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Guarantors' Combined Statements of Changes in Financial Position:

June 30, 2000

Guarantors
(Parent Company Only)    Adjustments
------------------------      and       Combined
CEMEX Mexico     ETM      eliminations Guarantors
------------  ----------  ------------ ----------

Operating activities
Net income.................  Ps 1,805,482      22,156      (22,156)  1,805,482
Charges to operations which
did not require
resources.................     1,248,854      71,327     (696,889)    623,292
------------  ----------   ----------  ----------
Resources provided by
operating activities......     3,054,336      93,483     (719,045)  2,428,774
------------  ----------   ----------  ----------
Changes in working capital:
Trade accounts receivable,
net......................       130,087         --         8,171     138,258
Other receivables and
other current assets.....       413,333       3,206        4,905     421,444
Intercompany receivables
and payables, net........     1,635,352    (797,281)     793,852   1,631,923
Inventories...............       (42,080)        --        10,353     (31,727)
Trade accounts payable....       155,235         --        (4,126)    151,109
Other accounts payable and
accrued expenses.........      (143,754)    (56,174)      (4,349)   (204,277)
------------  ----------   ----------  ----------
Net change in working
capital.................     2,148,173    (850,249)     808,806   2,106,730
------------  ----------   ----------  ----------
Net resources provided by
operating activities....     5,202,509    (756,766)      89,761   4,535,504
------------  ----------   ----------  ----------
Financing activities
Bank loans and notes
payable, net..............      (639,385)        --        (5,372)   (644,757)
Dividends..................           --          --           --          --
Long-term intercompany
receivables and payables,
net.......................       (96,091) (3,059,241)    (134,616) (3,289,948)
Other noncurrent assets and
liabilities, net..........       (18,802)  3,943,200   (3,943,423)    (19,025)
------------  ----------   ----------  ----------
Resources used in financing
activities................      (754,278)    883,959   (4,083,411) (3,953,730)
------------  ----------   ----------  ----------
Investing activities
Property, plant and
equipment, net............      (367,192)        --       146,760    (220,432)
Investments in subsidiaries
and affiliates............    (3,926,511)    134,501    3,802,386      10,376
Deferred charges...........      (474,416)        --        29,035    (445,381)
Other investments..........        (3,581)   (212,627)      15,469    (200,739)
------------  ----------   ----------  ----------
Resources used in investing
activities................    (4,771,700)    (78,126)   3,993,650    (856,176)
------------  ----------   ----------  ----------
Change in cash and
temporary investments.....      (323,469)     49,067          --     (274,402)
Cash and temporary
investments initial
balance...................       653,148   1,540,330          --    2,193,478
------------  ----------   ----------  ----------
Cash and temporary
investments ending
balance...................  Ps   329,679   1,589,397          --    1,919,076
============  ==========   ==========  ==========

Guarantors--Investment in affiliates

At December 31, 1998 and 1999, of the Guarantors' total investment in
affiliates, which are accounted for under the equity method, Ps2,199,497 and
Ps5,001,284, respectively, correspond to investments in non-guarantors, and
Ps130,305 in 1998 and Ps138,376 in 1999, are related to minority investments in
third parties.

At December 31, 1999, 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 of the Company in Mexico, respectively; and Centro Distribuidor de
Cemento, S.A. de C.V., which is the parent company of the international
operations of the Company.

F-75

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Indebtedness of the guarantors

At December 31, 1998, 1999 and June 30, 2000 (unaudited), the Guarantors had
total indebtedness of $218.1 million (Ps2,532.1 million), $94.7 million
(Ps940.4 million) and $30.1 million (Ps295.9 million), respectively. At
December 31 1999, the average interest rate of this indebtedness was
approximately 8.3%. Of the total indebtedness of the Guarantors at December 31,
1999, approximately $65.0 million (Ps645.3 million) matures in 2000 and $29.7
million (Ps295.1 million) matures in different dates from 2001 until 2003. As
mentioned in note 22, approximately $148.8 million of the total indebtedness of
the Guarantors at December 31, 1999 was prepaid during February 2000 as a
result of the purchase offer conducted in connection with the consent
solicitation of the 8.375% Yankee Notes. At December 31, 1999, of this $148.8
million prepaid in February 2000, $90 million in cash were invested and
committed to the repayment of this debt by the creation of an irrevocable
trust; such amount was considered extinguished for balance sheet presentation
under Mexican GAAP. At the same date, the remaining $58.8 million, were
reclassified to short-term debt.

Guarantors--Balances and transactions with related parties

At December 31, 1998, 1999 and June 30, 2000 (unaudited), included in
current assets, the Guarantors had intercompany receivables amounting to
approximately Ps14,229.3 million, Ps3,123.7 million and Ps2,148.4 million,
respectively. As of June 30, 2000, the guarantors had long term intercompany
receivables amounting to approximately Ps2,603.6 million (unaudited). Within
Guarantors' current liabilities, the Guarantors had intercompany payables
amounting to approximately Ps1,131.1 million in 1998, Ps1,646.2 in 1999 and
Ps2,302.5 million as of June 30, 2000. At December 31, 1998, 1999 and June 30,
2000 (unaudited), included in Guarantors' other non-current liabilities, there
are intercompany payables of Ps29,844.8 million, Ps23,561.6 million and
Ps22,880.7 million, respectively.

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,
its parent and certain affiliates. The intercompany balance detail is as
follows:

1998
----------------------------------
Assets         Liabilities
------------ ---------------------
Guarantors                   Short-Term  Short-Term Long-Term
----------                  ------------ ---------- ----------

Cemex, S.A. de C.V......................... Ps 9,978,103       --   29,844,766
Petrocemex, S.A. de C.V. ..................    1,732,052       --          --
Cemex Concretos, S.A. de C.V...............    1,255,694       --          --
Sunbelt Enterprises........................      778,480       --          --
Cemex Central, S.A. de C.V.................      182,214       --          --
Cemex Internacional, S.A. de C.V...........          --    710,338         --
Aviacion Comercial de America, S.A. de
C.V. .....................................          --     97,988         --
Productora de Bolsas de Papel, S.A. de
C.V. .....................................          --     48,912         --
Inmobiliaria Valiant, S.A. de C.V. ........          --     48,175         --
Turismo Cemex, S.A. de C.V. ...............          --     47,725         --
Inmobiliaria Canopo, S.A. de C.V...........          --     32,270         --
Compania de Transportes del Mar de Cortes,
S.A. de C.V. .............................          --     25,029         --
Others.....................................      302,767   120,637         --
------------ ---------  ----------
Ps14,229,310 1,131,074  29,844,766
============ =========  ==========

F-76

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

1999
---------------------------------
Assets         Liabilities
----------- ---------------------
Guarantors         Short-Term  Short-Term Long-Term
----------         ----------- ---------- ----------

Cemex Concretos, S.A. de
C.V....................  Ps1,188,607       --          --
Beeston Investments
Holdings Limited.......    1,124,294       --          --
Cemex Central, S.A. de
C.V....................      524,062       --          --
Cemex, S.A. de C.V......          --     94,227  23,561,635
Petrocemex, S.A. de
C.V....................          --    618,961         --
Cemex Internacional,
S.A. de C.V............          --    505,165         --
Turismo Cemex, S.A. de
C.V....................          --    104,189         --
Productora de Bolsas de
Papel, S.A. de C.V.....          --     80,291         --
Inmobiliaria Valiant,
S.A. de C.V............          --     71,542         --
Others..................      286,779   171,817         --
----------- ---------  ----------
Ps3,123,742 1,646,192  23,561,635
=========== =========  ==========

(unaudited) As of June 30, 2000
---------------------------------------------
Short Term              Long Term
----------------------- ---------------------
Assets    Liabilities  Assets   Liabilities
----------- ----------- --------- -----------

Cemex, S.A. de C.V. ............  Ps1,172,191        --         --  20,130,720
Centro Distribuidor de Cemento,
S.A. de C.V. ..................      459,134        --     100,000        --
Cemex Central, S.A. de C.V. ....      181,365        --     569,000        --
Proveedora Mexicana de
Materiales, S.A. de C.V. ......      111,283        --         --         --
Beeston Investments Holdings
Limited........................          --   1,061,272        --         --
Petrocemex, S.A. de C.V. .......          --     362,814        --   2,750,000
Cemex Concretos, S.A. de C.V. ..          --     262,901  1,787,608        --
Turismo Cemex, S.A. de C.V. ....          --     155,946        --         --
Productora de Bolsas de Papel,
S.A. de C.V. ..................          --     107,617        --         --
Cemex Internacional, S.A. de
C.V. ..........................          --     102,267        --         --
Aviacion Comercial de America,
S.A. de C.V. ..................          --      67,661    147,000        --
Others..........................      224,469    181,997        --         --
-----------  ---------  --------- ----------
Ps2,148,442  2,302,475  2,603,608 22,880,720
===========  =========  ========= ==========

The principal transactions carried out with affiliated companies are:

December 31,                    June 30,
----------------------------------  ----------------------
Guarantors           1997        1998        1999        1999        2000
----------        -----------  ---------  ----------  ----------  ----------

Net sales............... Ps2,443,314  2,364,118   2,276,837     915,236   1,686,670
Purchases...............    (902,465)  (812,684)   (837,833)   (165,147)   (424,055)
Selling and
administrative
expenses...............         --     (39,791)    (41,118)    (24,755)    (27,930)
Financial expense.......    (478,034)  (469,858)   (587,287)    (11,651) (1,174,276)
Financial income........   2,201,517  3,250,735   2,355,069   1,613,202     270,102
Other expense, net......         --         --   (2,661,189) (1,067,379)  1,444,245
===========  =========  ==========  ==========  ==========

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.

F-77

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Selling and administrative expenses--The Company allocates part of its
corporate expense to the Guarantors.

Financial income and expense is recorded on 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.

Other expense, net--The Guarantors incur rental and trade mark rights
expenses payable to the Company.

Guarantors--U.S. GAAP reconciliation of net income and stockholders'
equity:

As discussed at the beginning of this note 23, 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.

(Unaudited) Periods
Year ended December 31,            ended June 30,
-----------------------------------  ---------------------
1997         1998        1999        1999       2000
-----------  ----------  ----------  ----------  ---------

Net income reported
under Mexican GAAP..... Ps8,074,187   4,715,917  10,436,052   7,704,619  1,805,482
Approximate U.S. GAAP
adjustments:
1. Amortization of
pushdown goodwill
(see note 1)........    (169,360)   (167,656)   (167,004)    (83,163)   (83,690)
2. Deferred income
taxes and ESPS
(see note 2)........  (1,134,863) (1,570,442) (1,660,511) (1,165,616)  (416,394)
3. Other employees'
benefits (see note
3)..................     (13,493)    (24,503)    (25,059)    (25,534)   (25,762)
4. Inflation adjustment
for machinery and
equipment (see note
4)..................    (122,267)      1,804    (125,997)    (85,329)   (67,652)
5. Other U.S. GAAP
adjustments (see
note 5).............     203,020     254,787    (170,661)     66,684    233,245
6. Monetary position
result (see note
6)..................   1,389,958   1,614,349   1,093,321     637,292    363,456
-----------  ----------  ----------  ----------  ---------
Total approximate U.S.
GAAP adjustments.....     152,995     108,339  (1,055,911)   (655,666)     3,203
-----------  ----------  ----------  ----------  ---------
Total approximate net
income under
U.S. GAAP............ Ps8,227,182   4,824,256   9,380,141   7,048,953  1,808,685
===========  ==========  ==========  ==========  =========

Year ended December 31,   (Unaudited)
------------------------   June 30,
1998         1999        2000
------------  ----------  -----------

Total stockholders' equity under Mexican
GAAP.................................... Ps21,215,748  17,080,560  13,296,064
Approximate U.S. GAAP adjustments:
1. Effect of pushdown of goodwill, net
(see note 1).........................    1,390,885   1,126,833   1,099,585
2. Deferred income taxes and ESPS (see
note 2)..............................   (9,157,474) (9,813,533) (5,270,616)
3. Other employees' benefits (see note
3)...................................     (116,950)   (129,182)   (149,476)
4. Inflation adjustment for machinery
and equipment (see note 4)...........      (43,761)  2,984,977   3,024,088
5. Other U.S. GAAP adjustments (see note
5)...................................   (1,745,265) (1,933,484)   (152,982)
------------  ----------  ----------
Total approximate U.S. GAAP
adjustments...........................   (9,672,565) (7,764,389) (1,449,401)
------------  ----------  ----------
Total approximate stockholders' equity
under U.S. GAAP....................... Ps11,543,183   9,316,171  11,846,663
============  ==========  ==========

F-78

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

Footnotes to the U.S. GAAP reconciliation:

1. Business Combinations

In 1989 and 1990, through an exchange of its shares with the Company, CEMEX
Mexico (formerly Tolmex) acquired substantially all its 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 Ps6,223,287. In addition,
during 1995 CEMEX acquired through a public exchange offer, where the Company
exchanged its own shares for Tolmex' shares, a 24.2% equity interest in Tolmex.
The excess of the purchase price paid by CEMEX over the fair value of the net
assets of Tolmex was Ps805,918. These goodwill amounts have been pushed-down to
CEMEX Mexico for purposes of the U.S. GAAP reconciliation. Amortization expense
related to these pushed-down goodwill amounts is recognized for purposes of the
net income reconciliation to U.S. GAAP in each period.

The amounts shown in the above table relative to this adjustment for the
years ended December 31, 1998 and 1999 have been restated by Ps3,141,892 and
Ps3,236,750, respectively from amounts previously reported to reflect the
correction of an error in the original calculations. As a result, total
approximate stockholders' equity under US GAAP at December 31, 1998 and 1999 is
lower by those amounts than what was previously reflected." For purposes of
U.S. GAAP presentation, Ps966,605 and Ps966,643 as of December 31, 1998 and
1999, respectively, were reclassified from goodwill to investments in
subsidiaries. This, however, has no effect in stockholders' equity under U.S.
GAAP.

2. Deferred income taxes and Employees' Statutory Profit Sharing

Deferred income taxes provision at December 31, 1998, 1999 and June 30, 2000
(unaudited) for the Guarantors amounts to Ps6,639,220, Ps7,268,959 and
Ps2,696,263, respectively. In addition, deferred Employees' Statutory Profit
Sharing ("ESPS") provision amounts to Ps2,518,254 in 1998 and Ps2,544,574 in
1999 and Ps2,574,353, as of June 30, 2000 (unaudited).

3. Other employees' benefits

The Guarantors do not accrue for vacation expense and severance payments;
these items are recognized when vacation is taken or when retirements occur,
respectively. For purposes of the U.S. GAAP reconciliation, a vacation
liability has been determined in an amount of Ps20,901, Ps23,087 and Ps26,714,
at December 31, 1998, 1999 and June 30, 2000 (unaudited), respectively. In
addition, the Guarantors recognized, for purposes of the U.S. GAAP
reconciliation, a liability for severance benefits for Ps96,049 in 1998,
Ps106,095 in 1999 and Ps122,762, as of June 30, 2000 (unaudited).

4. Inflation Adjustment of Machinery and Equipment

On December 2, 1997, the International Practices Task Force of the American
Institute of Certified Public Accountants encouraged Mexican companies to
restate their fixed assets of foreign origin by applying the inflation rate of
each country in which companies operate, instead of using the methodology
included in the fifth amendment to Bulletin B-10, which consists of restating
the fixed assets of foreign origin on the basis of the devaluation of the
functional currency against the currency of origin and applying a factor of
inflation in such foreign country. 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.

F-79

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

5. Other U.S. GAAP adjustments

Deferred charges--For U.S. GAAP purposes, other deferred charges net of
accumulated amortization generated during 1999, that did not qualify for
deferral under U.S. GAAP have been charged to expense, with a net effect on the
stockholders' equity and in the net income reconciliation to U.S. GAAP of
Ps(183,785) in 1999 and Ps(100,836), as of June 30, 1999 (unaudited). As of
June 30, 2000, the guarantors recognize a decrease of Ps176,005 in their
stockholders' equity reconciliation to U.S. GAAP. Mexican GAAP allowed the
deferral of these expenses.

Inventory costs--As permitted by Mexican GAAP, certain inventories are
valued under the direct cost system, which includes material, labor and other
direct costs. For purposes of the reconciliation to U.S. GAAP, inventories have
been valued under the full absorption cost method, including all costs and
expenses necessary for the manufacturing process. At December 31, 1998, the
Guarantors recognized an increase of Ps138,539 in their stockholders' equity
reconciliation to U.S. GAAP. For purposes of the net income reconciliation to
U.S. GAAP, the Guarantors recognized income of Ps33,986 in 1997, income of
Ps23,449 in 1998, expense of Ps123,343 in 1999 and expense of Ps118,898 as of
June 30, 1999 (unaudited), respectively.

Subsidiary companies--The Guarantors have adjusted their investment in 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 was
Ps(1,883,804), Ps(1,749,699) and Ps23,023 in 1998, 1999 and June 30, 2000
(unaudited), respectively. The net effect in the net income reconciliation to
U.S. GAAP was benefits of Ps169,034, Ps231,338, Ps136,467, Ps286,418 and
Ps233,245 in 1997, 1998, 1999 and June 30, 1999 and 2000 (unaudited),
respectively. From the U.S. GAAP adjustments to subsidiary companies in the
Guarantor's reconciliation of stockholders' equity, Ps(2,594,077) in 1998,
Ps(2,710,190) in 1999, and Ps(1,157,348) as of June 30, 2000 (unaudited) are
related to deferred income taxes and deferred ESPS.

6. 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 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 to the transactions presented under each caption.
The nature of the differences between Mexican GAAP and U.S. GAAP in the amounts
reported is mainly 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.

F-80

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

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, 1997, 1998 and 1999,
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 on a historical Peso basis and it is not presented in constant
purchasing power.

(Unaudited)
----------------------
Years ended December 31,         Period ended June 30,
------------------------------------  ----------------------
1997         1998        1999        1999        2000
------------  ----------  ----------  ----------  ----------

Net cash provided by
operating activities... Ps   798,653   2,617,994   2,464,265     315,728   3,194,850
Net cash provided by
(used in) financing
activities.............    3,718,702    (159,044)    277,668   1,133,652  (1,020,905)
Net cash used in
investing activities...   (4,284,536) (2,161,902) (2,847,880) (1,703,955) (2,342,406)
------------  ----------  ----------  ----------  ----------

Net cash flow from operating activities reflects cash payments for
interests and income taxes as follows:

(Unaudited)
----------------------
Six months ended
Years ended December 31,               June 30,
------------------------------------  ----------------------
1997         1998        1999        1999        2000
------------  ----------  ----------  ----------  ----------

Interest paid........... Ps   565,022     659,394     799,594     150,014     132,941
Income taxes paid.......      669,874   1,501,030     145,501      85,084     318,560
------------  ----------  ----------  ----------  ----------

Guarantors' non-cash activities are comprised of the following:

During 1999, the Guarantors acquired from CEMEX, an equity interest in
Centro Distribuidor de Cemento, S.A. de C.V. for an amount of Ps1,952,779,
which was compensated against an account payable owed by CEMEX to the
Guarantors.

Dividends declared to CEMEX amounting to Ps578,479 in 1997 and Ps11,645,698
in 1999 and as of June 30, 1999 (unaudited), are recognized by the Guarantors
as accounts payable to the Company at the end of the corresponding year.

Contingent liabilities of the guarantors

At December 31, 1999, Cemex Mexico, S.A. de C.V. and Empresas Tolteca de
Mexico, S.A. de C.V., had guaranteed debt of CEMEX, S.A. de C.V. in the amount
of US dollars $2,090 million (see note 11).

(w) Newly Issued Accounting Pronouncements

In June 1998, The Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"),
which requires entities to recognize all derivatives in their financial
statements as either assets or liabilities measured at fair value. SFAS 133
also specifies new methods of accounting for hedging transactions, prescribes
the items and transactions that may be hedged and specifies detailed criteria
to be met to qualify for hedge accounting. SFAS 133 is currently scheduled to
be effective for fiscal years beginning after June 15, 2000. We are currently
evaluating the impact that SFAS 133 will have on our consolidated financial
statements and disclosures.

F-81

CEMEX, S.A. DE C.V. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1997, 1998 and 1999
(Thousands of constant Mexican pesos as of June 30, 2000)

(x) Subsequent events under U.S. GAAP (unaudited)

In June 2000, we exercised an option to acquire an additional 13% of Assiut
Cement Co. for approximately U.S.$56 million, increasing the Company's interest
in Assiut to 90%.

On May 31, 2000, the Company sold its 100% interest in the Marriott Casa
Magna hotels in Cancun and Puerto Vallarta, Mexico, to Marriott International,
as well as a land property in Puerto Vallarta, for a total of US$116 million.
As a result of this transaction, for Mexican and U.S. GAAP purposes, the
Company will record under the line item Other Income and Expense, net, a loss
of approximately $9 million, before the related tax benefits.

In April 2000, the Company agreed to invest $20 million for an ownership
interest of 80% in PuntoCom Holdings, an e-business development accelerator of
several Internet projects for Latin America. Additionally, the Company agreed
to invest $30 million for a 100% ownership interest in PuntoCom Investments, a
Delaware fund that will make e-business investments in Latin America, this
company has the right to co-invest in PuntoCom Holdings portfolio companies.
The Company expects to begin the consolidation of PuntoCom Holdings and
PuntoCom Investments during the second quarter of year 2000.

In April 2000, the Company through its Philippine affiliate formalized an
exclusive long-term distributorship agreement with Universe Cement of Taiwan.
This agreement signals the Company's entrance into the Taiwan cement market,
and reinforces its presence in Southeast Asia. The agreement covers an
estimated 900,000 metric tons per year in sales in one of Southeast Asia's most
dynamic markets.

In March 2000, the Company agreed to invest $26 million to begin the
construction of a new grinding mill near Dhaka, Bangladesh. The facility is
expected to begin operations in March 2001.

In February 2000, the Company through a subsidiary, entered into
shareholders and subscription agreements with institutional investors, whom
subscribed for approximately 8.8% ownership interest in Cemex Asia Holdings
("CAH") for approximately $56 million. As a result of this transaction, our
ownership interest in CAH was reduced to 77.4%, therefore, our economic
interest in Rizal and APO were reduced to approximately 54% and 77%,
respectively.

On January 26, 2000, the Company obtained a favorable resolution by the
Domestic and Customs Office of Colombia, dismissing the tax assessment that was
served on three of our Colombian subsidiaries in 1998. (see note 20B).

On September 5, 2000, we were notified of a tax assessment in respect of the
1994 tax year for approximately Ps460 million.

In September 2000, one of our subsidiaries, Latin Networks Holding, BV,
launched CXNetworks, an e-business project with the objective of developing,
managing and deploying several e-business networks relating to online
construction websites with an internet based marketplace, an e-procurement
marketplace and the expansion of our existing information technology company
Cemtec, S.A. de C.V., which will provide information technology solution and
its related services to e-business industry. We have committed to invest US$100
million during these projects each year.

In September 2000, we terminated the Equity Swap transaction subject to the
24.8% of the outstanding capital stock of Valenciana through a bridge loan for
US$400 million, contracted in August 2000; we repurchased Valenciana's shares
subject to it for US$500 million, through one of our subsidiaries.

F-82

REPORT OF INDEPENDENT AUDITORS

Monterrey N.L., January 12, 2000

To the Stockholders of
Cal Guadalajara, S.A. de C.V.
(formerly Simifa, S.A. de C.V.)

We have audited the balance sheets of Cal Guadalajara, S.A. de C.V. as of
December 31, 1999 and 1998, and the related statements of income, of changes in
stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cal Guadalajara, S.A. de C.V.
at December 31, 1999 and 1998, and the results of its operations, the changes
in its stockholders' equity and the changes in its financial position for the
three years in the period then ended, in conformity with accounting principles
generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-83

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Productora de Bolsas de Papel, S.A.

We have audited the balance sheets of Productora de Bolsas de Papel, S.A. as
of December 31, 1999 and 1998, and the related statements of income, of changes
in stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Productora de Bolsas de Papel,
S.A. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-84

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Cemtec, S.A. de C.V.

We have audited the balance sheets of Cemtec, S.A. de C.V. as of December
31, 1999 and 1998, and the related statements of income, of changes in
stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cemtec, S.A. de C.V. at
December 31, 1999 and 1998, and the results of its operations, the changes in
its stockholders' equity and the changes in its financial position for the
years then ended, in conformity with accounting principles generally accepted
in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-85

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Agregados y Triturados Monterrey, S.A. de C.V.

1. We have audited the balance sheets of Agregados y Triturados Monterrey, S.A.
de C.V. as of December 31, 1999 and 1998, and the related statements of
income, of changes in stockholders' equity and of changes in financial
position for the years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement and that they were prepared in accordance
with generally accepted accounting principles. 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.

2. As described in Note 1 to the financial statements, at a meeting held on
December 6, 1999, the stockholders resolved to merge the company with Cemex
Concretos, S.A. de C.V. (formerly Concretos de Alta Calidad y Agregados,
S.A. de C.V., a related party), the former company being absorbed by the
latter. Consequently, Agregados y Triturados Monterrey, S.A. de C.V.
terminates operations. This merger is effective from December 31, 1999
onwards.

3. In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Agregados y Triturados
Monterrey, S.A. de C.V. at December 31, 1999 and 1998, and the results of
its operations, the changes in its stockholders' equity and the changes in
its financial position for the years then ended, in conformity with
accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-86

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Petrocemex, S.A. de C.V.

1.  We have audited the balance sheets of Petrocemex, S.A. de C.V. as of
December 31, 1999 and 1998, and the related statements of income, of
changes in stockholders' equity and of changes in financial position for
the years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement and that they were prepared in accordance
with generally accepted accounting principles. 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.

2.  As described in Note 1 to the financial statements, at a meeting held on
May 18, 1999, the stockholders resolved to merge the company with Dinek and
Badenoch, affiliated companies, both latter companies being absorbed by
Petrocemex, S.A. de C.V. This merger is effective from July 1, 1999
onwards.

3.  In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Petrocemex, S.A. de C.V.
at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial
position for the years then ended, in conformity with accounting principles
generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-87

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Cemex Concretos, S.A. de C.V.
(formerly Concretos de Alta Calidad y Agregados, S.A. de C.V.)

1. We have audited the balance sheets of Cemex Concretos, S.A. de C.V. as of
December 31, 1999 and 1998, and the related statements of income, of changes
in stockholders' equity and of changes in financial position for the years
then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement and that they were prepared in accordance
with generally accepted accounting principles. 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.

2. As described in Note 1 to the financial statements, at a meeting held on
December 6, 1999, the stockholders resolved to merge the company with
Agregados y Triturados Monterrey, S.A. de C.V., Arenera de Occidente, S.A.
de C.V., Concreto Premezclado Nacional, S.A. de C.V., Concreto y Precolados,
S.A. de C.V. and Pavimentos Mexicanos de Concreto, S.A. de C.V. (affiliated
companies), all latter companies being absorbed by the company. This merger
is effective from December 31, 1999 onwards.

3. In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cemex Concretos, S. A. de
C. V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial
position for the years then ended, in conformity with accounting principles
generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-88

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Cementos del Noreste, S.A. de C.V.
(formerly Polycemex, S.A. de C.V.)

1. We have audited the balance sheets of Cementos del Noreste, S.A. de C.V. (as
a separate legal entity) as of December 31, 1999 and 1998, and the related
statements of income, of changes in stockholders' equity and of changes in
financial position for the years then ended. These financial statements are
the responsibility of the Company's management and are to be submitted for
approval by the General Meeting of Stockholders; therefore, they include the
investment in subsidiaries accounted for by the equity method, as determined
on the basis of the unaudited financial statements. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement and that they were prepared in accordance
with generally accepted accounting principles. 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.

2. As described in Note 1 to the financial statements, at a meeting held on
December 7, 1999, the stockholders resolved to merge the company with Cemex
Mexico, S.A. de C.V. (formerly Serto Construcciones, S.A. de C.V., a related
party), the former company being absorbed by the latter. This merger is
effective from December 31, 1999 onwards.

3. In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cementos del Noreste, S.A.
de C.V. (as a separate legal entity) at December 31, 1999 and 1998, and the
results of its operations, the changes in its stockholders' equity and the
changes in its financial position for the years then ended, in conformity
with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-89

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Cementos Monterrey, S.A. de C.V.
(formerly Polimeros Cemex, S.A. de C.V.)

1.  We have audited the balance sheets of Cementos Monterrey, S.A. de C.V. (as
a separate legal entity) as of December 31, 1999 and 1998, and the related
statements of income, of changes in stockholders' equity and of changes in
financial position for the years then ended. These financial statements are
the responsibility of the Company's management and are to be submitted for
approval by the General Meeting of Stockholders; therefore, they include
the investment in subsidiaries accounted for by the equity method, as
determined on the basis of the unaudited financial statements. Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement and that they were prepared in accordance
with generally accepted accounting principles. 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.

2.  As described in Note 1 to the financial statements, at a meeting held on
March 15, 1999 the stockholders resolved to merge the company with Ceser,
S.A. and Maritima del Golfo, S.A. (related parties) both latter companies
being absorbed by Cementos Monterrey, S.A. de C.V. this merger is effective
from March 31, 1999, onwards. At a meeting held on December 7, 1999, the
stockholders resolved to merge the company with Cemex Mexico, S.A. de C.V.
(formerly Serto Construcciones, S.A. de C.V., a related party) the former
company being absorbed by the latter. Consequently, Cementos Monterrey,
S.A. de C.V. terminates operations. This merger is effective from December
31, 1999 onwards.

3.  In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cementos Monterrey, S.A.
de C.V. (as a separate legal entity) at December 31, 1999 and 1998, and the
results of its operations, the changes in its stockholders' equity and the
changes in its financial position for the years then ended, in conformity
with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-90

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Cementos Anahuac, S.A. de C.V.
(formerly Immobiliaria Angela Segovia, S.A.)

We have audited the balance sheets of Cementos Anahuac, S.A. as of December
31, 1999 and 1998, and the related statements of income, of changes in
stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cementos Anahuac, S.A. at
December 31, 1999 and 1998, and the results of its operations, the changes in
its stockholders' equity and the changes in its financial position for the
years then ended, in conformity with accounting principles generally accepted
in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-91

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Cementos del Norte, S.A. de C.V.
(formerly Immobiliaria ZP Triangular, S.A. de C.V.)

We have audited the balance sheets of Cementos del Norte, S.A. de C.V. as of
December 31, 1999 and 1998, and the related statements of income, of changes in
stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cementos del Norte, S.A. de
C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-92

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Compania Minera Atoyac, S.A. de C.V.

We have audited the balance sheets of Compania Minera Atoyac, S.A. de C.V.
as of December 31, 1999 and 1998, and the related statements of income, of
changes in stockholders' equity and of changes in financial position for the
years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Compania Minera Atoyac, S.A.
de C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-93

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Granos y Terrenos, S.A. de C.V.

We have audited the balance sheets of Granos y Terrenos, S.A. de C.V. as of
December 31, 1999 and 1998, and the related statements of income, of changes in
stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Granos y Terrenos, S.A. de
C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-94

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Productos Calcareos, S.A. de C.V.

We have audited the balance sheets of Productos Calcareos, S.A. de C.V. as
of December 31, 1999 and 1998, and the related statements of income, of changes
in stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Productos Calcareos, S.A. de
C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-95

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Proveedora Mexicana de Materiales, S.A. de C.V.

We have audited the balance sheets of Proveedora Mexicana de Materiales,
S.A. de C.V. (as a separate legal entity) as of December 31, 1999 and 1998, and
the related statements of income, of changes in stockholders' equity and of
changes in financial position for the years then ended. These financial
statements are the responsibility of the Company's management and are to be
submitted for approval by the General Meeting of Stockholders; therefore, they
include the investment in subsidiary accounted for by the equity method. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Proveedora Mexicana de
Materiales, S.A. de C.V. (as a separate legal entity) at December 31, 1999 and
1998, and the results of its operations, the changes in its stockholders'
equity and the changes in its financial position for the years then ended, in
conformity with accounting principles generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-96

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Pavimentos Mexicanos de Concreto, S.A. de C.V.

We have audited the balance sheets of Pavimentos Mexicanos de Concreto, S.A.
de C.V. as of December 31, 1999 and 1998, and the related statements of income,
of changes in stockholders' equity and of changes in financial position for the
years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, at the stockholders'
meeting held on December 6, 1999, the stockholders approved the merger of the
company into Cemex Concreto, S.A. de C.V. This merger became effective as from
December 31, 1999, which means that all the company's rights and obligation
were transferred to the merging company.

As mentioned in Note 2E to the financial statements, on the basis of a study
carried out in 1999, the company decided to modify the technical useful lives
of the plant and equipment, particularly as concerns a lower rate of wear and
tear as compared to the rate originally considered. The result of this change
was a reduction in depreciation charged to income amounting to approximately
Ps1,300,000.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Pavimentos Mexicanos de
Concreto, S.A. de C.V. at December 31, 1999 and 1998, and the results of its
operations, the changes in its stockholders' equity and the changes in its
financial position for the years then ended, in conformity with accounting
principles generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-97

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Explotadora de Canteras, S.A. de C.V.

We have audited the balance sheets of Explotadora de Canteras, S.A. de C.V.
as of December 31, 1999 and 1998, and the related statements of income, of
changes in stockholders' equity and of changes in financial position for the
years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statement, income and operating cost
and expenses, arise from transactions with related parties. In view of the
before going, these transactions may not be considered to be the same as those
that would be carried out with independent parties in comparable transactions.

As mentioned in Note 1 to the financial statements, at the stockholders'
meeting held on December 6, 1999, the stockholders approved the merger of the
company into Cemex Mexicana, S.A. de C.V. This merger became effective as from
December 31, 1999, which means that all the company's rights and obligation
were transferred to the merging company.

As mentioned in Note 2D. to the financial statements, on the basis of a
study carried out in 1999, the company decided to modify the technical useful
lives of the property, plant and equipment, particularly as concerns a lower
rate of wear and tear as compared to the rate originally considered. The result
of this change was a reduction in depreciation charged to income amounting to
approximately Ps8,179,000.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Explotadora de Canteras, S.A.
de C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-98

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Arenera del Oriente, S.A. de C.V.

We have audited the balance sheets of Arenera del Oriente, S.A. de C.V. as
of December 31, 1999 and 1998, and the related statements of income, of changes
in stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, income and operating
cost and expenses arise from transactions with related parties. In view of the
before going, these transactions may not be considered to be the same as those
that would be carried out with independent parties in comparable transactions.

As mentioned in Note 1 to the financial statements, at the stockholders'
meeting held on December 6, 1999, the stockholders approved the merger of the
company into Cemex Concreto, S.A. de C.V. This merger became effective as from
December 31, 1999, which means that all the company's rights and obligation
were transferred to the merging company.

As mentioned in Note 2E. to the financial statements, on the basis of a
study carried out in 1999, the company decided to modify the technical useful
lives of the property, plan and equipment, particularly as concerns a lower
rate of wear and tear as compared to the rate originally considered. The result
of this change was a reduction in depreciation charged to income amounting to
approximately Ps9,482,000.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Arenera del Oriente, S.A. de
C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-99

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Compania de Transporte del Mar de Cortes, S.A. de C.V.

We have audited the balance sheets of Compania de Transporte del Mar de
Cortes, S.A. de C.V. as of December 31, 1999 and 1998, and the related
statements of income, of changes in stockholders' equity and of changes in
financial position for the years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, income and operating
cost and expenses arise from transactions with related parties. In view of the
before going, these transactions may not be considered to be the same as those
that would be carried out with independent parties in comparable transactions.

As mentioned in Note 2D. to the financial statements, on the basis of a
study carried out in 1999, the company decided to modify the technical useful
lives of the plant and equipment, particularly as concerns a lower rate of wear
and tear as compared to the rate originally considered. The result of this
change was a reduction in depreciation charged to income amounting to
approximately Ps4,658,000.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Compania de Transporte del Mar
de Cortes, S.A. de C.V. at December 31, 1999 and 1998, and the results of its
operations, the changes in its stockholders' equity and the changes in its
financial position for the years then ended, in conformity with accounting
principles generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-100

REPORT OF INDEPENDENT AUDITORS

Monterrey, N. L., January 12, 2000

To the Stockholders of
Cementos Guadalajara, S.A. de C.V.
(formerly Inmobiliaria Industrial Mazatleca, S.A. de C.V.)

We have audited the balance sheets of Cementos Guadalajara, S.A. de C.V. as
of December 31, 1999 and 1998, and the related statements of income, of changes
in stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, income and operating
cost and expenses, arise from transactions with related parties. In view of the
before going, these transactions may not be considered to be the same as those
that would be carried out with independent parties in comparable transactions.

As mentioned in Note 1 to the financial statements, at the stockholders'
meeting held on June 30, 1999 it was decided to change the name of the company
from Inmobiliaria Industrial Mazatleca, S.A. de C.V. to Cementos Guadalajara,
S.A. de C.V.

In our opinion the aforementioned financial statements present fairly, in
all material respects, the financial position of Cementos Guadalajara, S.A. de
C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-101

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Cementos de Oriente S.A. de C.V.
(formerly Maquiladora y Distribuidora
de Materiales para la Construccion, S.A. de C.V.)

We have audited the balance sheets of Cementos de Oriente, S.A. de C.V. as
of December 31, 1999 and 1998, and the related statements of income, of changes
in stockholders' equity and of changes in financial position for the years then
ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, income and operating
cost and expenses arise from transactions with related parties. In view of the
beforegoing, this transaction may not be considered to be the same as those
that would be carried out with independent parties in comparable transactions.

As mentioned in Note 1 to the financial statements, at the stockholders'
meeting held on August 31, 1999, it was decided to change to the name of the
company from Maquiladora y Distribuidora de Materiales para la Construccion,
S.A. de C.V. to Cementos de Oriente, S.A. de C.V.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Cementos de Oriente, S.A. de
C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-102

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Autotransportes de Huichapan, S.A. de C.V.

We have audited the balance sheets of Autotransportes de Huichapan, S.A. de
C.V. as of December 31, 1999 and 1998, and the related statements of income, of
changes in stockholders' equity and of changes in financial position for the
years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, income and operating
cost and expenses arise from transactions with related parties. In view of the
before going, these transactions may not be considered to be the same as those
that would be carried out with independent parties in comparable transactions.

As mentioned in Note 2D. to the financial statements, on the basis of a
study carried out in 1999, the company decided to modify the technical useful
lives of the property, plant and equipment, particularly as concerns a lower
rate of wear and tear as compared to the rate originally considered. The result
of this change was a reduction in depreciation charged to income amounting to
approximately Ps742,000.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Autotransportes de Huichapan,
S.A. de C.V. at December 31, 1999 and 1998, and the results of its operations,
the changes in its stockholders' equity and the changes in its financial
position for the years then ended, in conformity with accounting principles
generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-103

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Concretos y Precolados, S.A. de C.V.

We have audited the balance sheets of Concretos y Precolados, S.A. de C.V.
as of December 31, 1999 and 1998, and the related statements of income, of
changes in stockholders' equity and of changes in financial position for the
years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, at the stockholders'
meeting held on December 6, 1999, the stockholders approved the merger of the
company into Cemex Concreto, S.A. de C.V. This merger became effective as from
December 31, 1999, which means that all the company's rights and obligations
were transferred to the merging company.

As mentioned in Note 2E. to the financial statements, on the basis of a
study carried out in 1999, the company decided to modify the technical useful
lives of the property, plant and equipment, particularly as concerns a lower
rate of wear and tear as compared to the rate originally considered. The result
of this change was a reduction in depreciation charged to income amounting to
approximately Ps10,355,000.

As mentioned in Note 1 to the financial statements, at the extraordinary
stockholders' meeting held on November 19, 1998, it was agreed that as from
December 31, 1998, Concretos y Derivados, S.A. de C.V. would be merged into the
company.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Concretos y Precolados, S.A.
de C.V. at December 31, 1999 and 1998, and the results of its operations, the
changes in its stockholders' equity and the changes in its financial position
for the years then ended, in conformity with accounting principles generally
accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-104

REPORT OF INDEPENDENT AUDITORS

Monterrey, N.L., January 12, 2000

To the Stockholders of
Concreto Premezclado Nacional, S.A. de C.V.

We have audited the balance sheets of Concreto Premezclado Nacional, S.A. de
C.V. as of December 31, 1999 and 1998, and the related statements of income, of
changes in stockholders' equity and of changes in financial position for the
years then ended. 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 auditing standards generally
accepted in Mexico. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and that they were prepared in accordance with
generally accepted accounting principles. 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.

As mentioned in Note 1 to the financial statements, at the stockholders'
meeting held on December 6, 1999, the stockholders approved the merger of the
company into Cemex Concreto, S.A. de C.V. This merger became effective as from
December 31, 1999, which means that all the company's rights and obligation
were transferred to the merging company.

In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Concreto Premezclado Nacional,
S.A. de C.V. at December 31, 1999 and 1998, and the results of its operations,
the changes in its stockholders' equity and the changes in its financial
position for the years then ended, in conformity with accounting principles
generally accepted in Mexico.

PricewaterhouseCoopers

Hector Puente S.

F-105

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each shareholder of the Company or such shareholder or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:

The Depositary for the Offer is:

Citibank, N.A.

By Facsimile Transmission
(for Eligible Institutions only):
(212) 505-2248
Confirm by Telephone:
(800) 270-0808

By Courier:                    By Mail:                      By Hand:
Citibank, N.A.                Citibank, N.A.                Citibank, N.A.
915 Broadway, 5th Floor            P.O. Box 685             Corporate Trust Window
New York, N.Y. 10010           Old Chelsea Station       111 Wall Street, 5th Floor
New York, N.Y. 10113          New York, N.Y. 10043

Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Requests for copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and all other tender offer
materials may be directed to the Information Agent as set forth below and will
be furnished promptly at Purchaser's expense. Purchaser will not pay fees or
commissions to any broker or dealer or any other person (other than the Dealer
Manager) for soliciting tenders of Shares pursuant to the Offer. Shareholders
may also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer.

The Information Agent for the Offer is:

[MACKENZIE LOGO] 

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free (800) 322-2885

The Dealer Manager for the Offer is:

Salomon Smith Barney

388 Greenwich Street
New York, New York 10013
Call Toll Free (877) 755-4456

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

EXHIBIT (a)(1)(B)
Letter of Transmittal
to Tender Shares of Common Stock
(Including the Related Rights to Purchase Preferred Stock)
of
Southdown, Inc.
Pursuant to the Offer to Purchase, dated October 5, 2000,

by
CENA Acquisition Corp.,
an indirect subsidiary of
CEMEX, S.A. de C.V.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Offer is:
Citibank, N.A.

By Overnight Courier,
By First Class Mail:        Certified or Express Mail             By Hand:
Delivery:
Citibank, N.A.                Citibank, N.A.                Citibank, N.A.
P.O. Box 685             915 Broadway, 5th Floor       Corporate Trust Window
Old Chelsea Station           New York, N.Y. 10010       111 Wall Street, 5th Floor
New York, N.Y. 10013                                        New York, N.Y. 10043

Facsimile
Transmission for Eligible              For Confirmation by Telephone:
Institutions:                            (800) 270-0808
(212) 505-2248

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED
THEREFORE BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE
SUBSTITUTE FORM W-9 SET FORTH BELOW.

THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

DESCRIPTION OF SHARES TENDERED
--------------------------------------------------------------------------------

Share Certificate(s) and Share(s)
Tendered (Please attach additional
signed list,
if necessary)
-------------------------------------------------------
Name(s) and
Address(es)
of
Registered
Holder(s)                  Total Number
(Please        Share       of Shares     Number of
fill in, if   Certificate  Represented by   Shares
blank)      Number(s)(1) Certificate(s) Tendered(2)
-------------------------------------------------------

-------
-------
-------
-------
-------

Total
Shares
Tendered
-------------------------------------------------------

(1) Need not be completed by shareholders who deliver Shares by book-entry
transfer ("Book-Entry Shareholders").
(2) Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
[_]CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE INSTRUCTION
11.

The names and addresses of the registered holders of the tendered Shares
should be printed, if not already printed above, exactly as they appear on the
Share Certificates tendered hereby.

This Letter of Transmittal is to be used by shareholders of Southdown, Inc.
(the "Company") if certificates for Shares (as defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in Section 3 of
the Offer to Purchase) is utilized, if delivery of Shares is to be made by
book-entry transfer to an account maintained by the Depositary at the Book-
Entry Transfer Facility (as defined in Section 2 of the Offer to Purchase and
pursuant to the procedures set forth in Section 3 thereof).

Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, or who cannot complete the
procedure for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to the Depositary prior to the Expiration Date (as
defined in the Offer to Purchase), must tender their Shares according to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.

TENDER OF SHARES

[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):

Name of Tendering Institution:_____________________________________________

Account Number:____________________________________________________________

Transaction Code Number:___________________________________________________

[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:

Name(s) of Registered Holder(s):___________________________________________

Window Ticket Number (if any):_____________________________________________

Date of Execution of Notice of Guaranteed Delivery:________________________

Name of Eligible Institution that Guaranteed Delivery: ____________________

2

NOTE: SIGNATURES MUST BE PROVIDED BELOW

PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY

Ladies and Gentlemen:

The undersigned hereby tenders to CENA Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect subsidiary of CEMEX, S.A. de C.V., a
corporation organized under the laws of the United Mexican States, the above-
described shares of common stock, par value $1.25 per share, and the related
rights to purchase preferred stock (the "Shares"), of Southdown, Inc., a
Louisiana corporation (the "Company"), pursuant to Purchaser's offer to
purchase all outstanding Shares, at a purchase price of $73.00 per Share, net
to the seller in cash (the "Offer Price"), without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
October 5, 2000 (the "Offer to Purchase"), and in this Letter of Transmittal
(which, together with the Offer to Purchase and any amendments or supplements
thereto or hereto, collectively constitute the "Offer"). Receipt of the Offer
is hereby acknowledged.

Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), and
effective upon acceptance for payment of the Shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to or upon the order of Purchaser all right, title and interest
in and to all the Shares that are being tendered hereby (and any and all
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect thereof with a record date before, and a payment date after
the Expiration Date (as defined in Section 1 of the Offer to Purchase)
(collectively, "Distributions")) and irrevocably constitutes and appoints
Citibank, N.A. (the "Depositary") the true and lawful agent and attorney-in-
fact of the undersigned with respect to such Shares (and any and all
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
certificates for such Shares (and any and all Distributions), or transfer
ownership of such Shares (and any and all Distributions) on the account books
maintained by any of the Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, (ii) present such Shares (and any and all
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any and all Distributions), all in accordance with the terms of the
Offer.

By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Jill Simeone, Jeffrey H. Smith and Andrew M. Miller in their
respective capacities as officers or directors of Purchaser, and any individual
who shall thereafter succeed to any such office of Purchaser, and each of them,
and any other designees of Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or
postponement thereof or otherwise in such manner as each such attorney-in-fact
and proxy or his or her substitute shall in his or her sole discretion deem
proper with respect to, to execute any written consent concerning any matter as
each such attorney-in-fact and proxy or his or her substitute shall in his or
her sole discretion deem proper with respect to, and to otherwise act as each
such attorney-in-fact and proxy or his or her substitute shall in his or her
sole discretion deem proper with respect to, all of the Shares (and any and all
Distributions) tendered hereby and accepted for payment by Purchaser. This
appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall, without further action, revoke any
prior powers of attorney and proxies granted by the undersigned at any time
with respect to such Shares (and any and all Distributions), and no subsequent
powers of attorney, proxies, consents or revocations may be given by the
undersigned with respect thereto (and, if given, will not be deemed effective).
Purchaser reserves the right to require that, in order for the Shares or other
securities to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise full
voting, consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of the Company's stockholders.

3

The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that, when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the account
of Purchaser all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of each such Distribution and
may withhold the entire purchase price of the Shares tendered hereby or deduct
from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.

All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.

The undersigned understands that the valid tender of the Shares pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase and
in the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the Merger Agreement (as
defined in the Introduction to the Offer to Purchase), the price to be paid to
the undersigned will be the amended price notwithstanding the fact that a
different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.

Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the purchase price of all the Shares purchased and/or
return any certificates for the Shares not tendered or accepted for payment in
the name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered". Similarly, unless otherwise indicated under "Special Delivery
Instructions", please mail the check for the purchase price of all the Shares
purchased and/or return any certificates for the Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered". In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and deliver
such check and/or return any such certificates (and any accompanying documents,
as appropriate) to, the person(s) so indicated. Unless otherwise indicated
herein in the box entitled "Special Payment Instructions", please credit any
Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book-Entry Transfer Facility designated
above. The undersigned recognizes that Purchaser has no obligation, pursuant to
the "Special Payment Instructions", to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.

4

SPECIAL PAYMENT INSTRUCTIONS              SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6 and 7)           (See Instructions 1, 5, 6 and 7)

To be completed ONLY if the               To be completed ONLY if the
check for the purchase price of           check for the purchase price of
Shares accepted for payment and/or        Shares accepted for payment and/or
certificates representing Shares          certificates representing Shares
not tendered or accepted for              not tendered or accepted for
payment are to be issued in the           payment are to be sent to someone
name of someone other than the            other than the undersigned or to
undersigned.                              the undersigned at an address other
than that shown under "Description
of Shares Tendered".

Issue: [_] Check                          Mail: [_] Check      
[_] Certificate(s) to                     [_] Certificate(s) to 

Name:______________________________       Name:______________________________  
(Please Print)                             (Please Print)            

Address:___________________________       Address:___________________________  

___________________________________       ___________________________________  
(Include Zip Code)                         (Include Zip Code)          

___________________________________       ___________________________________  
(Taxpayer Identification or Social         (Taxpayer Identification or Social  
Security Number)                           Security Number)           

(Also complete Substitute Form W-9        
below)                      

5

IMPORTANT

SHAREHOLDER: SIGN HERE
(Complete Substitute Form W-9 Included)

_____________________________________________________________________________
(Signature(s) of Owner(s))

Name(s):_____________________________________________________________________

Capacity (Full Title):_______________________________________________________
(See Instructions)

Address:_____________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________
(Include Zip Cod
_____________________________________________________________________________  

Area Code and Telephone Number:______________________________________________

Taxpayer Identification or Social Security Number:___________________________
(See Substitute Form W-9)

Dated:_______________ 

(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please set forth full title and
see Instruction 5).

GUARANTEE OF SIGNATURE(S)
(If Required--See Instructions 1 and 5)

FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.

Authorized Signature(s):_____________________________________________________

Name:________________________________________________________________________

Name of Firm:________________________________________________________________

Address:_____________________________________________________________________
(Include Zip Code)

Area Code and Telephone Number:______________________________________________

Dated:_______________

6

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter or Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
or by any other "eligible guarantor institution" as such term is defined in
Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution"). In all
other cases, all signatures on this Letter of Transmittal must be guaranteed by
an Eligible Institution. See Instruction 5.

2. Requirements of Tender. This Letter of Transmittal is to be completed by
shareholders if certificates are to be forwarded herewith or, unless an Agent's
Message is utilized, if tenders are to be made pursuant to the procedure for
tender by book-entry transfer set forth in Section 3 of the Offer to Purchase.
Share Certificates evidencing tendered Shares, or timely confirmation (a "Book-
Entry Confirmation") of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility, as well as this Letter of
Transmittal (or a facsimile hereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase). Shareholders whose Share Certificates are not immediately
available, or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis or who cannot deliver all other required documents
to the Depositary prior to the Expiration Date, may tender their Shares by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together with the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a book-
entry delivery, an Agent's Message) and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three New York
Stock Exchange trading days after the date of execution of such Notice of the
Guaranteed Delivery. If Share Certificates are forwarded separately to the
Depositary, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery.

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND THE RISK OF THE TENDERING SHAREHOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution
of this Letter of Transmittal (or a facsimile hereof), waive any right to
receive any notice of the acceptance of their Shares for payment.

7

3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.

4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share Certificate are
to be tendered, fill in the number of Shares that are to be tendered in the box
entitled "Number of Shared Tendered". In this case, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless indicated.

5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any change
whatsoever.

If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.

If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations.

If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Purchaser of the authority of such person so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment to be made or certificates
for Shares not tendered or not accepted for payment are to be issued in the
name of a person other than the registered holder(s). Signatures on any such
Share Certificates or stock powers must be guaranteed by an Eligible
Institution.

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed and transmitted hereby, the
certificate(s) must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear(s)
on the certificate(s). Signature(s) on any such Share Certificates or stock
powers must be guaranteed by an Eligible Institution.

6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
the Purchaser will pay all stock transfer taxes with respect to the transfer
and sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificate(s) for Shares
not tendered or not accepted for payment are to be registered in the name of,
any person other than the registered holder(s), or if tendered certificate(s)
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such other person) payable on account of the
transfer to such other person will be deducted from the purchase price of such
Shares purchased unless evidence satisfactory to the Purchaser of the payment
of such taxes, or exemption therefrom, is submitted.

Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) evidencing the Shares
tendered hereby.

7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be returned
to a person other than the person(s) signing this Letter of Transmittal or to
an address other than that shown in this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed.

8

8. Substitute Form W-9. A tendering shareholder is required to provide the
Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9, which is provided under "Important Tax Information" below, and to
certify, under penalty of perjury, that such TIN is correct and that such
holder is not subject to backup withholding tax. If a tendering shareholder is
subject to backup withholding, the shareholder must cross out Item (Y) of Part
3 of the Certification Box of the Substitute Form W-9. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
federal income tax withholding of 31% of any payments made to the shareholder,
but such withholdings will be refunded if the tendering shareholder provides a
TIN within 60 days.

Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.

9. Requests for Assistance or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at the address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.

10. Waiver of Conditions. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), the Purchaser reserves the
right, in its sole discretion, to waive, at any time or from time to time, any
of the specified conditions of the Offer (other than the Minimum Condition), in
whole or in part, in the case of any Shares tendered.

11. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the shareholder should promptly
notify American Stock Transfer and Trust Company, in its capacity as transfer
agent for the shares, at 800-937-5449. The shareholder will then be instructed
as to the steps that must be taken in order to replace the certificate. This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST
BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER
CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES
MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH
CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY
WITH THE PROCEDURES FOR GUARANTEED DELIVERY.

9

IMPORTANT TAX INFORMATION

Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
shareholder's correct TIN on the Substitute Form W-9 below. If such shareholder
is an individual, the TIN is such shareholder's Social Security Number. If a
tendering shareholder is subject to backup withholding, such shareholder must
cross out Item (Y) of Part (3) of the Certification box on the Substitute Form
W-9. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder may be subject to backup
withholding of 31%.

Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. Exempt shareholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.

If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.

Purpose of Substitute Form W-9

To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such shareholder is awaiting a TIN).

What Number to Give the Depositary

The shareholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record holder of the Shares. If
the Shares are in more than one name, or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report. If the tendering shareholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
the shareholder should write "Applied For" in the space provided for the TIN in
Part I, and sign and dated the Substitute Form W-9. If "Applied For" is written
in Part I, the Depositary will withhold 31% of payments made for the
shareholder, but such withholdings will be refunded if the tendering
shareholder provides a TIN within 60 days.

10

CITIBANK, N.A.

Name:__________________________________________________

Address:_______________________________________________

_______________________________________________________
(Number and Street)
_______________________________________________________
(Zip Code)              (City)               (State)

SUBSTITUTE
FORM W-9               -------------------------------------------------------

Department of the      Part 1(a)--PLEASE PROVIDE
Treasury               YOUR TIN IN THE BOX AT
Internal Revenue       RIGHT AND CERTIFY BY            TIN:__________________
Service                SIGNING AND DATING BELOW.
--------------------------------------------------------
Payer's Request for    Part 1(b)--PLEASE CHECK THE BOX AT RIGHT IF YOU HAVE
Taxpayer               APPLIED FOR, AND ARE AWAITING RECEIPT OF YOUR
TIN.                                              [_]
Part 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
Identification         PLEASE WRITE "EXEMPT" HERE (SEE INSTRUCTIONS).
Number ("TIN")        --------------------------------------------------------
Part 3--CERTIFICATION UNDER PENALTIES OF PERJURY, I
CERTIFY THAT (X) The number shown on this form is my
correct TIN (or I am waiting for a number to be
issued to me), and (Y) I am not subject to backup
withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a
failure to report all interest or dividends, or (c)
the IRS has notified me that I am no longer subject
to backup withholding.
--------------------------------------------------------

Sign Here 
SIGNATURE ___________________________________
DATE ________________________________________

Certification of Instructions--You must cross out Item (Y) of Part 3 above
if you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out such Item (Y).

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
1(b) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE
AWAITING RECEIPT OF, YOUR TIN.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER
IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (1) I
HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER
IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE SERVICE
CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (2) I INTEND TO
MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT
IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER TO THE PAYOR BY
THE TIME OF PAYMENT, 31 PERCENT OF ALL REPORTABLE PAYMENTS MADE TO ME
PURSUANT TO THIS OFFER WILL BE WITHHELD.

----------------------------------   -----------------------------------------
Signature                                  Date

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

11

MANUALLY SIGNED FACSIMILE COPIES OF THIS LETTER OF TRANSMITTAL WILL BE
ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER
REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH SHAREHOLDER OF THE
COMPANY OR SUCH SHAREHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR
OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE FIRST
PAGE.

Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Requests for copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and all other tender offer
materials may be directed to the Information Agent as set forth below and will
be furnished promptly at Purchaser's expense. Purchaser will not pay fees or
commissions to any broker or dealer or any other person (other than the Dealer
Manager) for soliciting tenders of Shares pursuant to the Offer. Shareholders
may also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer.

The Information Agent for the Offer is:

[MACKENZIE LOGO APPEARS HERE]

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free (800) 322-2885

The Dealer Manager for the Offer is:

Salomon Smith Barney

388 Greenwich Street
New York, New York 10013
Call Toll Free (877) 755-4456

Exhibit (a)(1)(C)

Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
(Including the Related Rights to Purchase Preferred Stock)
of
Southdown, Inc.
to
CENA Acquisition Corp.,
an indirect subsidiary of
CEMEX, S.A. de C.V.
(Not to be used for signature guarantees)

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.

This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates for
Shares (as defined below) are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach Citibank, N.A. (the "Depositary") on or
prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). This form may be delivered by hand, transmitted by facsimile
transmission or mailed (to the Depositary). See Section 3 of the Offer to
Purchase.

The Depositary for the Offer is:

Citibank, N.A.

By Overnight Courier,
By First Class Mail:        Certified or Express Mail             By Hand:
Delivery:
Citibank, N.A.                Citibank, N.A.                Citibank, N.A.
P.O. Box 685             915 Broadway, 5th Floor       Corporate Trust Window
Old Chelsea Station          New York, N.Y. 10010       111 Wall Street, 5th Floor
New York, N.Y. 10113                                        New York, N.Y. 10043

Facsimile
Transmission for Eligible              For Confirmation by Telephone:
Institutions:                            (800) 270-0808
(212) 505-2248

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN
THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO
THE DEPOSITARY.

THIS NOTICE OF GUARANTEED DELIVERY TO THE DEPOSITARY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO
BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" (AS DEFINED IN THE OFFER TO
PURCHASE) UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR
IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER TO
TRANSMITTAL.

The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in Section 3 of the Offer to Purchase) and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.

THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.

Ladies and Gentlemen:

The undersigned hereby tenders to CENA Acquisition Corp., a Delaware
corporation and an indirect subsidiary of CEMEX, S.A. de C.V., a company
organized under the laws of the United Mexican States, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated October 5,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (the
"Letter of Transmittal" which, together with the Offer to Purchase and any
amendments or supplements thereto, constitute the "Offer"), receipt of which
is hereby acknowledged, the number of shares of common stock, par value $1.25
per share, including the related rights to purchase preferred stock (the
"Shares"), of Southdown, Inc., a Louisiana corporation (the "Company"), set
forth below, pursuant to the guaranteed delivery procedures set forth in the
Offer to Purchase.

Number of Shares Tendered: __________    SIGN HERE
Certificate No(s) (if available):        Name(s) of Record Holder(s):
-------------------------------------    --------------------------------------
-------------------------------------    --------------------------------------
[_]  Check if securities will be                     (Please Print)
tendered by book-entry transfer
Address(es):
Name of Tendering Institution:           --------------------------------------
-------------------------------------    --------------------------------------
(Zip Code)
Account: No: ________________________    Area Code and Telephone No(s):

Dated: ______________________________    --------------------------------------

Signature(s):
--------------------------------------
--------------------------------------

GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing of the Securities Transfer
Agents Medallion Program, guarantees to deliver to the Depositary either the
certificates evidencing all tendered Shares, in proper form for transfer, or to
deliver Shares pursuant to the procedure for book-entry transfer into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility"), in either case together with the Letter of Transmittal (or a
facsimile thereof) properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in the case of a book-entry delivery, and any other required
documents, all within three New York Stock Exchange trading days after the days
after the date hereof.

Name of Firm: _______________________     ___________________________________
Address: ____________________________            (Authorized Signature)
_____________________________________     Title: ______________________________
Zip Code     Name: _______________________________

Area Code and Tel. No. ______________            (Please type or print)

Dated:  , ___________________________
NOTE:  DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

Exhibit (a)(1)(D)

OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED RIGHTS TO PURCHASE PREFERRED STOCK)

of
Southdown, Inc.

by

CENA Acquisition Corp.,
an indirect subsidiary of
CEMEX, S.A. de C.V.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.

October 5, 2000

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

CENA Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect
subsidiary of CEMEX, S.A. de C.V., a corporation organized under the laws of
the United Mexican States ("CEMEX"), has made an offer to purchase all
outstanding shares of common stock, par value $1.25 per share, including the
related rights to purchase preferred stock (collectively, the "Shares"), of
Southdown, Inc., a Louisiana corporation (the "Company"), at a purchase price
of $73.00 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated October 5, 2000 (the "Offer to Purchase"), and the related Letter of
Transmittal (the "Letter of Transmittal" which, together with the Offer to
Purchase and any amendments or supplements thereto, collectively constitute the
"Offer") enclosed herewith.

Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, who cannot complete the
procedures for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to Citibank, N.A. (the "Depositary") prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.

The Offer is conditioned upon, among other things, (1) there being validly
tendered (other than by guaranteed delivery where actual delivery has not
occurred) and not properly withdrawn prior to the expiration of the Offer a
number of Shares that represents at least two-thirds of the Shares outstanding
on a fully diluted basis, and (2) any waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder having expired or been terminated. The offer is subject to certain
other conditions contained in Section 15 of the Offer to Purchase. Please read
Sections 1 and 15 of the Offer to Purchase, which set forth in full the
conditions to the Offer.

Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.

1. Offer to Purchase dated October 5, 2000;

2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients (manually signed
facsimile copies of the Letter of Transmittal may be used to tender
Shares);

3. Notice of Guaranteed Delivery to be used to accept the Offer if Share
Certificates are not immediately available or if such certificates and all
other required documents cannot be delivered to the Depositary, or if the
procedures for book-entry transfer cannot be completed on a timely basis;

4. A printed form of letter that may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;

5. The letter to shareholders of the Company from Clarence C. Comer,
President and Chief Executive Officer of the Company, accompanied by the
Company's Tender Offer Solicitation/Recommendation Statement on Schedule
14D-9 filed with the Securities and Exchange Commission by the Company,
which includes the recommendation of the Board of Directors of the Company
(the "Board of Directors") that shareholders accept the Offer and tender
their Shares to the Purchaser pursuant to the Offer; and

6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.

The Company's Board of Directors, at a special meeting held on September 28,
2000, unanimously (1) determined that the Merger Agreement (as defined below)
and the transactions contemplated thereby, including the Offer and the Merger
(as defined below), are fair to the Company's shareholders and in the best
interests of the Company and its shareholders; (2) approved and adopted the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger; and (3) recommended that the Company's shareholders (i) accept
the Offer and (ii) if shareholder approval is necessary, approve the Merger
Agreement and the Merger. Accordingly, the Company's Board of Directors
recommends that your clients accept the Offer and tender all of their Shares
pursuant to the Offer.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 28, 2000 (the "Merger Agreement"), among CEMEX, Purchaser and
the Company. The Merger Agreement provides for, among other things, the making
of the Offer by Purchaser, and further provides that Purchaser will be merged
with and into the Company (the "Merger") as soon as practicable following the
satisfaction or waiver of each of the conditions to the Merger set forth in the
Merger Agreement. Following the Merger, the Company will continue as the
surviving corporation, an indirect subsidiary of CEMEX, and the separate
corporate existence of Purchaser will cease.

In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in Section 3 of the Offer to Purchase) in
connection with a book-entry delivery of Shares, and other required documents
should be sent to the Depositary and (ii) Share Certificates representing the
tendered Shares should be delivered to the Depositary, or such Shares should be
tendered by book-entry transfer into the Depositary's account maintained at the
Book-Entry Transfer Facility (as described in Section 3 of the Offer to
Purchase), all in accordance with the instructions set forth in the Letter of
Transmittal and the Offer to Purchase.

If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents prior to the
Expiration Date or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.

Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary as described in the Offer to Purchase)
for soliciting tenders of Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse you for customary mailing and handling costs
incurred by you in forwarding the enclosed materials to your customers.

Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.

WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.

2

Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
Information Agent.

Very truly yours,

Salomon Smith Barney Inc.

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF CEMEX, PURCHASER, THE COMPANY, THE
DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.

3

EXHIBIT (a)(1)(E)

OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK

(INCLUDING THE RELATED RIGHTS TO PURCHASE PREFERRED STOCK)

of

Southdown, Inc.

by
CENA Acquisition Corp.,
an indirect subsidiary of
CEMEX, S.A. de C.V.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.

To Our Clients:

Enclosed for your consideration is the Offer to Purchase dated October 5,
2000 (the "Offer to Purchase") and a related Letter of Transmittal (the "Letter
of Transmittal" which, together with the Offer to Purchase and any amendments
or supplements thereto, collectively constitute the"Offer") in connection with
the offer by CENA Acquisition Corp., a Delaware corporation ("Purchaser") and
an indirect subsidiary of CEMEX, S.A. de C.V., a company organized under the
laws of the United Mexican States ("CEMEX"), to purchase all outstanding shares
of common stock, par value $1.25 per share, including the related rights to
purchase preferred stock (collectively, the "Shares"), of Southdown, Inc., a
Louisiana corporation (the "Company"), at a purchase price of $73.00 per Share,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase and the Letter of
Transmittal enclosed herewith.

We are the holder of record of Shares for your account. A tender of such
Shares can be made only by us as the holder of record and pursuant to your
instructions. The enclosed Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held by us for your
account.

We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Your attention is invited to the
following:

1. The offer price is $73.00 per Share, net to you in cash, without
interest thereon.

2. The Offer is being made for all outstanding Shares.

3. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of September 28, 2000 (the "Merger Agreement"), among CEMEX,
Purchaser and the Company. The Merger Agreement provides, among other
things, that Purchaser will be merged with and into the Company (the
"Merger") following the satisfaction or waiver of each of the conditions to
the Merger set forth in the Merger Agreement.

4. The Company's Board of Directors, at a special meeting held on
September 28, 2000, unanimously (1) determined that the Merger Agreement
and the transactions contemplated thereby, including the Offer and the
Merger, are fair to the Company's shareholders and in the best interests of
the Company and the Company's shareholders; (2) approved and adopted the
Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger; and (3) recommended that the Company's shareholders
accept the Offer and, if shareholder approval is necessary, approve the
Merger Agreement and the Merger. Accordingly, the Company's Board of
Directors recommends that you accept the Offer and tender all of your
shares pursuant to the Offer.

5. The Offer and withdrawal rights will expire at 12:01 a.m., New York
City time, on Friday, November 3, 2000 (the "Expiration Date"), unless the
Offer is extended.

6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.

The Offer is conditioned upon, among other things, (1) there being validly
tendered (other than by guaranteed delivery where actual delivery has not
occurred) and not properly withdrawn prior to the expiration of the Offer a
number of Shares that represents at least two-thirds of the Shares outstanding
on a fully diluted basis, and (2) any waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder having expired or been terminated. The offer is subject to certain
other conditions contained in Section 15 of the Offer to Purchase. Please read
Sections 1 and 15 of the Offer to Purchase, which set forth in full the
conditions to the Offer.

The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. In those jurisdictions where securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
will be deemed to be made on behalf of Purchaser by Salomon Smith Barney Inc.,
the Dealer Manager for the Offer, or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.

If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is also enclosed. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the Expiration Date.

2

INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED RIGHTS TO PURCHASE PREFERRED STOCK)

of
Southdown, Inc.

by

CENA Acquisition Corp.,
an indirect subsidiary of
CEMEX, S.A. de C.V.

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated October 5, 2000, and the related Letter of Transmittal, in
connection with the offer by CENA Acquisition Corp., a Delaware corporation
("Purchaser") and an indirect subsidiary of CEMEX, S.A. de C.V., a company
organized under the laws of the United Mexican States (the "Parent"), to
purchase all outstanding shares of common stock, par value $1.25 per share,
including the related rights to purchase preferred stock (collectively, the
"Shares"), of Southdown, Inc., a Louisiana corporation (the "Company"), at a
purchase price of $73.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase and the Letter of Transmittal.

This will instruct you to tender to Purchaser the number of Shares indicated
below (or, if no number is indicated below, all Shares) that are held by you
for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.

Number of Shares to be                    Sign Here: _________________________
Tendered*: ________                       Signature _______________________

Date: ________________                    ____________________________________
Printed Name

Address
____________________________________
____________________________________
____________________________________

____________________________________
Area Code and Telephone Number

____________________________________
Taxpayer Identification or Social
Security Number

____________________________________
Account No.
--------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.

3

EXHIBIT (a)(1)(F)

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.

--------------------------------------------------------------------------------

For this type of Account:                     Give the Social Security Number of:
-----------------------------------------------------------------------------------------

1. An individual's account                   The individual

2. Two or more individuals                   The actual owner (joint account) of the
account or, if combined funds, the first
individual on the account (1)

3. Custodian account of a minor (Uniform     The minor(2)
Gift to  Minors Act)

4. a. The usual revocable savings trust      The grantor trustee(1)
account  (grantor is also trustee)

b. So-called trust account that is not a  The actual owner(1)
legal or  valid trust under state law

5. Sole proprietorship account               The owner(3)

6. A valid trust, estate, or pension         The legal entity trust (Do not furnish the
identifying number of the personal
representative or trustee unless the legal
entity itself is not designated in the
account title.)(4)

7. Corporate account                         The corporation

8. Association, club, religious,             The organization
charitable,  educational or other tax-
exempt organization  account

9. Partnership                               The partnership

10. A broker or registered nominee            The broker or nominee

11. Account with the Department of            The public entity
Agriculture in the name of a public entity
(such as a state or local government,
school district, or prison) that receives
agricultural program payments

--------
(1) List first and circle the name of the person whose number you furnish.

(2) Circle the minor's name and furnish the minor's social security number.

(3) Show the name of the owner. Either the social security number or the
employer identification number may be furnished.

(4) List first and circle the name of the legal trust, estate, or pension
trust.

NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

OBTAINING A NUMBER

If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Card (for resident
individuals), Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), or Form W-7, Application for IRS Individual
Taxpayer Identification Number (for alien individuals required to file U.S. tax
returns), at an office of the Social Security Administration or the Internal
Revenue Service.

To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, check the appropriate box in Part 1(b), sign and date
the Form, and give it to the requester. Generally, you will then have 60 days
to obtain a taxpayer identification number and furnish it to the requester. If
the requester does not receive your taxpayer identification number within 60
days, backup withholding, if applicable, will begin and will continue until you
furnish your taxpayer identification number to the requester.

PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING set forth below is a list
of payees that are exempt from backup withholding with respect to all or
certain types of payments. For interest and dividends, all listed payees are
exempt except the payee in item (9). For broker transactions, all payees listed
in items (1) through (13) and any person registered under the Investment
Advisors Act of 1940 who regularly acts as a broker is exempt. For payments
subject to reporting under Sections 6041 and 6041A, the payees listed in items
(1) through (7) are generally exempt. For barter exchange transactions and
patronage dividends, the payees listed in items (2) through (6) are exempt.

(1) A corporation.

(2) An organization exempt from tax under Section 501(a), an IRA, or a
custodial account under Section 403(b)(7) if the account satisfies the
requirements of Section 401(f)(2).

(3) The United States or any agency or instrumentality thereof.

(4) A state, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.

(5) A foreign government, or a political subdivision, agency or instrumentality
thereof.

(6) An international organization or any agency or instrumentality thereof.

(7) A foreign central bank of issue.

(8) A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.

(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.

(10) A real estate investment trust.

(11) An entity registered at all times under the Investment Company Act of
1940.

(12) A common trust fund operated by a bank under Section 584(a).

(13) A financial institution.

(14) A middleman known in the investment community as a nominee or custodian.

(15) A trust exempt from tax under Section 664 or described in Section
4947(a)(1).

2

Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:

. Payments to non-resident aliens subject to withholding under Section
1441.

. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one non-resident partner.

. Payments of patronage dividends not paid in money.

. Payments made by certain foreign organizations.

. Section 404(k) distributions made by an ESOP.

Payments of interest not generally subject to backup withholding include the
following:

. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.

. Payments of tax-exempt interest (including exempt-interest dividends
under Section 852).

. Payments described in Section 6049(b)(5) to non-resident aliens.

. Payments on tax-free covenant bonds under Section 1451.

. Payments made by certain foreign organizations.

. Mortgage interest paid to you.

Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 2 OF THE FORM, AND
RETURN IT TO THE PAYER.

Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting, are also not subject to backup
withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045,
6049,6050A and 6050N and the regulations promulgated thereunder.

PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.

PENALTIES

(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a requester, you are
subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.

(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.

(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.

FOR ADDITIONAL INFORMATION CONSULT YOUR TAX
ADVISOR OR THE INTERNAL REVENUE SERVICE

3

EXHIBIT (a)(5)(A)
[CEMEX Logo]                                                    [Southdown Logo]

FOR IMMEDIATE RELEASE

Contact Information:
FOR CEMEX:                                                    FOR SOUTHDOWN:
Winnie Lerner                                                 Thomas E. Daman
(800) 576-6555                                                (713) 650-6200

CEMEX TO ACQUIRE SOUTHDOWN IN US$2.8 BILLION TRANSACTION

MONTERREY, MEXICO AND HOUSTON, TEXAS, September 29, 2000 -- CEMEX (NYSE: CX,
BMV:CEMEXCPO) and Southdown (NYSE: SDW) announced today that the companies have
entered into a definitive merger agreement under which CEMEX will acquire all of
the outstanding stock of Southdown for US$73.00 in cash per share, or a total of
approximately US$2.8 billion including US$185 million in long term debt.  The
transaction has been approved by the boards of both companies.  CEMEX will
commence its tender offer on or before October 5th, 2000, and intends to fund
the purchase price through commitments it has arranged with The Chase Manhattan
Bank, Citibank, N.A., Salomon Smith Barney Inc and Deutsche Bank AG.

"Southdown is an excellent fit for CEMEX," said Lorenzo H. Zambrano, Chairman
and CEO of CEMEX. "The company's management and facilities are world class and,
I believe, will mesh well with our global network.  This combination will not
only expand our presence in the United States, but help us compete more
effectively in all our markets. Integrating Southdown into a company with the
scale and resources to prosper in a rapidly consolidating, global industry will
create value for our shareholders," he added.

After the merger with Southdown, CEMEX will have annualized combined sales in
excess of US$6.3 billion pro forma as of June 30th 2000.

"As we indicated to our shareholders last March, we have been looking at many
alternatives for enhancing value and adding to the challenge of effectively
participating in the global economy.  I believe that combining with CEMEX is far
and away the best of these," said Clarence C. Comer President and CEO of
Southdown.  "We recommended this transaction to our board and, with their
endorsement, we are recommending it to our shareholders because we believe it
maximizes the value for all stakeholders.  This transaction is good for our
shareholders; it is good for our customers; and it is good for our employees."

The closing of the tender offer is conditioned upon, among other things, (1) at
least two-thirds of Southdown's fully diluted shares being tendered and not
withdrawn prior to the expiration of the tender offer, and (2) expiration or
termination of the appropriate waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.

Subsequent to the consummation of the tender offer, CEMEX will acquire the
remaining shares of Southdown's outstanding common stock through a merger of an
indirect subsidiary of CEMEX with Southdown, after which each outstanding share
of Southdown common stock will be converted into the right to receive US$73.00
per share in cash.

Until completion of the tender offer and the regulatory process, the two
companies will remain independent. Thereafter, CEMEX intends to operate all its
U.S. operations, including Southdown, as a combined entity.  Mr. Comer is
expected to become the President and CEO of the new entity.

"This acquisition meets all of our investment criteria," said Mr. Zambrano.  "It
allows us to maintain the strength of our capital structure and is expected to
generate attractive returns, while diversifying the sources of our cash flow and
providing a better balance between our developed and developing country markets.
We believe that implementation of CEMEX's best practices in the new entity will
lead to significant cost savings.  We expect this transaction to add to our cash
earnings and free cash flow per share from day one."

CEMEX is one of the three largest cement companies in the world with
approximately 65 million metric tons of production capacity.  CEMEX is engaged
in the production, distribution, marketing and sale of cement, ready-mix
concrete, aggregates and clinker through operating subsidiaries in four
continents. For more information, visit www.cemex.com.

Southdown, headquartered in Houston, has a network of 12 cement-manufacturing
plants and 45 cement distribution terminals serving 27 states throughout the
United States. Southdown also mines, processes, and sells construction
aggregates and specialty mineral products in the eastern half of the U.S. and in
California.  In addition, the company produces and distributes ready-mixed
concrete products in California and Florida. For more information, visit
www.southdown.com.

Salomon Smith Barney Inc. is acting as exclusive financial advisor to CEMEX in
connection with the acquisition and the related financing. Lehman Brothers Inc.
is acting as exclusive financial advisor to Southdown in this transaction and
rendered a fairness opinion.

EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED, THE MATTERS DISCUSSED IN THIS
PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS, THE ACCURACY OF WHICH IS
NECESSARILY SUBJECT TO RISKS AND UNCERTAINTIES.  ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE DISCUSSION OF CERTAIN MATTERS IN THE FORWARD-LOOKING
STATEMENTS.  FACTORS THAT MAY CAUSE SUCH DIFFERENCE INCLUDE THOSE FACTORS SET
FORTH IN SOUTHDOWN 'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1999 AND CEMEX'S ANNUAL REPORT ON FORM 20-F FOR THE YEAR ENDED DECEMBER 31,
1999, AND OTHER FILINGS MADE BY EACH COMPANY FROM TIME TO TIME WITH THE
SECURITIES AND EXCHANGE COMMISSION.

INVESTORS AND SECURITY HOLDERS ARE STRONGLY ADVISED TO READ BOTH THE TENDER
OFFER DOCUMENTS AND THE SOLICITATION/RECOMMENDATION STATEMENT REGARDING THE
TENDER OFFER REFERRED TO IN THIS PRESS RELEASE, WHEN THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. THE TENDER OFFER DOCUMENTS WILL
BE FILED BY CEMEX WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL BE FILED BY SOUTHDOWN WITH THE
COMMISSION. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THESE
DOCUMENTS AND OTHER RELATED MATERIAL FILED BY CEMEX AND SOUTHDOWN WITH THE
COMMISSION AT www.sec.gov.

THE TENDER OFFER STATEMENT AND RELATED OFFERING DOCUMENTS MAY BE OBTAINED FROM
CEMEX BY DIRECTING SUCH REQUEST TO: www.CEMEX.com. THE SOLICITATION/
RECOMMENDATION STATEMENT AND SUCH OTHER DOCUMENTS MAY BE OBTAINED FROM SOUTHDOWN
BY DIRECTING SUCH REQUEST TO: www.southdown.com.

A WEB CAST PRESENTATION WILL BE ACCESSIBLE LIVE AT 10:00 AM EDT AT:
http://www03.activate.net/cemex.  IF YOU ARE UNABLE TO PARTICIPATE, A REPLAY OF
THE WEB CAST WILL BE AVAILABLE UNTIL OCTOBER 6.

An analyst conference call/web cast presentation will be held today at 10:00 AM
EDT. PARTICIPANTS IN THE US, MEXICO AND NASSAU, PLEASE DIAL: (800) 406-5345.
PARTICIPANTS FROM FRANCE ON FRANCE TELECOM, HONG KONG ON HONG KONG TELECOM, AND
SINGAPORE ON SINGAPORE TEL CAN DIAL TOLL FREE: 001-800-77771111. PARTICIPANTS IN
GERMANY ON DEUTSCHE TELECOM, SPAIN ON TELFONICA, ENGLAND, SCOTLAND AND ANYWHERE
ELSE IN THE UK ON BT MERCURY CAN DIAL TOLL FREE: 00-800-77771111.

INTERNATIONAL CALLERS EXPERIENCING DIFFICULTY ACCESSING THE TOLL FREE NUMBER CAN
DIAL DIRECT: (913) 981-5571 (PARTICIPANTS FROM THE NETHERLANDS SHOULD USE THIS
NUMBER ONLY).

IF YOU ARE UNABLE TO PARTICIPATE IN THE CONFERENCE CALL, A REPLAY WILL BE
AVAILABLE BEGINNING AT 3:00 PM EDT ON SEPTEMBER 29 AND RUNNING THROUGH 11:59 PM
EDT ON OCTOBER 5.  TO ACCESS THE REPLAY, PLEASE DIAL: (719) 457-0820,
RESERVATION #520564.

IF YOU HAVE ANY QUESTIONS REGARDING THE CONFERENCE CALL/WEB CAST, PLEASE CONTACT
JESSICA BAGA, ABERNATHY MACGREGOR GROUP, (212) 371-5999.

EXHIBIT (a)(5)(B)

This announcement is neither an offer to purchase nor a solicitation of
an offer to sell Shares (as defined below). The Offer (as defined below) is made
only by the Offer to Purchase (as defined below), dated October 5, 2000, and the
related Letter of Transmittal (as defined below) and any amendments or
supplements thereto, and is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. In those jurisdictions where securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of Purchaser by Salomon Smith Barney Inc.,
the Dealer Manager (as defined below), or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.

Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Related Rights to Purchase Preferred Stock)
of
Southdown, Inc.
at
$73.00 Net Per Share
by
CENA Acquisition Corp.,
an indirect subsidiary of
CEMEX, S.A. de C.V.

CENA Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect subsidiary of CEMEX, S.A. de C.V., a corporation organized under the
laws of the United Mexican States ("CEMEX"), is offering to purchase all
outstanding shares of common stock, par value $1.25 per share, including the
related rights to purchase preferred stock (the "Shares"), of Southdown, Inc., a
Louisiana corporation (the "Company"), at a price of $73.00 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated October 5, 2000 (the "Offer
to Purchase"), and in the related Letter of Transmittal (the "Letter of
Transmittal," which, together with the Offer to Purchase and any amendments or
supplements thereto, collectively constitute the "Offer"). Tendering
shareholders who have Shares registered in their names and who tender directly
to Citibank, N.A. (the "Depositary") will not be charged brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares pursuant to the Offer. Shareholders who hold
their Shares through a broker or bank should consult such institution as to
whether it charges any service fees. Purchaser will pay all charges and expenses
of the Dealer Manager, the Depositary and MacKenzie Partners, Inc., which is
acting as the information agent (the "Information Agent"), incurred in
connection with the Offer. Following the consummation of the Offer, Purchaser
intends to effect the Merger (as defined below).

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 3, 2000, UNLESS THE OFFER IS EXTENDED.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING
VALIDLY TENDERED (OTHER THAN BY GUARANTEED DELIVERY WHERE ACTUAL DELIVERY HAS
NOT TAKEN PLACE) AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
A NUMBER OF SHARES THAT REPRESENTS AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES
ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"), AND (2) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND
THE 

REGULATIONS THEREUNDER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO
SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. PLEASE
READ SECTIONS 1 AND 15 OF THE OFFER TO PURCHASE, WHICH SET FORTH IN FULL THE
CONDITIONS TO THE OFFER. PURCHASER'S OBLIGATION TO PURCHASE THE SHARES IS NOT
CONDITIONED ON ANY FINANCING ARRANGEMENTS OR SUBJECT TO ANY FINANCING CONDITION.
SEE SECTION 9 OF THE OFFER TO PURCHASE FOR A DESCRIPTION OF PARENT'S AND
PURCHASER'S FINANCING ARRANGEMENTS.

The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of September 28, 2000 (the "Merger Agreement"), among CEMEX, Purchaser
and the Company. The purpose of the Offer is for CEMEX, through Purchaser, to
acquire an at least two-thirds voting interest in the Company as the first step
in acquiring the entire equity interest in the Company. The Merger Agreement
provides that, among other things, Purchaser will commence the Offer and that as
promptly as practicable after the purchase of Shares pursuant to the Offer and
the satisfaction or waiver of the other conditions set forth in the Merger
Agreement and in accordance with relevant provisions of the General Corporation
Law of the State of Delaware and the Louisiana Business Corporation Law (the
"LBCL"), Purchaser will merge with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation. At the effective time of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares owned by CEMEX, Purchaser, the
Company or any of their respective subsidiaries, all of which will be cancelled,
and other than Shares that are held by shareholders, if any, who properly
exercise their dissenters' rights under the LBCL) will automatically be
converted into the right to receive $73.00 in cash, without interest thereon.
Without limiting the foregoing, effective upon the acceptance for payment of
Shares pursuant to the Offer in accordance with the terms of the Merger
Agreement, the holders of such Shares will sell and assign to Purchaser all
right, title and interest in and to all of the Shares tendered (including, but
not limited to, such holder's right to any and all dividends and distributions
with a record date before, and a payment date after, the scheduled or extended
expiration date of the Offer).

THE COMPANY'S BOARD OF DIRECTORS, AT A SPECIAL MEETING HELD ON SEPTEMBER
28, 2000, UNANIMOUSLY (1) DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR
TO THE COMPANY'S SHAREHOLDERS AND IN THE BEST INTERESTS OF THE COMPANY AND THE
COMPANY'S SHAREHOLDERS; (2) APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER; AND (3)
RECOMMENDED THAT THE COMPANY'S SHAREHOLDERS (A) ACCEPT THE OFFER AND (B) IF
SHAREHOLDER APPROVAL IS NECESSARY, APPROVE THE MERGER AGREEMENT AND THE MERGER.
ACCORDINGLY, THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT YOU ACCEPT THE
OFFER AND TENDER ALL OF YOUR SHARES OF COMMON STOCK PURSUANT TO THE OFFER.

For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, the Shares validly tendered (other than by
guaranteed delivery where actual delivery has not taken place) and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases, on the terms and subject to the conditions of the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payment from Purchaser and
transmitting such payment to tendering shareholders. Under no circumstances will
interest on the purchase price of Shares be paid by Purchaser because of any
delay in making any payment. Payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after the timely receipt by the
Depositary of (i) certificates for such Shares or timely confirmation of a book-
entry transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined in the Offer to Purchase) pursuant to the
procedures set forth in the Offer to Purchase, (ii) 

a properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) with all required signature guarantees or, in the case of
book-entry transfer, an Agent's Message (as defined in the Offer the Purchase),
and (iii) any other documents required by the Letter of Transmittal.

Subject to the terms of the Merger Agreement, Purchaser may, without the
consent of the Company, extend the Expiration Date of the Offer: 

(i) if, at the Expiration Date of the Offer, any of the
conditions to the Offer will not have been satisfied or, to the extent
permitted, waived, until such conditions are satisfied or, to the extent
permitted by the Merger Agreement, waived;

(ii) for any period required by any rule, regulation,
interpretation or position of the U.S. Securities and Exchange Commission or the
staff thereof applicable to the Offer or any period required by applicable law;

(iii) for up to 10 additional business days in increments of not
more than two business days each (but in no event beyond the Termination Date
(as defined in the Offer to Purchase)), if, immediately prior to the Expiration
Date, the Shares tendered and not withdrawn pursuant to the Offer constitute
more than 80% and less than 90% of the outstanding shares of common stock of the
Company, notwithstanding that all conditions to the Offer are satisfied as of
the Expiration Date; or

(iv) as contemplated in paragraph (c)(i) of "Termination" in
Section 11 of the Offer to Purchase;

provided, that, in the case of any extension under clause (iii), CEMEX and
Purchaser may not thereafter assert the failure of any of the conditions
provided for in clauses (a)(iii), (a)(iv), (a)(v), and (b)(ii) of Section 15 of
the Offer to Purchase, or for purposes of clause (b)(iii) or (c) of Section 15
of the Offer to Purchase, a Company Material Adverse Effect (as defined in the
Offer to Purchase) or a material breach of a representation or warranty, in each
such case, by reasons of an event other than a breach of a covenant by the
Company occurring after the initial extension under clause (iii). As agreed in
the Merger Agreement, if any condition to the Offer is not satisfied or waived
on the Expiration Date, subject to the terms of the Merger Agreement, Purchaser
must extend the Offer, if such condition or conditions could reasonably be
expected to be satisfied, until such conditions are satisfied or waived. See
Section 1 and "Termination" of Section 11 of the Offer to Purchase for more
details on our ability to extend the Offer. The term "Expiration Date" means
12:01 A.M., New York City time, on Friday, November 3, 2000, unless Purchaser
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire.

Purchaser has the right to include a "subsequent offering period" in the
event that the Minimum Condition has been satisfied but the Shares tendered and
not withdrawn pursuant to the Offer constitute less than 90% of the outstanding
common stock of the Company as of the Expiration Date. During a subsequent
offering period, shareholders may tender, but not withdraw, their Shares and
receive the Offer consideration. Under federal securities laws, Purchaser may
not extend the Offer during the subsequent offering period for less than three
business days or more than 20 business days (for all such extensions).

Any extension of the period during which the Offer is open will be
followed, as promptly as practicable, by public announcement thereof, such
announcement to be issued not later than 9:00 a.m., New York City time, on the
same day as the previously scheduled Expiration Date. During any such extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer, subject to the rights of a tendering shareholder to withdraw such
shareholder's Shares (except during the subsequent offering period.)

Shares tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after December 3, 2000;
however, Shares 

tendered in a subsequent offering period may not be withdrawn. Except as
otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares made
pursuant to the Offer are irrevocable. For a withdrawal to be effective, a
written, telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover of the Offer to Purchase. Any notice of withdrawal must specify the name,
address and taxpayer identification number of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such shares, if different from that of the person who
tendered the Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered for
the account of an Eligible Institution (as defined in the Offer to Purchase),
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the procedures for book-
entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of
withdrawal must also specify the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn Shares. All questions
as to the form and validity (including time of receipt) of notices of withdrawal
will be determined by Purchaser, in its sole discretion, and its determination
will be final and binding on all parties.

The exchange of Shares for cash pursuant to the Offer or the Merger will
be a taxable transaction for United States federal income tax purposes and
possibly for state, local and foreign income tax purposes as well. In general, a
shareholder who sells Shares pursuant to the Offer or receives cash in exchange
for Shares pursuant to the Merger will recognize gain or loss for United States
federal income tax purposes equal to the difference, if any, between the amount
of cash received and the shareholder's adjusted tax basis in the Shares sold
pursuant to the Offer or exchanged for cash pursuant to the Merger. Provided
that such Shares constitute capital assets in the hands of the shareholder, such
gain or loss will be capital gain or loss, and will be long-term capital gain or
loss if the holder has held the Shares for more than one year at the time of
sale. The maximum United States federal income tax rate applicable to individual
taxpayers on long-term capital gains is generally 20%, and the deductibility of
capital losses is subject to limitations. All shareholders should consult with
their own tax advisors as to the particular tax consequences of the Offer and
the Merger to them, including the applicability and effect of the alternative
minimum tax and any state, local or foreign income and other tax laws and of
changes in such tax laws. For a more complete description of certain United
States federal income tax consequences of the Offer and the Merger, see Section
5 of the Offer to Purchase.

The information required to be disclosed by Paragraph (d)(1) of Rule 
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.

The Company has provided Purchaser with its list of shareholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.

THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Requests for copies of the Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be directed to the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is:

MacKenzie Partners, Inc
156 Fifth Avenue
New York, New York 10010
Call Collect: (212) 929-5500
E-mail: proxy@mackenziepartners.com
or
Call Toll-Free (800) 322-2885

The Dealer Manager for the Offer is:

Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
Call Toll Free: (877) 755-4456

October 5, 2000

EXHIBIT (a)(5)(C)

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Cemex, S.A. de C.V.:

We consent to the use of our reports included herein and to the reference to
our firm in the Tender Offer Statement.

KPMG Cardenas Dosal S.C.

/s/ Rafael Gomez Eng
Rafael Gomez Eng

Monterrey, N.L., Mexico
October 3, 2000

EXHIBIT (a)(5)(D)

CONSENT OF INDEPENDENT ACCOUNTANTS

We here consent to the use in the Tender Offer Statement on Schedule TO, to
be filed by CENA Acquisition Corp., and CEMEX, S.A. de C.V., of our reports
dated January 12, 2000, relating to the financial statements of Agregados y
Trituralos Monterrey, S.A. de C.V., Arenera del Oriente, S.A. de C.V.,
Autotransportes de Huichapan, S.A. de C.V., Cal Guadalajara, S.A. de C.V.
(formerly Simifa, S.A. de C.V.) Cementos Anahuac, S.A. (formerly Inmobiliaria
Angela Segovia, S.A.), Cementos del Noreste, S.A. de C.V. (formerly Polycemex,
S.A. de C.V.), Cementos del Norte, S.A. de C.V. (formerly Inmobiliaria ZP
Triangular, S.A. de C.V.), Cementos de Oriente, S.A. de C.V. (formerly
Maquiladora y Distribuidora de Materiales para la Construccion, S.A. de C.V.),
Cementos Guadalajara, S.A. de C.V. (formerly Inmobiliaria Industrial Mazatleca,
S.A. de C.V.), Cementos Monterrey, S.A. de C.V. (formerly Polimeros Cemex, S.A.
de C.V.), Cemex Concretos, S.A. de C.V. (formerly Concretos de Alta Calidad y
Agregados, S.A. de C.V.), Cemtec, S.A. de C.V., Compania de Transporte del Mar
de Cortes, S.A. de C.V., Compania Minera Atoyac, S.A. de C.V., Concreto
Premezclado Nacional, S.A. de C.V., Concreto y Precolados, S.A. de C.V.,
Explotadora de Canteras, S.A. de C.V., Granos y Terrenos, S.A. de C.V.,
Pavimentos Mexicanos de Concreto, S.A. de C.V., Petrocemex, S.A. de C.V.,
Productora de Bolsas de Papel, S.A., Productos Calcareos, S.A. de C.V. and
Proveedora Mexicana de Materiales, S.A. de C.V.

PricewaterhouseCoopers

/s/ Hector Puente S.
Hector Puente S.

Monterrey, N.L.
Mexico
October 3, 2000

EXHIBIT (b)(1)

[CHASE LOGO]                                             [DEUTSCHE BANK AG LOGO]

28 September 2000

Cemex, S.A. de C.V. ("Green")
AV. Constitucion 444 Pte
Monterrey
Mexico 6400

Attention:Rodrigo Trevino
Chief Financial Officer

Dear Sirs,

Project Rey/Spur--Credit Facilities--Commitment Letter

1. Introduction

This Commitment Letter, together with the terms set out in the Term Sheet
attached as the Appendix (the "Arrangement Terms") sets out terms and
conditions of the facility (the "Facility"), which, respectively, The Chase
Manhattan Bank and Deutsche Bank AG London (in such capacity, each a "Joint
Underwriter" and together the "Joint Underwriters") are prepared to co-
underwrite, and Chase Manhattan plc and Deutsche Bank Securities Inc. (in such
capacity and as bookmanager, each a "Joint Lead Arranger" and together the
"Joint Lead Arrangers") are prepared to co-arrange in connection with the offer
(the "Offer") proposed to be made by Bidco for all the shares in the capital of
the company identified by you to us as "Spur" (the "Target") and Bidco's
acquisition of those shares (the "Acquisition").

Undefined capitalised terms used in this Commitment Letter have the meanings
given to them in the Arrangement Terms. References to this Commitment Letter
include its Appendix.

The Facility comprises an 18 month US$1,500,000,000 term loan facility to be
provided to the Bank Borrower Vehicle (the "Borrower"), a newly-formed special
purpose company, to be incorporated in a jurisdiction acceptable to the Banks
and owned by a charitable trust (or otherwise constituted in a manner
acceptable to the Banks) in accordance with the Structure Paper, pursuant to
facility documentation (the "Facility Documentation") to be entered into on the
terms envisaged by the Arrangement Terms.

The proposal and underwriting commitment set out in this Commitment Letter
is subject to the conditions set out in paragraph 16 below.

Our obligations under this Commitment Letter are subject to your signature
of our letters to you (the "Fee Letters") dated the same date as this
Commitment Letter and which set out details of certain fees payable in relation
to the Facility.

This Commitment Letter regulates certain matters relating to the Facility
and shall survive execution of the Facility Documentation.

2. Clear Market

It is agreed that (a) the Joint Lead Arrangers will together act as the sole
and exclusive arrangers and bookmanagers of the Facility, (b) the Facility
Agent will act as the sole and exclusive facility agent in respect of the
Facility and (c) the Joint Underwriters will together initially act as the sole
and exclusive underwriters of the Facility.

1

Except for the Facility and the US$1,400,000,000 facility to be made
available to Bidco (the "Bidco Facility"), for the purposes of or in connection
with, the Offer and the Acquisition and except for the refinancing of the
US$400,000,000 bridge facility to Green by Chase and of certain other bridge
and asset financings and except with the prior written consent of the Joint
Lead Arrangers:

(i) there will not at any time until the date syndication of the Facility
has been successfully completed (the "Syndication Date") be (or be
announced, arranged, underwritten, syndicated, attempted or solicited)
any other public or private financing in the domestic (whether in the
United Kingdom, the United States of America or elsewhere) or
international money, debt, bank or capital markets (including, but not
limited to, any public or private bond issue, private placement, note
issuance, bilateral or syndicated credit) for (or guaranteed by) Green
or any other member of the Group including (after the Target becomes a
subsidiary of Bidco) the Target or any of its subsidiaries; and

(ii) no amendment, waiver or consent shall be requested at any time prior
to the Syndication Date in respect of anything referred to in (i)
above,

but the restrictions in (i) and (ii) above shall not:

(a) prohibit you, the Target and/or any of its subsidiaries from
approaching existing lenders to the Target and/or any of its
subsidiaries for any amendment, waiver or consent required to avoid the
Acquisition triggering a default, event of default or the like in
respect of any borrowed money (or any facility which may give rise to
borrowed money) of the Target and/or any of its subsidiaries; or

(b) prohibit Yellow from (i) making a capital markets issue; or (ii) the
securitisation of Yellow receivables; and (iii) the refinancing of the
Vencemos trade facility provided in each case provided the size, terms,
structure and pricing thereof have been previously approved by the
Joint Lead Arrangers (such approval not to be unreasonably withheld);
or

(c) prohibit Green from making a capital markets issue or continuing the
syndication of the new USCP program in each case provided the size,
terms, structure and pricing thereof have previously been approved by
the Joint Lead Arrangers (such approval not to be unreasonably
withheld).

3. Delegation

Each of the Joint Lead Arrangers and the Joint Underwriters may delegate any
or all of its respective rights and/or obligations under any Underwriting
Document to any of its affiliates (each a "Delegate") and may designate in
writing to you any Delegate of its as responsible for the performance of any of
its appointed functions under any Underwriting Document. Any Delegate must have
the financial resources to honour obligations so delegated to it.

In this Commitment Letter "Underwriting Documents" means this Commitment
Letter, the Fee Letters, the Facility Documentation and any documentary
ancillary or supplemental to any of the foregoing.

4. Syndication Strategy

It is the intention of the Joint Lead Arrangers, prior to or after the
execution of the Facility Documentation, to syndicate all or a portion of the
commitment of the Joint Underwriters under the Facility Documentation to one or
more Banks. You understand that the Joint Lead Arrangers intend to commence
syndication efforts promptly following the date of your acceptance of this
Commitment Letter. The Joint Lead Arrangers will, in consultation with you,
manage all aspects of the syndication, including the selection of Banks,
determination of when the Joint Lead Arrangers will approach prospective Banks,
any naming rights and the final allocation of the commitments among the Banks.
It is also understood and agreed that the amount and distribution of
participating fees among the Banks will be at the Joint Lead Arrangers'
discretion, after consultation with you, and that no Bank will receive any
compensation of any kind for its participation in the Facility, except as
expressly provided for in the Fee Letter or in the Facility Documentation.

2

You will actively assist the Joint Lead Arrangers in completing a timely and
orderly syndication of the Facility in a manner satisfactory to the Joint Lead
Arrangers and the Joint Underwriters. Such assistance shall include, but not be
limited to (in addition to the obligations set out under the heading
"Information Memorandum" below):

(a) you using all reasonable efforts to ensure that the syndication efforts
benefit from your existing lending relationships and those of Yellow
and, so long as the Offer is recommended (and to the extent reasonably
possible), those of the Target;

(b) direct contact during the syndication process between senior
management, senior representatives and advisers of you, Sunward, Yellow
and, so long as the Offer is recommended (and to the extent reasonably
possible), the Target, on the one hand, and the prospective Banks, on
the other hand;

(c) providing assistance in the preparation of a confidential Information
Memorandum and other marketing materials to be used in connection with
the syndication and providing all Information and Projections (each as
defined below) reasonably deemed necessary by the Joint Lead Arrangers
to successfully complete the syndication of the Facility;

(d) the hosting, with the Joint Lead Arrangers, of one or more meetings of,
and holding discussions with, prospective Banks;

(e) agreeing to interest periods of one month's duration or less in respect
of the Facility during syndication; and

(f) ensuring that the syndication of the Facility is properly and
satisfactorily coordinated with the syndication of the Bidco Facility.

5. Information Memorandum

In line with normal euromarket practice, the Joint Lead Arrangers may
provide an Information Memorandum, on your behalf, to prospective Banks on a
strictly confidential basis. Such an Information Memorandum would, subject to
applicable law, contain all relevant information about the Group, the Yellow
Group, the Target, the Target Group, the financing structure for the
Acquisition and the Facility and the use to which the proceeds of the Facility
will be applied.

We shall be pleased to help in the preparation of such an Information
Memorandum. However, you will need to represent to the Joint Lead Arrangers in
the terms set out below in respect of the Information Memorandum. In
underwriting, arranging and syndicating the Facility, the Arranging Parties
will be using and relying on such information without independent verification.

You will be asked to approve the final version of the Information Memorandum
before its distribution to prospective Banks.

6. Supplied Information and Projections

You hereby represent, warrant and covenant to the Arranging Parties that (a)
to the best of your knowledge, all information and data (excluding financial
projections) concerning the Group, the Yellow Group, the Target, the Target
Group, the financing structure for the Acquisition and the Facility and/or the
use to which the proceeds of the Facility will be applied and the other
transactions contemplated by this letter (the "Information") that has been or
will be prepared by or on behalf of you or any of your authorised
representatives and that has been made available or will be made available to
any of the Arranging Parties by you or any of your authorised representatives
in connection with the transactions contemplated by this Commitment Letter is,
or will at the time such information is made available be, when taken as a
whole, accurate, correct and complete in all material respects and does not,
and at the time such information is made available will not, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein, taken as a whole, not misleading in any
material respect in light of the

3

circumstances under which such statements are made and (b) all financial
projections concerning the Group, the Yellow Group, the Target, the Target
Group, the financing structure for the Acquisition and the Facility and the use
to which the proceeds of the Facility will be applied and the other
transactions contemplated by this Commitment Letter that have been or will be
prepared by or on behalf of you or any of your authorised representatives and
that have been or will be made available to any of the Arranging Parties by you
or any of your authorised representatives in connection with the transactions
contemplated by this letter (the "Projections") have been and will be prepared
in good faith based upon assumptions believed by you to be reasonable at the
time made and at the time made available to any Arranging Party.

7. Updating of Information and Projections

You agree to supplement all Information concerning the Group, the Yellow
Group, the Target and the Target Group that is or has been made available to
the Arranging Parties and all the Projections which have been or are hereafter
prepared by any of the Group, the Yellow Group, the Target or the Target Group
from time to time until the sub-underwriting and general syndication of the
Facility has been successfully completed so that all information provided
remains, to the best of your knowledge, true and correct in all material
respects and all projections remain based on assumptions believed by you to be
reasonable.

8. Syndication

The Joint Lead Arrangers shall be entitled, following consultation with you,
to change the existing structure (or to seek an alternative structure
(including capital markets solutions)), amount, terms and/or pricing of the
Facility, if the syndication has not been successfully completed following
efforts by the Joint Lead Arrangers which are in their opinions reasonable and
if the Joint Lead Arrangers determine that, in the light of the same, changes
are advisable in order to ensure a successful syndication of the Facility.

9. Confidentiality

This underwriting commitment is intended for the Borrower's exclusive use
and is made on the express understanding that it and its terms and conditions
and that each of the Underwriting Documents will be treated as strictly
confidential; provided that you may disclose this underwriting commitment
(including its terms and conditions) (but not, in the case of (b) and (c)
below, the Fee Letters) (a) to your accountants, attorneys and other advisers,
in each case only in connection with the transactions contemplated by this
Commitment Letter, (b) in any document in relation to the Offer or press
release relating to the Offer, to the extent required by law or the rules of
any competent regulatory authority, (c) to the directors of the Target in
connection with the Offer or (d) as you may be compelled to do so in a judicial
or administrative proceeding or as otherwise required by law.

10. Conflicts

Upon countersignature of this Commitment Letter you acknowledge that the
Joint Underwriters and/or the Joint Lead Arrangers, their respective parent
undertakings, subsidiary undertakings and fellow subsidiary undertakings
(collectively the "Arranging Groups") may be providing debt financing, equity
capital or other services (including financial advisory services) to other
persons with whom you may have conflicting interests.

No member of the Arranging Groups shall use confidential information
obtained from you by virtue of the Facility or its relationship with you in
connection with its performance of services for other persons. This shall not,
however, affect any obligations that any member of the Arranging Groups may
have as Facility Agent under the Facility Documentation. You also acknowledge
that no member of the Arranging Groups has any obligation to use in connection
with the transactions contemplated by this Commitment Letter, or furnish to
you, confidential information obtained from other persons.

4

The terms "parent undertaking", "subsidiary undertaking" and "fellow
subsidiary undertaking" have the meanings given to them in Sections 258 and 259
of the Companies Act 1985.

The term "confidential information" means any information relating to the
Group, the Yellow Group, the Target, the Target Group and/or their affiliates
and/or their business excluding any information which (i) at the time of
disclosure is in the public domain, (ii) comes into the public domain other
than as a result of a breach of the confidentiality obligations contained in
this Commitment Letter or (iii) became available to the disclosing party from a
source other than the Group, the Yellow Group, the Target or the Target Group
(or in each case, any of their affiliates).

11. Indemnity and Limitation

Upon countersignature of this Commitment Letter by you, you agree to
indemnify, and hold harmless, each member of the Arranging Groups and their
directors, officers, employees and agents (each an "Indemnified Person")
against any loss, claim, damage, liability, cost or expense incurred in
connection with any claim, litigation, investigation or proceeding relating to
this Commitment Letter, the Fee Letters or the Facility or the use or proposed
use of proceeds of the Facility (including the reasonable fees and expenses of
counsel to the Indemnified Persons), and to reimburse each of such Indemnified
Person upon demand for any reasonable legal or other expenses incurred in
connection with investigating or defending any of the foregoing (except to the
extent resulting from the gross negligence or wilful misconduct of such
Indemnified Person).

You also agree that no Indemnified Person shall have any liability (whether
direct or indirect in contract or tort or otherwise) to you or any other member
of the Group (or your or its affiliates) for or in connection with the
transactions contemplated by this Commitment Letter except following your
acceptance of this Commitment Letter for (i) breach of the terms of this
Commitment Letter or (ii) any such liability for loss or damages incurred to
the extent that such losses or damages are found in a final judgment by a court
of competent jurisdiction (against which no appeal is or can be made) to have
resulted directly from the gross negligence or wilful misconduct of such
Indemnified Person. No Indemnified Person shall be responsible or liable to you
or any other person for consequential damages.

12. Expenses

By countersignature of this Commitment Letter you agree that you shall on
demand pay, or procure that there is paid, to the Joint Lead Arrangers and the
Joint Underwriters (who shall provide on request reasonable details of the
relevant cost or expense) the amount of all reasonable costs and expenses
(including, without limitation, legal fees, consultants fees, due diligence
expenses, travel expenses and disbursements) incurred by the Joint Lead
Arrangers and/or the Joint Underwriters in connection with:

(a) the syndication of the Facility and the negotiation, preparation,
printing and execution of the Underwriting Documents including the
Facility Documentation and, establishing the Bank Borrower Vehicle and
all other relevant corporate or other entities and carrying out the
other steps envisaged by the Structure Paper; and

(b) any signing and publicity expenses incurred in connection with the
Facility and the Facility Documentation.

You shall reimburse, or procure that there is reimbursed, such expenses upon
presentation to you by the Joint Lead Arrangers or the Joint Underwriters of a
statement of account. You shall reimburse, or procure that there is reimbursed,
such expenses in all circumstances and irrespective of whether or not (i) the
transactions contemplated by this Commitment Letter are actually completed or
(ii) the Facility Documentation is signed.

You confirm that, if such fees have not already been paid, the Joint Lead
Arrangers are authorised to deduct all fees payable in relation to the Facility
from the drawdown of the Facility by the Borrower.

5

All payments to be made by you under any Underwriting Document shall be made
free and clear of and without any deduction for or on account of any set-off or
counterclaim.

It is agreed that estimates of expenses accrued will be provided
periodically as agreed during the course of the transaction.

13. Taxes

All amounts payable to any of the Arranging Parties under the Underwriting
Documents are exclusive of Value Added Tax or any similar taxes ("VAT"). All
amounts charged by any Arranging Party or any Bank or for which any Arranging
Party or any Bank are to be reimbursed will be invoiced together with VAT,
where appropriate.

14. Termination

The Joint Underwriters may terminate their underwriting commitments in
respect of the Facility, and the Joint Lead Arrangers may terminate their
proposal to arrange the Facility (in each case by written notice to each of the
other parties to this Commitment Letter) if:

(a) Facility Documentation acceptable to the Joint Underwriters and Joint
Lead Arrangers is not signed on or before 30 November 2000 (or such
later date as the Joint Arrangers may agree); or

(b) you breach, in any material respect, any term of this Commitment
Letter; or

(c) any information provided by you, any other member of the Group or your
or their advisers (either orally or in writing) to any Arranging Party
or its advisers is materially inaccurate such that, if such information
had been accurate when provided, it could reasonably be expected to be
relevant to the decision of the Joint Lead Arrangers and the Joint
Underwriters to arrange or underwrite the Facility; or

(d) you or any member of the Group or your or its advisers fails to
disclose material facts or material information to the Joint Lead
Arrangers and the Joint Underwriters which could reasonably be expected
to be relevant to their decision to arrange or underwrite the Facility;
or

(e) either (i) there occurs after the date of this Commitment Letter any
material adverse change in the operations, condition or prospects
(financial or otherwise) of the Group including the Target Group or
(ii) there occurs a material disruption of or material adverse change
in the financial, banking or capital market conditions, in either case
which may have an adverse effect on the successful syndication of the
Facility.

The Facility Documentation will embody the commitment of each Bank
(including the Joint Underwriters) to lend money to the Borrower under the
Facility. The Joint Underwriters will not be obliged to provide the Borrower
with any funds under the Facility until the Facility Documentation is signed by
the Joint Underwriters and then only pursuant to its terms. No party will be
obliged to sign the Facility Documentation unless it is satisfied in all
respects with it.

Each of your obligations under the paragraphs headed "Expenses", "Indemnity
and Limitation" and "Confidentiality" will survive the termination (for
whatever reason) of the Joint Lead Arrangers' and the Joint Underwriters'
obligations set out in this Commitment Letter.

15. Assignment

No Underwriting Document nor your rights under it may be assigned without
our prior written consent. References in this Commitment Letter to any person
shall include any permitted assignee or other successor in title of such
person.

6

16. Conditions

The proposal and underwriting commitment set out in this Commitment Letter
is subject to:

(a) Chase Manhattan plc being appointed as joint lead arranger and The
Chase Manhattan Bank being appointed as joint underwriter in relation
to the Bidco Facility on terms acceptable to them, as discussed with
you previously;

(b) finalising in detail the corporate and financing structure for the
Offer; however, in this regard, we confirm that we are satisfied with
the structure as set out in the draft Structure Paper in the form
attached;

(c) agreement acceptable to you and us on the arrangements for, and
interrelationship of, the Facility with the Bidco Facility; and

(d) the Offer being an all cash offer.

17. Execution and General

If you agree with the terms and conditions of this Commitment Letter, please
confirm this by signing, dating and returning the two enclosed copies of this
Commitment Letter together with two signed and dated copies of the relevant Fee
Letters to Kristian Orssten of Chase Manhattan plc and Robert Gray of Deutsche
Bank Securities Inc. on or before 5pm (London time) on 28 September 2000,
failing which this proposal and underwriting commitment will terminate.

This proposal and underwriting commitment will take effect subject to the
terms and conditions set out in this Commitment Letter once countersigned by
you.

If this Commitment Letter is not so accepted, the Underwriting Documents
(and any copies) shall be returned to the persons referred to above on behalf
of the Arranging Parties promptly.

This Commitment Letter may be executed in counterparts, each of which shall
be an original and all of which, taken together, shall constitute one
agreement. Delivery of an executed signature page of this Commitment Letter by
facsimile transmission shall be effective as delivery of a manually executed
counter-part.

This proposal and underwriting commitment supersedes any prior oral and/or
written understandings and/or agreements relating to the Facility. It may not
be amended except as agreed in writing by all parties to this Commitment
Letter.

You acknowledge that you have not relied on any representation other than
those set out in this Commitment Letter. We are not liable to you for any
representation (other than any fraudulent one) that is not set out in this
Commitment Letter.

Other than the Borrower a person who is not a party to this Commitment
Letter shall have no rights under the Contract (Right of Third Parties) Act
1999 to enforce any of its terms.

18. Law and Jurisdiction

This Commitment Letter shall be governed by English law. You irrevocably and
unconditionally submit to the exclusive jurisdiction of the High Court of
Justice of England and Wales over any suit, action or proceeding arising out of
or in relation to this Commitment Letter or any transaction contemplated by
this Commitment Letter or the performance of any services under this Commitment
Letter. You irrevocably and unconditionally waive any objection to the laying
of venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum.

7

You agree that a final judgment in any such suit, action or proceeding
brought in any such court shall be conclusive and binding against you and may
be enforced in any other courts to which you are or may be subject, by suit
upon judgment.

You irrevocably agree to waive trial by jury in any suit, action,
proceeding, claim or counterclaim brought by or on behalf of any party related
to or arising out of this Commitment Letter, the transactions contemplated by
it or the performance of services under this Commitment Letter.

You hereby irrevocably appoint The Law Debenture Trust Corporation plc as
your agent for service of process in England and Wales in respect of this
Commitment Letter and the Fee Letters and agree to procure that The Law
Debenture Trust Corporation plc promptly after the date of your acceptance of
this Letter Commitment accepts such appointment.

We look forward to your favourable response to our proposal and to your
mandate to us to proceed with this transaction.

Please confirm your agreement to the above terms by signing where indicated
below.

Yours faithfully,

/s/ Kristian Orssten                        /s/ Victoria T. Mursell
----------------------------             --------------------------------------
For and on behalf of                     For and on behalf of
THE CHASE MANHATTAN BANK                 DEUTSCHE BANK AG LONDON
Joint Underwriter

Joint Underwriter

/s/ Kristian Orssten                        /s/ Victoria T. Mursell
----------------------------             --------------------------------------
For and on behalf of                     For and on behalf of
CHASE MANHATTAN plc                      DEUTSCHE BANK SECURITIES INC.
Joint Lead Arranger                      Joint Lead Arranger

Accepted and agreed by:

CEMEX, S.A. de C.V.

/s/ Ramiro Villarreal

By: Ramiro Villarreal
----------------------------

Date: 28 September 2000

8

[CHASE LOGO]                                             [DEUTSCHE BANK AG LOGO]

This is the Appendix to a Commitment Letter from Chase and Deutsche Bank
to Green dated 28 September 2000

The Appendix

Project Rey/Spur

US$1,500,000,000 SENIOR FACILITY

SUMMARY TERMS AND CONDITIONS

This Appendix should be read in conjunction with the Commitment Letter and
the Fee Letter of the same date (together the "Letters"). Undefined capitalised
terms used in this Appendix have the meanings given to them in the Letters.

The representations and warranties, events of default, covenants and
mandatory-prepayment, yield protection and other commercial provisions will be
subject where customary to exceptions, appropriate materiality (referring to
the term Material Adverse Effect in provisions which customarily are qualified
in this way) and other qualifications, grace periods, baskets and thresholds to
be agreed ("Usual Exceptions").

The term "Material Adverse Effect" as used in this Appendix signifies a
matter which is reasonably likely materially and adversely to affect:

(a) the ability of the Borrower and the other relevant members of the Group
to comply with their payment obligations and/or the financial covenants
(provided that in this latter case such non compliance materially
adversely affects or could affect the ability of relevant members of
the Group to comply with its payment obligations) under the facility
agreement to be made between the Borrower, the Joint Lead Arrangers and
others (the "Facility Agreement"), the related fee letter, the Dutch
Holdco Documentation, the Trigger Right Agreement and any related
documentation, together being the "Facility Documents"; and/or

(b) the validity or enforceability of any of the Facility Documents; and/or

(c) the business, assets, financial or trading condition of the Borrower
and/or Yellow and its subsidiaries from time to time taken as a whole
on a consolidated basis and including the Target from the date (the
"Unconditional Date") upon which the Offer becomes or is declared
unconditional in all respects in accordance with this Appendix.

The term "material Yellow Group company" as used in this Appendix signifies
any member of the Yellow Group accounting for at least 10% of the Yellow Group
profit, cash flow or assets.

The Facility is to be made available to the Borrower on the condition that
it is to be used in the manner envisaged by the structure we have discussed. A
detailed paper (the "Structure Paper") setting out the tax, accounting,
corporate and legal structure, consistent with those discussions and this
Appendix will be prepared and agreed between our respective advisers and the
availability of the Facility is also conditional on each of the other steps set
out in the Structure Paper being fulfilled in accordance with the terms of the
Structure Paper.

9

A Parties

Finance Parties

Joint Lead Arrangers and
Bookmanager                   Chase Manhattan plc and Deutsche Bank
Securities Inc. who shall together be joint
lead arrangers and joint bookrunners on an
equal basis

Joint Underwriters             The Chase Manhattan Bank and Deutsche Bank AG
London who shall together be joint underwriters
on an equal basis for US$750,000,000 each

Banks                          The Joint Underwriters and the other banks,
financial institutions and other entities
selected by the Joint Lead Arrangers in
consultation with Green in the syndication of
the Facility

Facility Agent                 Chase Manhattan International Limited

Arranging Parties              The Joint Lead Arrangers, the Joint
Underwriters and the Facility Agent

Finance Parties                The Arranging Parties and the Banks

Group Entities

Bidco                          a US special purpose vehicle, being a 100%
subsidiary of Yellow

Dutch Holdco                   a Dutch BV company or other entity (which may
incorporated in another jurisdiction) as agreed
between the Arranging Parties and Green; in
either case to be majority owned by Sunward and
owned as to the remainder by the Bank Borrower
Vehicle

Green                          Green S.A. de C.V.

Group                          Green and all its subsidiary undertakings from
time to time

Bank Borrower Vehicle          a company or companies (or other appropriate
entities) newly established and owned by a
charitable trust (or otherwise not owned by
either the Banks or Green) established and
structured in a way acceptable to the Joint
Lead Arrangers and Green, and in accordance
with the Structure Paper

Sunward                        Sunward Acquisitions NV a Dutch company and a
100% subsidiary of Green

Target                         Spur

Target Group                   Target and all its subsidiary undertakings from
time to time

Yellow
Yellow S.A.

Yellow Group
Yellow and all its subsidiary undertakings from
time to time

10

Obligors

Borrower                       the top company or entity in the Bank Borrower
Vehicle

Warrantors                     all other companies or entities in the Bank
Borrower Vehicle

As party to the Dutch Holdco
Documentation                 Sunward

B Description of Facility

Amount                         US$1,500,000,000

Type                           Term Loan Facility

Tenor                          18 months from signing of the Facility
Agreement

Purpose                        The Facility is to be used for the Offer
Purposes, namely, following the bid for Target
becoming unconditional, the financing
indirectly of part of the payment by Bidco of
(i) consideration due to shareholders in the
Target pursuant to the Offer (the shares in the
Target acquired by Bidco (whether pursuant to
the Offer or otherwise) being "Target Shares"),
(ii) consideration due to holders of share
options (if any) in the Target in respect of
the cancellation of those options and (iii)
related fees and expenses, such financing to be
provided to Bidco in accordance with the terms
of the Structure Paper.

Availability                   The Facility shall be available on and from
satisfaction of the conditions precedent until
30 June 2001 (the "Availability Period"). Any
undrawn amount of the Facility at the end of
the Availability Period will be automatically
cancelled.

C General Provisions

Repayment                      The Facility shall be repaid:

(a)  as to US$300,000,000, in instalments of
the following amounts on the following
dates after first drawdown:

. US$100,000,000 on the ninth month;

. US$100,000,000 on the twelfth month; and

. US$100,000,000 on the fifteenth month;
and

(b)  as to the balance on the date falling 18
months after signature of the Facility
Agreement

Interest Rate                  The interest rate will be the London Interbank
Offered Rate ("LIBOR") (determined by reference
to the applicable screen page for US dollars)
plus the applicable Margin and any applicable
additional costs rate.

Interest shall be paid on the last day of each
Interest Period and will be calculated on the
basis of actual days elapsed and a year of 360
days.

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Margin                         The applicable Margin will be determined by the
ratio of Total Debt (as defined in "Financial
Covenants" below) to EBITDA (as defined in
"Financial Covenants" below) (tested
quarterly), as follow:

Martin    
Ratio           (basis points)
-----           --------------
3.75 and above       175      
3.25-3.75            150      
2.75-3.25            125      
below 2.75           100       

provided that the Margin during the first three
months after the Facility is drawn down will be
150 basis points.

Interest Periods               The Facility shall have Interest Periods of 1,
2 or 3 months or such other period as may be
agreed to by the Banks. During the syndication
process, the Joint Lead Arrangers may require
the Facility to have an Interest Period of one
month to assist the syndication process.

Default Rate                   All overdue amounts, whether of principal,
interest, fees or otherwise, shall bear
interest at 2% per annum over the rate
otherwise applicable thereto.

Commitment Fees                0.375% per annum on the undrawn portion of the
Facility from the date of signing the Facility
Agreement and during the Availability Period.
Such commitment fees shall accrue from signing
of the Facility Agreement and be payable
quarterly in arrears, and on the drawdown date
of the Facility and shall be calculated on the
basis of actual days elapsed and a year of 360
days.

Agency Fee                     An agency fee in the amount agreed between the
Facility Agent and Green in the Fee Letter
shall be paid annually in advance to the
Facility Agent.

Optional Prepayments           The Borrower may prepay all or, subject to an
appropriate minimum amount and multiple, any
part of the Facility upon 30 banking days'
notice. No penalty, fee or premium will be
payable unless the prepayment is otherwise than
on the last day of an Interest Period in which
case prepayment shall be subject to an
indemnity for broken funding costs.

Mandatory Prepayments          Mandatory prepayments shall be required:

(a) in full, on an IPO of any member of the
Yellow Group or on a change of control or
sale of substantially all of the business
or assets of any material member of the
Yellow Group other than any IPO related to
previous agreements with investors under
joint venture agreements or similar
agreements in connection with Cemex Asia
Holdings or any sale of e-business
activities of Green or the Group;

(b) in full, on the Call Option (as defined
below) being exercised;

(c) in full, on the Trigger Right (as defined
below) becoming exercisable;

12

(d) in full, on Green ceasing to be the owner,
directly or indirectly, of 100% of the
issued share capital of Sunward;

(e) in full, if any debt is raised for the
purpose of prepaying any of the Banks (in
whole or in part); and

(f) to the extent such application is legally
permitted, from the proceeds of any
disposal of assets or shares by any members
of the Yellow Group (net of reasonable
costs and expenses of disposal and tax
incurred or provided for in connection with
the disposal) in excess of an amount to be
agreed provided this paragraph shall not
apply to proceeds of disposals reinvested
by any member of the Yellow Group in the
ordinary course of business, or used to
permanently repay borrowed money of the
Yellow Group, within 3 months of receipt of
such disposal proceeds.

Amounts prepaid shall not be available for
redrawing.

Conditions Precedent           Availability of the Facility is subject to
satisfactory legal documentation being agreed
between all relevant parties including the
Borrower, Sunward and the Banks and certain
conditions precedent, each of which shall be in
form, substance and in all respects
satisfactory to the Facility Agent, including:

(a) evidence that the corporate and capital
structure of the Yellow Group and regarding
the Bank Borrower Vehicle and Dutch Holdco,
is in accordance with the Structure Paper
(noting paragraph 16(b) of the Commitment
Letter);

(b) receipt of copies of constitutive documents
and corporate authorities for each Obligor
and each other company entering into the
Facility Documentation;

(c) legal, accounting and tax opinions from
counsel and other advisers to the Banks in
all applicable jurisdictions;

(d) copies of the tender offer document(s) and
the agreement and plan of merger, in the
agreed form (the "Offer Documents");

(e) evidence that all regulatory and other
approvals for the Acquisition have been
given (whether formal notification of such
approvals has been issued or not) and that
the Acquisition is not liable to be
prohibited by any relevant regulatory
authority;

(f) the payment of fees pursuant to the Fee
Letter;

(g) the Offer being unconditionally accepted
and effective in respect of an aggregate
purchase price of not more than an amount
to be agreed (it being agreed that if the
aggregate purchase price exceeds such
amount the extra funding required will be
provided by Green and that if the Offer
consideration is not all cash, the Banks
may reduce the amount of the Facility),
with a minimum acceptance level of an
amount to be agreed (on the basis it will
be that percentage that will enable Bidco
to acquire, and merge with, the Target);

13

(h) evidence that the amount advanced under the
Facility will, on receipt by the Bank
Borrower Vehicle be used to acquire the
relevant number of first ranking preference
shares of Dutch Holdco (or other suitable
instruments as may be agreed which confer
priority on the Bank Borrower Vehicle for
income and capital of Dutch Holdco
(together "Preference Shares")), in
accordance with the Structure Paper;

(i) evidence that Yellow on receipt of the
moneys referred to in (h) above will remit
such amount to Bidco on terms acceptable to
the Banks and in accordance with the
Structure Paper;

(j) a copy of all documentation required to
effect (i) above executed by all the
parties thereto, in the agreed form;

(k) evidence that Sunward has contributed
85.15% of Yellow to the Dutch Holdco in
exchange for the relevant number of
ordinary shares (or other relevant
instruments which are subordinate to the
Preference Shares in all respects (together
the "Ordinary Shares"));

(l) the Dutch Holdco Documentation (as defined
below), in the agreed form, duly executed
by all the parties thereto;

(m) if not constituted by the Dutch Holdco
Documentation, the agreement (the "Trigger
Right Agreement") constituting the Trigger
Right (as defined below), in the agreed
form, duly executed by all the parties
thereto;

(n) evidence that the Bidco Facility has been,
or will be on the date the Facility is
advanced, advanced to Bidco (the Bidco
Facility being on the terms and
arranged/underwritten by the persons as
discussed);

(o) the Offer Documents having become effective
containing an Offer price not exceeding the
agreed maximum;

(p) no material regulatory conditions or
undertakings having been required of the
Group (including any divestment obligation)
and none of the conditions of the Offer
relating to price, acceptances and
regulatory matters having been waived
without in any such case the prior written
consent of the Majority Banks having been
obtained; and

(q) evidence that a Debt Service Reserve
Account has been established and has been
fully funded (with three months' interest).

Further conditions:

(i) representations and warranties (other than
those not to be repeated) are true and
accurate on the date of drawdown of the
Facility; and

(ii) no event of default or Trigger Event or
potential event of default or Trigger
Event has occurred and is continuing or
will occur as a result of drawdown of the
Facility.

14

Condition Subsequent           Green's Egyptian assets to be contributed to
Yellow, as envisaged by the Structure Paper, as
soon as practicable after the Facility
Agreement being executed.

Dutch Holdco Documentation     As a condition precedent to the availability of
the Facility, the Dutch Holdco, Sunward (whose
obligations to act, or to omit to act, in
certain ways as shareholder will be confirmed
by Green) and the Bank Borrower Vehicle will
enter into an agreement or agreements and will
approve Articles of Dutch Holdco (together the
"Dutch Holdco Documentation") regulating
Sunward's and the Bank Borrower Vehicle's
interests in the Dutch Holdco and their
respective rights under Preference Shares and
Ordinary Shares held by them and, accordingly,
their interests in, and the activities of,
Yellow and the payment of dividends by Yellow.
The principle point is that the Preference
Shares held by the Bank Borrower Vehicle will
rank for income and capital in all respects
prior to those held by Sunward. No material
decision may be made without the consent of
holders of all the Preference Shares.

Dutch Holdco will have a corporate entity as
its sole managing director and certain reserved
matters may only be exercised with the consent
of both the Bank Borrower Vehicle and, save as
described below, Sunward

Additional Rights of the
Bank Borrower Vehicle
Under the Dutch Holdco Documentation the Bank
Borrower Vehicle will have the right (the
"Trigger Right"), on the occurrence of certain
specified events (including an Event of Default
under the Facility Agreement) (each a "Notice
Event"), to give notice to Sunward. Sunward
will continue to have the right, within a
specified period after such notice, either to
(i) exercise and complete the Call Option or
(ii) place Dutch Holdco into liquidation.

If Sunward places Dutch Holdco into
liquidation, the pre-agreed liquidator will be
obliged to sell such number of Yellow shares as
are required to be sold in order to effect a
repayment of the Facility Outstanding Amount
(as defined below), but such sale would be
conducted through procedures which would be set
out in the Dutch Holdco Documentation (the
"Trigger Procedures"). The Trigger Procedures
would require the appointment jointly by Dutch
Holdco and the Facility Agent of agreed
investment bank(s) (the "Investment Banks") to
advise on and to market the Yellow shares with
a view to obtaining the best price reasonably
obtainable in the open market given a
reasonable period (to be agreed) in which to
achieve such sale. If the Facility Agent is
advised by the Investment Banks that it is not
necessary to sell all the Yellow shares in
order to repay all amounts outstanding in
respect of the Facility, the Investment Banks
will market for sale such number of Yellow
shares as the Facility Agent determines (on
such advice) is required to be sold in order to
repay all amounts outstanding or otherwise due
in relation to the Facility.

15

The proceeds of sale would be used to
repay/redeem the Preference Shares (together
with accrued coupon, costs and expenses and any
taxes or duties) and any surplus would be paid
on the Ordinary Shares. To the extent it would
be necessary to place Dutch Holdco into
liquidation in order to make a lawful
distribution on the Preference Shares, the
Dutch Holdco Documentation will provide for all
necessary resolutions to that effect to be
passed.

It is agreed that Sunward will retain the
ability, pursuant to the Call Option described
below, to avoid Yellow shares being sold to a
third party. Sunward can do this at any time
before such sale is effected. Under the terms
of the Trigger Sale Procedures, Sunward will
receive notice (of a reasonable period to be
agreed) of any intended sale under the Trigger
Right, to afford Sunward/Green the opportunity
to use the Call Option.

If (a) a Notice Event occurs and Sunward does
not take either of the actions in (i) or (ii)
above within such specified period, or (b)
Sunward fails to exercise and complete the Call
Option by the maturity date of the Facility
where the Facility has not otherwise been
repaid in full, arrangements will apply under
which the Bank Borrower Vehicle will be able to
cause Dutch Holdco to sell Yellow shares to the
extent required to repay the Facility
Outstanding Amount.

Call Option                    Sunward and the Bank Borrower Vehicle will
enter into a call option (the "Call Option")
pursuant to which Sunward will have the right,
at any time during the term of the Facility, to
purchase from the Bank Borrower Vehicle all its
Preference Shares. The consideration payable by
Sunward on exercise of this option will be that
amount as is required to repay the Facility in
full, together with all interest and all other
amounts due under the Facility Documentation up
to the date of such repayment (the "Facility
Outstanding Amount").

Representations and            Subject to the Usual Exceptions, the
Warranties                    representations and warranties to be given by
each Obligor in respect of itself and Yellow
Group will include representations and
warranties as commonly found in a facility of
this type including those representations and
warranties as to:

(a) status, due incorporation, power and
authority to perform, no requirement to
file the Facility Documentation, no event
of default continuing, no breach of
borrowing restrictions, consents and
compliance with laws, non-conflict with law
or other agreements and obligations under
the Facility Documentation are binding;

(b) no material litigation or labour disputes,
no winding-up or other insolvency
proceedings, no material adverse change, no
encumbrances (other than as permitted), no
material defaults;

(c) no unpaid taxes or overdue filings in
respect of any member of the Group;

16

(d) Finance Parties' claims will rank pari
passu;

(e) Information supplied, accounts and
projections;

(f) (from the Borrower only) the Borrower is
controlled by the trustees of the
charitable trust;

(g) compliance with environmental law and
approvals;

(h) key intellectual property representations;

(i) each of (i) (from each Obligor other than
Sunward) the Borrower and the Bank Borrower
Vehicle and (ii) (from each Obligor) Dutch
Holdco is a holding company and does not
have any material assets or material
liabilities other than shares (or other
interest) in the other entities in the Bank
Borrower Vehicle or Yellow (in accordance
with the Structure Paper) and intercompany
debt, in accordance with the Structure
Paper;

(j) no borrowed money, other than as permitted;

(k) all shares in Target acquired by Bidco will
be beneficially owned by Bidco free from
encumbrances;

(l) the transactions contemplated in the
Structure Paper are and can be implemented
in all material respects in accordance with
the terms of the Structure Paper and all
applicable laws and regulations;

(m) original financial statements were properly
prepared and give a true and fair view;

(n) no material adverse change since original
financial statements;

(o) (after the expiry of a 120 day clean up
period beginning on the date of the
Acquisition) relevant representations about
the Target and the Target Group as required
by reference to the results of due
diligence on the Target and the Target
Group.

The representations and warranties will be
repeated on the drawdown date of the Facility,
the date upon which the Offer is made and on
the first day of each Interest Period, subject
to the Usual Exceptions.

Additionally, under the Facility Documents,
Sunward will give certain representations
regarding, amongst other things, its ownership
of shares in Dutch Holdco, the injection of
Yellow into Dutch Holdco and the arrangements
set out in the Structure Paper.

Financial Covenants            The following financial covenants will apply,
to be tested quarterly:

(a) Total Debt: EBITDA at level(s) to be
agreed; and

(b) EBITDA: Total Interest, at level(s) to be
agreed,

where:

"Total Debt" means the aggregate total debt
of the Yellow Group and principal element
of the consideration payable by

17

Sunward under the Call Option (being the
Facility Outstanding Amount from time to
time) minus the amount standing to the
credit of the Debt Service Reserve Account,
but including any off-balance sheet
financings. Note: Some exceptions to this
definition will be agreed to carve out
certain indebtedness of Yellow Group (i.e.
non interest-paying subordinated
intercompany loans, subordinated to the
Preference Shares on terms satisfactory to
the Banks, from members of Green group,
financial derivatives and operating leases)

"EBITDA" means EBITDA of the Yellow Group,
provided that if country risk for any
country materialises, the contribution to
EBITDA of any members of the Yellow Group
in that jurisdiction shall be ignored;
Note: Certain adjustments to reflect
Spanish GAAP treatment to prior year
figures and the way to incorporate EBITDA
coming from acquired subsidiaries during
calculation period, to be discussed; and

"Total Interest" means total interest on
Total Debt plus preferred dividends (or
similar) paid by members of the Yellow
Group on putable securities (or similar)

Information Covenants          Each of the Borrower and Yellow shall provide
financial information including the following:

(a) (from Yellow) annual audited accounts of it
and audited consolidated accounts of the
Yellow Group within 180 days of the
financial year-end;

(b) (from Yellow) the quarterly accounts of the
Yellow Group within 60 days of the end of
each quarter;

(c) (from Yellow) together with each set of
accounts delivered pursuant to (a) or (b)
above, annual or, as the case may be,
quarterly compliance certificates signed by
two directors (one of whom is the Finance
Director) and, in the case of compliance
certificates delivered with the annual
audited consolidated accounts, such
compliance certificates are to be signed by
the Yellow Group's auditor together with a
certificate, signed by two directors or
Yellow's auditors as aforesaid, stating the
amount of Total Debt; and

(d) (from the Borrower or, as appropriate,
Yellow) such other information in the
possession of the Borrower and/or Yellow
relating to the financial condition of it
and the other parts of the Bank Borrower
Vehicle, the Yellow Group or any member of
the Group as the Facility Agent may
reasonably request.

Negative undertakings          Negative undertakings, as commonly found in a
facility of this type, including the following,
will apply in relation to the Obligors and the
Yellow Group, subject to the Usual Exceptions:

(a) no encumbrances other than permitted
encumbrances;

18

(b) no indebtedness save for indebtedness under
the Facility Documentation and the Bidco
Facility and an aggregate permitted amount
for the Yellow Group to be agreed by Green
and the Joint Lead Arrangers by reference
to relevant financial parameters;

(c) limitation on finance leasing arrangements,
hire purchase, conditional sale or other
agreements for the acquisition of any asset
upon deferred payment terms other than
trade credit incurred in the ordinary
course of business and subject to
limitations to be agreed, with all existing
arrangements of this type disclosed to the
Joint Lead Arrangers and further
arrangements of this type up to an amount
to be agreed to be permitted;

(d) limitation on guarantees or indemnities and
loans save for the ordinary course of
trading activities and guarantees,
indemnities and loans to other members of
the Yellow Group;

(e) no factoring of receivables and no sale and
leaseback transaction, in the case of
factoring, in excess of an aggregate limit
for the Yellow Group to be agreed;

(f) limitation on acquisition of any property
or investments or subsidiaries and no entry
into joint venture or similar arrangements
above a certain value, to be agreed,
without prior written consent of the
Majority Banks;

(g) other than in relation to the merger of
Bidco and the Target pursuant to the
agreement and plan of merger, a limitation
on redemption, repurchase, retirement or
acquisition of any share capital or
warrants or repayment of shareholder or
subordinated debt, if any;

(h) prohibition on arrangements restricting
implementation of the Acquisition or
restricting implementation of the steps in
the Structure Paper;

(i) other than in relation to the merger of
Bidco and the Target pursuant to the
agreement and plan of merger, a restriction
on changes from core business and no
amalgamations or mergers without consent of
the Majority Banks;

(j) limitation on sale, transfer, lease or
other disposal of assets subject to a
threshold to be agreed, other than where
such disposal is required by a relevant
regulatory body or where the proceeds of
such disposal are reinvested in assets
compatible with the business of the Yellow
Group, or used to permanently repay
borrowed money of the Yellow Group, within
a period to be agreed;

(k) no arrangement or transactions other than
on an arm's length basis in normal course
of business;

(l) no cashflow restrictions, other than under
the Facility Agreement and any imposed by
law or under the existing contractual
arrangements of members of the Target
Group;

19

(m) no issue or allotment to non-Yellow Group
companies of any shares or relevant
securities;

(n) neither the Bank Borrower Vehicle nor Dutch
Holdco shall carry on any business save for
acting as a holding company, the making of
loans envisaged by the Structure Paper, or
own any material assets or (subject to a
threshold to be agreed) have material
liabilities, other than shares in other
entities in the Bank Borrower Vehicle or,
as appropriate, Yellow, in accordance with
the Structure Paper or as otherwise
required by the Structure Paper; and

(o) neither the Bank Borrower Vehicle nor Dutch
Holdco shall carry on any business save for
acting as a holding company, the making of
loans to or own any material assets (or
subject to a threshold to be agreed) have
material liabilities other than shares in
other entities in the Bank Borrower Vehicle
or, as appropriate, Yellow, in accordance
with the Structure Paper.

Positive Undertakings          Positive undertakings, as commonly found in a
facility of this type, including the following
will apply in relation to the Obligors and the
Yellow Group, subject to the Usual Exceptions:

(a) use the proceeds of the Facility only as
permitted by the Facility Agreement;

(b) promptly obtain and renew all necessary
consents, filings and authorisations;

(c) maintain appropriate level of insurances
over all assets and in compliance with all
other relevant documentation (e.g. leases);

(d) promptly pay all taxes imposed/file tax
returns;

(e) observe and comply with all obligations in
respect of intellectual property, the
failure to comply with which would have a
Material Adverse Effect;

(f) observe and comply with all obligations in
respect of environmental laws and
environmental approvals, the failure to
comply with which would have a Material
Adverse Effect;

(g) (by the Borrower) ensure pari passu ranking
of payment obligations of the Borrower
under the Facility Agreement with other
unsecured unsubordinated debt obligations
of the Borrower;

(h) maintenance of corporate existence,
compliance with all laws and directives
applicable to the relevant business;

(i) comply in all respects with any
prohibitions against financial assistance
under laws of any applicable jurisdiction;

(j) Yellow will procure that the Bidco Facility
(that Facility being on the terms and
arranged/underwritten by the persons as
discussed) will be available to the Target
on the date there is a change of control of
the Target as a result of the Offer, and
that on that date, Target will repay in
full the outstandings, if

20

any, under any existing credit facilities
and will cancel the available commitments
thereunder in full and will procure the
release and discharge of any guarantees or
security provided by it or its subsidiaries
in respect of such facilities as soon as
practicable thereafter and in any event
within 30 days thereof save, in either case,
where consents or waivers have been obtained
which mean that facilities are not repayable
as a result of the Offer/Acquisition;

(k) ensure that at all times the Debt Service
Reserve Account is funded with three
months' interest; and

(l) Yellow will use its best endeavours to
agree extensions to the maturity of its
facilities.

Offer Covenants                The Facility Agreement will contain
undertakings by the relevant Obligors
concerning conduct of the Offer by Bidco
typical for the financing of an Offer for a US
target (subject to consent by the Majority
Banks to the contrary), including:

(a) no other public statement made in
connection with the Offer which is
inconsistent with the terms of the Offer
Documents;

(b) keep the Facility Agent informed as to
status and the progress of the Offer, and
promptly reply to requests by the Facility
Agent to supply information in connection
with the Offer;

(c) making of the Offer within a period to be
agreed;

(d) no acquisition of shares in Target to a
level that would trigger a mandatory offer;

(e) compliance with the provisions of
applicable law, regulations, codes and
practices; and

(f) the Offer to be in accordance with the
Offer Documents provided as conditions
precedent and not to include terms
materially different or adverse to the
Facility.

Events of Default              Events of default commonly found in a facility
of this type including the following will
apply, subject to the Usual Exceptions (which
shall include grace/cure periods and
materiality tests to be agreed and carve-outs
will be agreed to exclude events relating to
the Bank Borrower Vehicle which are
attributable to the Finance Parties knowingly
causing the Bank Borrower Vehicle to breach
obligations under the Facility Documentation):

(a) non-payment;

(b) breach of covenant;

(c) breach of representation or warranty;

(d) invalidity or unlawfulness or repudiation
of Finance Documents;

(e) cross acceleration with any other financial
indebtedness in excess of an amount to be
agreed of any Obligor or any member of the
Yellow Group (other than existing Target

21

Group debt capable of being declared due by
reason solely of a change in control) or of
Green;

(f) insolvency and related matters affecting
any Obligor or any material Yellow Group
company;

(g) litigation affecting any Obligor or
material Yellow Group company;

(h) any Obligor or a material Yellow Group
company ceases or proposes to cease
carrying on its business;

(i) compulsory acquisition of all or any part
of the property or assets of any Obligor or
material Yellow Group Company;

(j) the accounts are materially qualified by
the auditors;

(k) Sunward ceases to hold the requisite
percentage of the entire issued share
capital of Dutch Holdco;

(l) the Bank Borrower Vehicle ceases to hold
the requisite percentage of the entire
issued share capital of Dutch Holdco (other
than as a result of a default by the
Banks);

(m) Dutch Holdco ceases to hold directly the
requisite percentage (85.15% plus any
increased capital) of the entire issued
share capital of Yellow;

(n) Yellow ceases to hold directly 100% of the
entire issued share capital of Bidco; and

(o) material adverse change (by reference to
Material Adverse Effect).

Assignments and Transfers      The Banks may assign or transfer their
interests in the Facility to any bank or
financial institution with the consent of
Yellow (such consent not to be unreasonably
withheld or delayed).

Majority Banks                 51%

Other provisions               In addition to the above terms, the Facility
Agreement will be drafted on terms which are
usual for a facility of this type including
indemnities protecting the Banks for broken
funding and enforcement costs and for
liabilities incurred due to the Borrower's
(other than as a result of a default by the
Banks) or any member of Yellow Group's default
and terms relating to illegality, increased
costs, market disruption, withholding tax,
payments and to provide for changes in market
practice as a result of EMU. These terms and
conditions may be amended, as mutually agreed,
to reflect issues needed for proper execution
of the transaction.

Law                            The Facility Agreement and other Facility
Documentation will be governed by English law.

22

EXHIBIT (b)(2)

September 28, 2000

Cemex S.A. de C.V.
Av. Constitucion 444 Pte.
Monterey, N.L. 64000
Mexico

Attention: Rodrigo Trevino Muguerza
Chief Financial Officer

$350,000,000 364-Day Revolving Credit Facility
$500,000,000 364-Day Revolving Credit Facility
$550,000,000 5-Year Term Loan

COMMITMENT LETTER

Ladies and Gentlemen:

Cemex S.A. de C.V. (the "Company") has advised Salomon Smith Barney Inc.
("SSB") and Citibank, N.A. ("Citibank"; collectively, with SSB, "Citi/SSB")
that the Company intends to cause its majority-owned subsidiary, Cia.
Valenciana De Cementos Portland S.A., to organize a single-purpose, wholly-
owned acquisition vehicle ("Bid Co") that will offer to acquire through a
tender offer all of the shares of the outstanding capital stock (the "Target
Stock") of a publicly-held corporation code named "Spur" (the "Target"), but in
any event not less than sufficient shares of Target Stock to enable Bid Co,
voting without any other shareholders of the Target, to approve a merger (the
"Merger") of Bid Co with the Target. As promptly as practicable after the
closing of the Tender Offer, Bid Co will consummate a merger with the Target in
which the Target will be the surviving corporation (the "Surviving
Corporation"). The Company has further advised Citi/SSB that it desires to
establish, for Bid Co and following the merger, the Surviving Corporation, a
$350,000,000 364-Day Revolving Credit Facility, a $500,000,000 364-Day
Revolving Credit Facility and a $550,000,000 5-Year Term Loan (collectively the
"Facilities"), which would be used for the purposes described in Annex 1.
Subject to the terms and conditions of this letter and the attached Annex I
(collectively, and together with the Fee Letter referred to below, this
"Commitment Letter"), Citibank is pleased to inform the Company of Citibank's
commitment to provide the entire amount of the Facilities.

Section 1. Conditions Precedent. Citibank's commitment hereunder is subject
to: (i) the preparation, execution and delivery of mutually acceptable loan
documentation, including, without limitation, a guarantee of the Facilities
provided by Cia. Valenciana De Cementos Portland S.A.; (the "Operative
Documents"); (ii) the accuracy and completeness of all representations that the
Company, Bid Co and their affiliates make to Citi/SSB and all information that
the Company, Bid Co and their affiliates furnish to Citi/SSB and the Company's
compliance with the terms of this Commitment Letter; and (iii) the payment in
full of all fees, expenses and other amounts payable under this Commitment
Letter.

Section 2. Commitment Termination. Citibank's commitment hereunder will
terminate on the earlier of (a) the date the Operative Documents have been
executed, and (b) December 15, 2000. Before such date, Citibank may terminate
its commitment hereunder if (i) the Company fails to comply with the provisions
of the third paragraph of Section 3 hereof, (ii) any event occurs or
information becomes available that, in its judgment, results or is likely to
result in the failure to satisfy any condition set forth in Section 1 or (iii)
any condition or event occurs that results in (A) a material adverse change in
the business, condition (financial or otherwise), operations, performance,
properties or prospects of (1) the Company or the Company and its subsidiaries;
including the Target, taken as a whole since December 31, 1999, or (B) any
change in loan syndication, financial or capital market conditions generally
that, in the judgment of SSB, would materially impair syndication of the
Facilities. Once the Operative Documents have been executed, the commitments
shall terminate on May 31, 2001 if the conditions to effectiveness of the
Operative Documents have not been satisfied on or prior to such date.

Section 3. Syndication. Citibank reserves the right, before or after the
execution of the Operative Documents, to syndicate all or a portion of its
commitment to one or more other financial institutions reasonably acceptable to
the Company that will become parties to the Operative Documents pursuant to a
syndication to be managed by SSB (the financial institutions becoming parties
to the Operative Documents being collectively referred to herein as the
"Lenders"). SSB will manage all aspects of the syndication in consultation with
the Company, including the timing of all offers to potential Lenders, the
determination of the amounts offered to potential Lenders, the acceptance of
commitments of the Lenders and the compensation to be provided to the Lenders.

The Company shall take all action as SSB may reasonably request to assist
SSB in forming a syndicate acceptable to SSB and the Company. The Company's
assistance in forming such a syndicate shall include but not be limited to (i)
making senior management and representatives of the Company, and to the extent
practicable, the Target available to participate in information meetings with
potential Lenders at such times and places as SSB may reasonably request; (ii)
using the Company's best efforts to ensure that the syndication efforts benefit
from the Company's and the Target's lending relationships; and (iii) providing
SSB with all information reasonably deemed necessary by it to successfully
complete the syndication.

To ensure an effective syndication of the Facilities, the Company agrees
that until the termination of the syndication (as determined by SSB), the
Company will not, and will not permit any of its affiliates to, syndicate or
issue, attempt to syndicate or issue, announce or authorize the announcement of
the syndication or issuance of, or engage in discussions concerning the
syndication or issuance of, any debt facility or debt security (including any
renewals thereof) in the commercial bank market, without the prior written
consent of SSB; provided, however, that the foregoing shall not limit the
Company's ability to issue (i) commercial paper, (ii) other short-term debt
programs currently in place, (iii) equity or public debt securities, (iv) a
$200 to $300 million commercial paper program syndication for the Company., (v)
a $70 to $100 million pre-export facility for the Company's Venezuela
operations, (vi) a $1 billion medium term note issue in euros or dollars for
Cia. Valenciana De Cementos Portland S.A., (vii) a $500 million syndicated
credit facility or bond offering for the Company or (viii) the execution of the
syndication to not more than eight financial institutions of the $1.5 billion
European Equity Swap facility in favor of Cia. Valenciana De Cementos Portland
S.A.

Citibank will act as the sole Administrative Agent for the Facilities and
SSB will act as sole lead arranger and syndication agent. No additional agents,
co-agents or arrangers will be appointed, or other titles conferred, without
the consent of SSB and Citibank; provided, however, to the extent that the
Company identifies another financial institution satisfactory to SSB in its
reasonable discretion that will commit $700,000,000 to the Facilities, such
financial institution will be designated as an arranger; provided further,
however, to the extent that the Company identifies another financial
institution satisfactory to SSB that will commit $100,000,000 to the
Facilities, such financial institution will be given an agent title.

SSB reserves the right at any time (whether prior to or after the execution
and delivery of the Operative Documents and any borrowings thereunder) to
change any or all of the terms, structure, tenor, or pricing (but not the
aggregate amount) of the Facilities if SSB determines that such changes would
be advisable in order to ensure a successful syndication of the Facilities (as
determined by SSB). SSB's rights under this paragraph and the other provisions
of this Section 3 will survive the execution and delivery of the Operative
Documents and any borrowings thereunder and continue in effect until such
syndication efforts shall be completed. The Company agrees that the Operative
Documents shall grant Citi/SSB such rights, and, if such rights are exercised,
be amended if necessary in connection with the syndication to include any such
changes deemed advisable by SSB.

Section 4. Fees. In addition to the fees described in Annex I, the Company
shall pay the non-refundable fees set forth in that certain letter agreement
dated the date hereof (the "Fee Letter") between the Company and Citi/SSB. The
terms of the Fee Letter are an integral part of Citibank's commitment hereunder
and constitute part of this Commitment Letter for all purposes hereof.

2

Section 5. Indemnification. The Company shall indemnify and hold harmless
Citi/SSB, each Lender and each of their respective affiliates and each of their
respective officers, directors, employees, agents, advisors and representatives
(each, an "Indemnified Party") from and against any and all claims, damages,
losses, liabilities and expenses (including, without limitation, fees and
disbursements of counsel), joint or several, that are incurred by or asserted
or awarded against any Indemnified Party (including, without limitation, in
connection with any investigation, litigation or proceeding or the preparation
of a defense in connection therewith), in each case arising out of or in
connection with or by reason of this Commitment Letter or the Operative
Documents or the transactions contemplated hereby or thereby or any actual or
proposed use of the proceeds of the Facilities, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
paragraph applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Company, the Target
or any of their respective directors, security holders or creditors, an
Indemnified Party or any other person or an Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated.

No Indemnified Party shall have any liability (whether in contract, tort or
otherwise) to the Company or any of its security holders or creditors for or in
connection with the transactions contemplated hereby, except for direct damages
(as opposed to special, indirect, consequential or punitive damages (including,
without limitation, any loss of profits, business or anticipated savings))
determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct.

Section 6. Costs and Expenses. The Company shall pay, or reimburse Citi/SSB
on demand for, all reasonable out-of-pocket costs and expenses incurred by
Citi/SSB (whether incurred before or after the date hereof) in connection with
the Facilities and the preparation, negotiation, execution and delivery of this
Commitment Letter, including, without limitation, the disclosed reasonable fees
and expenses of counsel, regardless of whether any of the transactions
contemplated hereby are consummated. The Company shall also pay all costs and
expenses of Citi/SSB (including, without limitation, the reasonable fees and
disbursements of counsel) incurred in connection with the enforcement of any of
its rights and remedies hereunder.

Section 7. Confidentiality. By accepting delivery of this Commitment Letter,
the Company agrees that this Commitment Letter is for the Company's
confidential use only and that neither its existence nor the terms hereof will
be disclosed by the Company to any person other than the Company's, Bid Co's
their respective officers, directors, employees, accountants, attorneys and
other advisors, and then only on a confidential and "need to know" basis in
connection with the transactions contemplated hereby; provided, however, that
the Company may make such other public disclosures of the terms and conditions
hereof as the Company is required by law, in the opinion of the Company's
counsel, to make.

Section 8. Representations and Warranties of the Company. The Company
represents and warrants that (i) all information that has been or will
hereafter be made available to Citi/SSB, any Lender or any potential Lender by
the Company, or the Target (after the acquisition thereof) or any of their
representatives in connection with the transactions contemplated hereby is and
will be complete and correct in all material respects and does not and will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not misleading
in light of the circumstances under which such statements were or are made and
(ii) all financial projections, if any, that have been or will be prepared by
the Company, or the Target (after the acquisition thereof) and made available
to Citi/SSB, any Lender or any potential Lender have been or will be prepared
in good faith based upon reasonable assumptions (it being understood that such
projections are subject to significant uncertainties and contingencies, many of
which are beyond the Company's, and the Target's control, and that no assurance
can be given that the projections will be realized). The Company agrees to
supplement the information and projections from time to time until the
Operative Documents become effective so that the representations and warranties
contained in this paragraph remain correct.

3

In providing this Commitment Letter, Citi/SSB is relying on the accuracy of
the information furnished to it by or on behalf of the Company and its
affiliates without independent verification thereof.

Section 9. No Third Party Reliance, Etc. The agreements of Citi/SSB
hereunder and of any Lender that issues a commitment to provide financing under
the Facilities are made solely for the benefit of the Company and the Borrower
and may not be relied upon or enforced by any other person. Please note that
those matters that are not covered or made clear herein are subject to mutual
agreement of the parties. The Company may not assign or delegate any of its
rights or obligations hereunder without Citi/SSB's prior written consent. This
Commitment Letter may not be amended or modified except in a written agreement
signed by all parties hereto. This Commitment Letter is not intended to create
a fiduciary relationship among the parties hereto.

The Company should be aware that Citi/SSB and/or one or more of its
affiliates may be providing financing or other services to parties whose
interests may conflict with the Company's interests. Consistent with Citi/SSB's
longstanding policy to hold in confidence the affairs of its customers, neither
Citi/SSB nor any of its affiliates will furnish confidential information
obtained from the Company to any of Citi/SSB's other customers. Furthermore,
neither Citi/SSB nor any of its affiliates will make available to the Company
confidential information that Citi/SSB obtained or may obtain from any other
customer.

Section 10. Governing Law, Etc. This Commitment Letter shall be governed by,
and construed in accordance with, the law of the State of New York. This
Commitment Letter sets forth the entire agreement between the parties with
respect to the matters addressed herein and supersedes all prior
communications, written or oral, with respect hereto. This Commitment Letter
may be executed in any number of counterparts, each of which, when so executed,
shall be deemed to be an original and all of which, taken together, shall
constitute one and the same Commitment Letter. Delivery of an executed
counterpart of a signature page to this Commitment Letter by telecopier shall
be as effective as delivery of an original executed counterpart of this
Commitment Letter. Sections 3 through 8, 10 and 11 hereof shall survive the
termination of Citibank's commitment hereunder.

Section 11. Waiver of Jury Trial. Each party hereto irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Commitment
Letter or the transactions contemplated hereby or the actions of the parties
hereto in the negotiation, performance or enforcement hereof.

4

Please indicate the Company's acceptance of the provisions hereof by signing
the enclosed copy of this Commitment Letter and the Fee Letter and returning
them, together with the fees then payable under the Fee Letter, to Steven R.
Victorin, Managing Director, Salomon Smith Barney Inc., 390 Greenwich Street,
1st Floor, New York, NY, 10013 (fax: 212 723 8692) at or before 5 p.m. (New
York City time) on September 29, 2000, the time at which Citibank's commitment
hereunder (if not so accepted prior thereto) will terminate. If the Company
elects to deliver this Commitment Letter by telecopier, please arrange for the
executed original to follow by next-day courier.

Very truly yours,

SALOMON SMITH BARNEY INC.

/s/ Steven R. Victorin
By___________________________________
Steven R. Victorin
Managing Director

CITIBANK, N.A.

/s/ Candy Miller
By __________________________________
Candy Miller
Vice President

ACCEPTED AND AGREED
on September 28, 2000:

Cemex S.A. de C.V.

/s/ Ramiro Villarreal
By __________________________________
Ramiro Villarreal
General Counsel

5

Summary of Terms and Conditions

US$1,400,000,000 Senior Credit Facilities

Borrower:                      Bid Co, a subsidiary of Cemex, and, following
the consummation of the Merger, the Surviving
Corporation.

Guarantors:                    Cia. Valenciana De Cementos Portland S.A. (the
"Parent Guarantor").

Facility Amount:               Tranche A: US$500,000,000.

Tranche B: US$350,000,000.

Tranche C: US$550,000,000.

Type of Facility:              Tranche A: Senior Unsecured 364 Day Revolving
Credit Facility Bridge.

Tranche B: Senior Unsecured 364 Day Revolving
Credit Facility.

Tranche C: Senior Unsecured 5-Term Loan.

Purpose:                       To finance Bid Co's purchase of not less than a
mutually agreed percentage of the issued and
outstanding capital stock of the Target;
refinance certain indebtedness of the Target;
commercial paper backstop; and general
corporate purposes.

Administrative Agent:          Citibank, N.A. (the "Agent").

Lead Arranger:                 Salomon Smith Barney Inc.

Lenders:                       Financial institutions acceptable to the Lead
Arranger and the Borrower.

Final Maturity Date:           Tranche A: 364 days from the Closing Date.

Tranche B: 364 days from the Closing Date.

Tranche C: 5 Years from the Closing Date.

Amortization:                  None.

Closing Date:                  December 15, 2000.

Commitment Reduction:          The Borrower will have the right, upon at least
3 business days' notice, to terminate or
cancel, in whole or in part, the unused portion
of the Facility Amount of any Tranche in excess
of the aggregate outstanding Advances under
such Tranche, provided that each partial
reduction shall be in a minimum amount of
$10,000,000 or any whole multiple of $1,000,000
in excess thereof. Once terminated, a
commitment may not be reinstated.

6

Facility Fee:                  Facility Fee will be based on the attached
Pricing Grid, based on the long-term senior
unsecured non credit enhanced debt ratings of
the Parent Guarantor until the consummation of
the Merger, and thereafter on the long-term
unsecured non credit enhanced debt ratings of
the Surviving Corporation. The Facility Fee
will be payable from the Closing Date and will
be calculated on a 360-day basis.

Interest Rates and
Interest Periods:
At the Borrower's option, any Advance that is
made to it will be available at the rates and
for the Interest Periods stated below:

. Base Rate: a fluctuating rate equal to
Citibank's Base Rate plus the Applicable
Margin.

. Eurodollar Rate: a periodic fixed rate equal
to LIBOR plus the Applicable Margin.

The Eurodollar Rate will be fixed for Interest
Periods of 1, 2, 3, or 6 months or 9 or 12
months if available by all Lenders.

Upon the occurrence and during the continuance
of any Event of Default, each Eurodollar Rate
Advance will convert to a Base Rate Advance at
the end of the Interest Period then in effect
for such Eurodollar Rate Advance.

Applicable Margin:             The Applicable Margin means, for each of
Tranches A, B and C:

. for Base Rate Advances, zero basis points per
annum; and

. for Eurodollar Rate Advances, an amount which
will vary as per the attached Pricing Grid,
based on the long-term senior unsecured non-
credit-enhanced debt ratings of the Parent
Guarantor until the consummation of the
Merger, and thereafter on the long-term
unsecured non credit enhanced debt ratings of
the Surviving Corporation.

Upon the occurrence and during the continuance
of any Event of Default, the Applicable Margin
will increase by 200 basis points per annum.

Utilization Fee:
Utilization Fee for Tranches A and B will be
based on attached Pricing Grid, based on the
long-term senior unsecured non-credit-enhanced
debt ratings of the Parent Guarantor until the
consummation of the Merger, and thereafter on
the long-term unsecured non credit enhanced
debt ratings of the Surviving Corporation. The
Utilization Fee will be added to the Applicable
Margin for any date where outstanding Advances
under the applicable Tranche exceed 33% of
commitments. The Utilization Fee will be
calculated on a 360-day basis and will be
payable on the same basis as interest.

Interest Payments:             At the end of each Interest Period for each
Advance, but no less frequently than quarterly.
Interest will be computed on a 365/366-day
basis for Base Rate Advances and a 360-day
basis for Eurodollar Rate Advances.

7

Borrowings:                    Borrowings will be in minimum principal amounts
of $10,000,000 and integral multiples of
$1,000,000 in excess thereof. All Advances
(other than Competitive Bid Advances) will be
made by the Lenders ratably in proportion to
their respective commitments. Borrowings will
be available on same day notice for Base Rate
Advances and 3 business days' notice for
Eurodollar Rate Advances. Tranche C will be
fully drawn on the date that the conditions
precedent to effectiveness have been satisfied.

Competitive Bid Option:        The Borrower may request the Agent to solicit
competitive bids from the Lenders for Advances
under Tranche A or Tranche B with requested
maturities of 30 days or more. Each Lender will
bid at its discretion. The Borrower's notice
requesting such bids will be given to the Agent
at least 1 business day prior to the proposed
Advance date for fixed rate bids and at least 4
business days prior to the proposed Advance
date for LIBOR based bids, and will specify the
proposed date of Advance, amount and maturity
date of the proposed Advance, interest payment
schedule, the interest rate basis to be used by
the Lenders in bidding, and such other terms as
the Borrower may specify. The Agent will advise
the Lenders of the terms of the Borrower's
notice, and such Lenders as elect may submit
bids, which the Agent will provide to the
Borrower.

The Borrower may accept one or more bids,
provided that the aggregate outstanding
Advances of all Lenders on the date of, and
giving effect to, any Competitive Bid Advance
may not exceed the aggregate commitments for
the applicable Tranche at such time. Bids will
be accepted in order of the lowest to the
highest rates ("Bid Rates"). The Borrower may
not accept bids in excess of the requested bid
amount for any maturity. If two or more Lenders
bid at the same Bid Rate, the amount to be
borrowed at such Bid Rate will be allocated
among such Lenders in proportion to the amount
which each Lender bid at such Bid Rate.

Each Borrowing under the Competitive Bid Option
will be in an amount of not less than
$10,000,000 and integral multiples of
$1,000,000 in excess thereof. While any such
Borrowing is outstanding, it will be deemed
usage of the applicable Tranche for the
purposes of availability, and the commitment of
each Lender under the applicable Tranche will
be reduced and deemed used for all purposes by
its pro rata share (based on its respective
commitment) of an amount equal to the
outstanding amount of such Borrowing. However,
each Lender's Advance made under the
Competitive Bid Option will not reduce such
Lender's obligation to lend its pro rata share
of the remaining undrawn commitment under the
applicable Tranche.

Repayment:
The Borrower will repay (i) each Advance (other
than a Competitive Bid Advance) under each
Tranche no later than on the Final Maturity
Date for such Tranche and (ii) each Competitive
Bid Advance at the maturity date specified in
the Borrower's notice requesting such
Competitive Bid Advance.

8

Optional Prepayment:           Advances (other than Competitive Bid Advances)
may be prepaid without penalty, on same day
notice for Base Rate Advances and 2 business
days' notice for Eurodollar Rate Advances, in
minimum amounts of $10,000,000 and increments
of $1,000,000 in excess thereof. The Borrower
will bear all costs related to the prepayment
of a Eurodollar Rate Advance prior to the last
day of the Interest Period. Competitive Bid
Advances may not be prepaid.

Loan Documentation:            The commitments will be subject to preparation,
execution and delivery of mutually acceptable
loan documentation, which will contain
conditions precedent, representations and
warranties, covenants, events of default and
other provisions customary for facilities of
this nature, including, but not limited to,
those noted below.

Conditions Precedent to
Effectiveness:                Customary for facilities of this nature
including, but not limited to:

1.  Board resolutions.

2.  Incumbency/specimen signature
certificate.

3.  Favorable legal opinion from counsel for
the Agent.

4.  Favorable legal opinion from counsel for
the Borrower.

5.  Accuracy of Representations and
Warranties.

6.  No Event of Default or event which, with
the giving of notice or passage of time
or both, would be an Event of Default,
has occurred and is continuing, or would
result from such Borrowing.

7.  Disclosure of material agreements, if
any, of the Target.

8.  No law, regulation or decree that
imposes materially adverse conditions
upon the Borrower; and neither the
Facilities nor the transactions
contemplated by the Facilities will
conflict with, violate or result in a
default under any contract, agreement or
instrument to which the Borrower is a
party.

9.  The Borrower shall have acquired
sufficient shares of Target Stock to
enable Bid Co, voting without any other
shareholders of the Target, to approve a
merger of Bid Co with the Target.

10.  The Borrower shall have received no less
than $1.5 billion as a capital
contribution from the Parent Guarantor
from the proceeds of a European equity
swap facility.

Conditions Precedent to all
Borrowings:                   Customary for facilities of this nature
including, but not limited to:

1.  All representations and warranties are
true and correct in all material respects
on and as of the date of the Borrowing,
before and after giving effect to such
Borrowing and to the

9

application of the proceeds therefrom, as
though made on and as of such date; provided
that the representation as to no material
adverse change and no material adverse
litigation shall be made only at the date of
effectiveness.

2.  No Event of Default or event which, with the
giving of notice or passage of time or both,
would be an Event of Default, has occurred
and is continuing, or would result from such
borrowing.

Representations and            Customary for facilities of this nature
Warranties:                   including, but not limited to:

1.  Confirmation of corporate status and
authority.

2.  Due authorization of the legal
documentation.

3.  Execution, delivery, and performance of the
legal documentation do not violate law or
existing agreements.

4.  All required governmental and regulatory
approvals have been obtained and remain in
full force and effect.

5.  No litigation which would have a material
adverse effect on the business, condition
(financial or otherwise) or operations or
which would affect the legality, validity
and enforceability of legal documentation.

6.  No material adverse change in the business,
condition (financial or otherwise)
operations, performance, properties or
prospects of the Parent Guarantor and the
Target taken as a whole.

7.  Accuracy of information, financial
statements.

8.  Material compliance with laws and
regulations, including ERISA and applicable
environmental laws and regulations.

9.  Legality, validity, binding effect and
enforceability of the legal documentation.

10. Margin regulation.

11. Not an investment company.

12. The termination of the commitment of the
lenders and payment in full of all debt
outstanding under the existing Target's $250
million credit agreement at the Merger.

Financial Covenants:           To be agreed between the Borrower and the
Lenders, will include:

1.  Ratio of Total Debt to EBITDA to be
determined at a later date.

2.  Ratio of EBITDA to Interest to be determined
at a later date.

Covenants:
Customary for facilities of this nature
including, but not limited to:

1.  Preservation and maintenance of corporate
existence.

2.  Material compliance with laws.

10

3.  Payment of taxes.

4.  Payment of material obligations.

5.  Visitation and inspection rights.

6.  Maintenance of books and records.

7.  Maintenance of properties necessary for
the due course of business.

8.  Maintenance of insurance as used in the
industry.

9.  Negative pledge and certain restrictions
on liens.

10.  Certain restrictions on change of
business, consolidations, mergers, and
sales of assets.

11.  Certain reporting requirements.

12.  Use of proceeds.

13.  Prior to consummation of the Merger of
the Target into BidCo (i) restriction on
indebtedness of the Target other than in
the ordinary course of business and (ii)
the Parent Guarantor will use best
efforts to cause the Target to become a
guarantor.

Events of Default:             Customary for facilities of this nature
including, but not limited to:

1.  Failure to pay principal when due and
failure to pay interest, fees and other
amounts within 3 business days of when
due.

2.  Representations or warranties materially
incorrect.

3.  Failure to comply with covenants (with
notice and cure periods as applicable).

4.  Unenforceability of the loan
documentation.

5.  Bankruptcy/insolvency.

6.  Change of control or ownership at any
time.

7.  ERISA.

Other:                         Legal documentation will include:

1.  Customary indemnification of the Agent
and Lenders and their respective
affiliates, officers, directors,
employees, agents and advisors for any
liabilities and expenses arising out of
the Facility or the use or proposed use
of proceeds.

2.  Customary agency, set-off and sharing
language.

3.  Majority Lenders, as to each Tranche,
defined as those holding greater than
50% of the outstanding committed
Advances under such Facility or, if
none, commitments. The consent of all
the Lenders under each Facility will be
required to increase the size of such
Facility, to extend the maturity or to
decrease interest rates or fees with
respect to such Facility.

11

Assignments and
Participations:               Each Lender will have the right to assign to
one or more eligible assignees all or a portion
of its rights and obligations under the Legal
documentation, with the consent, not to be
unreasonably withheld, of the Agent and the
Borrower. Minimum aggregate assignment level of
$10,000,000 and increments of $1,000,000 in
excess thereof. The parties to the assignment
(other than the Borrower) will pay to the Agent
an administrative fee of $3,500.

Each Lender will also have the right, without
the consent of the Borrower or the Agent, to
assign (i) as security, all or part of its
rights under the legal documentation to any
Federal Reserve Bank and (ii) with notice to
the Borrower and the Agent, all or part of its
rights and obligations under the legal
documentation to any of its affiliates.

Each Lender will have the right to sell
participations in its rights and obligations
under the legal documentation, subject to
customary restrictions on the participants'
voting rights.

Yield Protection, Taxes, and
Other Deductions:             The legal documentation will contain yield
protection provisions, customary for facilities
of this nature, protecting the Lenders in the
event of unavailability of funding, funding
losses, and reserve and capital adequacy
requirements.

All payments to be free and clear of any
present or future taxes, withholdings or other
deductions whatsoever (other than income taxes
in the jurisdiction of the Lender's applicable
lending office). The Lenders will use
reasonable efforts to minimize to the extent
possible any applicable taxes and the Borrower
will indemnify the Lenders and the Agent for
such taxes paid by the Lenders or the Agent.

The Borrower will have the right to replace any
Lender which requests reimbursements for
amounts owing under (1) and (2) above, provided
that (i) no Event of Default, or event which
with the giving of notice or lapse of time or
both would be an Event of Default, has occurred
and is continuing, (ii) the Borrower has
satisfied all of its obligations under the
applicable Facility relating to such Lender,
and (iii) any replacement is acceptable to the
Agent and the Borrower has paid the Agent a
$3,500 administrative fee if such replacement
Lender is not an existing Lender.

Governing Law:                 New York.

Counsel to the Agent:          Shearman & Sterling.

Expenses:                      The Borrower will reimburse the Lead Arranger
and the Agent for all reasonable out-of-pocket
expenses (including fees and expenses of
counsel to the Agent) incurred by them in the
negotiation, syndication and execution of these
facilities. Such expenses will be reimbursed by
the Borrower upon presentation of a statement
of account, regardless of whether the
transaction contemplated is actually completed
or the loan documents are signed.

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