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While we continue to strive to sustain our record of disciplined profitable growth in the short, medium, and long term, given the environment in which we are living, our overarching commitment in the immediate future is to deleverage our balance sheet.
Toward this end, we are undertaking the following actions:
 , we will dedicate the bulk of our free cash flow, as well as asset sale proceeds, to debt reduction. We will maintain this priority until we have significantly reduced our net debt and regained our financial flexibility.
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, we will reduce costs in all of our operations and adjust our operations to current market conditions.
Through our global efficiency and cost reduction program, we have identified recurring synergies of US$700 million across all of our geographies and all of our main cost categories. Those synergies include reductions in fixed costs of US$250 million, variable costs of US$200 million, and SG&A of US$250 million. About 60% of the total cost reduction consisted of initiatives to make our operations more efficient. The other 40% were steps to adjust our operations to much-reduced market conditions, which steps we will reverse as market conditions change.
Thus far, we have made a significant temporary reduction in capacity: worldwide, we have suspended operations in 27 cement kilns, close to 300 ready-mix concrete plants, and almost 50 aggregates sites. Consequently, we have largely succeeded in adjusting our operations to the lower levels of activity that are expected for 2009.
, we will significantly reduce our capital expenditures.
We have cut our total capital expenditures-including maintenance and expansion expenditures-to US$650 million in 2009 from US$2.2 billion in 2008. To achieve this reduction, we stopped work on several major projects, and cancelled all new expansion projects. In 2009 we will complete only those projects that require small marginal investments and are accretive in the short run. Although we have significantly reduced our maintenance capital expenditures, we have not-and will not-put at risk our core health and safety commitments to our employees and our communities.
, we are divesting assets from our business portfolio, not only to strengthen our balance sheet, but also to reinforce our overall strategic focus.
As part of this effort, we reached an agreement to sell our assets in Austria and Hungary, and during the fourth quarter of 2008, we sold our Canary Island operations. We are pursuing additional initiatives to divest some other assets, and the proceeds of these sales will be used for debt reduction.
We have built a portfolio of assets with sustainable, profitable, long-term growth potential-producing positive free cash flow even in the down side of the economic cycle. Looking forward, we will continue to:
> Focus on our core business of cement, ready-mix concrete, and aggregates
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Our portfolio of cement, ready-mix concrete, and aggregates assets is concentrated in markets that provide sustainable top and bottom-line growth throughout the economic cycle. Over the past decade, our consolidated revenue and EBITDA have increased at compounded annual growth rates of 18% and 11%, respectively.
We intend to continue geographically diversifying our cement, ready-mix concrete, and aggregates assets and vertically integrating our operations in new and existing markets by acquiring or developing complementary assets along the value chain. By managing our cement, ready-mix concrete, and aggregate assets as one integrated business rather than as distinct businesses, we make them more efficient and profitable.
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> Provide our customers the best value proposition
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We always work to provide superior building solutions in the markets we serve. To this end, we customize our products and services to meet our customers' needs-from home construction, improvement, and renovation to agricultural, industrial, and marine/ hydraulic applications.
We also see abundant opportunities to deepen our customer relationships by focusing on more vertically integrated building solutions rather than separate products. By developing our integrated offerings, we can provide customers with more reliable, higher-quality service and more consistent product quality.
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> Grow profitably through integrated positions across our industry's value chain
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We believe that there is still ample room for further consolidation in our industry. Thus, we see substantial long-term opportunity for us to acquire new operations and leverage our existing assets, expertise, and infrastructure to intensify our strategic growth across the value chain.
Our potential for growth increases substantially when we look down the cement value chain. We believe that there is still ample room for further consolidation in our industry. Thus, we see substantial long-term opportunity for us to acquire new operations and leverage our existing assets, expertise, and infrastructure to intensify our strategic growth across the value chain.
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> Allocate capital effectively
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We complement the organic growth of our business with strategic acquisitions and capital investments. As a leading industry consolidator, we take a disciplined approach to capital allocation. We evaluate potential acquisitions in the light of the following investment criteria:
- The acquisition should provide a return on investment that is well in excess of our weighted cost of capital.
- Factors that we can influence, in particular the application of our management and turnaround expertise, should principally drive the potential for increasing the acquisition's value.
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> Integrate acquisitions quickly and achieve optimal operating standards.
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We are always looking for ways to improve our productivity and operating efficiency. Toward this end, we have implemented several standardized platforms to reduce our costs, streamline our processes, and extract synergies from our global operations. With each acquisition, we have refined the technological and managerial processes required to integrate new operations into our corporate structure. We have also taken various steps over the past several years to improve our overall product quality and the environmental impact of our operations.
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Employee stock-ownership plan
To better align our executives' interests with those of our stockholders, we began offering executives a new stock-ownership program in 2005. The plan's goal is to move our company's long-term incentives from stock options to programs based on restricted stock, which we believe is more highly valued by our executives and stockholders. As of December 31, 2008, our executives held 53,995,108 restricted CPOs, representing 0.7 percent of our total CPOs outstanding.
Corporate governance
We are committed to the highest standards of corporate governance. Our company's board of directors is composed of qualified directors who provide appropriate oversight. The requirement of independence of the audit committee members satisfies applicable law, and at least one member of our audit committee meets the requirements of a "financial expert" as defined by the Sarbanes-Oxley Act of 2002 (SOX).
We also have designed and deployed: 1) a formal internal process to support the certification by our chief executive officer and our executive vice president of planning and finance of the information that we present in CEMEX's periodic reports to the US Securities and Exchange Commission; 2) a system to ensure that relevant information reaches senior management in a timely manner; 3) a system for anonymously and confidentially communicating to the audit committee complaints and concerns regarding accounting and audit issues; 4) a process for anonymously and confidentially submitting complaints related to unethical conduct and misuse of assets; and 5) a task force to follow legal requirements and best corporate governance practices and, when appropriate, propose further improvements. Moreover, we have modified our code of ethics to reflect the requirements of SOX.
We are in compliance with the applicable sections of SOX, including section 404.
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