Cemex 2009 Annual Report Download - page 77

75
D) Contractual obligations
As of December 31, 2009 and 2008, CEMEX had the following contractual obligations:
(U.S. dollars millions) 2009 2008
Less than 1-3 3-5 More than
Obligations 1 year Years Years 5 Years Total Total
Long-term debt US$ 292 2,826 10,764 1,969 15,851 15,997
Capital lease obligations 9 5 1 – 15 27
Total debt 1 301 2,831 10,765 1,969 15,866 16,024
Operating leases 2 236 349 195 140 920 960
Interest payments on debt 3 1,004 2,254 1,550 336 5,144 1,272
Interest rate derivatives 4 – – – – – 92
Pension plans and other benefits 5 162 326 323 859 1,670 1,598
Inactive derivative financial instruments 6 – – – – – 385
Total contractual obligations US$ 1,703 5,760 12,833 3,304 23,600 20,331
$ 22,292 75,399 167,984 43,249 308,924 279,348
1 The scheduling of debt payments, which includes current maturities, does not consider the effect of any refinancing of debt that may occur during the following years.
CEMEX has replaced in the past its long-term obligations for others of similar nature.
2 The amounts of operating leases have been determined on the basis of nominal cash flows. CEMEX has operating leases, primarily for operating facilities, cement storage
and distribution facilities and certain transportation and other equipment, under which annual rental payments are required plus the payment of certain operating expenses.
Rental expense was US$243 ($3,305), US$198 ($2,239) and US$195 ($2,129) in 2009, 2008 and 2007, respectively.
3 For the determination of the future estimated interest payments on floating rate denominated debt, CEMEX used the interest rates in effect as of December 31, 2009 and
2008.
4 Refers to net cash flows under CEMEX’s interest rate swaps and CCS, determined in accordance with the interest rate applicable under such contracts as of
December 31, 2008.
5 Represents estimated annual payments under these benefits for the next 10 years (note 15). Future payments include the estimate of new retirees during such future
years.
6 Refers in 2008 to estimated contractual obligations within positions of inactive derivative instruments (note 13D).
21. CONTINGENCIES
A) Contingent liabilities resulting from legal proceedings
As of December 31, 2009, CEMEX was involved in various significant legal proceedings, the resolutions of which would imply cash outflows or the delivery
of other resources owned by CEMEX. As a result, certain provisions have been recognized in the financial statements. Such provisions represent the best
estimate of the contingent amounts payable in respect of these legal proceedings. As a result, CEMEX believes that it will not incur significant expenditure
in excess of the amounts previously recorded. The details of the most significant events are as follows:
•฀ On฀January฀2,฀2007,฀the฀Polish฀Competition฀and฀Consumers฀Protection฀Ofce฀(the฀“Protection฀Ofce”)฀notied฀CEMEX฀Polska,฀a฀subsidiary฀in฀Poland,฀
about the initiation of an antitrust proceeding against all cement producers in the country, including CEMEX Polska and another of CEMEX’s indirect
subsidiaries in Poland. The Protection Office alleged that there was an agreement between all cement producers in Poland regarding prices, market
quotas and other sales conditions of cement, and that the producers exchanged confidential information, all of which limited competition in the Polish
market of cement. In January 2007, CEMEX Polska filed its response to the notification, denying that it had committed the practices listed by the
Protection Office. In addition, CEMEX Polska submitted formal comments and objections gathered during the proceeding, as well as facts supporting
its position that its activities were in line with Polish competition law. In December 2009, the Protection Office issued a resolution imposing fines on
a number of Polish cement producers, including CEMEX Polska. The fine imposed on CEMEX Polska amounted to 115 million Polish zlotys (US$40 or
$524), which represents 10% of CEMEX Polska’s total revenue for the calendar year preceding the imposition of the fine. CEMEX Polska initiated
an appeal before the Polish Court of Competition and Consumer Protection. The resolution will not be enforced until two appeals are exhausted.
In December 2009, CEMEX recognized a provision of 68 million Polish zlotys (US$24 or $314) against the income statement, representing the best
estimate of the expected cash outflow in connection with this resolution.
•฀ In฀2005,฀through฀the฀acquisition฀of฀RMC฀Group฀plc฀(“RMC”),฀CEMEX฀assumed฀environmental฀remediation฀liabilities฀in฀the฀United฀Kingdom,฀pertaining฀
to closed and current landfill sites for the confinement of waste. As of December 31, 2009, CEMEX had generated a provision for the net present value
of such obligation of approximately £129 (US$208 or $2,723). Expenditure was assessed and quantified over the period in which the sites have the
potential to cause environmental harm, which was accepted by the regulator as being up to 60 years from the date of closure. The assessed expenditure
included the costs of monitoring the sites and the installation, repair and renewal of environmental infrastructure.
•฀ In฀August฀2005,฀Cartel฀Damages฀Claims,฀S.A.฀(“CDC”),฀led฀a฀lawsuit฀in฀the฀District฀Court฀in฀Düsseldorf,฀Germany฀against฀CEMEX฀Deutschland฀AG,฀
CEMEX’s subsidiary in Germany, and other German cement companies. CDC was seeking approximately €102 (US$146 or $1,911) in respect of damage
claims by 28 entities relating to alleged price and quota fixing by German cement companies between 1993 and 2002. CDC is a Belgian company
established in the aftermath of the German cement cartel investigation that took place from July 2002 to April 2003 by Germany’s Federal Cartel Office,
with the purpose of purchasing potential damage claims from cement consumers and pursuing those claims against the cartel participants. In 2006,
another entity assigned alleged claims to CDC, and the amount of damages being sought by CDC increased to €114 (US$163 or $2,136) plus interest.
In February 2007, the District Court in Düsseldorf allowed this lawsuit to proceed without going into the merits of this case by issuing an interlocutory
judgment. All defendants appealed the resolution but the appeal was dismissed in May 2008 and the lawsuit will proceed at the level of court of
first instance. In the meantime, CDC acquired new claims by assignment and announced an increase in the claim to €131 (US$188 or $2,461). As of
December 31, 2009, CEMEX Deutschland AG had accrued liabilities regarding this matter for approximately €20 (US$29 or $380).