Cemex 2009 Annual Report Download - page 88

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L. Executive stock option programs
Of the different stock option programs disclosed in note 18 to the consolidated financial statements, only the “Fixed program” was issued by the Parent
Company. Entities obligated under the other programs are part of the consolidated group.
M. Earnings per share
The calculation of earnings per share included in note 19 are the same for the Parent Company.
N. Contingencies and commitments
N.1 Guarantees
As of December 31, 2009 and 2008, CEMEX, S.A.B. de C.V. guaranteed loans made to certain subsidiaries for approximately US$12,570 and US$1,407,
respectively.
As of December 31, 2008, the Parent Company’s investment in Control Administrativo Mexicano, S.A. de C.V. (note 10A), was held in an ownership
transferring trust for management and payment. Under this trust arrangement, the Parent Company maintained its corporate and property rights, with the
pledge securing the payment of Parent Company’s debt in an amount of US$250 ($3,435) as of December 31, 2008, which includes quarterly amortizations
starting in July 2009 and maturing in October 2010. In the event of default, the assets would be sold and the amount applied to such debt. During 2009, the
Parent Company replaced the CPOs and the shares of its associates in exchange for a pledge of the assets of CEMEX plants in Merida and Ensenada.
N.2 Contractual obligations
As of December 31, 2009 and 2008, the approximate cash flows that were required by the Parent Company to meet its material contractual obligations are
summarized as follows:
(U.S. dollars millions) 2009 2008
Less than 1-3 3-5 More than
Obligations 1 year Years Years 5 years Total Total
Long-term debt 1 US$ 243 1,606 2,391 53 4,293 4,896
Interest payments on debt 2 222 495 281 6 1,004 376
Interest rate derivatives 3 – – – – – 92
Inactive derivative financial instruments 4 – – – – – 263
Total contractual obligations US$ 465 2,101 2,672 59 5,297 5,627
$ 6,087 27,502 34,976 773 69,338 77,315
1 The schedule of debt payments, which includes current maturities, does not consider the effect of any refinancing that may occur of debt during the following years. The
Parent Company has been successful replacing its long-term obligations with others of similar nature in the past.
2 In the determination of future estimated interest payments on floating rate denominated debt, the Parent Company used the floating interest rates in effect as of
December 31, 2009 and 2008.
3 Estimated contractual obligations under interest rate derivatives include the approximate cash flows under the Parent Company’s interest rate swaps and cross currency
swap contracts, and represent the net amount between the rate the Parent Company pays and the rate received under such contracts. In the determination of future
estimated cash flows, the Parent Company used the interest rates applicable under such contracts as of December 31, 2008.
4 Refers in 2008 to estimated contractual obligations of the Parent Company within positions of inactive derivative instruments (note 13).
O. Tax assessments and legal proceedings
CEMEX, S.A.B. de C.V. and certain of its subsidiaries in Mexico have been notified by the Mexican tax authority of several tax assessments related to
different tax periods. Tax assessments are based primarily on investments made in entities incorporated in foreign countries with preferential tax regimes.
On April 3, 2007, the Mexican tax authority issued a decree providing for a tax amnesty program, which allows for the settlement of previously issued tax
assessments. CEMEX decided to take advantage of the benefits of this program, resulting in the settlement of the existing fiscal tax assessments of prior
years. As a result of the program, as of December 31, 2009, CEMEX does not have any significant tax assessment pending for resolution.
Pursuant to amendments to the Mexican income tax law effective on January 1, 2005, Mexican companies with investments in entities incorporated in
foreign countries whose income tax liability is less than 75% of the income tax that would be payable in Mexico, are required to pay taxes in Mexico
on indirect revenues, such as dividends, royalties, interest, capital gains and rental fees obtained by such foreign entities, provided, however, that such
revenues are not derived from entrepreneurial activities in such countries. CEMEX challenged the constitutionality of the amendments before the Mexican
federal courts. In September 2008, the Supreme Court of Justice ruled the amendments were constitutional for tax years 2005 to 2007. Since the Supreme
Court’s decision does not pertain to the amount of taxes due or other tax obligations, CEMEX will self-assess any taxes due through the submission of
amended tax returns. As of December 31, 2009, based on preliminary estimates, CEMEX believes that the amount will not be material, but no assurance
can be given that the Mexican tax authorities will agree with CEMEX’s self-assessment of the taxes due for past periods.