Cemex 2012 Annual Report Download - page 111

Notes to the
consolidated
financial
statements
111
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• As of December 31, 2012, CEMEX’s subsidiaries in the United States have accrued liabilities specifically relating to
environmental matters in the aggregate amount of approximately US$21 ($270). The environmental matters relate to: a) the
disposal of various materials in accordance with past industry practice, which might currently be categorized as hazardous
substances or wastes, and b) the cleanup of sites used or operated by CEMEX, including discontinued operations, regarding
the disposal of hazardous substances or waste, either individually or jointly with other parties. Most of the proceedings
are in the preliminary stages, and a final resolution might take several years. For purposes of recording the provision,
CEMEX’s subsidiaries believe that it is probable that a liability has been incurred and the amount of the liability is reasonably
estimable, whether or not claims have been asserted, and without giving effect to any possible future recoveries. Based on
the information developed to date, CEMEX’s subsidiaries do not believe that they will be required to spend significant sums
on these matters in excess of the amounts previously recorded. The ultimate cost that may be incurred to resolve these
environmental issues cannot be assured until all environmental studies, investigations, remediation work and negotiations
with, or litigation against, potential sources of recovery have been completed.
24B) Other contingencies from legal proceedings
CEMEX is involved in various legal proceedings, other than tax related matters which are detailed in note 19D, which have
not required the recognition of accruals, as CEMEX believes that the probability of loss is less than probable or remote after
considering all the elements of such proceedings, as well as proceedings in which a negative resolution for CEMEX may represent,
among other things, the revocation of operating licenses or the assessment of fines, whereby CEMEX may experience a decrease
in future revenues, an increase in operating costs or a loss. Where no amount of the estimation is disclosed, it is because such
disclosure could impair the outcome of the relevant proceeding.
As of December 31, 2012, the details of the most significant events with a quantification of the potential loss, when it is
determinable, were as follows:
• On September 13, 2012, Assiut Cement Company (“ACC”), CEMEX’s subsidiary in Egypt, learned about a preliminary non-
enforceable decision against ACC made by a court of first instance in Assiut, Egypt, regarding the annulment of a Share
Purchase Agreement signed in November 1999 between CEMEX and state-owned Metallurgical Industries Company
(“MIC”) pursuant to which CEMEX acquired a controlling interest in ACC. On September 19, 2012, ACC received the formal
notification of the ruling made by the Assiut court of first instance. On October 18, 2012 and October 20, 2012, ACC and
MIC, respectively, filed appeals of the decision with the Assiut Court of Appeals. The first hearings were held on December
19, 2012 and January 22, 2013 with such Court of Appeals, and a third hearing is scheduled for April 16, 2013.
• On June 21, 2012, one of CEMEX’s subsidiaries in Israel was notified about an application for the approval of a class action
suit against it. The application, filed by a homeowner who built his house with concrete supplied by CEMEX in October of
2010, claims that the concrete supplied to him did not meet with the “Israel Standard for Concrete Strength No. 118” and
that as a result CEMEX acted unlawfully toward all of its customers who received concrete that did not comply with the
Israeli standard requirements. As per the application, the plaintiff claims that the supply of the alleged non-conforming
concrete has caused financial and non-financial damages to those customers, including the plaintiff. CEMEX presumes that
the class action would represent the claim of all the clients who purchased the alleged non-conforming concrete from its
subsidiary in Israel during the past 7 years, the limitation period according to applicable laws in Israel. The damages that
could be sought amount to approximately 276 million Israeli Shekel (US$74 or $951). CEMEX’s subsidiary has until January
31, 2013 to submit a formal response to the corresponding court. At this stage, CEMEX believes the application is vexatious
and should be dismissed without any expense to CEMEX. As of December 31, 2012, CEMEX is analyzing the legal strategy
to be employed and is not able to assess the likelihood of the class action application being approved or, if approved, of an
adverse result, but if adversely resolved, CEMEX does not believe the final resolutions would have a material adverse impact
on its liquidity and financial position.
• On January 20, 2012, the United Kingdom Competition Commission (the “UK Commission”), commenced a market investigation
into the supply or acquisition of cement, ready-mix concrete and aggregates. The referral to the UK Commission was made
by the Oce of Fair Trading, following an investigation by them of the aggregates sector. Those companies and persons
invited to participate in the market investigation are required by law to comply with certain requests for information and,
if necessary, to attend hearings. The UK Commission is required to report on this investigation by no later than January 17,
2014. CEMEX’s subsidiaries in the UK have been invited to participate in the market investigation and will fully cooperate
with it. At this stage of the market investigation, as of December 31, 2012, CEMEX is not able to assess what would be
the scope of the recommendations made by the UK Commission, if any, or if such recommendations would have a material
adverse impact on its results of operations.