Cemex 2012 Annual Report Download - page 132

Notes to the
financial
statements
132
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Other equity reserves
This caption groups the cumulative effects of items and transactions that are, temporarily or permanently, recognized directly
to stockholders’ equity, and includes the elements presented in the statements of comprehensive loss, which reflects the effects
on stockholders’ equity during a period that do not result from investments by owners and distributions to owners. The most
significant item within “Other equity reserves” during the reported periods is current and deferred income taxes during the period
arising from items whose effects are directly recognized in stockholders’ equity.
Items of “Other equity reserves” included within other comprehensive loss for the period:
• Current and deferred income taxes during the period arising from items whose effects are directly recognized in stockholders’
equity.
Items of “Other equity reserves” not included in comprehensive loss for the period:
• The equity component of outstanding mandatorily convertible securities, which are convertible into shares of CEMEX, S.A.B.
de C.V. (note 10B). Upon conversion, this amount will be reclassified to common stock and additional paid-in capital;
• As of 2012, 2011 and 2010, the increase in equity associated with (i) the capitalization of retained earnings was approximately
$4,138, $4,216 and $5,481, respectively, and (ii) CPOs issued as part of executive stock based compensation programs was
approximately $486, $506 and $317, respectively.
Retained earnings (note 13B)
Retained earnings represent the cumulative net results of prior accounting periods, net of dividends declared to stockholders, and
net of any capitalizations of retained earnings.
2P) Revenue recognition
CEMEX, S.A.B. de C.V.’s revenues represent the value, before tax on sales, of revenues originated by services sold to subsidiaries
as a result of their ordinary activities, and are quantified at the fair value of the consideration in cash received or receivable.
Revenue from services is recognized when services are rendered to customers, and there is no condition or uncertainty implying
a reversal thereof.
2Q) Executive stock-based compensation
Based on IFRS 2, Share-based payments (“IFRS 2”), stock awards based on shares of CEMEX granted to executives are defined
as equity instruments, when services received from employees are settled delivering shares; or as liability instruments, when
CEMEX, S.A.B. de C.V., commits to make cash payments to the executives on the exercise date of the awards based on changes
in CEMEX S.A.B. de C.V.’s own stock (intrinsic value). The cost of equity instruments represents their estimated fair value at the
date of grant and is recognized in the statements of operations during the period in which the exercise rights of the employees
become vested. Liability instruments are valued at their estimated fair value at each reporting date, recognizing the changes in
fair value through the operating results. CEMEX S.A.B. de C.V. determines the estimated fair value of options using the binomial
financial option-pricing model.
2R) Newly issued IFRS not yet adopted
There are a number of IFRS issued as of the date of issuance of these financial statements but which have not yet been adopted,
which are listed below. Except as otherwise indicated, CEMEX, S.A.B. de C.V. expects to adopt these IFRS when they become
effective.
• During 2011 and 2012, the IASB issued IFRS 9, Financial instruments: classication and measurement (“IFRS 9”), which as
issued, reflects the first part of Phase 1 of the IASB’s project to replace IAS 39. In subsequent phases, the IASB will address
impairment methodology, derecognition and hedge accounting. IFRS 9 requires an entity to recognize a financial asset or
a financial liability in its statement of financial position when, and only when, the entity becomes party to the contractual
provisions of the instrument. At initial recognition, an entity shall measure a financial asset or financial liability at its fair value
plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that
are directly attributable to the acquisition or issue of the financial asset or financial liability. IFRS 9 is effective for annual
periods beginning on or after January 1, 2015, with early adoption permitted. CEMEX, S.A.B. de C.V. does not consider that
current IFRS 9 will have a significant effect on the classification and measurement of CEMEX, S.A.B. de C.V.’s financial assets
and financial liabilities. Nonetheless, CEMEX, S.A.B. de C.V. will evaluate the impact and will quantify the effect together with
the other phases, when issued, to make a comprehensive analysis.