Cemex 2012 Annual Report Download - page 150

Notes to the
financial
statements
150
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On February 24, 2011, stockholders at the extraordinary shareholder meeting approved an increase in the variable portion of our
capital stock of up to 6 billion shares (2 billion CPOs). Pursuant to the resolution approved by the stockholders, the subscription
and payment of the new shares may occur through a public offer of CPOs and/or the issuance of convertible securities. These
shares are kept in the treasury of CEMEX, S.A.B. de C.V. as a guarantee for the potential issuance of shares through convertible
securities.
On February 24, 2011, stockholders at the annual ordinary shareholders’ meeting approved resolutions to: (i) increase the variable
common stock through the capitalization of retained earnings, issuing up to 1,202.6 million shares (400.9 million CPOs) based
on a price of $10.52 per CPO. Stockholders received 3 new shares for each 75 shares held (1 new CPO for each 25 CPOs held),
through the capitalization of retained earnings. As a result, shares equivalent to approximately 401 million CPOs were issued,
representing an increase in common stock of approximately $3, considering a nominal value of $0.00833 per CPO, and additional
paid-in capital of approximately $4,213; and (ii) increase the variable common stock by up to 60 million shares (20 million CPOs)
issuable as a result of antidilution adjustments upon conversion of CEMEX’s convertible securities (note 10B). These shares are
kept in CEMEX’s treasury. There was no cash distribution and no entitlement to fractional shares.
On April 29, 2010, stockholders at the annual ordinary shareholder meeting approved resolutions to: (i) increase the variable
common stock through the capitalization of retained earnings, issuing up to 1,153.8 million shares (384.6 million CPOs) based
on a price of $14.24 per CPO. Stockholders received 3 new shares for each 75 shares held (1 new CPO for each 25 CPOs held),
through the capitalization of retained earnings. As a result, shares equivalent to approximately 384.6 million CPOs were issued,
representing an increase in common stock of approximately $3, considering a nominal value of $0.00833 per CPO, and additional
paid-in capital of approximately $5,476, and (ii) increase the variable common stock by up to 750 million shares (250 million
CPOs) issuable as a result of antidilution adjustments upon conversion of CEMEX’s convertible securities (note 10B). These shares
are kept in CEMEX’s treasury. There was no cash distribution and no entitlement to fractional shares.
The CPOs issued pursuant to the exercise of options under the “Fixed program” generated additional paid-in capital of approximately
$11 in 2011 and $5 in 2010, and increased the number of shares outstanding. In addition, in connection with the cost associated
with the executive long-term compensation programs in CEMEX, S.A.B. de C.V.’s CPO, CEMEX, S.A.B. de C.V. generated additional
paid-in capital of approximately $486 in 2012, $506 in 2011 and $317 in 2010, in connection with the issuance of approximately
46.4 million CPOs, 43.4 million CPOs and 25.7 million CPOs, in 2012, 2011 and 2010, respectively, against the line item of “Other
equity reserves.” The compensation cost of these programs was recognized in the financial statements of the relevant subsidiaries.
CEMEX, S.A.B. de C.V. will recognize the effects associated with the new executive conditioned compensation program as part of
the additional paid-in capital upon compliance with the performance conditions once the related CPOs are issued.
13B) Retained earnings
Net income for the year is subject to a 5% allocation toward a legal reserve until such reserve equals one fifth of the capital
represented by the common stock. As of December 31, 2012, the legal reserve amounted to $1,804.
14) Contingencies and commitments
14A) Guarantees
As of December 31, 2012 and 2011, CEMEX, S.A.B. de C.V. had guaranteed loans to certain subsidiaries of approximately
US$9,148 ($117,557) and US$8,993 ($125,538), respectively.
14B) Pledged assets
In connection with the Facilities Agreement (note 10A), CEMEX transferred to a guarantee trust and entered into pledge
agreements for the benefit of the Facilities Agreement lenders, note holders and other creditors having the benefit of negative
pledge clauses, the shares of several of its main subsidiaries, including CEMEX México, S.A. de C.V. and CEMEX España, S.A., in
order to secure payment obligations under the Facilities Agreement and other debt instruments. These shares secure several other
financings entered into prior to the date of the Facilities Agreement.