Cemex 2012 Annual Report Download - page 21

Notes
to selected consolidated financial information
1. Cost of sales includes depreciation, amortization and deple-
tion of assets involved in production, and expenses related to
storage in producing plants, as well as, beginning in 2008,
freight expenses of raw material in plants and delivery ex-
penses of CEMEX’s ready-mix concrete business.
2. For the periods ending December 31, 2002 through 2007,
the expenses related to the distribution of the company’s
products were classified as selling expenses on the income
statement. In 2001, such expenses were recognized partially
as part of cost of sales.
3. Other financial expense (income), net, includes financial
income, realized and unrealized gains and losses from financial
instruments, foreign exchange results and the effects of net
present value on assets and liabilities. Prior to 2010, it also in-
cludes the monetary position result, applicable only for MFRS.
4. In October 2009, we completed the sale of our Austra-
lian operations for approximately A$2,020 million (approx.
US$1,700 million). The consolidated income statements pres-
ent the results of operations of the Australian assets, net of
income tax, for the years 2007, 2008, and 2009 in a single
line item as “Discontinued Operations”.
5. In 2000, a Dutch subsidiary of CEMEX issued preferred
stock for US$1.5 billion in connection with the financing
required for the CEMEX, Inc. (formerly Southdown) acquisi-
tion. After redemptions of preferred stock made during the life
of this transaction, the outstanding amount of preferred stock
included as minority interest as of December 31, 2001 and
2002, was US$900 million and US$650 million, respectively.
In October 2003, CEMEX early redeemed the total outstand-
ing amount of the preferred stock.
6. In 1998, a subsidiary of CEMEX in Spain issued US$250
million of capital securities. In April 2002, through a tender
offer, US$184 million of capital securities were redeemed. The
balance outstanding as of December 31, 2002 and 2003, was
US$66 million and was liquidated during 2004. This transac-
tion was recorded as minority interest during its tenure.
7. As of December 31, 2006, 2007, 2008, 2009, 2010,
2011 and 2012, non-controlling interest includes US$1,250
million, US$3,065 million, US$3,020 million, US$3,045 mil-
lion, US$1,320 million, US$938 million and US$473 million,
respectively, of aggregate notional amounts of perpetual
debentures issued by consolidated entities. For accounting
purposes, these debentures represent equity instruments (see
note 20D to the 2012 Annual Report’s Financial Statements).
8. The number of ADSs outstanding represents the total ADS
equivalent units outstanding at the close of each year, stated
in millions of ADSs, and includes the total number of ADS
equivalents issued by CEMEX in underlying derivative trans-
actions, and excludes the total number of ADS equivalents
issued by CEMEX and owned by subsidiaries. Each ADS listed
on the New York Stock Exchange represents 10 CPOs.
9. Our shareholders approved stock splits in 2005 and 2006.
As a result, each of our existing CPOs was surrendered in
exchange for two new CPOs. The proportional equity interest
participation of the stockholders in CEMEX’s common stock
did not change as a result of the stock splits mentioned above.
The number of our ADSs outstanding did not change as a
result of the stock splits in the year 2005. Instead, the ratio
of CPOs to ADSs was modified so that each ADS represented
10 new CPOs. As a result of the stock split approved during
2006, one additional ADS was issued in exchange for each
existing ADS, each ADS representing 10 new CPOs. Earn-
ings per ADS and the number of ADSs outstanding for the
years ending December 31, 2001 through 2005, have been
adjusted to make the effect of the stock splits retroactive for
the correspondent years. In the Financial Statements, these
figures are presented on a per-share basis (see note 22 to the
2012 Annual Report’s Financial Statements).
10. For purposes of the selected financial information for the
periods ended December 31, 2001 through 2012, the earnings
(losses)-per-ADS amounts were determined by considering the
year-end balance number of ADS equivalent units outstand-
ing during each year, i.e., 568.6, 598.3, 630.4, 665.8, 691.9,
718.4, 743.2, 838.1, 896.8, 1,104, 1,108.5 and 1,117 million,
respectively. These numbers of ADSs outstanding were not
restated retroactively to give effect to stock dividends occur-
ring during the period, as it would be required under MFRS and
IFRS for their disclosure in the financial statements.
11. Dividends declared at each year’s annual stockholders’
meeting for each period are reflected as dividends for the
preceding year. We did not declare a dividend for the years
2008, 2009, 2010, and 2011. Instead, at our 2009, 2010,
2011 and 2012 annual shareholders’ meetings, CEMEX’s
stockholders approved a capitalization of retained earnings.
New CPOs issued pursuant to the capitalization were al-
located to shareholders on a pro-rata basis. As a result, shares
equivalent to approximately 335 million CPOs, 384 million
CPOs, 401 million CPOs, and 419 million CPOs were issued
and paid during 2009, 2010, 2011, and 2012, respectively.
CPO holders received one new CPO for each 25 CPOs held,
and ADS holders received one new ADS for each 25 ADSs
held. There was no cash distribution and no entitlement to
fractional shares.
12. Please refer to page 153 for the definition of terms.
13. In 2010, 2011 and 2012, other financial obligations
include the liability components associated with CEMEX’s
financial instruments convertible into CEMEX’s CPOs, as well
as CEMEX’s capital leases (see note 16B to the 2012 Annual
Report’s Financial Statements). Prior to 2010, there were no
significant transactions concerning capital leases or convert-
ible financial instruments.
14. Beginning in 2005, free cash flow is calculated after main-
tenance capital expenditures only.
(A) In November 2008, the CNBV issued regulations requir-
ing registrants whose shares are listed on the MSE to begin
preparing their consolidated financial statements using
International Financial Reporting Standards (“IFRS”), as issued
by the International Accounting Standards Board (“IASB”),
no later than January 1, 2012 and to stop using Mexican
Financial Reporting Standards (“MFRS”). In connection with
this requirement, CEMEX’s consolidated financial statements
as of December 31, 2012 and 2011 and for the years ended
December 31, 2012, 2011 and 2010, were prepared in ac-
cordance with IFRS as issued by the IASB.
(B) As a consequence of the IFRS migration, as described in
paragraph (A) above, certain accounting differences resulted
from the adoption as compared with MFRS. The most sig-
nificant differences within the financial statements were: 1)
Derecognition of financial assets and liabilities due to securi-
tization programs; 2) Application of accounting guidelines in
financial instruments; 3) Certain reclassification between line
items in order to comply with presentation requirements; 4)
Effects on property, machinery and equipment, mostly related
to the fair value application on IFRS 1 and the hyperinflation-
ary economies threshold change; 5) Application of IFRS 1
exemption on pensions and other post retirement benefits; 6)
Effects of all differences on the balance sheet that impacted
the deferred income taxes; 7) Change in the recognition
method of the uncertain tax positions; 8) In 2011, Ready Mix
USA, LLC, was consolidated in March 31, 2011, thus four ad-
ditional months within the statement of operation in compari-
son to MFRS.
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