Cemex 2012 Annual Report Download - page 58

Notes to the
consolidated
financial
statements
58
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For the years ended December 31, 2012, 2011 and 2010, revenues and costs related to construction contracts in progress were
as follows:
Recognized to date 1 2012 2011 2010
Revenue from construction contracts included in
consolidated net sales 2 $ 7,270 180 1,027 2,548
Costs incurred in construction contracts included in
consolidated cost of sales 3 (5,727) (80) (895) (1,976)
Construction contracts operating profit $ 1,543 100 132 572
1 Revenues and costs recognized from inception of the contracts until December 31, 2012 in connection with those projects still in progress.
2 Revenues from construction contracts during 2012, 2011 and 2010, determined under the percentage of completion method, were mainly obtained
in Mexico.
3 Refers to actual costs incurred during the periods. The oldest contract in progress as of December 31, 2012 started in 2008.
As of December 31, 2012 and 2011, amounts receivable for progress billings to customers of construction contracts and/or
advances received by CEMEX from these customers were not significant.
4) Selected nancial information by geographic operating segment
CEMEX applies IFRS 8, Operating Segments (“IFRS 8”), for the disclosure of its operating segments, which are defined as the
components of an entity that engage in business activities from which they may earn revenues and incur expenses, whose
operating results are regularly reviewed by the entity’s top management to make decisions about resources to be allocated to the
segments and assess their performance, and for which discrete financial information is available.
CEMEX’s main activities are oriented to the construction industry segment through the production, distribution, marketing and
sale of cement, ready-mix concrete, aggregates and other construction materials. CEMEX operates geographically on a regional
basis. Beginning in April 2011, CEMEX’s operations were reorganized into six geographical regions, each under the supervision
of a regional president: 1) Mexico, 2) United States, 3) Northern Europe, 4) Mediterranean (“MED”), 5) South America and the
Caribbean (“SAC”), and 6) Asia. Each regional president supervises and is responsible for all the business activities in the countries
comprising the region. These activities refer to the production, distribution, marketing and sale of cement, ready-mix concrete,
aggregates and other construction materials, the allocation of resources and the review of their performance and operating
results. All regional presidents report directly to CEMEX’s Chief Executive Ocer. The country manager, who is one level below
the regional president in the organizational structure, reports the performance and operating results of its country to the regional
president, including all the operating sectors. CEMEX’s top management internally evaluates the results and performance of each
country and region for decision-making purposes and allocation of resources, following a vertical integration approach considering:
a) that the operating components that comprise the reported segment have similar economic characteristics; b) that the reported
segments are used by CEMEX to organize and evaluate its activities in its internal information system; c) the homogeneous nature
of the items produced and traded in each operative component, which are all used by the construction industry; d) the vertical
integration in the value chain of the products comprising each component; e) the type of clients, which are substantially similar
in all components; f) the operative integration among components; and g) that the compensation system of a specific country is
based on the consolidated results of the geographic segment and not on the particular results of the components. In accordance
with this approach, in CEMEX’s daily operations, management allocates economic resources and evaluates operating results on a
country basis rather than on an operating component basis.