Cemex 2013 Annual Report Download - page 125

Notes to the consolidated financial statements
• InAugust2005,alawsuitwasledagainstasubsidiaryofCEMEXColombiaandothermembersoftheColombianReady-mixProducers
Association(
AsociaciónColombianadeProductoresdeConcreto orASOCRETO),aunionformedbyalltheready-mixconcreteproducers
inColombia.ThelawsuitclaimedthatCEMEXColombiaandotherASOCRETOmemberswereliablefortheprematuredistressofthe
concreteslabsofthe
AutopistaNorte trunklineoftheTransmileniobusrapidtransitsysteminBogotáinwhichready-mixconcrete
andowablellsuppliedbyCEMEXColombiaandotherASOCRETOmemberswasused.Theplaintiffsallegedthatthebasematerial
suppliedfortheroadconstructionfailedtomeetthequalitystandardsofferedbyCEMEXColombiaandtheotherASOCRETOmembers
and/orthattheyprovidedinsufcient orinaccurateinformationin connectionwiththeproduct.Theplaintiffssoughttherepairof
concreteslabsandestimatedthatthecostofsuchrepairwouldbeapproximately100billionColombianpesos(US$52or$677).In
2008,assecurityforapossiblefuturemoneyjudgmenttoberenderedagainstCEMEXColombiaintheseproceedings,theSuperior
CourtofBogotáallowedCEMEXtopresentandinsurancepolicyintheamountof20billionColombianpesos(US$10or$135).CEMEX
depositedthesecurityand,inJuly2009,theattachmentwaslifted.OnOctober10,2012,thecourtissuedatrstinstancejudgment
pursuanttowhichtheaccusationmadeagainsttwoASOCRETOofcerswasnullied,butthejudgmentconvictedtheformerdirector
oftheUrbanDevelopmentInstitute(“UDI”),andlegalrepresentativesofthebuilderandtheauditortoaprisontermof85months
andaneof32millionColombianPesos(17thousanddollars).Asaconsequenceoftheannulmentthejudgeorderedarestartofthe
proceedingagainsttheASOCRETOofcers.TheUDIandotherpartiestotheproceedingappealedtherstinstancejudgment,andon
August30,2013,theSuperiorCourtofBogotáresolved:a)toreducetheprisontermimposedtotheformerUDIofcersto60months
andimposedaneequivalentto8.8millionColombianpesos;b)tosentencetheUDIofcerstoseverallypaytheamountof108billion
Colombianpesos(US$56 or$731);c) tooverturnthe penaltyimposed tothebuilder’slegal representatives andauditorbecause
thecriminalactionagainstthemwastimebarred;andd) torevoketheannulmentinfavoroftheASOCRETOofcersandordered
therstinstancejudgetorenderajudgmentregardingtheASOCRETOofcers’liabilityorlackthereof.Inaddition,sixactionsrelated
totheprematuredistresswere brought againstCEMEXColombia. TheCundinamarcaAdministrativeCourt(
Tribunal Administrativo 
deCundinamarca )nulliedveoftheseactionsandcurrently,onlyoneremainsoutstanding.Inaddition,theUDIledanotheraction
allegingthatCEMEXColombiamadedeceivingadvertisementsonthecharacteristicsoftheowablellusedintheconstructionofthe
line.CEMEXColombiaparticipatedinthisprojectsolelyandexclusivelyassupplieroftheready-mixconcreteandowablell,which
weredeliveredandreceivedtothesatisfactionofthecontractor,fulllingalltherequiredtechnicalspecications.CEMEXColombia
didnotparticipateinnorhadanyresponsibilityonthedesign,sourcingofmaterialsortheircorrespondingtechnicalspecicationsor
construction.Atthisstageoftheproceedings,asofDecember31,2013,CEMEXisnotabletoassessthelikelihoodofanadverse
result,butifadverselyresolved,itcouldhaveamaterialadverseimpactonCEMEX’sresultsofoperations,liquidityornancialcondition.
As of December31,2013,CEMEXis involved invarious legalproceedingsof minor impact thathave arisen inthe ordinarycourseof
business.Theseproceedingsinvolve:1)productwarrantyclaims;2)claimsforenvironmentaldamages;3)indemnicationclaimsrelatingto
acquisitions;4)claimstorevokepermitsand/orconcessions;and5)otherdiversecivilactions.CEMEXconsidersthatinthoseinstancesin
whichobligationshavebeenincurred,CEMEXhasaccruedadequateprovisionstocovertherelatedrisks.CEMEXbelievesthesematterswill
beresolvedwithoutanysignicanteffectonitsbusiness,nancialpositionorresultsofoperations.Inaddition,inrelationtocertainongoing
legalproceedings,CEMEXissometimesabletomakeanddisclosereasonableestimatesoftheexpectedlossorrangeofpossibleloss,as
wellasdiscloseanyprovisionaccruedforsuchloss,butforalimitednumberofongoinglegalproceedings,CEMEXmaynotbeabletomake
areasonableestimateoftheexpectedlossorrangeofpossiblelossormaybeabletodosobutbelievesthatdisclosureofsuchinformation
onacase-by-casebasiswouldseriouslyprejudiceCEMEX’spositionintheongoinglegalproceedingsorinanyrelatedsettlementdiscussions.
Accordingly,inthesecases,CEMEXhasdisclosedqualitativeinformationwithrespecttothenatureandcharacteristicsofthecontingency,
buthasnotdisclosedtheestimateoftherangeofpotentialloss.
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