Cemex 2013 Annual Report Download - page 152

Notes to the financial statements
Basedonitsnancialforecasts,for2014andgoingforward,CEMEX,S.A.B.deC.V.believesthatitwillcontinuetocomplywithitsconsolidated
covenantsunderitsFacilitiesAgreement,asitisexpectingtobenetfromcostsavingsprogramsimplementedduring2013,2012and
2011,favorablemarketconditionsinsomeofitskeymarketsanddecreasingcostsforkeyinputssuchasenergy.Furthermore,CEMEXhas
anassetdisposalplaninplacewhich,asinprioryears,isexpectedtosupportCEMEX’seffortstoreduceitsoveralldebt.
CEMEX,S.A.B.deC.V.willclassifyallofitsoutstandingdebtascurrentdebtinitsbalancesheetif:1)asofanyrelevantmeasurementdate
onwhichCEMEXfailstocomplywiththenancialratiosagreeduponpursuanttotheFacilitiesAgreement;or2)asofanydatepriortoa
subsequentmeasurementdateonwhichCEMEXexpectsnottobeincompliancewithitsnancialratiosagreeduponundertheFacilities
Agreement,intheabsenceof:a)amendmentsand/orwaiverscoveringthenextsucceeding12months;b)highprobabilitythattheviolation
willbecuredduringanyagreeduponremediationperiodandbesustainedforthenextsucceeding12months;and/orc)asignedagreement
torenancetherelevantdebtonalong-termbasis.Moreover,concurrentwiththeaforementionedclassicationofdebtintheshort-term,
thenoncomplianceofCEMEXwiththenancialratiosagreeduponpursuanttotheFacilitiesAgreementor,insuchevent,theabsenceofa
waiverofcomplianceoranegotiationthereof,aftercertainproceduresuponCEMEX’slenders’request,theywouldcallfortheacceleration
ofpaymentsdueundertheFacilitiesAgreement.ThatscenariowillhaveamaterialadverseeffectonCEMEX,S.A.B.deC.V.’sliquidity,capital
resourcesandnancialposition.
10B) Other nancial obligations
OthernancialobligationsinthebalancesheetofCEMEX,S.A.B.deC.V.asofDecember31,2013and2012,areasfollows:
2013 2012
Short-term Long-term Total Short-term Long-term Total
I.Convertiblesubordinatednotesdue2018  $ – 7,565 7,565 $ – 7,100 7,100
I.Convertiblesubordinatednotesdue2016  – 11,551 11,551  – 10,768 10,768
II.Convertiblesubordinatednotesdue2015   – 8,919 8,919  – 8,397 8,397
III.Convertiblesecuritiesdue2019  177 1,392 1,569  152 1,561 1,713
   $ 177 29,427 29,604 $ 152 27,826 27,978
FinancialinstrumentsconvertibleintoCEMEX’ssharescontaincomponentsofliabilityandequity,whicharerecognizeddifferentlydepending
uponthecurrencyinwhichtheinstrumentisdenominatedandthefunctionalcurrencyoftheissuer.
I. Optional convertible subordinated notes due in 2016 and 2018
OnMarch15,2011,CEMEX,S.A.B.deC.V.closedtheofferingofUS$978($11,632)aggregateprincipalamountof3.25%convertible
subordinatednotesduein2016(the“2016ConvertibleNotes”)andUS$690($8,211)aggregateprincipalamountof3.75%convertible
subordinatednotesduein2018(the“2018ConvertibleNotes”).ThenotesaresubordinatedtoallofCEMEX’sliabilitiesandcommitments.
ThenotesareconvertibleintoaxednumberofCEMEX’sADSs,attheholder’selection,atanytimeafterJune30,2011andaresubjectto
antidilutionadjustments.AsofDecember31,2013and2012,theconversionpriceperADSwasapproximatelyUS$10.03andUS$10.43,
respectively.Aportionofthenetproceedsfromthistransactionwereusedtofundthepurchaseofcappedcalltransactions(note10D),
whicharegenerallyexpectedtoreducethepotentialdilutioncosttoCEMEX,S.A.B.deC.V.uponthepotentialconversionofsuchnotes.
Thefairvalueoftheconversionoptionasoftheissuancedateamountedtoapproximately$3,959,whichconsideringthethenfunctional
currencyoftheissuer,wasrecognizeduntilDecember31,2012asaderivativeinstrumentthroughprotorloss(note10D).Changesin
fairvalueoftheconversionoptiongeneratedalossof$1,094(US$88)in2012andagainof$167(US$13)in2011,recognizedwithin
othernancial(expense)income,net.EffectiveJanuary1,2013,inconnectionwiththechangeofthefunctionalcurrencydescribedinnote
2D,whichamongothereffectsalignedthefunctionalcurrencyoftheissuerwiththecurrencyinwhichtheinstrumentsaredenominated,
theconversionoptionsembeddedinthe2016ConvertibleNotesandthe2018ConvertibleNotesceasedtobetreatedasstand-alone
derivativesatfairvaluethroughprotorloss.TheliabilityaccrueduntilDecember31,2012wascancelledagainststockholders’equity.After
antidilutionadjustments,theconversionrateasofDecember31,2013and2012was99.6866ADSand95.8525ADS,respectively,per
each1thousanddollarsprincipalamountofsuchnotes.
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