Cemex 2013 Annual Report Download - page 153

Notes to the financial statements
II. Optional convertible subordinated notes due in 2015
On March 30, 2010, CEMEX, S.A.B. de C.V. issued US$715 ($8,837) aggregate principal amount of 4.875% Optional Convertible
SubordinatedNotesdue2015(the“2015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,andaresubjecttoantidilutionadjustments.Asof
December31,2013and2012,theconversionpriceperADSwasapproximatelyUS$11.62andUS$12.09,respectively.Concurrentwith
theoffering,aportionoftheproceedswereusedtoenterintoacappedcalltransactionexpectedtogenerallyreducethepotentialdilution
costtoCEMEX,S.A.B.deC.V.uponthepotentialconversionofthenotes(note10D).Thefairvalueoftheconversionoptionasofthe
issuancedateamountedto$1,232,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$114(US$9)
in2012andagainof$39(US$3)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instrumentisdenominated,theconversionoptionembeddedinthe2015ConvertibleNotesceasedtobetreated
asstand-alonederivativeatfairvaluethroughthestatementofoperations.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86.0316ADSand
82.7227ADS,respectively,pereach1thousanddollarsprincipalamountofsuchnotes.
III. Mandatorily convertible securities due in 2019
InDecember2009,CEMEX,S.A.B.deC.V.completeditsoffertoexchangemarketablenotesissuedinMexicowithmaturitiesbetween
2010and2012,intomandatorilyconvertiblesecuritiesforapproximately$4,126(US$315).Reectingantidilutionadjustments,attheir
scheduledconversionin2019orearlierifthepriceoftheCPOreachesapproximately$30.68thesecuritieswillbemandatorilyconvertible
intoapproximately202millionCPOsataconversionpriceofapproximately$20.45perCPO.Duringtheirtenure,thesecuritiesbearinterest
atanannualrateof10%payablequarterly.Holdershaveanoptiontovoluntarilyconverttheirsecurities,aftertherstanniversaryoftheir
issuance,onanyinterestpaymentdateintoCPOs.Consideringthethenfunctionalcurrencyoftheissuer,theequitycomponentrepresented
bythefairvalueoftheconversionoptionasoftheissuancedateof$1,971wasrecognizedwithin“Otherequityreserves.”EffectiveJanuary
1,2013,inconnectionwiththechangeoftheParentCompany’sfunctionalcurrency,theconversionoptionembeddedinthesesecuritiesas
ofJanuary1,2013,whichrepresentedaliabilityof$365,startedtobetreatedasstand-alonederivativeatfairvaluethroughprotorloss.
Changesinfairvalueoftheconversionoptiongeneratedalossof$135(US$10)in2013.
10C) Fair value of nancial instruments
Financial assets and liabilities
Thecarryingamountsofcash,otheraccountsreceivable,short-termintercompanybalances,otheraccountspayableandaccruedexpenses,
aswellasshort-termdebt,approximatetheircorrespondingestimatedfairvaluesduetotheshort-termmaturityandrevolvingnatureof
thesenancialassetsandliabilities.Temporaryinvestments(cashequivalents)andcertainlong-terminvestmentsarerecognizedatfairvalue,
consideringtotheextentavailable,quotedmarketpricesforthesameorsimilarinstruments.Theestimatedfairvalueoflong-termdebtis
eitherbasedonestimatedmarketpricesforsuchorsimilarinstruments,consideringinterestratescurrentlyavailableforCEMEXS.A.B.de
C.V.tonegotiatedebtwiththesamematurities,ordeterminedbydiscountingfuturecashowsusingmarket-basedinterestratescurrently
availabletoCEMEXS.A.B.deC.V.
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