Cemex 2012 Annual Report Download - page 109

Notes to the
consolidated
financial
statements
109
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On July 30, 2012, CEMEX signed a 10-year strategic agreement with IBM pursuant to which IBM will provide business processes
services and information technology (“IT”). Moreover, IBM will provide business consulting to detect and promote sustainable
improvements in CEMEX’s profitability. The 10-year contract assigned to IBM is expected to generate cost reductions to CEMEX of
approximately US$1,000 (unaudited) over such period, and includes: data processing services (back oce) in finance, accounting
and human resources; as well as IT infrastructure services, support and maintenance of IT applications in the countries in which
CEMEX operates.
23D) Commitments from employee benefits
In some countries, CEMEX has self-insured health care benefits plans for its active employees, which are managed on cost plus
fee arrangements with major insurance companies or provided through health maintenance organizations. As of December 31,
2012, in certain plans, CEMEX has established stop-loss limits for continued medical assistance derived from a specific cause
(e.g., an automobile accident, illness, etc.) ranging from 23 thousand dollars to 400 thousand dollars. In other plans, CEMEX has
established stop-loss limits per employee regardless of the number of events ranging from 350 thousand dollars to 2 million
dollars. The contingency for CEMEX if all employees qualifying for health care benefits required medical services simultaneously
is significantly larger. However, this scenario is remote. The amount expensed through self-insured health care benefits was
approximately US$96 ($1,234) in 2012, US$78 ($1,089) in 2011 and US$81 ($1,026) in 2010.
23E) Contractual obligations
As of December 31, 2012 and 2011, CEMEX had the following contractual obligations:
(U.S. dollars millions) 2012 2011
Less than 1-3 3-5 More than
Obligations 1 year Years Years 5 Years Total Total
Long-term debt US$ 42 1,333 6,600 5,882 13,857 14,924
Capital lease obligations 1 83 112 51 115 361 182
Convertible notes 2 12 683 878 604 2,177 2,102
Total debt and other financial obligations 3 137 2,128 7,529 6,601 16,395 17,208
Operating leases 4 129 155 76 53 413 565
Interest payments on debt 5 747 1,437 1,066 463 3,713 4,111
Pension plans and other benefits 6 154 301 314 884 1,653 1,845
Purchases of raw materials 7 102 25 – – 127 184
Purchases of fuel and energy 8 201 413 430 2,495 3,539 3,794
Total contractual obligations US$ 1,470 4,459 9,415 10,496 25,840 27,707
$ 18,889 57,298 120,983 134,874 332,044 386,791
1 The amounts of payments under capital leases have been determined on the basis of nominal cash flows. As of December 31, 2012, the net present
value of future payments under such leases was approximately US$265 ($3,400), of which, approximately US$90 ($1,163) refers to cash flows
from 1 to 3 years, and approximately US$32 ($413) refer to cash flows from 3 to 5 years, and approximately US$79 ($1,011) refer to cash flows
of more than 5 years.
2 Refers to the convertible notes described in note 16B and assumes repayment at maturity and no conversion of the notes.
3 The schedule of debt payments, which includes current maturities, does not consider the effect of any refinancing of debt that may occur during the
following years. In the past, CEMEX has replaced its long-term obligations for others of a similar nature.
4 The amounts for operating leases have been determined on the basis of nominal cash flows. CEMEX has operating leases, primarily for operating
facilities, cement storage and distribution facilities and certain transportation and other equipment, under which annual rental payments are
required plus the payment of certain operating expenses. Rental expense was US$156 ($2,003) in 2012, US$256 ($3,195) in 2011 and US$199
($2,521) in 2010.
5 For the determination of the future estimated interest payments on floating rate denominated debt, CEMEX used the floating interest rates in effect
as of December 31, 2012 and 2011.
6 Represents estimated annual payments under these benefits for the next 10 years (note 18). Future payments include the estimate of new retirees
during such future years.
7 Future payments for the purchase of raw materials are presented on the basis of contractual nominal cash flows.
8 Future nominal payments for energy have been estimated for all contractual commitments on the basis of an aggregate average expected
consumption of approximately 3,171.4 GWh per year using the future prices of energy established in the contracts for each period. Future
payments also include CEMEX’s commitments for the purchase of fuel.