Cemex 2012 Annual Report Download - page 141

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Notes to the
financial
statements
141
< previous I contents I next >
III. Mandatorily convertible securities due in 2019
In December 2009, CEMEX, S.A.B. de C.V. completed its offer to exchange CBs issued in Mexico, into mandatorily convertible
securities for approximately $4,126 (US$315). Reflecting antidilution adjustments, at their scheduled conversion in ten years
or earlier if the price of the CPO reaches approximately $31.9 the securities will be mandatorily convertible into approximately
194 million CPOs at a conversion price of approximately $21.269 per CPO. During their tenure, the securities bear interest at
an annual rate of 10% interest payable quarterly. Holders have an option to voluntarily convert their securities, after the first
anniversary of their issuance, on any interest payment date into CPOs. 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.”
10C) Fair value of financial 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 financial 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 flows using market-based interest rates currently available to CEMEX S.A.B. de C.V.
As of December 31, 2012 and 2011, the carrying amounts of financial assets and liabilities and their respective fair values were
as follows:
2012 2011
Carrying Carrying
amount Fair value amount Fair value
Financial assets
Derivative instruments (note 10D) $ 4,276 4,276 $ 1,788 1,788
Long-term accounts receivable with related parties (note 11) 6,942 7,243 13,943 11,702
Other investments (note 7B) 98 98 101 101
$ 11,316 11,617 $ 15,832 13,591
Financial liabilities
Long-term debt (note 10A) $ 52,365 55,453 $ 60,517 51,650
Other financial obligations (note 10B) 27,826 37,565 29,219 25,321
Derivative financial instruments (note 10D) 5,430 5,430 984 984
Long-term accounts payable with related parties (note 11) 15,814 15,072 17,146 9,964
$ 101,435 113,520 $ 107,886 87,919
Fair Value Hierarchy
CEMEX, S.A.B. de C.V. applies IFRS 13 for fair value measurements of financial assets and financial liabilities recognized or
disclosed at fair value (note 2L). The fair values determined by CEMEX S.A.B. de C.V. as of December 31, 2012 and 2011, for its
financial assets and liabilities are determined by Level 2.