Cemex 2012 Annual Report Download - page 71

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Notes to the
consolidated
financial
statements
71
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Intangible assets of definite life
Changes in intangible assets of definite life in 2012, 2011 and 2010 were as follows:
2012
Industrial
Extraction property and Customer Mining
rights trademarks relations projects Others
1 Total
Balance at beginning of period $ 27,532 1,012 2,848 1,681 3,315 36,388
Additions (disposals), net 1 (4) (513) 134 263 (265) (385)
Amortization (446) (373) (512) (69) (1,713) (3,113)
Impairment losses (42) – – – (69) (111)
Foreign currency translation effects (1,597) 227 (214) (533) 416 (1,701)
Balance at end of period $ 25,443 353 2,256 1,342 1,684 31,078
2011
Industrial
Extraction property and Customer Mining
rights trademarks relations projects Others
1 Total 2010
Balance at beginning
of period $ 25,225 1,267 2,991 1,342 3,881 34,706 41,338
Business combinations – – – – 6 6 48
Additions (disposals), net 1 61 92 11 117 340 621 (287)
Amortization (386) (506) (463) (86) (1,638) (3,079) (3,771)
Impairment losses – – – – – – (5)
Foreign currency
translation effects 2,632 159 309 308 726 4,134 (2,617)
Balance at end of period $ 27,532 1,012 2,848 1,681 3,315 36,388 34,706
1 As of December 31, 2012 and 2011, “Others” includes the carrying amount of internal-use software of approximately $204 and $711, respectively.
Capitalized direct costs incurred in the development stage of internal-use software, such as professional fees, direct labor and related travel
expenses, amounted to approximately $352 in 2012, $501 in 2011 and $30 in 2010.
When impairment indicators exist, for each intangible asset, CEMEX determines its projected revenue streams over the estimated
useful life of the asset. In order to obtain discounted cash flows attributable to each intangible asset, such revenues are adjusted
for operating expenses, changes in working capital and other expenditures, as applicable, and discounted to net present value
using the risk adjusted discount rate of return. Significant management judgment is necessary to determine the appropriate
valuation method and estimates under the key assumptions, among which are: a) the useful life of the asset; b) the risk adjusted
discount rate of return; c) royalty rates; and d) growth rates. Assumptions used for these cash flows are consistent with internal
forecasts and industry practices.
The fair values of intangible assets are very sensitive to changes in the significant assumptions used in their calculation. Certain
key assumptions are more subjective than others. In respect of trademarks, CEMEX considers the royalty rate, which is key in the
determination of revenue streams, as the most subjective assumption. In respect of extraction rights and customer relationships,
the most subjective assumptions are revenue growth rates and estimated useful lives. CEMEX validates its assumptions through
benchmarking with industry practices and the corroboration of third party valuation advisors.