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Notes to the
consolidated
financial
statements
82
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Financial Covenants
The Facilities Agreement requires the compliance with financial ratios calculated on a consolidated basis, which mainly include:
a) the ratio of net debt to operating EBITDA (“leverage ratio”); and b) the ratio of operating EBITDA to interest expense (“coverage
ratio”). Pursuant to the Facilities Agreement, beginning on September 17, 2012, at each compliance date, financial ratios should
be calculated according to the formulas established in the debt contracts using the consolidated amounts under IFRS. During
2011 and 2010, financial ratios were calculated according to the formulas established in the Financing Agreement using the
consolidated amounts under MFRS. The determinations of financial ratios require in most cases pro forma adjustments, according
to the definitions of the contracts that differed from terms defined under IFRS and MFRS.
Based on the Facilities Agreement, CEMEX must comply with consolidated financial ratios and tests under IFRS, including a
coverage ratio for each period of four consecutive fiscal quarters (measured semi-annually) of not less than (i) 1.50 times for the
period ending on December 31, 2012 up to and including the period ending on June 30, 2014, (ii) 1.75 times from the period
ending on December 31, 2014 up to and including the period ending on June 30, 2015, (iii) 1.85 times for the period ending
on December 31, 2015, (iv) 2.0 times for the period ending on June 30, 2016, and (v) 2.25 times for the period ending on
December 31, 2016. In addition, the Facilities Agreement allows CEMEX a maximum consolidated leverage ratio for each period
of four consecutive fiscal quarters (measured semi-annually) not to exceed: (i) 7.0 times for each period from the period ending on
December 31, 2012 up to and including the period ending on December 31, 2013, (ii) 6.75 times for the period ending on June
30, 2014, (iii) 6.5 times for the period ending on December 31, 2014, (iv) 6.0 times for the period ending on June 30, 2015, (v)
5.5 times for the period ending on December 31, 2015, (vi) 5.0 times for the period ending on June 30, 2016, and (vii) 4.25 times
for the period ending on December 31, 2016. Applicable during 2011 and 2010, and resulting from the amendments made to
the original Financing Agreement on October 25, 2010, CEMEX had to comply with consolidated financial ratios and tests under
MFRS, including a coverage ratio of not less than 1.75 times for the periods ended on December 31, 2011 and 2010. In addition,
the maximum leverage ratio must not have exceeded 7.75 times for the period ending December 31, 2010 and 7.0 times for the
period ending December 31, 2011.
CEMEX’s ability to comply with these ratios may be affected by economic conditions and volatility in foreign exchange rates, as
well as by overall conditions in the financial and capital markets. For the compliance periods ended as of December 31, 2012,
2011 and 2010, taking into account the Facilities Agreement and the amended Financing Agreement, as applicable, and based
on its IFRS and MFRS amounts, as applicable, CEMEX, S.A.B. de C.V. and its subsidiaries were in compliance with the financial
covenants imposed by its debt contracts.
The main consolidated financial ratios as of December 31, 2012, 2011 and 2010 were as follows:
IFRS Consolidated MFRS Consolidated
nancial ratios nancial ratios
2012 2011 2010
Leverage ratio 1, 2 Limit =< 7.00 =< 7.00 =< 7.75
Calculation 5.44 6.64 7.43
Coverage ratio 3 Limit > 1.50 > 1.75 > 1.75
Calculation 2.10 1.88 1.95
1 The leverage ratio is calculated in pesos by dividing “funded debt” by pro forma Operating EBITDA for the last twelve months as of the calculation
date. Funded debt equals debt, as reported in the balance sheet excluding finance leases, plus perpetual debentures and guarantees, plus or minus
the fair value of derivative financial instruments, as applicable, among other adjustments.
2 Pro forma Operating EBITDA represents, all calculated in pesos, Operating EBITDA for the last twelve months as of the calculation date, plus the
portion of Operating EBITDA referring to such twelve-month period of any significant acquisition made in the period before its consolidation in
CEMEX, minus Operating EBITDA referring to such twelve-month period of any significant disposal that had already been liquidated.
3 The coverage ratio is calculated in pesos using the amounts from the financial statements, by dividing the pro forma operating EBITDA by the
financial expense for the last twelve months as of the calculation date. Financial expense includes interest accrued on the perpetual debentures.