Cemex 2012 Annual Report Download - page 90

Notes to the
consolidated
financial
statements
90
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In addition, even though the changes in fair value of CEMEX’s embedded conversion options in the convertible notes affect the
statements of operations, they do not imply any risk or variability in cash flows, considering that through their exercise, CEMEX
will settle a fixed amount of debt with a fixed amount of shares. As of December 31, 2012 and 2011, the potential change in
the fair value of these embedded conversion options that would result from a hypothetical, instantaneous decrease of 10% in
the market price of CEMEX’s CPOs, with all other variables held constant, would have decreased CEMEX’s net loss for 2012 and
2011 by approximately US$89 ($1,148) and US$17 ($240), respectively, as a result of additional positive changes in fair value
associated with this option. A 10% hypothetical increase in the CPO price would generate approximately the opposite effect.
Liquidity risk
Liquidity risk is the risk that CEMEX will not have sucient funds available to meet its obligations. CEMEX has satisfied its
operating liquidity needs primarily through the operations of its subsidiaries and expect to continue to do so for both the short and
long-term. Although cash flow from our operations has historically met CEMEX’s overall liquidity needs for operations, servicing
debt and funding capital expenditures and acquisitions, its subsidiaries are exposed to risks from changes in foreign currency
exchange rates, price and currency controls, interest rates, inflation, governmental spending, social instability and other political,
economic and/or social developments in the countries in which they operate, any one of which may materially increase CEMEX
net loss and reduce cash from operations. Consequently, in order to meet its liquidity needs, CEMEX also relies on cost-cutting
and operating improvements to optimize capacity utilization and maximize profitability, as well as borrowing under credit facilities,
proceeds of debt and equity offerings, and proceeds from asset sales. CEMEX’s consolidated net cash flows provided by operating
activities, as presented in its consolidated statements of cash flows, were approximately $5,624 in 2012, $6,486 in 2011 and
$6,674 in 2010. The maturities of CEMEX’s contractual obligations are included in note 23E.
The requirement of margin calls based on the relevant master agreements under CEMEX’s derivative instruments can have a
significant negative effect on CEMEX’s liquidity position and can impair CEMEX’s ability to service its debt and fund its capital
expenditures. In addition to the current amount of margin calls previously described as of December 31, 2012 referring to
CEMEX’s derivative financial instruments positions of approximately $1,169 (US$91), the potential requirement for additional
margin calls that would result from reasonable and hypothetical instantaneous changes in the key variables associated with
CEMEX’s derivative instruments is as follows:
• As of December 31, 2012, the potential requirement for additional margin calls that would result from a hypothetical
instantaneous decrease of 10% in the value of the shares of Axtel, with all other variables held constant, was approximately
US$1.
• As of December 31, 2012, the potential requirement for additional margin calls that would result from a hypothetical
instantaneous decrease of 10% in CEMEX’s CPO price, with all other variables held constant, was approximately US$36.
17) Other current and non-current liabilities
As of December 31, 2012 and 2011, consolidated other current accounts payable and accrued expenses were as follows:
2012 2011
Provisions $ 9,496 11,625
Other accounts payable and accrued expenses 4,174 4,056
Advances from customers 1,641 1,830
Interest payable 3,003 3,134
Current liabilities for valuation of derivative instruments 623 2
Dividends payable 30 33
$ 18,967 20,680
Current provisions primarily consist of employee benefits accrued at the balance sheet date, insurance payments, and accruals
related to legal and environmental assessments expected to be settled in the short-term. These amounts are revolving in nature
and are expected to be settled and replaced by similar amounts within the next 12 months.