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Document and Entity Information
12 Months Ended
Dec. 31, 2014
Document and Entity Information [abstract]  
Entity registrant name CEMEX, S.A.B. de C.V.
Trading symbol CX
Document period end date Dec. 31, 2014
Current fiscal year end date --12-31
Document fiscal year focus 2014
Document fiscal period focus FY
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Consolidated Statements of Operations (MXN $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Statement [abstract]      
Net sales $ 210,023 $ 195,661 $ 197,036
Cost of sales (142,746) (134,774) (138,706)
Gross profit 67,277 60,887 58,330
Administrative and selling expenses (25,263) (24,142) (23,749)
Distribution expenses (19,831) (17,241) (17,580)
Operating expenses (45,094) (41,383) (41,329)
Operating earnings before other expenses, net 22,183 19,504 17,001
Other expenses, net (5,128) (4,903) (5,490)
Operating earnings 17,055 14,601 11,511
Financial expense (21,504) (19,937) (18,511)
Other financial income, net 2,495 1,706 977
Equity in gain of associates 297 229 728
Loss before income tax (1,657) (3,401) (5,295)
Income tax (4,023) (6,210) (6,043)
CONSOLIDATED NET LOSS (5,680) (9,611) (11,338)
Non-controlling interest net income 1,103 1,223 662
CONTROLLING INTEREST NET LOSS $ (6,783) $ (10,834) $ (12,000)
BASIC LOSS PER SHARE $ (0.18) $ (0.29) $ (0.33)
DILUTED LOSS PER SHARE $ (0.18) $ (0.29) $ (0.33)
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Consolidated Statements of Comprehensive Loss (MXN $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement Of Comprehensive Income [abstract]      
CONSOLIDATED NET LOSS $ (5,680) $ (9,611) $ (11,338)
Items that will not be reclassified subsequently to profit or loss      
Actuarial losses (3,025) (391) (754)
Income tax recognized directly in other comprehensive income 486 (122) 263
Other comprehensive income net of tax gains losses on remeasurements of defined benefit plans (2,539) (513) (491)
Items that will be reclassified subsequently to profit or loss when specific conditions are met      
Effects from available-for-sale investments (94) 80 (44)
Currency translation of foreign subsidiaries 501 952 (7,324)
Income tax recognized directly in other comprehensive income (85) (1,085) (3,639)
Other comprehensive income that will be reclassified to profit or loss net of tax 322 (53) (11,007)
Other comprehensive loss (2,217) (566) (11,498)
TOTAL COMPREHENSIVE LOSS (7,897) (10,177) (22,836)
Non-controlling interest comprehensive income 2,129 892 662
CONTROLLING INTEREST COMPREHENSIVE LOSS $ (10,026) $ (11,069) $ (23,498)
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Consolidated Balance Sheets (MXN $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
CURRENT ASSETS    
Cash and cash equivalents $ 12,589 $ 15,176
Trade receivables less allowance for doubtful accounts 26,954 25,971
Other accounts receivable 4,435 7,010
Inventories, net 18,074 16,985
Other current assets 8,906 3,906
Total current assets 70,958 69,048
NON-CURRENT ASSETS    
Investments in associates 9,560 9,022
Other investments and non-current accounts receivable 10,317 12,060
Property, machinery and equipment, net 202,928 205,717
Goodwill and intangible assets, net 193,484 174,940
Deferred income taxes 27,714 25,343
Total non-current assets 444,003 427,082
TOTAL ASSETS 514,961 496,130
CURRENT LIABILITIES    
Short-term debt including current maturities of long-term debt 14,507 3,959
Other financial obligations 11,512 5,568
Trade payables 24,271 22,202
Income tax payable 9,890 9,779
Other accounts payable and accrued expenses 20,045 18,054
Total current liabilities 80,225 59,562
NON-CURRENT LIABILITIES    
Long-term debt 191,327 187,021
Other financial obligations 27,083 33,750
Employee benefits 16,881 14,073
Deferred income taxes 19,783 18,315
Other non-current liabilities 31,491 35,091
Total non-current liabilities 286,565 288,250
TOTAL LIABILITIES 366,790 347,812
STOCKHOLDERS EQUITY    
Controlling interest:      
Common stock and additional paid-in capital 105,367 88,943
Other equity reserves 10,738 15,037
Retained earnings 21,781 40,233
Net loss (6,783) (10,834)
Total controlling interest 131,103 133,379
Non-controlling interest and perpetual debentures 17,068 14,939
TOTAL STOCKHOLDERS EQUITY 148,171 148,318
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 514,961 $ 496,130
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Consolidated Statements of Cash Flows (MXN $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
OPERATING ACTIVITIES      
Consolidated net loss $ (5,680) $ (9,611) $ (11,338)
Non-cash items:         
Depreciation and amortization of assets 14,457 14,459 17,505
Impairment losses 3,867 1,591 1,661
Equity in gain of associates (297) (229) (728)
Other (expenses) income, net (409) 476 1,593
Financial items, net 19,009 18,231 17,534
Income taxes 4,023 6,210 6,043
Changes in working capital, excluding income taxes 1,544 (4,082) (2,048)
Net cash flow provided by operating activities before interest, coupons on perpetual debentures and income taxes 36,514 27,045 30,222
Financial expense paid in cash including coupons on perpetual debentures (16,844) (19,110) (19,564)
Income taxes paid in cash (7,678) (6,665) (4,709)
Net cash flows provided by operating activities 11,992 1,270 5,949
INVESTING ACTIVITIES      
Property, machinery and equipment, net (6,134) (5,570) (5,922)
Disposal (acquisition) of subsidiaries and associates, net 167 1,259 (895)
Intangible assets and other deferred charges (902) (1,203) (438)
Long term assets and others, net 208 118 4,696
Net cash flows used in investing activities (6,661) (5,396) (2,559)
FINANCING ACTIVITIES      
Issuance of common stock by subsidiaries       12,442
Derivative instruments 1,561 (256) 1,633
Issuance (repayment) of debt, net (11,110) 5,933 (17,239)
Securitization of trade receivables 2,052 (1,854) (193)
Non-current liabilities, net (1,130) (568) (1,679)
Net cash flows (used in) provided by financing activities (8,627) 3,255 (5,036)
Decrease in cash and cash equivalents (3,296) (871) (1,646)
Cash conversion effect, net 709 3,569 (2,004)
Cash and cash equivalents at beginning of year 15,176 12,478 16,128
CASH AND CASH EQUIVALENTS AT END OF YEAR 12,589 15,176 12,478
Changes in working capital, excluding income taxes:      
Trade receivables, net (3,266) (2,187) 2,956
Other accounts receivable and other assets 1,264 (1,033) (2,010)
Inventories (2,735) (616) 1,412
Trade payables 3,794 1,620 (424)
Other accounts payable and accrued expenses 2,487 (1,866) (3,982)
Changes in working capital, excluding income taxes $ 1,544 $ (4,082) $ (2,048)
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Statements of Changes in Stockholders Equity (MXN $)
In Millions, unless otherwise specified
Total
Common stock [member]
Additional paid-in capital [member]
Other equity reserves [member]
Retained earnings [member]
Total controlling interest [member]
Non-controlling interest [member]
TOTAL STOCKHOLDERS EQUITY at Dec. 31, 2011 $ 171,706 $ 4,135 $ 109,309 $ 14,965 $ 26,695 $ 155,104 $ 16,602
Statement of changes in equity [line items]              
Net Loss (11,338)          (12,000) (12,000) 662
Total other items of comprehensive loss (11,498)       (11,498)    (11,498)   
Capitalization of retained earnings    4 4,134    (4,138)      
Stock-based compensation 622    486 136    622   
Effects of perpetual debentures (5,777)       1,227    1,227 (7,004)
Changes in non-controlling interest 11,912       7,684    7,684 4,228
TOTAL STOCKHOLDERS EQUITY at Dec. 31, 2012 155,627 4,139 113,929 12,514 10,557 141,139 14,488
Statement of changes in equity [line items]              
Net Loss (9,611)          (10,834) (10,834) 1,223
Total other items of comprehensive loss (566)       (235)    (235) (331)
Change in the Parent Companys functional currency 3,027       3,027    3,027   
Restitution of retained earnings       (35,667)    35,667      
Capitalization of retained earnings    4 5,987    (5,991)      
Stock-based compensation 687    551 136    687   
Effects of perpetual debentures (405)       (405)    (405)   
Changes in non-controlling interest (441)                (441)
TOTAL STOCKHOLDERS EQUITY at Dec. 31, 2013 148,318 4,143 84,800 15,037 29,399 133,379 14,939
Statement of changes in equity [line items]              
Net Loss (5,680)          (6,783) (6,783) 1,103
Total other items of comprehensive loss (2,217)       (3,243)    (3,243) 1,026
Effects of early conversion of subordinated notes 7,440 4 8,037 (601)    7,440   
Capitalization of retained earnings    4 7,614    (7,618)      
Stock-based compensation 730    765 (35)    730   
Effects of perpetual debentures (420)       (420)    (420)   
TOTAL STOCKHOLDERS EQUITY at Dec. 31, 2014 $ 148,171 $ 4,151 $ 101,216 $ 10,738 $ 14,998 $ 131,103 $ 17,068
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1) Description of Business
12 Months Ended
Dec. 31, 2014
Description of Business [abstract]  
Disclosure of notes and other explanatory information

1)       DESCRIPTION OF BUSINESS

 

CEMEX, S.A.B. de C.V., a public stock corporation with variable capital (S.A.B. de C.V.) organized under the laws of the United Mexican States, or Mexico, is a holding company (parent) of entities whose main activities are oriented to the construction industry, through the production, marketing, distribution and sale of cement, ready-mix concrete, aggregates and other construction materials. In addition, in order to facilitate the acquisition of financing and to run its operations in Mexico more efficiently considering that there are efficiency and improvement opportunities by shifting from a platform where its customers were served from different entities according to its line of business (i.e. cement, concrete, aggregates), into a platform where customers, sorted by end-user segment (i.e. distributor, builder, manufacturer) are now serviced from a single entity. In a first phase, beginning in April 1, 2014, CEMEX, S.A.B de C.V. integrated and carried out all businesses and operational activities of the cement and aggregates sectors in Mexico. During the second phase beginning in 2015, CEMEX, S.A.B. de C.V. will integrate productive, commercial, marketing and administrative activities related to the sale of ready-mix concrete in Mexico.

 

CEMEX, S.A.B. de C.V. was founded in 1906 and was registered with the Mercantile Section of the Public Register of Property and Commerce in Monterrey, N.L., Mexico in 1920 for a period of 99 years. In 2002, this period was extended to the year 2100. The shares of CEMEX, S.A.B. de C.V. are listed on the Mexican Stock Exchange (“MSE”) as Ordinary Participation Certificates (“CPOs”). Each CPO represents two series “A” shares and one series “B” share of common stock of CEMEX, S.A.B. de C.V. In addition, CEMEX, S.A.B. de C.V.'s shares are listed on the New York Stock Exchange (“NYSE”) as American Depositary Shares (“ADSs”) under the symbol “CX.” Each ADS represents ten CPOs.

 

The terms “CEMEX, S.A.B. de C.V.” and/or the “Parent Company” used in these accompanying notes to the financial statements refer to CEMEX, S.A.B. de C.V. without its consolidated subsidiaries. The terms the “Company” or “CEMEX” refer to CEMEX, S.A.B. de C.V. together with its consolidated subsidiaries. The issuance of these consolidated financial statements was authorized by the management of CEMEX, S.A.B. de C.V. on January 29, 2015.

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2) Significant Accouning Policies
12 Months Ended
Dec. 31, 2014
Significant Accounting Policies [abstract]  
Disclosure of summary of significant accounting policies

2)       SIGNIFICANT ACCOUNTING POLICIES

 

2A)       BASIS OF PRESENTATION AND DISCLOSURE

 

The consolidated financial statements as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013 and 2012, were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

 

Presentation currency and definition of terms

 

The presentation currency of the consolidated financial statements is the Mexican peso, which is also the currency in which the Company submits its periodic filings to the MSE. When reference is made to pesos or “$” it means Mexican pesos. The amounts in the financial statements and the accompanying notes are stated in millions, except when references are made to loss per share and/or prices per share. When reference is made to “US$” or dollars, it means dollars of the United States of America (“United States”). When reference is made to “€” or Euros, it means the currency in circulation in a significant number of European Union (“EU”) countries. When it is deemed relevant, certain amounts presented in the notes to the financial statements include between parentheses a convenience translation into dollars or into pesos, as applicable. These translations should not be construed as representations that the amounts in pesos or dollars, as applicable, actually represent those peso or dollar amounts or could be converted into pesos or dollars at the rate indicated. As of December 31, 2014 and 2013, translations of pesos into dollars and dollars into pesos, were determined for balance sheet amounts using the closing exchange rates of $14.74 and $13.05 pesos per dollar, respectively, and for statements of operations amounts, using the average exchange rates of $13.37, $12.85 and $13.15 pesos per dollar for 2014, 2013 and 2012, respectively. When the amounts between parentheses are the peso and the dollar, the amounts were determined by translating the euro amount into dollars using the closing exchange rates at year-end, and then translating the dollars into pesos as previously described.

 

All amounts disclosed in these notes to the financial statements, mainly in connection with tax or legal proceedings (notes 19D and 24), which are originated in jurisdictions which currencies are different to the dollar, are presented in dollar equivalents as of the closing of the most recent year presented. Consequently, without any change in the original currency, such dollar amounts will fluctuate over time due to changes in exchange rates.

 

Statements of operations

 

In the statements of operations, CEMEX includes the line item titled “Operating earnings before other expenses, net” considering that it is a relevant measure for CEMEX's management as explained in note 4. Under IFRS, while there are line items that are customarily included in the statement of operations, such as net sales, operating costs and expenses and financial revenues and expenses, among others, the inclusion of certain subtotals such as “Operating earnings before other expenses, net” and the display of such statement of operations varies significantly by industry and company according to specific needs.

 

The line item “Other expenses, net” in the statements of operations consists primarily of revenues and expenses not directly related to CEMEX's main activities, or which are of an unusual and/or non-recurring nature, including impairment losses of long-lived assets, results on disposal of assets and restructuring costs, among others (note 6).

 

 

Statements of other comprehensive loss

 

For the years ended December 31, 2014, 2013 and 2012, based on IAS 1, Presentation of financial statements, CEMEX presents line items for amounts of “Other comprehensive income (loss) in the period grouped into those that, in accordance with other IFRSs: a) will not be reclassified subsequently to profit or loss; and b) will be reclassified subsequently to profit or loss when specific conditions are met.

 

Statements of cash flows

 

The statements of cash flows present cash inflows and outflows, excluding unrealized foreign exchange effects, as well as the following transactions that did not represent sources or uses of cash:

 

  • In 2014, the decrease in debt for $6,483, the decrease in other equity reserves for $601, the increase in common stock for $4 and the increase in additional paid-in capital for $8,037, in connection with several early conversions of the 4.875% Optional Convertible Subordinated Notes due 2015 (the “2015 Convertible Notes”) for a notional amount of approximately US$511, incurred in different dates during the year, pursuant to which inducement premiums of approximately $828 were recognized as expense within the line item Other financial income, net (note 16B);

     

  • In 2014, 2013 and 2012, the increases in common stock and additional paid-in capital associated with: (i) the capitalization of retained earnings for $7,618, $5,991 and $4,138, respectively (note 20A); and (ii) CPOs issued as part of the executive stock-based compensation for $765, $551 and $486, respectively (note 20A);

     

  • In 2014, 2013 and 2012, the increases in property, plant and equipment for approximately $108, $141 and $2,025, respectively, a decrease in debt for approximately $827, a decrease of approximately $657, and an increase of approximately $1,401, respectively, associated with the negotiation of capital leases during the year (note 16B);

     

  • In 2013, the increase in investments in associates for $712, related to CEMEX´s joint arrangement in Concrete Supply Co., LLC. (note 13A). As part of the agreement CEMEX contributed cash of approximately US$4 million;

     

  • In 2013, the decrease in other non-current liabilities for approximately $4,325 before a deferred tax liability of approximately $1,298, as a result of the change in the functional currency at the Parent Company (note 16B);

     

  • In 2012, the exchange of approximately US$452 (48%) of CEMEX's then outstanding perpetual debentures and of approximately €470 (53%) of CEMEX's then outstanding Euro-denominated 4.75% notes due 2014, for new Euro-denominated notes for €179 and new Dollar-denominated notes for US$704. These exchanges represented a net increase in debt of $4,111, a reduction in equity's non controlling interest of $5,808 and an increase in equity's controlling interest of $1,680.

2B)       PRINCIPLES OF CONSOLIDATION

 

Pursuant to IFRS 10, Consolidated financial statements, the consolidated financial statements include those of CEMEX, S.A.B. de C.V. and those of the entities, including Special Purpose Entities (“SPEs”), in which the Parent Company exercises control, by means of which the Parent Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Among other factors, control is evidenced when the Parent Company: a) holds directly or through subsidiaries, more than 50% of an entity's common stock; b) has the power, directly or indirectly, to govern the administrative, financial and operating policies of an entity, or c) is the primary receptor of the risks and rewards of a SPE. Balances and operations between related parties are eliminated in consolidation.

 

Pursuant to IAS 28, Investments in associates, investments in associates are accounted for by the equity method when CEMEX has significant influence, which is generally presumed with a minimum equity interest of 20%, unless it is proven in unusual cases that CEMEX has significant influence with a lower percentage. The equity method reflects in the financial statements the investment's original cost and the proportional interest of the holding company in the associate's equity and earnings after acquisition, considering, if applicable, the effects of inflation. According to IFRS 11, Joint arrangements, the financial statements of joint ventures, are those joint arrangements in which CEMEX and other third-party investors have agreed to exercise joint control and have rights to the net assets of the arrangement, are recognized under the equity method, whereas, the financial statements of joint operations, in which the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement, are proportionally consolidated line-by-line. The equity method is discontinued when the carrying amount of the investment, including any long-term interest in the associate or joint venture, is reduced to zero, unless CEMEX has incurred or guaranteed additional obligations of the associate or joint venture.

 

Other investments of a permanent nature where CEMEX holds equity interests of less than 20% and/or there is no significant influence are carried at their historical cost.

 

2C)       USE OF ESTIMATES AND CRITICAL ASSUMPTIONS

 

The preparation of financial statements in accordance with IFRS principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. These assumptions are reviewed on an ongoing basis using available information. Actual results could differ from these estimates.

 

The main items subject to estimates and assumptions by management include, among others, impairment tests of long-lived assets, allowances for doubtful accounts and obsolescence of inventories, recognition of deferred income tax assets, as well as the measurement of financial instruments at fair value, and the assets and liabilities related to employee benefits. Significant judgment is required by management to appropriately assess the amounts of these concepts.

 

2D)       FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS

 

According to IAS 21, The effects of changes in foreign exchange rates (“IAS 21”), transactions denominated in foreign currencies are recorded in the functional currency at the exchange rates prevailing on the dates of their execution. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date, and the resulting foreign exchange fluctuations are recognized in earnings, except for exchange fluctuations arising from: 1) foreign currency indebtedness associated to the acquisition of foreign entities; and 2) fluctuations associated with related parties' balances denominated in foreign currency, which settlement is neither planned nor likely to occur in the foreseeable future and as a result, such balances are of a permanent investment nature. These fluctuations are recorded against “Other equity reserves”, as part of the foreign currency translation adjustment (note 20B) until the disposal of the foreign net investment, at which time, the accumulated amount is recycled through the statement of operations as part of the gain or loss on disposal.

 

The financial statements of foreign subsidiaries, as determined using their respective functional currency, are translated to pesos at the closing exchange rate for balance sheet accounts and at the closing exchange rates of each month within the period for statements of operations accounts. The functional currency is that in which each consolidated entity primarily generates and expends cash. The corresponding translation effect is included within “Other equity reserves” and is presented in the statement of other comprehensive income (loss) for the period as part of the foreign currency translation adjustment (note 20B) until the disposal of the net investment in the foreign subsidiary.

 

Considering guidance in IAS 21 and changing circumstances on the net monetary position in foreign currencies of the Parent Company, resulting mainly from: a) a significant decrease in tax liabilities denominated in Mexican Pesos; b) a significant increase in its U.S. Dollar-denominated debt and other financial obligations; and c) the increase in U.S. Dollar-denominated intra-group administrative expenses associated with the externalization of major back office activities with IBM (note 23C); effective as of January 1, 2013, CEMEX, S.A.B. de C.V., on a stand-alone basis, prospectively changed its functional currency from the Mexican Peso to the U.S. Dollar. The main effects in the Parent Company's-only financial statements beginning on January 1, 2013, associated with the change in functional currency, as compared to prior years are: i) all transactions, revenues and expenses in any currency are recognized in U.S. Dollars at the exchange rates prevailing at their execution dates; ii) monetary balances of CEMEX, S.A.B. de C.V. denominated in U.S. Dollars will not generate foreign currency fluctuations, while monetary balances in Mexican Pesos and other non-U.S. Dollar-denominated balances will now generate foreign currency fluctuations through the statement of operations; and iii) the conversion option embedded in the Parent Company's mandatory convertible notes denominated in pesos are now treated as a stand-alone derivative instrument with changes in fair value through the statement of operations (notes 16B and 16D), the options embedded in the Parent Company's optional convertible notes denominated in dollars ceased to be treated as stand-alone derivatives, recognizing its fair value as an equity component (notes 16B and 16D). Based on IFRS, prior period financial statements were not restated.

 

During the reported periods, there were no subsidiaries whose functional currency was the currency of a hyperinflationary economy, which is generally considered to exist when the cumulative inflation rate over the last three years is approaching, or exceeds, 100%. In a hyperinflationary economy, the accounts of the subsidiary's statements of operations should be restated to constant amounts as of the reporting date, in which case, both the balance sheet accounts and the statements of operations accounts would be translated to pesos at the closing exchange rates of the year.

 

The most significant closing exchange rates and the approximate average exchange rates for balance sheet accounts and income statement accounts, as of December 31 2014, 2013 and 2012, were as follows:

 

   2014 2013 2012
              
 Currency Closing Average Closing Average Closing Average
 Dollar  14.7400 13.3700 13.0500 12.8500 12.8500 13.1500
 Euro  17.8386 17.6306 17.9554 17.1079 16.9615 16.9688
 British Pound Sterling  22.9738 21.9931 21.6167 20.1106 20.8841 20.9373
 Colombian Peso 0.0062 0.0066 0.0068 0.0068 0.0073 0.0073
 Egyptian Pound 2.0584 1.8824 1.8750 1.8600 2.0233 2.1590
 Philippine Peso 0.3296 0.3009 0.2940 0.3014 0.3130 0.3125

The financial statements of foreign subsidiaries are initially translated from their functional currencies into dollars and subsequently into pesos. Therefore, the foreign exchange rates presented in the table above between the functional currency and the peso represent the exchange rates resulting from this methodology. The peso to U.S. dollar exchange rate used by CEMEX is an average of free market rates available to settle its foreign currency transactions. No significant differences exist, in any case, between the foreign exchange rates used by CEMEX and those exchange rates published by the Mexican Central Bank.

 

2E)       CASH AND CASH EQUIVALENTS (note 8)

 

The balance in this caption is comprised of available amounts of cash and cash equivalents, mainly represented by highly-liquid short-term investments, which are easily convertible into cash, and which are not subject to significant risks of changes in their values, including overnight investments, which yield fixed returns and have maturities of less than three months from the investment date. These fixed-income investments are recorded at cost plus accrued interest. Other investments which are easily convertible into cash are recorded at their market value. Gains or losses resulting from changes in market values and accrued interest are included in the statements of operations as part of “Other financial income (expense), net.

The amount of cash and cash equivalents in the balance sheet includes restricted cash and investments, comprised of deposits in margin accounts that guarantee several of CEMEX's obligations, to the extent that the restriction will be lifted in less than three months from the balance sheet date. When the restriction period is greater than three months, such restricted cash and investments are not considered cash equivalents and are included within short-term or long-term “Other accounts receivable,” as appropriate. When contracts contain provisions for net settlement, these restricted amounts of cash and investments are offset against the liabilities that CEMEX has with its counterparties.

 

2F)       TRADE ACCOUNTS RECEIVABLE AND OTHER CURRENT ACCOUNTS RECEIVABLE (notes 9, 10)

 

According to IAS 39, Financial instruments: recognition and measurement (“IAS 39”), items under this caption are classified as “loans and receivables”, with no explicit cost, which are recorded at their amortized cost, which is represented by the net present value of the consideration receivable or payable as of the transaction date. Due to their short-term nature, CEMEX initially recognizes these receivables at the original invoiced amount less an estimate of doubtful accounts. Allowances for doubtful accounts as well as impairment of other current accounts receivable are recognized against administrative and selling expenses.

 

Trade receivables sold under securitization programs, in which CEMEX maintains a residual interest in the trade accounts receivable sold in case of recovery failure, as well as continued involvement in such assets, do not qualify for derecognition and are maintained on the balance sheet.

 

2G)       INVENTORIES (note 11)

 

Inventories are valued using the lower of cost and net realizable value. The cost of inventories includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. CEMEX analyzes its inventory balances to determine if, as a result of internal events, such as physical damage, or external events, such as technological changes or market conditions, certain portions of such balances have become obsolete or impaired. When an impairment situation arises, the inventory balance is adjusted to its net realizable value, whereas, if an obsolescence situation occurs, the inventory obsolescence reserve is increased. In both cases, these adjustments are recognized against the results for the period. Advances to suppliers of inventory are presented as part of other short-term accounts receivable.

 

2H)       OTHER INVESTMENTS AND NON-CURRENT RECEIVABLES (note 13B)

 

As part of the category of “loans and receivables” under IAS 39, non-current accounts receivable, as well as investments classified as held to maturity are initially recognized at their amortized cost. Subsequent changes in net present value are recognized in the statements of operations as part of “Other financial income (expenses), net.

 

Investments in financial instruments held for trading, as well as those investments available for sale, classified under IAS 39, are recognized at their estimated fair value, in the first case through the statements of operations as part of “Other financial income (expenses), net, and in the second case, changes in valuation are recognized as part of “Other comprehensive income (loss) of the period within “Other equity reserves until their time of disposition, when all valuation effects accrued in equity are reclassified to “Other financial income (expenses), net in the statements of operations. These investments are tested for impairment upon the occurrence of a significant adverse change or at least once a year during the last quarter.

 

2I)       PROPERTY, MACHINERY AND EQUIPMENT (note 14)

 

Property, machinery and equipment are recognized at their acquisition or construction cost, as applicable, less accumulated depreciation and accumulated impairment losses. Depreciation of fixed assets is recognized as part of cost and operating expenses (note 5), and is calculated using the straight-line method over the estimated useful lives of the assets, except for mineral reserves, which are depleted using the units-of-production method.

 

As of December 31, 2014, the maximum average useful lives by category of fixed assets were as follows:

   Years
    
 Administrative buildings 34
 Industrial buildings  33
 Machinery and equipment in plant  18
 Ready-mix trucks and motor vehicles  7
 Office equipment and other assets  6

CEMEX capitalizes, as part of the related cost of fixed assets, interest expense from existing debt during the construction or installation period of significant fixed assets, considering CEMEX's corporate average interest rate and the average balance of investments in process for the period.

Based on IFRIC 20, Stripping costs in the production phase of a surface mine (“IFRIC 20”), all waste removal costs or stripping costs incurred in the operative phase of a surface mine that result in improved access to mineral reserves are recognized as part of the carrying amount of the related quarries. The capitalized amounts are further amortized over the expected useful life of exposed ore body based on the units of production method. Until December 31, 2012, only initial stripping costs were capitalized, while ongoing stripping costs in the same quarry were expensed as incurred, consequently, the consolidated statement of operations for the year ended December 31, 2012 included as part of these consolidated financial statements was restated as a result of the adoption of IFRIC 20. The effects were not significant.

 

Costs incurred in respect of operating fixed assets that result in future economic benefits, such as an extension in their useful lives, an increase in their production capacity or in safety, as well as those costs incurred to mitigate or prevent environmental damage, are capitalized as part of the carrying amount of the related assets. The capitalized costs are depreciated over the remaining useful lives of such fixed assets. Periodic maintenance on fixed assets is expensed as incurred. Advances to suppliers of fixed assets are presented as part of other long-term accounts receivable.

 

2J)       BUSINESS COMBINATIONS, GOODWILL, OTHER INTANGIBLE ASSETS AND DEFERRED CHARGES (note 15)

 

Business combinations are recognized using the purchase method, by allocating the consideration transferred to assume control of the entity to all assets acquired and liabilities assumed, based on their estimated fair values as of the acquisition date. Intangible assets acquired are identified and recognized at fair value. Any unallocated portion of the purchase price represents goodwill, which is not amortized and is subject to periodic impairment tests (note 2K), can be adjusted for any correction to the preliminary assessment given to the assets acquired and/or liabilities assumed within the twelve-month period after purchase. Costs associated with the acquisition are expensed in the statements of operations as incurred.

 

CEMEX capitalizes intangible assets acquired, as well as costs incurred in the development of intangible assets, when future economic benefits associated with the assets are identified and there is evidence of control over such benefits. Intangible assets are presented at their acquisition or development cost. Such assets are classified as having a definite or indefinite life; the latter are not amortized since the period cannot be accurately established in which the benefits associated with such intangibles will terminate. Amortization of intangible assets of definite life is calculated under the straight-line method and recognized as part of costs and operating expenses (note 5).

 

Startup costs are recognized in the statements of operations as they are incurred. Costs associated with research and development activities (“R&D activities”), performed by CEMEX to create products and services, as well as to develop processes, equipment and methods to optimize operational efficiency and reduce costs, are recognized in the operating results as incurred. The Technology and Energy departments in CEMEX undertake all significant R&D activities as part of their daily activities. In 2014, 2013 and 2012, total combined expenses of these departments were approximately $538 (US$36), $494 (US$38) and $514 (US$40), respectively. Development costs are capitalized only if they meet the definition of intangible asset mentioned above.

 

Direct costs incurred in the development stage of computer software for internal use are capitalized and amortized through the operating results over the useful life of the software, which on average is approximately 5 years.

 

Costs incurred in exploration activities such as payments for rights to explore, topographical and geological studies, as well as trenching, among other items incurred to assess the technical and commercial feasibility of extracting a mineral resource, which are not significant to CEMEX, are capitalized when future economic benefits associated with such activities are identified. When extraction begins, these costs are amortized during the useful life of the quarry based on the estimated tons of material to be extracted. When future economic benefits are not achieved, any capitalized costs are subject to impairment.

 

CEMEX's extraction rights have maximum useful lives that range from 30 to 100 years, depending on the sector, and the expected life of the related reserves. As of December 31, 2014, except for extraction rights and/or as otherwise indicated, CEMEX's intangible assets are amortized on a straight line basis over their useful lives that range on average from 3 to 20 years.

 

2K)       IMPAIRMENT OF LONG LIVED ASSETS (notes 14, 15)

 

Impairment of property, machinery and equipment, intangible assets of definite life and other investments

 

Property, machinery and equipment, intangible assets of definite life and other investments are tested for impairment upon the occurrence of factors such as the occurrence of a significant adverse event, changes in CEMEX's operating environment, changes in projected use or in technology, as well as expectations of lower operating results for each cash generating unit, in order to determine whether their carrying amounts may not be recovered. In such cases, an impairment loss is recorded in the income statements for the period when such determination is made within “Other expenses, net.” The impairment loss of an asset results from the excess of the asset's carrying amount over its recoverable amount, corresponding to the higher of the fair value of the asset, less costs to sell such asset, and the asset's value in use, the latter represented by the net present value of estimated cash flows related to the use and eventual disposal of the asset.

 

Significant judgment by management is required to appropriately assess the fair values and values in use of these assets. The main assumptions utilized to develop these estimates are a discount rate that reflects the risk of the cash flows associated with the assets evaluated and the estimations of generation of future income. Those assumptions are evaluated for reasonableness by comparing such discount rates to available market information and by comparing to third-party expectations of industry growth, such as governmental agencies or industry chambers of commerce.

 

Goodwill

 

Goodwill is tested for impairment when required due to significant adverse changes or at least once a year, during the last quarter of such year, by determining the recoverable amount of the group of cash-generating units (“CGUs”) to which goodwill balances have been allocated, which consists of the higher of such group of CGUs fair value, less cost to sell and its value in use, represented by the discounted amount of estimated future cash flows to be generated by such CGUs to which goodwill has been allocated. Other intangible assets of indefinite life may be tested at the CGU or group of CGUs level, depending on their allocation. CEMEX determines discounted cash flows generally over periods of 5 years. In specific circumstances, when, according to CEMEX's experience, actual results for a given cash-generating unit do not fairly reflect historical performance and most external economic variables provide the Company with confidence that a reasonably determinable improvement in the mid-term is expected in their operating results, management uses cash flow projections over a period of up to 10 years, to the extent CEMEX has detailed, explicit and reliable financial forecasts and is confident and can demonstrate its ability, based on past experience, to forecast cash flows accurately over that longer period. The number of additional periods above the standard period of 5 years of cash flow projections up to 10 years is determined by the extent to which future expected average performance resembles the historical average performance. If the value in use of a group of CGUs to which goodwill has been allocated is lower than its corresponding carrying amount, CEMEX determines the fair value of such group of CGUs using methodologies generally accepted in the market to determine the value of entities, such as multiples of Operating EBITDA and by reference to other market transactions, among others. An impairment loss is recognized within other expenses, net, if the recoverable amount is lower than the net book value of the group of CGUs to which goodwill has been allocated. Impairment charges recognized on goodwill are not reversed in subsequent periods.

 

The geographic operating segments reported by CEMEX (note 4), represent CEMEX's groups of CGUs to which goodwill has been allocated for purposes of testing goodwill for impairment. In arriving at this conclusion, CEMEX considered: a) that after the acquisition, goodwill was allocated at the level of the geographic operating segment; b) that the operating components that comprise the reported segment have similar economic characteristics; c) that the reported segments are used by CEMEX to organize and evaluate its activities in its internal information system; d) the homogeneous nature of the items produced and traded in each operative component, which are all used by the construction industry; e) the vertical integration in the value chain of the products comprising each component; f) the type of clients, which are substantially similar in all components; g) the operative integration among components; and h) that the compensation system of a specific country is based on the consolidated results of the geographic segment and not on the particular results of the components. In addition, the country level represents the lowest level within CEMEX at which goodwill is monitored for internal management purposes.

 

Impairment tests are significantly sensitive to, among other factors, the estimation of future prices of CEMEX's products, the development of operating expenses, local and international economic trends in the construction industry, the long-term growth expectations in the different markets, as well as the discount rates and the growth rates in perpetuity applied. For purposes of estimating future prices, CEMEX uses, to the extent available, historical data plus the expected increase or decrease according to information issued by trusted external sources, such as national construction or cement producer chambers and/or in governmental economic expectations. Operating expenses are normally measured as a constant proportion of revenues, following past experience. However, such operating expenses are also reviewed considering external information sources in respect to inputs that behave according to international prices, such as gas and oil. CEMEX uses specific pre-tax discount rates for each group of CGUs to which goodwill is allocated, which are applied to discount pre-tax cash flows. The amounts of estimated undiscounted cash flows are significantly sensitive to the growth rate in perpetuity applied. Likewise, the amounts of discounted estimated future cash flows are significantly sensitive to the weighted average cost of capital (discount rate) applied. The higher the growth rate in perpetuity applied, the higher the amount of undiscounted future cash flows by group of CGUs obtained. Conversely, the higher the discount rate applied, the lower the amount of discounted estimated future cash flows by group of CGUs obtained.

 

2L)       FINANCIAL LIABILITIES, DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (note 16)

 

Debt

 

Bank loans and notes payable are recognized at their amortized cost. Interest accrued on financial instruments is recognized in the balance sheet within “Other accounts payable and accrued expenses” against financial expense. During the reported periods, CEMEX did not have financial liabilities voluntarily recognized at fair value or associated to fair value hedge strategies with derivative financial instruments. Direct costs incurred in debt issuances or borrowings, as well as debt refinancing or non-substantial modifications to debt agreements that did not represent an extinguishment of debt, by considering: a) that the relevant economic terms of the new instrument are not substantially different to the replaced instrument; and b) the proportion in which the final holders of the new instrument are the same of the replaced instrument, adjust the carrying amount of related debt are amortized as interest expense as part of the effective interest rate of each transaction over its maturity. These costs include commissions and professional fees. Costs incurred in the extinguishment of debt, as well as debt refinancing or modifications to debt agreements when the new instrument is substantially different to the old instrument according to a qualitative and quantitative analysis, are recognized in the statements of operations within “Financial expense as incurred.

 

Capital leases

 

Capital leases, in which CEMEX has substantially all risks and rewards associated with the ownership of an asset, are recognized as financing liabilities against a corresponding fixed asset for the lesser of the market value of the leased asset and the net present value of future minimum payments, using the contract's implicit interest rate to the extent available, or the incremental borrowing cost. Among other elements, the main factors that determine a capital lease are: a) if ownership title of the asset is transferred to CEMEX at the expiration of the contract; b) if CEMEX has a bargain purchase option to acquire the asset at the end of the lease term; c) if the lease term covers the majority of the useful life of the asset; and/or d) if the net present value of minimum payments represents substantially all the fair value of the related asset at the beginning of the lease.

Financial instruments with components of both liabilities and equity

 

Based on IAS 32, Financial instruments: presentation (“IAS 32”) and IAS 39, when a financial instrument contains components of both liability and equity, such as a note that at maturity is convertible into a fixed number of CEMEX's shares and the currency in which the instrument is denominated is the same as the functional currency of the issuer, each component is recognized separately in the balance sheet according to the specific characteristics of each transaction. In the case of instruments mandatorily convertible into shares of the issuer, the liability component represents the net present value of interest payments on the principal amount using a market interest rate, without assuming any early conversion, and is recognized within “Other financial obligations,” whereas the equity component represents the difference between the principal amount and the liability component, and is recognized within “Other equity reserves” net of commissions. In the case of instruments that are optionally convertible into a fixed number of shares, the liability component represents the difference between the principal amount and the fair value of the conversion option premium, which reflects the equity component (note 2P). When the transaction is denominated in a currency different than the functional currency of the issuer, the conversion option is accounted for as a derivative financial instrument at fair value in the statements of operations.

 

Derivative financial instruments

 

CEMEX recognizes all derivative instruments as assets or liabilities in the balance sheet at their estimated fair values, and the changes in such fair values are recognized in the statements of operations within “Other financial expense, net” for the period in which they occur, except for changes in fair value of derivative instruments associated with cash flow hedges, in which case, such changes in fair value are recognized in stockholders' equity, and are reclassified to earnings as the interest expense of the related debt is accrued, in the case of interest rate swaps, or when the underlying products are consumed in the case of contracts on the price of raw materials and commodities. Likewise, in hedges of the net investment in foreign subsidiaries, changes in fair value are recognized in stockholders' equity as part of the foreign currency translation result (note 2D), which reversal to earnings would take place upon disposal of the foreign investment. During the reported periods, CEMEX has not designated any derivative instruments in fair value hedges. Derivative instruments are negotiated with institutions with significant financial capacity; therefore, CEMEX believes the risk of non-performance of the obligations agreed to by such counterparties to be minimal.

 

Accrued interest generated by interest rate derivative instruments, when applicable, is recognized as financial expense in the relevant period, adjusting the effective interest rate of the related debt.

 

CEMEX reviews its different contracts to identify the existence of embedded derivatives. Identified embedded derivatives are analyzed to determine if they need to be separated from the host contract and recognized in the balance sheet as assets or liabilities, applying the same valuation rules used for other derivative instruments.

 

Put options granted for the purchase of non-controlling interests and associates

 

Represent agreements by means of which CEMEX commits to acquire, in case the counterparty exercises its right to sell at a future date at a predefined price formula or at fair market value, the shares of a non-controlling interest in a subsidiary of CEMEX or an associate. In respect of a put option granted for the purchase of a non-controlling interest in a CEMEX subsidiary, to the extent CEMEX should settle the obligation in cash or through the delivery of other financial asset CEMEX recognizes a liability for the net present value of the redemption amount as of the financial statements' date against the controlling interest within stockholders' equity. A liability is not recognized as a result of an option granted for the purchase of a non-controlling interest when the redemption amount is determined at fair market value at the exercise date and CEMEX has the election to settle using its own shares.

 

In respect of a put option granted for the purchase of an associate, CEMEX would recognize a liability against a loss in the statements of operations whenever the estimated purchase price exceeds the fair value of the net assets to be acquired by CEMEX, had the counterparty exercised its right to sell.

 

Fair value measurements

 

CEMEX applies the guidance of IFRS 13, Fair value measurements (“IFRS 13”) for its fair value measurements of financial assets and financial liabilities recognized or disclosed at fair value. IFRS 13 does not require fair value measurements in addition to those already required or permitted by other IFRSs and is not intended to establish valuation standards or affect valuation practices outside financial reporting. Under IFRS 13, fair value represents an “Exit Value,” which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, considering the counterparty's credit risk in the valuation.

 

The concept of exit value is premised on the existence of a market and market participants for the specific asset or liability. When there is no market and/or market participants willing to make a market, IFRS 13 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

 

  • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that CEMEX has the ability to access at the measurement date. A quote price in an active market provides the most reliable evidence of fair value and is used without adjustment to measure fair value whenever available.

     

  • Level 2 inputs are inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly, and are used mainly to determine the fair value of securities, investments or loans that are not actively traded. Level 2 inputs included equity prices, certain interest rates and yield curves, implied volatility, credit spreads and other market corroborated inputs, including inputs extrapolated from other observable inputs. In the absence of Level 1 inputs CEMEX determined fair values by iteration of the applicable Level 2 inputs, the number of securities and/or the other relevant terms of the contract, as applicable.

     

  • Level 3 inputs are unobservable inputs for the asset or liability. CEMEX used unobservable inputs to determine fair values, to the extent there are no Level 1 or Level 2 inputs, in valuation models such as Black-Scholes, binomial, discounted cash flows or multiples of Operative EBITDA, including risk assumptions consistent with what market participants would use to arrive at fair value.

 

2M)       PROVISIONS

 

CEMEX recognizes provisions when it has a legal or constructive obligation resulting from past events, whose resolution would imply cash outflows or the delivery of other resources owned by the Company. As of December 31, 2014 and 2013 some significant proceedings that gave rise to a portion of the carrying amount of CEMEX's other current and non-current liabilities and provisions are detailed in note 24A.

 

In May 2013, the IASB issued IFRIC 21, Levies (“IFRIC 21”), setting up guidance on the accounting for levies imposed by governments. IFRIC 21, which was effective January 1, 2014, clarifies, among other aspects, that the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy, as identified in the legislation and that an entity does not have a constructive obligation to pay a levy that will be triggered by operating in a future period. CEMEX implemented IFRIC 21 as of January 1, 2014. Given that clear interpretive guidance on the application of IFRIC 21 is not yet available, the adoption of this standard required management to exercise judgment on the conclusion that the effects were not significant. As a result of this assessment it was also determined that the effects from judgments made in measuring the impact of this adoption may subsequently vary from conclusive interpretive guidance when it becomes available.

 

Restructuring (note 17)

 

CEMEX recognizes provisions for restructuring costs only when the restructuring plans have been properly finalized and authorized by management, and have been communicated to the third parties involved and/or affected by the restructuring prior to the balance sheet date. These provisions may include costs not associated with CEMEX's ongoing activities.

 

Asset retirement obligations (note 17)

 

Unavoidable obligations, legal or constructive, to restore operating sites upon retirement of long-lived assets at the end of their useful lives are measured at the net present value of estimated future cash flows to be incurred in the restoration process, and are initially recognized against the related assets' book value. The increase to the assets' book value is depreciated during its remaining useful life. The increase in the liability related to the passage of time is charged to the line item “Other financial expenses, net.” Adjustments to the liability for changes in estimations are recognized against fixed assets, and depreciation is modified prospectively. These obligations are related mainly to future costs of demolition, cleaning and reforestation, so that quarries, maritime terminals and other production sites are left in acceptable condition at the end of their operation.

 

Costs related to remediation of the environment (notes 17 and 24)

 

Provisions associated with environmental damage represent the estimated future cost of remediation, which are recognized at their nominal value when the time schedule for the disbursement is not clear, or when the economic effect for the passage of time is not significant; otherwise, such provisions are recognized at their discounted values. Reimbursements from insurance companies are recognized as assets only when their recovery is practically certain. In that case, such reimbursement assets are not offset against the provision for remediation costs.

 

Contingencies and commitments (notes 23 and 24)

 

Obligations or losses related to contingencies are recognized as liabilities in the balance sheet when present obligations exist resulting from past events that are expected to result in an outflow of resources and the amount can be measured reliably. Otherwise, a qualitative disclosure is included in the notes to the financial statements. The effects of long-term commitments established with third parties, such as supply contracts with suppliers or customers, are recognized in the financial statements on an incurred or accrued basis, after taking into consideration the substance of the agreements. Relevant commitments are disclosed in the notes to the financial statements. The Company does not recognize contingent revenues, income or assets, unless their realization is virtually certain.

 

 

2N)       PENSIONS AND POSTRETIREMENT EMPLOYEE BENEFITS (note 18)

 

Defined contribution pension plans

 

The costs of defined contribution pension plans are recognized in the operating results as they are incurred. Liabilities arising from such plans are settled through cash transfers to the employees' retirement accounts, without generating future obligations.

 

Defined benefit pension plans, other postretirement benefits and termination benefits

 

Based on IAS 19, Employee benefits (“IAS19”), the costs associated with employees' benefits for: a) defined benefit pension plans; and b) other postretirement benefits, basically comprised of health care benefits, life insurance and seniority premiums, granted by CEMEX and/or pursuant to applicable law, are recognized as services are rendered, based on actuarial estimations of the benefits' present value with the advice of external actuaries. For certain pension plans, CEMEX has created irrevocable trust funds to cover future benefit payments (“plan assets”). These plan assets are valued at their estimated fair value at the balance sheet date. The actuarial assumptions and accounting policy consider: a) the use of nominal rates, b) a single rate is used for the determination of the expected return on plan assets and the discount of the benefits obligation to present value; c) a net interest is recognized on the net defined benefit liability (liability minus plan assets), and d) all actuarial gains and losses for the period, related to differences between the projected and real actuarial assumptions at the end of the period, as well as the difference between the expected and real return on plan assets, are recognized as part of “Other comprehensive income or loss within stockholders' equity. Until December 31, 2012, the expected rates of return on plan assets were determined based on market prices prevailing on the calculation date, applicable to the period over which the obligation were expected to be settled. As a result of the adoption of amendments to IAS 19 on January 1, 2013, CEMEX restated its consolidated statement of operations for the year ended December 31, 2012. The effects were no significant.

 

The service cost, corresponding to the increase in the obligation for additional benefits earned by employees during the period, is recognized within operating costs and expenses. The net interest is recognized within “Other financial expenses, net.”

 

The effects from modifications to the pension plans that affect the cost of past services are recognized within operating costs and expenses during the period in which such modifications become effective with respect to the employees or without delay if changes are effective immediately. Likewise, the effects from curtailments and/or settlements of obligations occurring during the period, associated with events that significantly reduce the cost of future services and/or reduce significantly the population subject to pension benefits, respectively, are recognized within operating costs and expenses.

 

Termination benefits, not associated with a restructuring event, which mainly represent severance payments by law, are recognized in the operating results for the period in which they are incurred.

 

2O)       INCOME TAXES (note 19)

 

Based on IAS 12, Income taxes (“IAS 12”), the effects reflected in the statements of operations for income taxes include the amounts incurred during the period and the amounts of deferred income taxes, determined according to the income tax law applicable to each subsidiary. Consolidated deferred income taxes represent the addition of the amounts determined in each subsidiary by applying the enacted statutory income tax rate to the total temporary differences resulting from comparing the book and taxable values of assets and liabilities, considering tax loss carryforwards as well as other recoverable taxes and tax credits, to the extent that it is probable that future taxable profits will be available against which they can be utilized. The measurement of deferred income taxes reflects the tax consequences that follow the manner in which CEMEX expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred income taxes for the period represent the difference between balances of deferred income at the beginning and the end of the period. Deferred income tax assets and liabilities relating to different tax jurisdictions are not offset. According to IFRS, all items charged or credited directly in stockholders' equity or as part of other comprehensive income or loss for the period are recognized net of their current and deferred income tax effects. The effect of a change in enacted statutory tax rates is recognized in the period in which the change is officially enacted.

 

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is not considered probable that the related tax benefit will be realized. In conducting such assessment, CEMEX analyzes the aggregate amount of self-determined tax loss carryforwards included in its income tax returns in each country where CEMEX believes, based on available evidence, that the tax authorities would not reject such tax loss carryforwards; and the likelihood of the recoverability of such tax loss carryforwards prior to their expiration through an analysis of estimated future taxable income. If CEMEX believes that it is probable that the tax authorities would reject a self-determined deferred tax asset, it would decrease such asset. Likewise, if CEMEX believes that it would not be able to use a tax loss carryforward before its expiration or any other deferred tax asset, CEMEX would not recognize such deferred tax asset. Both situations would result in additional income tax expense for the period in which such determination is made. In order to determine whether it is probable that deferred tax assets will ultimately be realized, CEMEX takes into consideration all available positive and negative evidence, including factors such as market conditions, industry analysis, expansion plans, projected taxable income, carryforward periods, current tax structure, potential changes or adjustments in tax structure, tax planning strategies, future reversals of existing temporary differences, etc. Likewise, every reporting period, CEMEX analyzes its actual results versus the Company's estimates, and adjusts, as necessary, its tax asset valuations. If actual results vary from CEMEX's estimates, the deferred tax asset and/or valuations may be affected and necessary adjustments will be made based on relevant information. Any adjustments recorded will affect CEMEX's statements of operations in such period.

The income tax effects from an uncertain tax position are recognized when it is more-likely-than-not that the position will be sustained based on its technical merits and assuming that the tax authorities will examine each position and have full knowledge of all relevant information, and they are measured using a cumulative probability model. Each position has been considered on its own, regardless of its relation to any other broader tax settlement. The more-likely-than-not threshold represents a positive assertion by management that CEMEX is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained, no benefits of the position are recognized. CEMEX's policy is to recognize interest and penalties related to unrecognized tax benefits as part of the income tax in the consolidated statements of operations.

 

2P)       STOCKHOLDERS' EQUITY

 

Common stock and additional paid-in capital (note 20A)

 

These items represent the value of stockholders' contributions, and include increases related to the capitalization of retained earnings and the recognition of executive compensation programs in CEMEX's CPOs as well as decreases associated with the restitution of retained earnings.

 

Other equity reserves (note 20B)

 

This caption groups the cumulative effects of items and transactions that are, temporarily or permanently, recognized directly to stockholders' equity, and includes the elements presented in the statements of comprehensive income (loss). Comprehensive income (loss) for the period includes, in addition to net income (loss), certain changes in stockholders' equity during a period that do not result from investments by owners and distributions to owners. The most significant items within “Other equity reserves” during the reported periods are as follows:

 

Items of “Other equity reserves” included within other comprehensive loss:

 

  • Currency translation effects from the translation of foreign subsidiaries' financial statements, net of: a) exchange results from foreign currency debt directly related to the acquisition of foreign subsidiaries; and b) exchange results from foreign currency related parties balances that are of a long-term investment nature (note 2D);
  • The effective portion of the valuation and liquidation effects from derivative instruments under cash flow hedging relationships, which are recorded temporarily in stockholders' equity (note 2L);
  • Changes in fair value during the tenure of available-for-sale investments until their disposal (note 2H); and
  • Current and deferred income taxes during the period arising from items whose effects are directly recognized in stockholders' equity.

     

    Items of “Other equity reserves” not included in comprehensive loss:

     

  • Effects related to controlling stockholders' equity for changes or transactions affecting non-controlling interest stockholders in CEMEX's consolidated subsidiaries;
  • Effects attributable to controlling stockholders' equity for financial instruments issued by consolidated subsidiaries that qualify for accounting purposes as equity instruments, such as the interest expense paid on perpetual debentures;
  • The equity component determined upon issuance of convertible securities or upon classification, which are mandatorily or optionally convertible into shares of the Parent Company (note 16B) and that qualify under IFRS as instruments having components of liability and equity (note 2L). Upon conversion, this amount will be reclassified to common stock and additional paid-in capital; and
  • The cancellation of the Parent Company's shares held by consolidated entities.

     

    Retained earnings (note 20C)

     

    Retained earnings represent the cumulative net results of prior accounting periods, net of: a) dividends declared to stockholders; b) recapitalizations of retained earnings; c) the effects generated form initial adoption of IFRS as of January 1, 2010 according to IFRS 1; and d) when applicable, the restitution of retained earnings from other line items within stockholder´s equity.

     

    Non-controlling interest and perpetual debentures (note 20D)

     

    This caption includes the share of non-controlling stockholders in the results and equity of consolidated subsidiaries. This caption also includes the nominal amount as of the balance sheet date of financial instruments (perpetual notes) issued by consolidated entities that qualify as equity instruments considering that there is: a) no contractual obligation to deliver cash or another financial asset; b) no predefined maturity date; and c) a unilateral option to defer interest payments or preferred dividends for indeterminate periods.

     

    2Q)       REVENUE RECOGNITION (note 3)

     

    CEMEX's consolidated net sales represent the value, before tax on sales, of revenues originated by products and services sold by consolidated subsidiaries as a result of their ordinary activities, after the elimination of transactions between related parties, and are quantified at the fair value of the consideration received or receivable, decreased by any trade discounts or volume rebates granted to customers.

 

Revenue from the sale of goods and services is recognized when goods are delivered or services are rendered to customers, there is no condition or uncertainty implying a reversal thereof, and they have assumed the risk of loss. Revenue from trading activities, in which CEMEX acquires finished goods from a third party and subsequently sells the goods to another third-party, are recognized on a gross basis, considering that CEMEX assumes the total risk on the goods purchased, not acting as agent or broker.

 

Revenue and costs associated with construction contracts are recognized in the period in which the work is performed by reference to the percentage or stage of completion of the contract at the end of the period, considering that the following have been defined: a) each party's enforceable rights regarding the asset to be constructed; b) the consideration to be exchanged; c) the manner and terms of settlement; d) actual costs incurred and contract costs required to complete the asset are effectively controlled; and e) it is probable that the economic benefits associated with the contract will flow to the entity.

 

The percentage of completion of construction contracts represents the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs or the surveys of work performed or the physical proportion of the contract work completed, whichever better reflects the percentage of completion under the specific circumstances. Progress payments and advances received from customers do not reflect the work performed and are recognized as a short or long term advanced payments, as appropriate.

 

2R)       COST OF SALES, ADMINISTRATIVE AND SELLING EXPENSES AND DISTRIBUTION EXPENSES

 

Cost of sales represents the production cost of inventories at the moment of sale. Such cost of sales includes depreciation, amortization and depletion of assets involved in production and expenses related to storage in production plants. Cost of sales excludes expenses related to personnel, equipment and services involved in sale activities and storage of product at points of sales, which are included as part of the administrative and selling expenses. Cost of sales includes freight expenses of raw material in plants and delivery expenses of CEMEX's ready-mix concrete business, but excludes freight expenses of finished products between plants and points of sale and freight expenses between points of sales and the customers' facilities, which are included as part of the distribution expenses line item. For the years ended December 31, 2014, 2013 and 2012, selling expenses included as part of the selling and administrative expenses line item amounted to $6,218, $8,120 and $7,946, respectively.

 

2S)       EXECUTIVE STOCK-BASED COMPENSATION (note 21)

 

Based on IFRS 2, Share-based payments (“IFRS 2”), stock awards based on shares of the Parent Company and/or a subsidiary granted to executives are defined as equity instruments when services received from employees are settled by delivering CEMEX's shares; or as liability instruments when CEMEX commits to make cash payments to the executives on the exercise date of the awards based on changes in CEMEX's own stock (intrinsic value). The cost of equity instruments represents their estimated fair value at the date of grant and is recognized in the statements of operations during the period in which the exercise rights of the employees become vested. In respect of liability instruments, these instruments are valued at their estimated fair value at each reporting date, recognizing the changes in fair value through the operating results. CEMEX determines the estimated fair value of options using the binomial financial option-pricing model.

 

2T)       EMISSION RIGHTS

 

In some of the countries where CEMEX operates, such as EU countries, governments have established mechanisms aimed at reducing carbon dioxide emissions (“CO2”) by means of which industries releasing CO2 must submit to the environmental authorities at the end of a compliance period emission rights for a volume equivalent to the tons of CO2 released. Since the mechanism for emissions reduction in the EU has been in operation, a certain number of emission rights based on historical levels have been granted by the relevant environmental authorities to the different industries free of cost. Therefore, companies have to buy additional emission rights to meet deficits between actual CO2 emissions during the compliance period and emission rights actually held, or they can dispose of any surplus of emission rights in the market. In addition, the United Nations Framework Convention on Climate Change (“UNFCCC”) grants Certified Emission Reductions (“CERs”) to qualified CO2 emission reduction projects. CERs may be used in specified proportions to settle emission rights obligations in the EU. CEMEX actively participates in the development of projects aimed to reduce CO2 emissions. Some of these projects have been awarded with CERs.

 

CEMEX does not maintain emission rights, CERs and/or enter into forward transactions with trading purposes. In the absence of an IFRS that defines an accounting treatment for these schemes, CEMEX accounts for the effects associated with CO2 emission reduction mechanisms as follows:

 

  • Emission rights granted by governments are not recognized in the balance sheet considering that their cost is zero.

 

  • Revenues from the sale of any surplus of emission rights are recognized by decreasing cost of sales; in the case of forward sale transactions, revenues are recognized upon physical delivery of the emission certificates.
  • Emission rights and/or CERs acquired to hedge current CO2 emissions are recognized as intangible assets at cost, and are further amortized to cost of sales during the compliance period. In the case of forward purchases, assets are recognized upon physical reception of the emission certificates.
  • CEMEX accrues a provision against cost of sales when the estimated annual emissions of CO2 are expected to exceed the number of emission rights, net of any benefit obtained through swap transactions of emission rights for CERs.
  • CERs received from the UNFCCC are recognized as intangible assets at their development cost, which are attributable mainly to legal expenses incurred in the process of obtaining such CERs.

 

The combined effect of the use of alternate fuels that help reduce the emission of CO2, and the downturn in produced cement volumes in the EU, generated a surplus of emission rights held over the estimated CO2 emissions in the recent years. During 2014, 2013 and 2012, there were no sales of emission rights to third parties.

 

2U)       CONCENTRATION OF CREDIT

 

CEMEX sells its products primarily to distributors in the construction industry, with no specific geographic concentration within the countries in which CEMEX operates. As of and for the years ended December 31, 2014, 2013 and 2012, no single customer individually accounted for a significant amount of the reported amounts of sales or in the balances of trade receivables. In addition, there is no significant concentration of a specific supplier relating to the purchase of raw materials.

 

2V)       NEWLY ISSUED IFRS NOT YET ADOPTED

 

There are a number of IFRS issued as of the date of issuance of these financial statements but which have not yet been adopted, which are listed below. Except as otherwise indicated, CEMEX expects to adopt these IFRS when they become effective.

 

  • IFRS 9, Financial instruments: classification and measurement (“IFRS 9”). Phase 1: during 2009 and 2010, the IASB issued the chapters of IFRS 9 relating to the classification and measurement of financial assets and liabilities, and incorporated limited amendments in July 2014 for the classification and measurement of financial assets. Phase 2: in July 2014, the IASB added to IFRS 9 the impairment requirements related to the accounting for expected credit losses on an entity's financial assets and commitments to extend credits. Phase 3: in November 2013, the IASB added to IFRS 9 the requirements related to hedge accounting. As intended by the IASB, IFRS 9 will replace IAS 39 in its entirety. IFRS 9 requires an entity to recognize a financial asset or a financial liability in its statement of financial position when, and only when, the entity becomes party to the contractual provisions of the instrument. At initial recognition, an entity shall measure a financial asset or financial liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability, and includes a category of financial assets at fair value through other comprehensive income for simple debt instruments. In respect to impairment requirements, IFRS 9 eliminates the threshold set forth in IAS 39 for the recognition of credit losses. Under the impairment approach in IFRS 9 it is no longer necessary for a credit event to have occurred before credit losses are recognized, instead, an entity always accounts for expected credit losses, and changes in those expected losses through profit or loss. In respect to hedging activities, the requirements of IFRS 9 align hedge accounting more closely with an entity's risk management through a principles-based approach. Nonetheless, the IASB provided entities with an accounting policy choice between applying the hedge accounting requirements of IFRS 9 or continuing to apply the existing hedge accounting requirements in IAS 39 until the IASB completes its project on the accounting for macro hedging. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. If an entity elects to apply IFRS 9 early, it must apply all of the requirements in this standard at the same time. CEMEX is currently evaluating the impact that IFRS 9 will have on the classification and measurement of its financial assets and financial liabilities, impairment of financial assets and hedging activities. Preliminarily, CEMEX does not expect a significant effect. Nonetheless, CEMEX is not considering an early application of IFRS 9.

     

  • In May 2014, the IASB issued IFRS 15, Revenue from contracts with customers (“IFRS 15”). The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, following a five step model: Step 1: Identify the contract(s) with a customer, which is an agreement between two or more parties that creates enforceable rights and obligations; Step 2: Identify the performance obligations in the contract, considering that if a contract includes promises to transfer distinct goods or services to a customer, the promises are performance obligations and are accounted for separately; Step 3: Determine the transaction price, which is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer; Step 4: Allocate the transaction price to the performance obligations in the contract, on the basis of the relative stand-alone selling prices of each distinct good or service promised in the contract; and Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation, by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). IFRS 15 also includes disclosure requirements that would provide users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers. IFRS 15 will supersede all existing guidance on revenue recognition. IFRS 15 is effective for annual periods beginning on or after January 1, 2017, with early adoption permitted considering certain additional disclosure requirements. CEMEX is currently evaluating the impact that IFRS 15 will have on the recognition of revenue from its contracts with customers. Preliminarily, CEMEX does not expect a significant effect. Nonetheless, CEMEX is not considering an early application of IFRS 15.
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v2.4.0.6
3) Revenues and Construction Contracts
12 Months Ended
Dec. 31, 2014
Revenue [abstract]  
Disclosure of revenue

3)        REVENUES AND CONSTRUCTION CONTRACTS

 

For the years ended December 31, 2014, 2013 and 2012, net sales, after sales and eliminations between related parties resulting from consolidation, were as follows:

 

  2014 2013 2012
From the sale of goods associated to CEMEX’s main activities 1 $ 202,529 187,335 189,219
From the sale of services 2   2,618 2,523 2,574
From the sale of other goods and services 3   4,876 5,803 5,243
 $ 210,023 195,661 197,036

1       Includes in each period those revenues generated under construction contracts that are presented in the table below.

2       Refers mainly to revenues generated by Neoris N.V., a subsidiary involved in providing information technology solutions and services.

3        Refers mainly to revenues generated by subsidiaries not individually significant operating in different lines of business.

 

For the years ended December 31, 2014, 2013 and 2012, revenues and costs related to construction contracts in progress were as follows:

   Recognized to      
   date 12014 2013 2012
Revenue from construction contracts included in consolidated          
 net sales 2 $ 4,026 328 1,319 180
Costs incurred in construction contracts included in consolidated          
 cost of sales 3   (2,986) (291) (1,144) (80)
 Construction contracts operating profit$ 1,040 37 175 100

1       Revenues and costs recognized from inception of the contracts until December 31, 2014 in connection with those projects still in progress.

 

2       Revenues from construction contracts during 2014, 2013 and 2012, determined under the percentage of completion method, were mainly obtained in Mexico and Colombia.

 

3       Refers to actual costs incurred during the periods. The oldest contract in progress as of December 31, 2014 started in 2010.

 

As of December 31, 2014 and 2013, amounts receivable for progress billings to customers of construction contracts and/or advances received by CEMEX from these customers were not significant.

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v2.4.0.6
4) Selected Financial Information by Geographic Operating Segment
12 Months Ended
Dec. 31, 2014
Disclosure Of Operating Segments [abstract]  
Disclosure of entitys reportable segments

4)       SELECTED FINANCIAL INFORMATION BY GEOGRAPHIC OPERATING SEGMENT

 

CEMEX applies IFRS 8, Operating Segments (“IFRS 8”), for the disclosure of its operating segments, which are defined as the components of an entity that engage in business activities from which they may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity's top management to make decisions about resources to be allocated to the segments and assess their performance, and for which discrete financial information is available.

 

CEMEX's main activities are oriented to the construction industry segment through the production, distribution, marketing and sale of cement, ready-mix concrete, aggregates and other construction materials. CEMEX operates geographically on a regional basis. Beginning in April 2011, CEMEX's operations were reorganized into six geographical regions, each under the supervision of a regional president: 1) Mexico, 2) United States, 3) Northern Europe, 4) Mediterranean, 5) South America and the Caribbean (“SAC”), and 6) Asia. Each regional president supervises and is responsible for all the business activities in the countries comprising the region. These activities refer to the production, distribution, marketing and sale of cement, ready-mix concrete, aggregates and other construction materials, the allocation of resources and the review of their performance and operating results. All regional presidents report directly to CEMEX's Chief Executive Officer. The country manager, who is one level below the regional president in the organizational structure, reports the performance and operating results of its country to the regional president, including all the operating sectors. CEMEX's top management internally evaluates the results and performance of each country and region for decision-making purposes and allocation of resources, following a vertical integration approach considering: a) that the operating components that comprise the reported segment have similar economic characteristics; b) that the reported segments are used by CEMEX to organize and evaluate its activities in its internal information system; c) the homogeneous nature of the items produced and traded in each operative component, which are all used by the construction industry; d) the vertical integration in the value chain of the products comprising each component; e) the type of clients, which are substantially similar in all components; f) the operative integration among components; and g) that the compensation system of a specific country is based on the consolidated results of the geographic segment and not on the particular results of the components. In accordance with this approach, in CEMEX's daily operations, management allocates economic resources and evaluates operating results on a country basis rather than on an operating component basis.

 

Based on IFRS 8 and considering the financial information that is regularly reviewed by CEMEX's top management, each of the six geographic regions in which CEMEX operates and the countries that comprise such regions represent reportable operating segments. However, for disclosure purposes in the notes to the financial statements, considering similar regional and economic characteristics and/or the fact that certain countries do not exceed the materiality thresholds included in IFRS 8 to be reported separately, such countries have been aggregated and presented as single line items as follows: a) “Rest of Northern Europe” is mainly comprised of CEMEX's operations in Ireland, the Czech Republic, Austria, Poland, Hungary and Latvia, as well as trading activities in Scandinavia and Finland; b) “Rest of Mediterranean” is mainly comprised of CEMEX's operations in Croatia, the United Arab Emirates and Israel; c) “Rest of South America and the Caribbean” or “Rest of SAC” is mainly comprised of CEMEX's operations in Costa Rica, Panama, Puerto Rico, the Dominican Republic, Nicaragua, Jamaica and other countries in the Caribbean, Guatemala, and small ready-mix concrete operations in Argentina; and d) “Rest of Asia” is mainly comprised of CEMEX's operations in Thailand, Bangladesh, China and Malaysia. The segment “Others” refers to: 1) cement trade maritime operations, 2) Neoris N.V., CEMEX's subsidiary involved in the development of information technology solutions, 3) the Parent Company and other corporate entities, and 4) other minor subsidiaries with different lines of business.

 

The main indicator used by CEMEX's management to evaluate the performance of each country is “Operating EBITDA” representing operating earnings before other expenses, net, plus depreciation and amortization, considering that such amount represents a relevant measure for CEMEX's management as an indicator of the ability to internally fund capital expenditures, as well as a widely accepted financial indicator to measure CEMEX's ability to service or incur debt (note 16). Operating EBITDA should not be considered as an indicator of CEMEX's financial performance, as an alternative to cash flow, as a measure of liquidity, or as being comparable to other similarly titled measures of other companies. This indicator, which is presented in the selected financial information by geographic operating segment, is consistent with the information used by CEMEX's management for decision-making purposes. The accounting policies applied to determine the financial information by geographic operating segment are consistent with those described in note 2. CEMEX recognizes sales and other transactions between related parties based on market values.

 

Selected information of the consolidated statements of operations by geographic operating segment for the years ended December 31, 2014, 2013 and 2012 was as follows:

  Net sales       Less: Operating      
  (including Less:     depreciation earnings Other   Other
  related Related   Operating and before other expenses, Financial financing
2014 parties) parties Net sales EBITDA amortization expenses, net net expense items, net
                   
Mexico $51,411 (10,142) 41,269 13,480 2,420 11,060 734 (262) 481
United States  49,127 (32) 49,095 5,337 5,718 (381) (346) (417) (122)
Northern Europe                  
United Kingdom  17,071  17,071 1,672 1,004 668 1,062 (33) (378)
Germany  14,138 (1,247) 12,891 869 625 244 (797) (29) (122)
France  12,914  12,914 852 516 336 (94) (72) (4)
Rest of Northern Europe  12,936 (957) 11,979 1,348 897 451 (356) (31) (90)
Mediterranean                  
Spain  4,717 (559) 4,158 363 571 (208) (2,107) (29) (4)
Egypt  7,123 (12) 7,111 2,664 474 2,190 (209) (28) 15
Rest of Mediterranean  10,294 (94) 10,200 1,344 285 1,059 (73) (26) (13)
South America and the                  
Caribbean                  
Colombia  13,242 (1) 13,241 4,838 476 4,362 52 (90) (353)
Rest of SAC 16,292 (1,865) 14,427 4,767 688 4,079 (101) (44) 9
Asia                  
Philippines  5,912 (2) 5,910 1,374 338 1,036 40 (5) (8)
Rest of Asia  2,263  2,263 170 71 99 (174) (6) 36
Others 13,532 (6,038) 7,494 (2,438) 374 (2,812) (2,759) (20,432) 3,048
                   
Total $230,972 (20,949) 210,023 36,640 14,457 22,183 (5,128) (21,504) 2,495
                   

  Net sales       Less: Operating      
  (including Less:     depreciation earnings Other   Other
  related Related   Operating and before other expenses, Financial financing
2013 parties) parties Net sales EBITDA amortization expenses, net net expense items, net
                   
Mexico $40,932 (1,507) 39,425 12,740 2,493 10,247 (721) (337) 206
United States  42,582 (128) 42,454 2,979 5,885 (2,906) (359) (501) (129)
Northern Europe                  
United Kingdom  14,368  14,368 1,005 882 123 (258) (113) (220)
Germany  13,715 (976) 12,739 826 643 183 (80) (11) (125)
France  13,393  13,393 1,274 532 742 (160) (61) (22)
Rest of Northern Europe  12,250 (822) 11,428 1,310 889 421 (115) (13) (141)
Mediterranean                  
Spain  3,856 (203) 3,653 360 629 (269) (1,439) (55) 11
Egypt  6,162 3 6,165 2,373 462 1,911 (144) (15) 55
Rest of Mediterranean   9,517 (91) 9,426 1,334 225 1,109 (12) (49) 30
South America and the                  
Caribbean                  
Colombia  13,203  13,203 5,449 485 4,964 (87) (177) (183)
Rest of SAC 15,527 (1,843) 13,684 4,518 675 3,843 (345) (49) (11)
Asia                  
Philippines  5,067  5,067 1,173 320 853 12 (3) 38
Rest of Asia  2,330  2,330 153 80 73 57 (12) 29
Others 16,604 (8,278) 8,326 (1,531) 259 (1,790) (1,252) (18,541) 2,168
                   
Total $209,506 (13,845) 195,661 33,963 14,459 19,504 (4,903) (19,937) 1,706
                   

  Net sales       Less: Operating      
  (including Less:     depreciation earnings Other   Other
  related Related   Operating and before other expenses, Financial financing
2012 parties) parties Net sales EBITDA amortization expenses, net net expense items, net
                   
Mexico $44,412 (1,425) 42,987 16,048 2,645 13,403 (94) (438) (84)
United States  40,319 (122) 40,197 405 6,464 (6,059) (967) (617) (159)
Northern Europe                  
United Kingdom  14,620  14,620 1,910 996 914 (297) (244) (701)
Germany  14,406 (953) 13,453 704 1,015 (311) (258) (18) (170)
France  13,324  13,324 1,340 581 759 (156) (68) 13
Rest of Northern Europe  12,778 (806) 11,972 1,797 918 879 440 (119) 56
Mediterranean                  
Spain  4,841 (155) 4,686 1,349 690 659 (1,443) (111) 944
Egypt  6,382 (190) 6,192 2,473 556 1,917 (203) (9) 82
Rest of Mediterranean  8,160 (37) 8,123 1,069 307 762 (112) (47) (91)
South America and the                  
Caribbean                  
Colombia  11,932  11,932 4,905 396 4,509 31 (139) 348
Rest of SAC 16,450 (1,851) 14,599 4,417 761 3,656 (70) (62) 5
Asia                  
Philippines  4,704  4,704 901 305 596 27 (3) (11)
Rest of Asia  2,430  2,430 110 75 35 13 (13) 
Others  15,154 (7,337) 7,817 (2,922) 1,796 (4,718) (2,401) (16,623) 745
                   
Total $209,912 (12,876) 197,036 34,506 17,505 17,001 (5,490) (18,511) 977
                   

The information of equity in income of associates by geographic Operating segment for the years ended December 31, 2014, 2013 and 2012 is included in the note 13A.

As of December 31, 2014 and 2013, selected balance sheet information by geographic segment was as follows:

  Investments in Other segment Total Total  Net assets  Additions to
2014 in associates assets assets liabilities by segment fixed assets 1
             
Mexico $855 75,739 76,594 17,367 59,227 1,177
United States  1,007 228,068 229,075 15,420 213,655 2,738
Northern Europe            
United Kingdom  104 29,780 29,884 16,736 13,148 626
Germany  61 12,383 12,444 7,683 4,761 389
France  544 14,019 14,563 5,960 8,603 362
Rest of Northern Europe  73 16,791 16,864 4,541 12,323 353
Mediterranean            
Spain  77 21,343 21,420 2,583 18,837 166
Egypt   7,914 7,914 4,182 3,732 418
Rest of Mediterranean  5 11,364 11,369 4,518 6,851 289
South America and the Caribbean            
Colombia   15,949 15,949 9,447 6,502 1,378
Rest of South America and the Caribbean  24 18,341 18,365 3,361 15,004 766
Asia            
Philippines  3 9,567 9,570 1,931 7,639 705
Rest of Asia   1,871 1,871 751 1,120 49
Others 6,807 42,272 49,079 272,310 (223,231) 70
             
Total $9,560 505,401 514,961 366,790 148,171 9,486

  Investments in Other segment Total Total  Net assets  Additions to
2013 associates assets assets liabilities by segment fixed assets 1
             
Mexico $821 75,948 76,769 16,230 60,539 1,182
United States  920 205,487 206,407 11,259 195,148 2,237
Northern Europe            
United Kingdom  190 28,512 28,702 12,710 15,992 567
Germany  59 12,845 12,904 6,891 6,013 556
France  539 14,629 15,168 4,839 10,329 482
Rest of Northern Europe 74 18,089 18,163 4,400 13,763 505
Mediterranean            
Spain  15 23,362 23,377 2,539 20,838 151
Egypt   7,498 7,498 3,402 4,096 314
Rest of Mediterranean  6 10,646 10,652 3,711 6,941 299
South America and the Caribbean            
Colombia   17,285 17,285 9,948 7,337 934
Rest of South America and the Caribbean  24 16,681 16,705 3,233 13,472 594
Asia            
Philippines  3 7,716 7,719 1,296 6,423 451
Rest of Asia   2,116 2,116 711 1,405 74
Others  6,371 46,294 52,665 266,643 (213,978) 63
             
Total $9,022 487,108 496,130 347,812 148,318 8,409

  • In 2014 and 2013, the total “Additions to fixed assets “includes capital expenditures of approximately $8,866 and $7,769, respectively (note 14).

 

Total consolidated liabilities as of December 31, 2014 and 2013 included debt of $205,834 and $190,980, respectively. Of such balances, as of December 31, 2014 and 2013, 59% and 49% was in the Parent Company, 8% and 17% was in Spain, 32% and 32% was in finance subsidiaries in the Netherlands, Luxembourg and the United States, and 1% and 2% was in other countries, respectively. As mentioned above, the Parent Company and the finance subsidiaries mentioned above are included within the segment “Others.

Net sales by product and geographic segment for the years ended December 31, 2014, 2013 and 2012 were as follows:

2014 Cement Concrete Aggregates Others Eliminations Net sales
             
Mexico $27,667 12,855 2,963 9,056 (11,272) 41,269
United States  17,937 21,490 9,886 12,294 (12,512) 49,095
Northern Europe            
United Kingdom  3,824 6,666 6,128 7,929 (7,476) 17,071
Germany  4,883 6,600 4,042 2,434 (5,068) 12,891
France   10,826 4,585 215 (2,712) 12,914
Rest of Northern Europe  5,305 5,753 2,427 893 (2,399) 11,979
Mediterranean            
Spain  3,856 783 168 359 (1,008) 4,158
Egypt  6,402 542 19 318 (170) 7,111
Rest of Mediterranean  2,289 7,082 1,755 996 (1,922) 10,200
South America and the Caribbean            
Colombia  9,544 4,964 1,547 770 (3,584) 13,241
Rest of South America and the Caribbean 13,123 3,417 712 690 (3,515) 14,427
Asia            
Philippines  5,849 48  27 (14) 5,910
Rest of Asia 998 1,099 94 102 (30) 2,263
Others     11,605 (4,111) 7,494
Total $101,677 82,125 34,326 47,688 (55,793) 210,023
             
             
             
             

2013 Cement Concrete Aggregates Others Eliminations Net sales
             
Mexico $26,497 12,228 2,580 9,924 (11,804) 39,425
United States  15,296 18,589 8,764 10,793 (10,988) 42,454
Northern Europe            
United Kingdom  3,387 5,699 4,856 6,952 (6,526) 14,368
Germany  4,460 6,386 3,972 2,524 (4,603) 12,739
France   11,244 4,378 189 (2,418) 13,393
Rest of Northern Europe  5,377 5,775 2,186 619 (2,529) 11,428
Mediterranean            
Spain  3,057 678 174 368 (624) 3,653
Egypt  5,718 403 18 128 (102) 6,165
Rest of Mediterranean  2,122 6,214 1,438 911 (1,259) 9,426
South America and the Caribbean            
Colombia  8,847 4,474 1,358 630 (2,106) 13,203
Rest of South America and the Caribbean  12,677 3,240 651 552 (3,436) 13,684
Asia            
Philippines  5,040 10  23 (6) 5,067
Rest of Asia  977 1,166 143 101 (57) 2,330
Others     16,605 (8,279) 8,326
Total $93,455 76,106 30,518 50,319 (54,737) 195,661
             
             
             
             
             
             
             
             
             

2012 Cement Concrete Aggregates Others Eliminations Net sales
             
Mexico $29,229 12,927 2,478 10,090 (11,737) 42,987
United States  14,372 16,653 8,215 11,204 (10,247) 40,197
Northern Europe            
United Kingdom  3,404 5,628 5,064 7,345 (6,821) 14,620
Germany  4,546 6,264 3,882 3,283 (4,522) 13,453
France   11,181 4,112 312 (2,281) 13,324
Rest of Northern Europe  5,103 6,066 2,155 892 (2,244) 11,972
Mediterranean            
Spain  3,829 965 316 397 (821) 4,686
Egypt  5,461 463 24 525 (281) 6,192
Rest of Mediterranean  1,910 5,130 1,187 1,018 (1,122) 8,123
South America and the Caribbean            
Colombia  8,911 4,102 1,351 897 (3,329) 11,932
Rest of South America and the Caribbean  12,832 3,337 619 703 (2,892) 14,599
Asia            
Philippines  4,702  1 2 (1) 4,704
Rest of Asia  954 1,320 102 92 (38) 2,430
Others     15,153 (7,336) 7,817
Total $95,253 74,036 29,506