building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES<br />
Notes to the Consolidated Financial Statements – (Continued)<br />
As of December 31, 2010, 2009 and 2008<br />
(Millions of Mexican pesos)<br />
Changes in goodwill in 2010, 2009 and 2008, excluding effects from the discontinued Australian assets (note 3B), were as follows:<br />
2010 2009 2008<br />
Balance at beginning of period.......................................................................... Ps 150,827 157,541 142,344<br />
Increase for business acquisitions.................................................................... 81 504 1,289<br />
Disposals ......................................................................................................... (448) (414) (187)<br />
Impairment losses (note 11B).......................................................................... (189) – (18,314)<br />
Foreign currency translation effects 1.............................................................. (8,177) (6,804) 32,409<br />
Balance at end of period .................................................................................... Ps 142,094 150,827 157,541<br />
1 The amounts presented in this line item refer to the effects on goodwill from foreign exchange fluctuations during the period between the reporting units’<br />
currencies and the Mexican peso.<br />
As mentioned in note 11B, during 2010 and 2008, based on impairment tests made during the last quarter of such years, CEMEX recognized<br />
within “Other expenses, net” goodwill impairment losses in connection with the reporting units in Puerto Rico for approximately Ps189<br />
(US$15) in 2010, and with the reporting units located in the United States, Ireland and Thailand for approximately Ps17,476 (US$1,272) in<br />
2008. In addition, considering that the investment in CEMEX Venezuela is expected to be recovered through different means other than use,<br />
in 2008, CEMEX recognized an impairment loss of approximately Ps838 (US$61) associated with the goodwill of this investment. Based on<br />
impairment tests made during the last quarter of the year, no goodwill impairment losses were determined in 2009.<br />
Intangible assets of definite life<br />
Changes in balances of intangible assets of definite life in 2010, 2009 and 2008, excluding effects from the discontinued Australian assets<br />
(note 3B), were as follows:<br />
2010 2009 2008<br />
Balance at beginning of period.......................................................................... Ps 39,253 45,303 40,577<br />
Increase for business acquisitions.................................................................... 48 5 404<br />
Additions (disposals), net 1 ............................................................................. (287) 47 1,445<br />
Amortization ................................................................................................... (4,032) (4,350) (4,088)<br />
Impairment losses 2 ......................................................................................... (5) (42) (1,598)<br />
Foreign currency translation effects ................................................................ (1,235) (1,710) 8,563<br />
Balance at end of period .................................................................................... Ps 33,742 39,253 45,303<br />
1 CEMEX capitalized the costs incurred in the development stage of internal-use software for Ps30 in 2010, Ps161 in 2009 and Ps1,236 in 2008, related to the<br />
replacement of the technological platform in which CEMEX executes the most important processes of its business model. The items capitalized refer to<br />
direct costs incurred in the development phase of the software and relate mainly to professional fees, direct labor and related travel expenses.<br />
2 Considering impairment indicators, during the last quarter of 2008, CEMEX tested intangible assets of definite life for impairment in the United States, and<br />
determined that the carrying amount of names and commercial trademarks exceeded their value in use, resulting in an impairment loss of approximately<br />
Ps1,598.<br />
11A) MAIN ACQUISITIONS AND DIVESTITURES IN 2010, 2009 and 2008<br />
Sale of assets in Australia<br />
During 2009, CEMEX sold its Australian operations (note 3B).<br />
Nationalization of CEMEX Venezuela<br />
In August 18, 2008, as a result of a nationalization decree aimed to convert the cement industry in a sector controlled by the State, the<br />
Government of Venezuela expropriated all businesses, assets and shares of CEMEX in such country and took control of its facilities. CEMEX<br />
controlled and operated CEMEX Venezuela until August 17, 2008. In August 2008, CEMEX decided not to accept a compensation proposal<br />
for US$650 from the Government of Venezuela, considering that it significantly undervalued its business in Venezuela, and in proportion to<br />
price per ton of installed capacity and operating cash flow multiples, was lower than those proposals offered to the other foreign companies<br />
for their assets in Venezuela. In October 2008, CEMEX submitted a request to the International Centre for Settlement of Investment Disputes<br />
(“ICSID”), seeking international arbitration for the violations of the Venezuelan Government through its confiscation of assets without<br />
compensation, and deprivation of rights and legal guarantees in the process. The ICSID Tribunal was constituted on July 6, 2009. On July 27,<br />
2010, the arbitral tribunal heard arguments on the jurisdictional objections argued by the Republic of Venezuela and issued its decision in<br />
favor of jurisdiction on December 30, 2010. The proceedings are now expected to proceed to the merits phase of the arbitration.<br />
At December 31, 2010 and 2009, except for the impairment loss associated to the investment recognized in 2008, CEMEX has not adjusted<br />
its investment in Venezuela for impairment, remaining confident that it will eventually reach an agreement and obtain fair compensation.<br />
CEMEX carefully evaluates the evolution of the arbitration process with the ICSID and other negotiations to determine if the carrying amount<br />
requires an impairment adjustment.<br />
F-31