Management Report - Beursgorilla

ArcelorMittal Annual Report 200916 Consolidated Financial StatementsNotes to the Consolidated Financial Statements continuedArcelorMittal and Subsidiaries(millions of U.S. dollars, except share and per share data)Emission rightsArcelorMittal’s industrial sites whichare regulated by the European Directive2003/87/EC of October 13, 2003 on carbondioxide (“CO2”) emission rights, effectiveas of January 1, 2005, are located primarilyin Germany, Belgium, Spain, France, Poland,Romania, Czech Republic and Luxembourg.The emission rights allocated to the Companyon a no-charge basis pursuant to the annualnational allocation plan are recorded on thestatement of financial position at nil valueand purchased emission rights are recorded atcost. Gains and losses from the sale of excessallowances are recognized in the statementof operations. If at the statement of financialposition date the Company is short of emissionrights, it will record a provision through thestatement of operations.Revenue recognitionRevenue is measured at the fair valueof the consideration received or receivable.Revenue is reduced for estimated customerreturns and other similar allowances.Revenue from the sale of goods is recognizedwhen the Company has transferred to thebuyer the significant risks and rewards ofownership of the goods, no longer retainscontrol over the goods sold, the amount ofrevenue can be measured reliably, it is probablethat the economic benefits associated withthe transaction will flow to the Company, andthe costs incurred or to be incurred in respectof the transaction can be measured reliably.Shipping and handling costsArcelorMittal records amounts billed to acustomer in a sale transaction for shippingand handling costs as sales and the relatedshipping and handling costs incurred as costof sales.Financing costsFinancing costs include interest incomeand expense, amortization of discountsor premiums on borrowings, amortizationof costs incurred in connection with thearrangement of borrowings and net gain orloss from foreign exchange on translationof long-term debt, net of unrealized gainsand losses on foreign exchange contracts.Earnings per common shareBasic earnings per common share iscomputed by dividing net income by theweighted average number of common sharesoutstanding during the year. Diluted earningsper share is computed by dividing incomeavailable to equity holders and assumedconversion by the weighted average numberof common shares and potential commonshares from outstanding stock options aswell as potential common shares from theconversion of certain convertible bondswhenever the conversion results in a dilutiveeffect. Potential common shares arecalculated using the treasury stock methodand represent incremental shares issuableupon exercise of the Company’s outstandingstock options.Stock option plan/share-based paymentsArcelorMittal issues equity-settledshare-based payments to certainemployees. Equity-settled share-basedpayments are measured at fair value(excluding the effect of non market-basedvesting conditions) at the date of grant.The fair value determined at the grant dateof the equity-settled share-basedpayments is expensed on a graded vestingbasis over the vesting period, based on theCompany’s estimate of the shares that willeventually vest and adjusted for the effectof non market-based vesting conditions.Fair value is measured using the Black-Scholes pricing model. The expected lifeused in the model has been adjusted, basedon management’s best estimate, for theeffects of non-transferability, exerciserestrictions and behavioral considerations.Segment reportingArcelorMittal reports its operations insix segments: Flat Carbon Americas, FlatCarbon Europe, Long Carbon Americas andEurope, Asia, Africa and Commonwealthof Independent States (“AACIS”), StainlessSteel and ArcelorMittal Steel Solutions andServices (“Steel Solutions and Services”).Operating segments are components of theCompany that engage in business activitiesfrom which they may earn revenues and incurexpenses (including revenues and expensesrelating to transactions with othercomponents of the Company), for whichdiscrete financial information is availableand whose operating results are evaluatedregularly by the chief operating decisionmaker to make decisions about resourcesto be allocated to the segment and assess itsperformance. ArcelorMittal’s chief operatingdecision maker is the Group ManagementBoard. Operating segments are aggregatedwhen they have similar economiccharacteristics on the basis of the nature ofproducts and services, production processes,the type of customers and the methods usedto distribute products or provide services.Long Carbon Americas, Long Carbon Europe,and Tubular Products have been combined forreporting purposes.These operating segments include attributablegoodwill, intangible assets, property, plant andequipment, and equity method investments.They do not include cash and short-termdeposits, short-term investments, tax assets,and other current financial assets. Attributableliabilities are also those resulting from thenormal activities of the segment, excludingtax liabilities and indebtedness but includingpost retirement obligations where directlyattributable to the segment. Financing itemsare managed centrally for the Company asa whole and so are not directly attributableto individual operating segments.Geographical information is separatelydisclosed and represents ArcelorMittal’s mostsignificant regional markets. Attributed assetsare operational assets employed in eachregion and include items such as pensionbalances that are specific to a country. Theydo not include attributed goodwill, deferredtax assets, other investments or receivablesand other non-current financial assets.Attributed liabilities are those arising withineach region, excluding indebtedness.Financing items are managed centrally for theCompany as a whole and so are not directlyattributable to individual geographical areas.