building a STRONGER foundation - Cemex

1. DESCRIPTION OF BUSINESS
CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
As of December 31, 2010, 2009 and 2008
(Millions of Mexican pesos)
CEMEX, S.A.B. de C.V. is a Mexican corporation, 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. CEMEX is a public stock corporation with variable capital (S.A.B. de C.V.) organized under the laws of the United
Mexican States (“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.
shares are listed on the New York Stock Exchange (“NYSE”) as American Depositary Shares or "ADSs" under the symbol “CX.” Each ADS
represents ten CPOs.
The terms “CEMEX, S.A.B. de C.V.” 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 Parent Company only and consolidated financial statements was authorized by the
Company’s management on January 27, 2011, and they were approved at the February 24, 2011 stockholders’ meeting.
2. SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION AND DISCLOSURE
The financial statements are prepared in accordance with Mexican Financial Reporting Standards (“MFRS”) issued by the Mexican Board for
Research and Development of Financial Reporting Standards (“CINIF”), which recognized the effects of inflation on the financial
information until December 31, 2007.
Definition of terms
When reference is made to pesos or “Ps,” it means Mexican pesos. Except when specific references are made to “earnings per share” and
“prices per share,” the amounts in the financial statements and the accompanying notes are stated in millions of pesos. When reference is
made to “US$” or dollars, it means millions of dollars of the United States of America (“United States”). When reference is made to “£” or
pounds, it means millions of British pounds sterling. When reference is made to “€” or euros, it means millions of 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 translation into
dollars, into pesos, or both, as applicable. These translations are provided as informative data and should not be construed as representations
that the amounts in pesos or dollars, as applicable, actually represent that those peso or dollar amounts could be converted into pesos or
dollars at the rate indicated. The translation procedures used are detailed as follows:
In 2010, 2009 and 2008, translations of pesos into dollars, and dollars into pesos, were determined using the closing exchange rates of
Ps12.36 per dollar, Ps13.09 per dollar and Ps13.74 per dollar for balance sheet amounts, respectively, and using the average exchange rates
of Ps12.67 per dollar, Ps13.60 per dollar and Ps11.21 per dollar for the statements of operations amounts for 2010, 2009 and 2008,
respectively.
When the amounts between parentheses are the peso and the dollar, it means the disclosed amounts were originated in other currencies.
Such amounts were determined by translating the foreign currency figures into dollars using the respective closing exchange rates at yearend,
and then translated into pesos using the closing exchange rates of Ps12.36 per dollar in 2010, Ps13.09 per dollar in 2009 and Ps13.74
per dollar in 2008.
Inflationary accounting
Beginning on January 1, 2008, pursuant to MFRS B-10, “Inflation Effects” (“MFRS B-10”), the financial statements subject to restatement
are those related to an entity whose functional currency corresponds to a country in which the cumulative inflation rate over the preceding
three years equals or exceeds 26% (i.e., a high-inflation environment). Designation takes place at the end of each year, and inflation
restatement is applied prospectively. In 2010, CEMEX restated the financial statements of its subsidiaries in Egypt, Nicaragua and Costa
Rica; in 2009, the financial statements of its subsidiaries in Egypt, Nicaragua, Latvia and Costa Rica; and in 2008, the financial statements of
its subsidiaries in Costa Rica and Venezuela.
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