building a STRONGER foundation - Cemex

CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements – (Continued)
As of December 31, 2010, 2009 and 2008
(Millions of Mexican pesos)
Items of “Other equity reserves” not included in comprehensive income for the period:
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 component of equity of outstanding mandatorily convertible securities into shares of the Parent Company (note 12A). Upon
conversion, this amount will be reclassified to common stock and additional paid-in capital;
The component of equity of the optional convertible subordinated notes into shares of the Parent Company (note 12A). If the conversion
option is exercised, this amount would be reclassified to additional paid-in capital; and
The cancellation of the Parent Company’s shares held by consolidated subsidiaries.
Retained earnings (note 16C)
Retained earnings represent the cumulative net results of prior accounting periods, net of dividends declared to stockholders, and net of any
recapitalizations of retained earnings. Retained earnings also include the effects from the adoption of certain newly issued MFRS as detailed
in note 16C.
Non-controlling interest and perpetual debentures (note 16D)
This caption includes the share of non-controlling stockholders in the results and equity of consolidated subsidiaries. This caption also
includes the amount as of the balance sheet date of financial instruments (perpetual notes) issued by consolidated entities that qualify as
equity instruments because there is: a) no contractual obligation to deliver cash or another financial asset; b) no predefined maturity date; and
c) an unilateral option to defer interest payments or preferred dividends for indeterminate periods.
P) REVENUE RECOGNITION
CEMEX’s consolidated revenues represent the value, before tax on sales, of products and services sold by consolidated subsidiaries as a
result of ordinary activities, after the elimination of transactions between related parties. Revenues 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 the customers have assumed the risk of loss. Revenues 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 of property on the goods purchased, not acting as agent or commissioner.
Revenues and costs associated with construction contracts are recognized in the period in which the work is performed by reference to the
stage of completion of the contract activity 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
cost 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.
Q) 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 producing plants. Cost of sales excludes expenses related to
personnel, equipment and services involved in sale activities and storage of product at points of sales, as well as costs related to warehousing
of products at the selling points.
Expenses related to freight of raw material in plants, as well as of finished product between plants and points of sale and freight expenses
between points of sales and customers’ facilities, are all recognized within distribution expenses.
For the years ended December 31, 2010, 2009 and 2008, selling expenses amounted to Ps7,894, Ps9,310 and Ps11,079, respectively.
Distribution expenses refer to freight of finished products between points of sale and the customers’ facilities.
R) MONETARY POSITION RESULT
Monetary position result represents the gain or loss for holding monetary assets and liabilities in high-inflation environments and is calculated
applying the inflation rate of the country where the subsidiary operates to its net monetary position (monetary assets less monetary liabilities).
F-16