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)
24. DIFFERENCES BETWEEN MEXICAN AND UNITED STATES ACCOUNTING PRINCIPLES
(a) Basis of Presentation under U.S. GAAP
The consolidated financial statements are prepared in accordance with MFRS, which differ in certain significant respects from generally accepted
accounting principles applicable in the United States (“U.S. GAAP”). The term “SFAS” as used herein refers to U.S. Statements of Financial
Accounting Standards. Likewise, the term “FASB” refers to the U.S. Financial Accounting Standards Board. On July 1, 2009, the FASB instituted a
major change in the way accounting standards are organized by the implementation of the FASB Accounting Standards Codification TM (“ASC”)
which became the single official source of authoritative, nongovernmental U.S. GAAP. After that date, only one level of authoritative U.S. GAAP
exists, other than guidance issued by the Securities and Exchange Commission (“SEC”). All other literature will be non-authoritative.
As detailed in note 2A, until December 31, 2007, the MFRS consolidated financial statements included the effects of inflation, whereas financial
statements prepared under U.S. GAAP are presented on a historical cost basis. The reconciliation to U.S. GAAP includes: (i) a reconciling item to
reflect the difference in the carrying value of machinery and equipment of foreign origin and related depreciation between the methodology set forth by
MFRS B-10 until December 31, 2007 and the amounts that would be determined by using the historical cost/constant currency method. As described
below, this provision of inflation accounting under MFRS did not meet the requirements of Rule 3-20 of Regulation S-X promulgated by the SEC. The
reconciliation does not include the reversal of other MFRS inflation accounting adjustments as of and for the years ended December 31, 2010, 2009 and
2008, as these adjustments represent a comprehensive measure of the effects of price level changes in the applicable countries and, as such, are
considered a more meaningful presentation than historical cost-based financial reporting for both Mexican and U.S. accounting purposes.
Reconciliation of net income (loss) under MFRS to U.S. GAAP
Considering the presentation of CEMEX’s operations in Australia in 2009 and 2008 as discontinued operations under MFRS (note 3B), for
purposes of the reconciliation of net income (loss) to U.S. GAAP, all reconciling items pertaining to CEMEX’s operations in Australia for the
those periods were reclassified and presented in the single line item “U.S. GAAP adjustments from discontinued operations.” For the years
ended December 31, 2010, 2009 and 2008, the main differences between MFRS and U.S. GAAP, and their effect on consolidated net income
(loss) and earnings (loss) per share, are presented below:
2010 2009 2008
Income (loss) under MFRS from continuing operations .............................................. Ps (16,489) 5,925 226
U.S. GAAP adjustments having the effect of increasing reported income (loss)
from continuing operations:
1. Financial instruments – Fair value measurements (note 24(h)).................................... – – 1,305
2. Employees' statutory profit sharing (note 24(c)) .......................................................... – – 195
3. Employee benefits (note 24(e)) .................................................................................... 36 104 104
4. Other adjustments – Deferred charges (notes 24(c), (h) and (k)) ................................. 1,594 – 225
5. Other adjustments – Discontinued operations financial expense (note 24(l)) .............. – 373 388
6. Impairment of long-lived assets (note 24(j)) ................................................................ – 920 –
7. Hedge accounting (note 24(h))..................................................................................... 1,449 1,763 –
8. Income taxes (note 24(c)) ............................................................................................ 2,911 3,420 –
9. Accounting for uncertainty in income taxes (note 24(d))............................................. 5,279 – –
10. Financing transactions (note 24(f)) .............................................................................. 5,401 – –
U.S. GAAP adjustments having the effect of decreasing reported income (loss)
from continuing operations:
1. Impairment of long-lived assets (note 24(j)) ................................................................ – – (46,077)
2. Income taxes (note 24(c))............................................................................................. (5,442) – (7,861)
3. Hedge accounting (note 24(h))..................................................................................... – – (7,716)
4. Financing transactions (note 24(f)) .............................................................................. (1,627) (2,706) (2,596)
5. Accounting for uncertainty in income taxes (note 24(d))............................................. – (3,473) (1,584)
6. Financial instruments – Fair value measurements (note 24(h)).................................... (42) (1,057) –
7. Financial instruments – Mandatorily convertible securities (note 24(h)) ..................... – (65) –
8. Inflation adjustment of machinery and equipment (note 24(g)) ................................... (213) (224) (272)
9. Other adjustments – Deferred charges (notes 24(c) and (k))........................................ – (6,104) –
Loss under U.S. GAAP from continuing operations .............................................. Ps (7,143) (1,124) (63,663)
Income (loss) from discontinued operations as reported under MFRS......................... – (4,276) 2,097
U.S. GAAP adjustments from discontinued operations (note 24(l)) ............................ – (264) (275)
Income (loss) under U.S. GAAP from discontinued operations ............................. Ps – (4,540) 1,822
Non-controlling interest under MFRS.......................................................................... 27 240 45
Non-controlling interest share of U.S. GAAP adjustment............................................ – – –
Non-controlling income under U.S. GAAP ............................................................. Ps 27 240 45
Controlling net loss under U.S. GAAP ..................................................................... Ps (7,170) (5,904) (61,886)
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