Cemex 1997 Annual Report Download - page 63

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57
The inflation restatement adjustments for common stock and additional paid-in capital are restated by using
Mexican inflation. The weighted average restatement index was used for all other inflation restatement adjustments
to stockholders’ equity.
D) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include those of Cemex and the subsidiary companies in which Cemex holds
a majority interest and/or has control.
The main subsidiaries are:
• Cementos Monterrey, S.A. de C.V.
• Grupo Empresarial Maya, S.A. de C.V.
• Tolmex, S.A. de C.V.
• Cemex Central, S.A. de C.V.
• Cementos del Norte, S.A. de C.V.
• Sunbelt Enterprises
• Turismo Cemex, S.A. de C.V.
• Compañía Valenciana de Cementos Portland, S.A.
• Corporación Venezolana de Cementos, S.A.C.A.
• Cemex USA, Inc.
• Cementos Diamante, S.A.
• Cemento Bayano, S.A.
• Cementos Nacionales, S.A.
Commencing January 1, 1997, the operations of the Colombian subsidiary, Industrias e Inversiones Samper, S.A.
(Samper), were consolidated by the Company. At December 31, 1996, the investment in Samper was included on
the consolidated financial statements under the equity method of accounting and the Company’s investment was
$1,177,784.
In 1997, the Company, through a subsidiary, acquired 30% of the voting stock of Rizal Cement, Inc., (Rizal) for
US dollars 93 million. Rizal is a Philippine company that owns various cement plants. The investment in Rizal is
included in the consolidated financial statements under the equity method of accounting and totals $343,293 at
December 31, 1997.
All significant intercompany balances and transactions have been eliminated in consolidation.
E) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS
Transactions denominated in foreign currencies are recorded at the exchange rates prevalent on the dates of their
execution or liquidation. Monetary assets and liabilities denominated in foreign currencies are adjusted into
Mexican currency at the exchange rates prevailing at the balance sheet date. The resulting foreign exchange
fluctuations are reflected in the results of operations as part of the comprehensive financing income or as a charge
directly to the stockholders’ equity when the indebtedness is directly related to the acquisition of a foreign
subsidiary.
During 1997, the Company adopted Bulletin B-15 (see note 2B). Prior to 1997, the financial statements of foreign
subsidiaries were consolidated under the translation method for foreign entities as set forth in International
Accounting Standard No. 21 (IAS 21). The 1996 and prior financial statements, for consolidation purposes, were
restated for the effects of inflation, using the Mexican inflation rate, based upon Bulletin B-10.
F) CASH AND TEMPORARY INVESTMENTS
Cash and temporary investments include fixed-income marketable securities investments with original maturities
of three months or less. Investments in marketable securities are stated at market value. Gains or losses resulting
from changes in market values and the effects of inflation are included in the accompanying statements of income
as part of the comprehensive financing income or cost.