Cemex 1997 Annual Report Download - page 65

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59
L) INCOME TAX AND EMPLOYEES' STATUTORY PROFIT SHARING ( NOTE 14 )
Income tax (IT) and employees' statutory profit sharing (ESPS) expense recognize the amounts payable and the
effects on IT and ESPS of material timing differences between tax and book income on which it may reasonably
be estimated that, over a defined period, a benefit or liability will arise.
M) MONETARY POSITION GAIN OR LOSS
Beginning January 1, 1997, the monetary position gain or loss is calculated by applying the inflation rate of each
country in which the Company has operations to the average net monetary assets or liabilities in that country. Prior
to 1997, monetary position gain or loss was calculated using the Mexican inflation rate.
N) DEFICIT IN EQUITY RESTATEMENT
The deficit in equity restatement includes the accumulated effect from holding nonmonetary assets as well as the
effect of translation of financial statements of foreign subsidiaries since 1994.
O) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments to reduce its exposure to market risks from changes in foreign
exchange rates, interest rates and other risks inherent in its operations such as foreign exchange forward contracts,
interest rate swaps and options. These financial instruments, have been designated as hedges of the Company’s debt
or equity and their economic effects are recognized as part of the comprehensive financing income (cost) or in the
stockholders’ equity, according to their designation. The realized and unrealized gains and losses of forward
contracts that have been designated to hedge the Company’s investment in foreign subsidiaries are charged or
credited directly to stockholders’ equity as part of the foreign currency translation gain or loss.
3.- OTHER RECEIVABLES
Other current receivables include the following:
1997 1996
Consolidated Parent Consolidated Parent
Non-trade receivables $ 972,468 21 1,243,008 10,870
Refundable income tax 374,116 434,818 ——- 125,851
Other refundable taxes 216,747 3,764 305,812 13,356
$ 1,563,331 438,603 1,548,820 150,077
4.- INVENTORIES
Inventories are summarized as follows:
Consolidated
1997 1996
Finished goods $ 679,672 761,850
Work-in-process 204,698 194,042
Raw materials 444,504 394,813
Supplies and spare parts 1,742,120 1,586,238
Advances to suppliers 185,962 274,431
Inventory in transit 29,777 119,419
Real estate held for sale 162,851 173,486
$ 3,449,584 3,504,279