Cemex 1997 Annual Report Download - page 71

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B) SHARE REPURCHASE PROGRAM
Under the Company’s share repurchase program, as of December 31, 1997, a total of 9,693,000 Series “A” and
14,436,099 Series “B” shares have been acquired and canceled in stockholders’ equity of the Company', in the
amount of $824 common stock and $956,125 charged against the share repurchase reserve. Of those shares
acquired, 3,497,000 Series “A” shares and 1,807,000 Series “B” shares are in the Company’s treasury, and the
remaining 6,196,000 Series “A” shares and 12,629,099 Series “B” shares are under specific contracts with various
financial institutions, for which the Company has requested the physical delivery of the shares for safekeeping in
the Company’s treasury.
C) EXECUTIVE STOCK OPTION PLAN
In 1995, the Company adopted a stock option incentive plan for Series “ B” common shares of the variable portion
of the common stock. This plan grants to eligible personnel, designated by a Technical Committee, stock option
“rights” to subscribe up to 72,100,000 of the Series “B” common shares. As of December 31, 1997, the trust has
granted option rights for 21,152,885 Series “B” common shares and 2,246,523 common shares have been
exercised at the assigned value that generated $63,815 as a additional-paid in capital.
The options rights may be exercised up to 25% per year of the granted option rights during first the four years and
during a maximum period of ten years subsequent to the date of grant.
D) RETAINED EARNINGS
Retained earnings at December 31, 1997, include $24,316,862 of earnings generated by subsidiaries and affiliated
companies which may be distributed by the Company when dividends are declared from the subsidiaries or
affiliated companies.
Retained earnings at December 31, 1997, include a reserve to repurchase the Company’s common shares in the
amount of $8,493,756.
Net income of the year is subject to an allocation of a 5% to constitute a legal reserve, until such reserve equals one-
fifth of the capital stock. As of December 31, 1997, the legal reserve amounted to $873,221.
Earnings distributed as dividends in excess of tax earnings will be subject to tax as defined by the Mexican Income
Tax Law, in which case, only 66% of retained earnings may be distributed as dividends.
E) EFFECTS OF INFLATION
The effects of inflation on the majority interest of the stockholders' equity at December 31, 1997, are summarized
as follows:
Historical Inflation
cost adjustment Total
Common stock $ 46,514 2,043,061 2,089,575
Additional paid-in capital 6,466,398 5,079,097 11,455,495
Deficit in equity restatement. ——— (27,802,488) (27,802,488)
Retained earnings 17,783,998 18,610,569 36,394,567
Net income 5,926,898 213,061 6,139,959
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