Cemex 1997 Annual Report Download - page 75

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69
17.- CHARGES TO OPERATIONS WHICH DID NOT REQUIRE RESOURCES
Items charged or credited to income, but which did not result in cash receipts or disbursements, are summarized
as follows:
1997 1996
Consolidated Parent Consolidated Parent
Depreciation of property,
machinery and equipment $ 2,406,160 4,464 2,393,469 4,822
Amortization of deferred
charges and credits, net 969,816 86,962 581,673 93,037
Seniority premium 109,450 ——- 183,065 ——-
Equity in income of subsidiaries
and affiliates (141,106) (4,460,456) (288,935) (5,064,018)
Minority interest 860,592 ——- 997,965 ——-
$ 4,204,912 (4,369,030) 3,867,237 (4,966,159)
18.- EARNINGS PER SHARE
Basic earnings per share are calculated by dividing majority interest net income for the year by the weighted average
number of common shares outstanding during the year.
Diluted net earnings per share, request the effect upon the majority interest net income and the weighted average
number of common shares plus the incremental shares that would have been outstanding upon the assumed
exercise of the stock options described in note 12C and, for 1996, the effects from the assumed conversion of the
convertible debt.
The weighted average number of shares utilized in the calculations is as follows:
Basic (1) Diluted
December 31, 1997 1,283,994,608 1,302,900,970
December 31, 1996 1,298,042,412 1,347,928,211
(1) In 1997, includes 62,577,742 shares related with financing transactions (see note 9).
19.- CONTINGENCIES AND COMMITMENTS
A) GUARANTEES
At December 31, 1997, Cemex has signed as guarantor for loans made to certain subsidiaries in the amount of US
dollars 273 million.
B) TAX ASSESSMENTS
The Company and certain of its subsidiaries have been notified of several tax assessments determined by the tax
authorities for years prior to 1996. Total tax assessments amounts to $644 millions at December 31, 1997.
The tax assessments result primarily from: (i) disallowed deductions resulting from employee benefit plans; and (ii)
the authority estimates that certain “Advance Payments to Suppliers” are not by their nature credits, thus
recalculating the deductions because of the inflationary component of the credits. The companies involved have
legally contested the assessments by seeking legal remedies available before the courts.
The companies have obtained favorable resolutions in similar tax cases, that set forth case precedents for the tax
claims referred to herein. Also, the Company has obtained favorable resolutions on tax claims for amounts superior
to those referred to herein.