Cemex 1999 Annual Report Download - page 69

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The weighted average number of shares utilized in the calculations is as follows:
BASIC (1) DILUTED
December 31, 1999 3,767,646,462 3,787,200,759
December 31, 1998 3,786,281,775 3,797,376,945
December 31, 1997 3,851,983,824 3,908,702,910
(1) Included in 1998 and 1997, are 118,919,607 and 187,733,226 shares related to financial transactions, respectively, (see note 14F).
The difference between the basic and diluted average number of shares for 1999, 1998 and 1997 above is attributable
to the additional shares issued under the Company’s executive stock option plan (see note 14B).
21.- CONTINGENCIES AND COMMITMENTS
A) GUARANTEES
At December 31, 1999, Cemex, S.A. de C.V. has signed as guarantor for loans made to certain subsidiaries for
approximately US dollars 101 million.
B) TAX ASSESSMENTS
As of December 31, 1999, the Company and some of its subsidiaries in Mexico have been notified of several tax
assessments determined by the Tax Authorities related to years prior to 1996. These tax assessments total
approximately $2,616 million. The tax assessments result primarily from: (i) disallowed deductions resulting from
employee benefit plans; and (ii) recalculation of the inflationary tax deduction, since the tax authorities purport that
“Advance Payments to Suppliers” are not by their nature credits. The companies involved have legally contested the
assessments by seeking legal remedies available before the courts.
During 1998, three indirect subsidiaries of the Company in Colombia, acquired as a part of the purchase of Cementos
Diamante, S.A., were individually notified by the Domestic Taxes and Costumes Office of Colombia (“DIAN”), of
special assessments corresponding to income taxes of the 1995 fiscal year, for approximately US dollars 143 million
($1,360 millions). The Colombian subsidiaries filed a timely response to such special assessments within the required
legal period. During 1999, the DIAN issued a formal deficiency note and the Colombian subsidiaries issued a
reconsideration resource against such assessments within the required legal period. The company estimates that the
final resolution of these procedures may delay as long as 2 years, so far, it can not be established if the reconsideration
resources will succeed.
C) ANTI-DUMPING DUTIES
In 1990, the United States Department of Commerce (DOC) imposed an anti-dumping duty order on imports of gray
Portland cement and clinker from Mexico. As a result, certain subsidiaries of the Company as importers of record,
have been subject to payment of anti-dumping duty deposits estimated on imports of gray Portland cement and
clinker from Mexico since April 1990. The order is likely to continue for an indefinite period, however, it will be
reviewed by the United States government no later than July 2001, taking into consideration the World Trade
Organization new rules in order to determine whether the conditions for imposing the order still exist. The Company
and its subsidiaries have used the available legal means in this matter and will continue to do so in order to determine
the actual dumping margins within each period of the administration reviews carried out by the DOC.
As of December 31, 1999, the Company has accrued a liability of US dollars 37 million, including accrued interest,
for the difference between the amount of anti-dumping duties paid on imports and the latest findings by the DOC in
its administrative reviews for all of the reviewed periods.
As of December 31, 1999, the Company finds itself in the ninth administrative review period by the DOC, and will
expect a preliminary resolution in the second semester of the year 2000. With respect of the first 4 review periods,
the DOC has issued a final resolution of the anti-dumping duties. With respect of the remaining review periods, the
final resolutions are suspended until all the procedures before the NAFTA Panel have been concluded, for which, the
final results may be different from those registered in the accompanying consolidated financial statements.
D) LEASES
The Company has entered into various non-cancelable operating leases, primarily for the lease of operating facilities,
cement storage and distribution facilities and certain transportation and other equipment, which require annual rental
payments plus the payment of certain operating expenses. Future minimum annual rentals due under such leases are
summarized as follows: