Investor Presentaiton
38
f. Goodwill
Goodwill is considered as indefinite life and represents the cost of subsidiaries' shares in excess of the fair
value of the net assets acquired and its value is subject to annual impairment testing. This item is stated
as follows: i) as of January 1, 2008 at its historical cost, and ii) up to December 31, 2007, at its indexed net
value determined by applying factors derived from the NCPI to its costs. Accordingly, goodwill is stated
at its modified historical costs, less impairment losses, if any.
g.Liability provisions
Liabilities and liability provisions represent present obligations arising from past events, likely to require
the use of economic resources to settle the obligation. These provisions have been recorded according
to Management's best estimate.
h.Deferred Income Tax (IT)
Deferred IT is recorded by the comprehensive asset-and-liability method, which consists of recognizing
deferred tax on all temporary differences between the book and tax values of assets and liabilities to be
materialized over time, at the rates established in the tax provisions in effect at the date of the financial
statements. The Company recognized deferred IT, as its financial and tax projections show that the
Company will essentially pay IT in the future. See Note 14.
i. Deferred Employees' Statutory Profit Sharing (ESPS)
Deferred ESPS is recorded by the comprehensive asset-and-liability method, which consists of
recognizing deferred ESPS for all differences between the book and ESPS value of assets and liabilities, in
which payment or recovery thereof is likely.
At December 31, 2009 and 2008, the Company has recorded no effect of deferred ESPS, which is debtor
in nature and the amount thereof is not considered to be important in the context of the accompanying
consolidated financial statements.
ESPS currently payable is shown in the income statements under other income and expenses. See Note 15.
j. Employee benefits
Employee benefits granted by the Company to its employees, including defined benefit plans (or
defined contribution plans) are described as follows:
Direct benefits (salaries, overtime, vacations, holidays and paid leave of absence, among others) are
applied to income as they arise and the related liabilities are stated at their nominal value, due to their
short-term nature. Absences payable under legal or contractual provisions are noncumulative.
Employee benefits upon termination of employment for reasons other than restructuring (severance,
seniority premium, bonuses, special compensation or resignation, etc.), as well as retirement benefits
(pensions, seniority premium and indemnities, etc.) are recorded based on actuarial studies conducted
by independent experts by the projected unit credit method.
The net cost for the period of each benefit plan is recognized as an operating expense in the year in
which it becomes payable, which includes, among other items, amortization of the labor cost of past
services and prior years' actuarial gains (losses). See Note 12.
Items still unamortized at December 31, 2007, known as transition liabilities, which include the labor cost
of past services and unamortized actuarial gains (losses), are amortized as of January 1, 2008, over a five-
year period, rather than the estimated working lifetime of employees (12 years up to 2008). This change
gave rise to an additional charge to income for the 2008 period of Ps4,291.
At December 31, 2009 and 2008, the breakdown of the personnel benefit plans is described in Note 12.
k. Stockholders' equity
Capital stock, the reserve for the purchase of shares, the legal reserve, the premium on the subscription
of shares and retained earnings are expressed as follows: i) movements as of January 1, 2008, at their
historical cost, and ii) movements before January 1, 2008, at their indexed values determined by
applying factors derive from the NCPI to their restated values of up to December 31, 2007. Accordingly,
the different stockholders equity items are stated at their modified historical cost.
The net premium on the placement of shares represents the the payment on the subscription of shares
in excess of the par value thereof.
I. Comprehensive income
Comprehensive income is comprised of net income and the effects of conversion, which are reflected
in stockholders' equity and do not constitutes capital contributions, reductions and/or distributions. The
comprehensive income for 2009 and 2008 is expressed in historical pesos.
m. Revenue recognition
Income from the sale of goods is recognized in the income statement when the overall following
requirements are met: a) the risks and benefits of the goods have been transferred to the buyer and
no significant control thereon is retained, b) the revenue, costs incurred or to be incurred are reliably
determined and c) the Company is likely to receive economic benefits from the sale.
The allowance for doubtful accounts, rebates and discounts is recognized based on studies conducted by
Management and is considered to be sufficient to absorb losses, rebates, discounts and reimbursements,
as per Company policies.
n.Earning per share
Earnings per basic ordinary share before and after discontinued operations are the result of dividing
net income for the year by the weighted average of the current shares during 2009 and 2008, of
Ps427,509,963 and Ps428,358,363, respectively.
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